SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-84776)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No. 43 [X]
and
REGISTRATION STATEMENT (No. 811-3785)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 43 [X]
Fidelity Advisor Series I
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-563-7000
Eric D. Roiter, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
(X) on (February 28, 1998) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule 485.
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed
post-effective amendment.
FIDELITY ADVISOR FUNDS CLASS A, CLASS T, CLASS B, AND CLASS C
PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b,c .............................. Contents; Who May Want to Invest
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Performance
4 a i............................. Charter
ii........................... Investment Principles and Risks; Fundamental
Investment Policies and Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Cover Page; "FMR and its Affiliates"
ii........................... Charter
iii.......................... Expenses; Breakdown of Expenses
c .............................. Charter
d .............................. Charter; Breakdown of Expenses
e .............................. Charter; Breakdown of Expenses
f .............................. Expenses
g i............................. "FMR and its Affiliates"
ii........................... *
5A .............................. Performance
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions; Sales Charge Reductions and Waivers
iii.......................... Charter
b ............................. Charter
c .............................. Transaction Details; Exchange Restrictions
d .............................. Who May Want to Invest
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Exchange Restrictions;
Sales Charge Reductions and Waivers
f, g .............................. Dividends, Capital Gains, and Taxes
h .............................. Who May Want to Invest
7 a .............................. Cover Page; "FMR and its Affiliates"
b .............................. How to Buy Shares; Transaction Details
c .............................. Sales Charge Reductions and Waivers
d .............................. How to Buy Shares
e .............................. Breakdown of Expenses; Transaction Details
f .............................. Expenses; Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for future
reference. It contains important information, including how each fund invests
and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy of a
fund's most recent financial report and portfolio listing or a copy of the
Statement of Additional Information (SAI) dated February 28, 1998. The SAI has
been filed with the Securities and Exchange Commission (SEC) and is available
along with other related materials on the SEC's Internet Web site
(http://www.sec.gov). The SAI is incorporated herein by reference (legally forms
a part of the prospectus). For a free copy of either document, contact Fidelity
Distributors Corporation (FDC), 82 Devonshire Street, Boston, MA 02109, or your
investment professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
HIGH YIELD AND STRATEGIC INCOME MAY INVEST SIGNIFICANTLY IN LOWER-QUALITY DEBT
SECURITIES, SOMETIMES CALLED "JUNK BONDS." THESE SECURITIES CARRY GREATER RISKS,
SUCH AS THE RISK OF DEFAULT, THAN OTHER DEBT SECURITIES.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
ACOM-PRO-0298
FIDELITY ADVISOR FUNDS
CLASS A, CLASS T, CLASS B,
AND CLASS C
GROWTH FUNDS: CLASSES
Fidelity Advisor TechnoQuantSM Growth Fund A,T,B,C
Fidelity Advisor Mid Cap Fund A,T,B,C
Fidelity Advisor Equity Growth Fund A,T,B,C
Fidelity Advisor Growth Opportunities Fund A,T,B,C
Fidelity Advisor Strategic Opportunities Fund A,T,B
Fidelity Advisor Large Cap Fund A,T,B,C
GROWTH AND INCOME FUNDS:
Fidelity Advisor Growth & Income Fund A,T,B,C
Fidelity Advisor Equity Income Fund A,T,B,C
Fidelity Advisor Balanced Fund A,T,B,C
TAXABLE INCOME FUNDS:
Fidelity Advisor High Yield Fund A,T,B,C
Fidelity Advisor Strategic Income Fund A,T,B,C
Fidelity Advisor Mortgage Securities Fund A,T,B
Fidelity Advisor Government Investment Fund A,T,B,C
Fidelity Advisor Intermediate Bond Fund A,T,B,C
Fidelity Advisor Short Fixed-Income Fund A,T,C
MUNICIPAL FUNDS:
Fidelity Advisor Municipal Income Fund
(formerly Fidelity Advisor High Income Municipal Fund) A,T,B,C
Fidelity Advisor Intermediate Municipal
Income Fund A,T,B,C
Fidelity Advisor Short-Intermediate Municipal
Income Fund A,T
PROSPECTUS
FEBRUARY 28, 1998
(FIDELITY_LOGO_GRAPHIC)
82 DEVONSHIRE STREET, BOSTON, MA 02109
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
KEY FACTS WHO MAY WANT TO INVEST
<S> <C> <C>
EXPENSES Each class's sales charge (load) and its yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's financial data.
PERFORMANCE How each fund has done over time.
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's overall approach
to investing.
BREAKDOWN OF EXPENSES How operating costs are calculated
and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your account,
including tax-advantaged retirement plans.
HOW TO BUY SHARES Opening an account and making additional
investments.
HOW TO SELL SHARES Taking money out and closing your account.
INVESTOR SERVICES Services to help you manage your account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND WAIVERS
APPENDIX A
APPENDIX B
</TABLE>
<PAGE>
KEY FACTS
WHO MAY WANT TO INVEST
Class A, Class T, Class B, and Class C shares are offered to investors who
engage an investment professional for investment advice.
TechnoQuantSM Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, Balanced, High Yield,
Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, and Intermediate Municipal Income are
diversified funds.
Strategic Income and Short-Intermediate Municipal Income are non-diversified
funds. Non-diversified funds may invest a greater portion of their assets in
securities of individual issuers than diversified funds. As a result, changes in
the market value of a single issuer could cause greater fluctuations in share
value than would occur in a more diversified fund.
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, and Balanced are
designed for investors who are willing to ride out stock market fluctuations in
pursuit of potentially high long-term returns. TechnoQuant Growth, Mid Cap,
Equity Growth, Growth Opportunities, Strategic Opportunities, and Large Cap are
designed for investors who want to be invested in the stock market for its
long-term growth potential. These funds invest for growth and do not pursue
income. Growth & Income, Equity Income, and Balanced are designed for those
investors who seek a combination of growth and income from equity and some bond
investments.
TechnoQuant Growth is designed to provide an alternative to more traditional
styles of investing for growth-oriented investors. The fund utilizes
computer-aided quantitative analysis emphasizing technical factors, such as
historical price and volume relationships.
High Yield and Strategic Income are designed for investors who want high current
income with some potential for capital growth from a portfolio of debt
instruments with a focus on lower-quality debt securities and income-producing
equity securities. These funds may be appropriate for long-term, aggressive
investors who understand the potential risks and rewards of investing in
lower-quality debt securities, including defaulted securities.
Strategic Income may also be appropriate for investors who want to pursue their
investment goals in markets outside of the United States. By including
international investments in your portfolio, you can achieve additional
diversification and participate in growth opportunities around the world.
Mortgage Securities is designed for investors who seek high current income from
a portfolio of mortgage-related securities of all types.
Government Investment is designed for investors who seek high current income
from a portfolio of U.S. Government securities in a manner consistent with
preserving principal.
Intermediate Bond and Short Fixed-Income are designed for investors who seek
high current income from a portfolio of investment-grade debt securities
consistent with capital preservation.
Municipal Income, Intermediate Municipal Income, and Short-Intermediate
Municipal Income are designed for investors in higher tax brackets who seek high
current income that is free from federal income tax. Intermediate Municipal
Income and Short-Intermediate Municipal Income also invest consistent with
consideration of capital preservation.
The value of each fund's investments and, as applicable, the income they
generate, will vary from day to day, and generally reflect changes in market
conditions, interest rates and other company, political, and economic news. In
the short term, stock prices can fluctuate dramatically in response to these
factors. The securities of small, less well-known companies may be more volatile
than those of larger companies. Bond values fluctuate based on changes in
interest rates and the credit quality of the issuer, and may be subject to
prepayment risk, which can limit their price appreciation potential in periods
of declining interest rates. Over time, however, stocks, although more volatile,
have shown greater growth potential than other types of securities. Investments
in foreign securities may involve risks in addition to those of U.S.
investments, including increased political and economic risk, as well as
exposure to currency fluctuations.
Each fund is not in itself a balanced investment plan. You should consider your
investment objective and tolerance for risk when making an investment decision.
When you sell your fund shares, they may be worth more or less than what you
paid for them.
Each fund is composed of multiple classes of shares. All classes of a fund have
a common investment objective and investment portfolio. Class A and Class T
shares have a front-end sales charge and pay a 12b-1 fee. Class A and Class T
shares may be subject to a contingent deferred sales charge (CDSC). Class B and
Class C shares do not have a front-end sales charge, but do have a CDSC, and pay
a 12b-1 fee. Institutional Class shares have no sales charge and do not pay a
12b-1 fee, but are available only to certain types of investors. See "Sales
Charge Reductions and Waivers," page , for Institutional Class
eligibility information. You may obtain more information about Institutional
Class shares, which are not offered through this prospectus, by calling
1-800-843-3001 or from your investment professional.
The performance of one class of shares of a fund may be different from the
performance of another class of shares of the same fund because of different
sales charges and class expenses. Contact your investment professional to
discuss which class is appropriate for you.
In determining which class of shares is appropriate for you, you should
consider, among other factors, the amount you plan to invest, the length of time
you intend to hold your shares, your eligibility for a sales charge waiver or
reduction, and the package of services provided to you by your investment
professional and the overall costs of those services.
<PAGE>
In general, Class A shares have higher costs than Class T shares over a short
holding period because Class A shares have a higher front-end sales charge, and
Class A shares have lower costs than Class T shares over a longer holding period
because Class A shares have lower 12b-1 fees. If you are planning to invest a
significant amount either at one time or through a regular investment program,
you should consider the reduced front-end sales charges available on Class A and
Class T shares. If you are eligible for a front-end sales charge waiver on a
purchase of both Class A and Class T shares, Class A shares generally will have
lower costs than Class T shares because Class A shares have lower 12b-1 fees.
However, you should evaluate the overall costs of purchasing Class A shares or
Class T shares in the context of the package of services provided to you by your
investment professional. See "Transaction Details," page , and "Sales
Charge Reductions and Waivers," page , for sales charge reduction and
waiver information.
If you prefer not to pay a front-end sales charge, you should consider Class B
or Class C shares. While Class B and Class C shares are subject to higher
ongoing costs than Class A or Class T shares, in general because of their higher
12b-1 fees, Class B and Class C shares are sold with a CDSC instead of a
front-end sales charge so your entire purchase amount is immediately invested.
In general, Class B shares have higher costs than Class C shares over a short
holding period because Class B shares have a higher CDSC that declines over a
maximum of six years, and Class B shares have lower costs than Class C shares
over a longer period because Class B shares convert to Class A shares after a
maximum of seven years. Please note that purchase amounts of more than $250,000
will not be accepted for Class B shares, that purchase amounts of more than
$1,000,000 generally will not be accepted for Class C shares, and that Class A
or Class T shares may have lower costs for investments that qualify for a
front-end sales charge reduction or waiver. See "How to Buy Shares," page
, for more information on the maximum purchase amount for Class C shares.
If you sell your Class B shares of the Intermediate-Term Bond Funds within three
years or your Class B shares of the Bond Funds and the Equity Funds within six
years, you will normally pay a CDSC that varies depending on how long you have
held your shares. If you sell your Class C shares within one year, you will
normally pay a 1.00% CDSC. See "Transaction Details," page , for CDSC
schedules and related information. Class B shares will automatically convert to
Class A shares after a holding period of four years for the Intermediate-Term
Bond Funds and seven years for the Bond Funds and the Equity Funds. Class C
shares do not convert to another class of shares. See "Transaction Details,"
page , for conversion information.
The Board of Trustees of Fidelity Advisor Short-Intermediate Municipal Income
Fund has unanimously approved an Agreement and Plan of Reorganization
("Agreement") between Fidelity Advisor Short-Intermediate Municipal Income Fund
and Fidelity Advisor Intermediate Municipal Income Fund, a fund of Fidelity
Advisor Series VI. The agreement will be presented to Fidelity Advisor
Short-Intermediate Municipal Income Fund shareholders for their vote of approval
or disapproval at a special meeting to be held on May 4, 1998. If the proposal
is approved at the meeting by a majority of Fidelity Advisor Short-Intermediate
Municipal Income Fund's shareholders and certain conditions required by the
Agreement are satisfied, the Reorganization is expected to become effective on
or about May 28, 1998.
Effective January 1, 1998 Fidelity Advisor Short-Intermediate Municipal
Income Fund was closed to new accounts pending the reorganization.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy or sell
shares of a fund. In addition, you may be charged an annual account maintenance
fee if your account balance falls below $2,500. Lower front-end sales charges
may be available with purchases of $50,000 or more. See "Transaction Details,"
page , for an explanation of how and when these charges apply.
A CDSC is imposed on Class B shares only if you redeem Class B shares within
three years of purchase for the Intermediate-Term Bond Funds, or within six
years of purchase for the Bond Funds and the Equity Funds. A CDSC is imposed on
Class C shares only if you redeem Class C shares within one year of purchase.
See "Transaction Details," page , for information about the CDSC.
<TABLE>
<CAPTION>
CLASS A CLASS T CLASS B CLASS C
<S> <C> <C> <C> <C>
MAXIMUM SALES CHARGE (AS A % OF OFFERING PRICE)
ON PURCHASES OF: TECHNOQUANT GROWTH, MID CAP,
EQUITY GROWTH, GROWTH OPPORTUNITIES, STRATEGIC
OPPORTUNITIES*, LARGE CAP, GROWTH & INCOME,
EQUITY INCOME, AND BALANCED (THE EQUITY FUNDS) 5.75% 3.50% NONE NONE
MAXIMUM SALES CHARGE (AS A % OF OFFERING PRICE)
ON PURCHASES OF: HIGH YIELD, STRATEGIC INCOME,
MORTGAGE SECURITIES*, GOVERNMENT INVESTMENT, AND
MUNICIPAL INCOME (THE BOND FUNDS) 4.75% 3.50% NONE NONE
MAXIMUM SALES CHARGE (AS A % OF OFFERING PRICE)
ON PURCHASES OF: INTERMEDIATE BOND AND
INTERMEDIATE MUNICIPAL INCOME
(THE INTERMEDIATE-TERM BOND FUNDS) 3.75% 2.75% NONE NONE
MAXIMUM SALES CHARGE (AS A % OF OFFERING PRICE)
ON PURCHASES OF: SHORT FIXED-INCOME AND
SHORT-INTERMEDIATE MUNICIPAL INCOME*
(THE SHORT-TERM BOND FUNDS) 1.50% 1.50% ** NONE
MAXIMUM CDSC FOR ALL EQUITY AND BOND FUNDS
(AS A % OF THE LESSER OF ORIGINAL PURCHASE PRICE OR
REDEMPTION PROCEEDS) NONE[A] NONE[A] 5.00%[B] 1.00%[D]
MAXIMUM CDSC FOR THE INTERMEDIATE-TERM BOND
FUNDS (AS A % OF THE LESSER OF ORIGINAL PURCHASE
PRICE OR REDEMPTION PROCEEDS) NONE[A] NONE[A] 3.00%[C] 1.00%[D]
MAXIMUM CDSC FOR SHORT FIXED-INCOME AND
SHORT-INTERMEDIATE MUNICIPAL INCOME*
(AS A % OF THE LESSER OF ORIGINAL PURCHASE PRICE OR
REDEMPTION PROCEEDS) NONE[A] NONE[A] ** 1.00%[D]
SALES CHARGE ON REINVESTED DISTRIBUTIONS NONE NONE NONE NONE
ANNUAL ACCOUNT MAINTENANCE FEE
(FOR ACCOUNTS UNDER $2,500) $12.00 $12.00 $12.00 $12.00
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUNDS DO NOT OFFER CLASS B SHARES.
</TABLE>
<PAGE>
[A] A CDSC OF 0.25% IS ASSESSED ON CERTAIN REDEMPTIONS OF CLASS A AND CLASS T
SHARES
ON WHICH A FINDER'S FEE WAS PAID. SEE "TRANSACTION DETAILS," PAGE.
[B] DECLINES OVER 6 YEARS FROM 5.00% TO 0%.
[C] DECLINES OVER 3 YEARS FROM 3.00% TO 0%.
[D] ON CLASS C SHARES REDEEMED WITHIN 1 YEAR OF PURCHASE.
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each fund pays a
management fee to Fidelity Management & Research Company (FMR) that, for Growth
Opportunities and Strategic Opportunities, varies based on performance. Each
fund also incurs other expenses for services such as maintaining shareholder
records and furnishing shareholder statements and financial reports.
12b-1 fees for Class A, Class T, Class B, and Class C include a distribution fee
and, for Class B and Class C, a shareholder service fee. Distribution fees are
paid by each class of each fund to FDC for services and expenses in connection
with the distribution of the applicable class's shares. Shareholder service fees
are paid by Class B and Class C of the funds to FDC for services and expenses in
connection with providing personal service to and/or maintenance of Class B and
Class C shareholder accounts. Long-term shareholders may pay more than the
economic equivalent of the maximum sales charges permitted by the National
Association of Securities Dealers, Inc., due to 12b-1 fees.
Each class's expenses are factored into its share price or dividends and are not
charged directly to shareholder accounts (see "Breakdown of Expenses" on
page 67).
The following figures are based on estimated or historical expenses, adjusted to
reflect current fees, of each class of each fund and are calculated as a
percentage of average net assets of the applicable class of each fund.
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUNDS
OPERATING EXPENSES CLASS A CLASS T CLASS B CLASS C
<S> <C> <C> <C> <C> <C>
TECHNOQUANT MANAGEMENT FEE 0.60% 0.60% 0.60% 0.60%
GROWTH
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.90% 0.90% 0.90% 0.90%[A]
TOTAL OPERATING EXPENSES 1.75% 2.00% 2.50% 2.50%
MID CAP MANAGEMENT FEE 0.60% 0.60% 0.60% 0.60%
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A AND CLASS C) 0.90% 0.38% 0.43% 0.90%[A]
TOTAL OPERATING EXPENSES 1.75% 1.48% 2.03% 2.50%
EQUITY MANAGEMENT FEE 0.60% 0.60% 0.60% 0.60%
GROWTH
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A, CLASS B, AND CLASS C) 0.35% 0.21% 0.35% 0.35%[A]
TOTAL OPERATING EXPENSES 1.20% 1.31% 1.95% 1.95%
GROWTH MANAGEMENT FEE 0.49% 0.49% 0.49% 0.49%
OPPORTUNITIES
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES 0.31% 0.19% 0.32%[A] 0.29%[A]
TOTAL OPERATING EXPENSES 1.05% 1.18% 1.81% 1.78%
STRATEGIC MANAGEMENT FEE 0.40% 0.40% 0.40% *
OPPORTUNITIES
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B SHARES) 0.25% 0.50% 1.00% *
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A) 1.10% 0.34% 0.38% *
TOTAL OPERATING EXPENSES 1.75% 1.24% 1.78% *
LARGE CAP MANAGEMENT FEE 0.60% 0.60% 0.60% 0.60%
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A AND CLASS C) 0.90% 0.52% 0.56% 0.90%[A]
TOTAL OPERATING EXPENSES 1.75% 1.62% 2.16% 2.50%
GROWTH & MANAGEMENT FEE 0.50% 0.50% 0.50% 0.50%
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A, CLASS B, AND CLASS C) 0.75% 0.59% 0.75% 0.75%[A]
TOTAL OPERATING EXPENSES 1.50% 1.59% 2.25% 2.25%
EQUITY MANAGEMENT FEE 0.50% 0.50% 0.50% 0.50%
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A AND CLASS C) 0.35% 0.23% 0.24% 0.35%[A]
TOTAL OPERATING EXPENSES 1.10% 1.23% 1.74% 1.85%
BALANCED MANAGEMENT FEE 0.45% 0.45% 0.45% 0.45%
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A, CLASS B, AND CLASS C) 0.35% 0.22% 0.35% 0.35%[A]
TOTAL OPERATING EXPENSES 1.05% 1.17% 1.80% 1.80%
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
</TABLE>
<PAGE>
TAXABLE INCOME FUNDS
<TABLE>
<CAPTION>
OPERATING EXPENSES CLASS A CLASS T CLASS B CLASS C
<S> <C> <C> <C> <C> <C>
HIGH YIELD MANAGEMENT FEE 0.59% 0.59% 0.59% 0.59%
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES 0.41% 0.25% 0.25% 0.32%[A]
TOTAL OPERATING EXPENSES 1.15% 1.09% 1.74% 1.91%
STRATEGIC MANAGEMENT FEE 0.59% 0.59% 0.59% 0.59%
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A AND CLASS C) 0.51% 0.36% 0.37% 0.51%[A]
TOTAL OPERATING EXPENSES 1.25% 1.20% 1.86% 2.10%
MORTGAGE MANAGEMENT FEE 0.44% 0.44% 0.44% *
SECURITIES
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR CLASS B SHARES) 0.15% 0.25% 0.90% *
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.31%[A] 0.31%[A] 0.31%[A] *
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% *
GOVERNMENT MANAGEMENT FEE 0.44% 0.44% 0.44% 0.44%
INVESTMENT
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.31% 0.31% 0.31% 0.31%[A]
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% 1.75%
INTERMEDIATE MANAGEMENT FEE 0.44% 0.44% 0.44% 0.44%
BOND
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A, CLASS B, AND CLASS C) 0.31% 0.27% 0.31% 0.31%[A]
TOTAL OPERATING EXPENSES 0.90% 0.96% 1.65% 1.75%
SHORT MANAGEMENT FEE 0.44% 0.44% ** 0.44%
FIXED-INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR CLASS C SHARES) 0.15% 0.15% ** 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A AND CLASS C) 0.31% 0.30% ** 0.31%[A]
TOTAL OPERATING EXPENSES 0.90% 0.89% ** 1.75%
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
</TABLE>
<PAGE>
MUNICIPAL FUNDS
<TABLE>
<CAPTION>
OPERATING EXPENSES CLASS A CLASS T CLASS B CLASS C
<S> <C> <C> <C> <C> <C>
MUNICIPAL MANAGEMENT FEE 0.39% 0.39% 0.39% 0.39%
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR CLASS B
AND CLASS C SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT CLASS A AND CLASS C) 0.36% 0.25% 0.27% 0.36%[A]
TOTAL OPERATING EXPENSES 0.90% 0.89% 1.56% 1.75%
INTERMEDIATE MANAGEMENT FEE 0.39% 0.39% 0.39% 0.39%
MUNICIPAL
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER SERVICE FEE FOR
CLASS B AND CLASS C SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.36% 0.36% 0.36% 0.36%[A]
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% 1.75%
SHORT- MANAGEMENT FEE 0.39% 0.39% ** *
INTERMEDIATE
MUNICIPAL
INCOME
12B-1 FEE (DISTRIBUTION FEE) 0.15% 0.15% ** *
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.36% 0.36% ** *
TOTAL OPERATING EXPENSES 0.90% 0.90% ** *
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
</TABLE>
A portion of the brokerage commissions that certain of the funds pay is used to
reduce fund expenses. In addition, certain funds have entered into arrangements
with their custodian and transfer agent whereby credits realized as a result of
uninvested cash balances are used to reduce custodian and transfer agent
expenses. Including these reductions, the total operating expenses presented in
the preceding tables for the applicable class would have been:
<TABLE>
<CAPTION>
CLASS A CLASS T CLASS B
<S> <C> <C> <C>
MID CAP 1.71% 1.44% 1.98%
EQUITY GROWTH 1.18% 1.29% 1.92%
GROWTH OPPORTUNITIES 1.04% 1.17% +
STRATEGIC OPPORTUNITIES 1.73% 1.23% 1.77%
LARGE CAP 1.72% 1.60% 2.14%
EQUITY INCOME 1.09% 1.21% 1.73%
BALANCED 1.04% 1.17% 1.79%
HIGH YIELD 1.14% 1.08% 1.74%
STRATEGIC INCOME 1.24% 1.19% 1.85%
<FN>
+ IMPACT OF CREDITS NOT APPLIED TO FIRST YEAR ESTIMATES.
</TABLE>
<PAGE>
EXPENSE TABLE EXAMPLE: You would pay the following amount in total expenses on a
$1,000 investment, assuming a 5% annual return and either (1) full redemption or
(2) no redemption at the end of each time period. Total expenses shown below
include your shareholder transaction expenses, such as the maximum front-end
sales charge or CDSC, as applicable, and a class's annual operating expenses.
EQUITY FUNDS
<TABLE>
<CAPTION>
EXAMPLES
FULL REDEMPTION NO REDEMPTION
CLASS A CLASS T CLASS B CLASS C CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C>
TECHNOQUANT GROWTH 1 YEAR $ 74 $ 55 $ 75[A] $ 35[A] $ 25 $ 25
3 YEARS $109 $ 96 $108[A] $ 78 $ 78 $ 78
5 YEARS $147 $139 $153[A] $133 $133 $133
10 YEARS[B] $252 $260 $257 $284 $257 $284
MID CAP 1 YEAR $ 74 $ 50 $ 71[A] $ 35[A] $ 21 $ 25
3 YEARS $109 $ 80 $ 94[A] $ 78 $ 64 $ 78
5 YEARS $147 $113 $129[A] $133 $109 $133
10 YEARS[B] $252 $206 $225 $284 $225 $284
EQUITY GROWTH 1 YEAR $ 69 $ 48 $ 70[A] $ 30[A] $ 20 $ 20
3 YEARS $ 93 $ 75 $ 91[A] $ 61 $ 61 $ 61
5 YEARS $120 $104 $125[A] $105 $105 $105
10 YEARS[B] $195 $187 $199 $227 $199 $227
GROWTH OPPORTUNITIES 1 YEAR $ 68 $ 47 $ 68[A] $ 28[A] $ 18 $ 18
3 YEARS $ 89 $ 71 $ 87[A] $ 56 $ 57 $ 56
5 YEARS $112 $ 98 $118[A] $ 96 $ 98 $ 96
10 YEARS[B] $178 $173 $183 $209 $183 $209
STRATEGIC OPPORTUNITIES 1 YEAR $ 74 $ 47 $ 68[A] * $ 18 *
3 YEARS $109 $ 73 $ 86[A] * $ 56 *
5 YEARS $147 $101 $116[A] * $ 96 *
10 YEARS[B] $252 $180 $208 * $208 *
LARGE CAP 1 YEAR $ 74 $ 51 $ 72[A] $ 35[A] $ 22 $ 25
3 YEARS $109 $ 84 $ 98[A] $ 78 $ 68 $ 78
5 YEARS $147 $120 $136[A] $133 $116 $133
10 YEARS[B] $252 $220 $234 $284 $234 $284
GROWTH & INCOME 1 YEAR $ 72 $ 51 $ 73[A] $ 33[A] $ 23 $ 23
3 YEARS $102 $ 83 $100[A] $ 70 $ 70 $ 70
5 YEARS $135 $119 $140[A] $120 $120 $120
10 YEARS[B] $226 $217 $231 $258 $231 $258
EQUITY INCOME 1 YEAR $ 68 $ 47 $ 63[A] $ 29[A] $ 13 $ 19
3 YEARS $ 90 $ 73 $ 69[A] $ 58 $ 39 $ 58
5 YEARS $115 $100 $ 88[A] $100 $ 68 $100
10 YEARS[B] $184 $179 $144 $217 $144 $217
BALANCED 1 YEAR $ 68 $ 47 $ 68[A] $ 28[A] $ 18 $ 18
3 YEARS $ 89 $ 71 $ 87[A] $ 57 $ 57 $ 57
5 YEARS $112 $ 97 $117[A] $ 97 $ 97 $ 97
10 YEARS[B] $178 $172 $183 $212 $183 $212
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER SEVEN YEARS.
</TABLE>
<PAGE>
TAXABLE INCOME FUNDS
<TABLE>
<CAPTION>
EXAMPLES
FULL REDEMPTION NO REDEMPTION
CLASS A CLASS T CLASS B CLASS C CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD 1 YEAR $ 59 $ 46 $ 68[A] $ 29[A] $ 18 $ 19
3 YEARS $ 82 $ 68 $ 85[A] $ 60 $ 55 $ 60
5 YEARS $108 $ 93 $114[A] $103 $ 94 $103
10 YEARS[B] $181 $163 $182 $223 $182 $223
STRATEGIC INCOME 1 YEAR $ 60 $ 47 $ 69[A] $ 31[A] $ 19 $ 21
3 YEARS $ 85 $ 72 $ 88[A] $ 66 $ 58 $ 66
5 YEARS $113 $ 99 $121[A] $113 $101 $113
10 YEARS[B] $191 $175 $195 $243 $195 $243
MORTGAGE SECURITIES 1 YEAR $ 56 $ 45 $ 67[A] * $ 17 *
3 YEARS $ 75 $ 66 $ 82[A] * $ 52 *
5 YEARS $ 95 $ 88 $110[A] * $ 90 *
10 YEARS[B] $153 $153 $166 * $166 *
GOVERNMENT INVESTMENT 1 YEAR $ 56 $ 45 $ 67[A] $ 28[A] $ 17 $ 18
3 YEARS $ 75 $ 66 $ 82[A] $ 55 $ 52 $ 55
5 YEARS $ 95 $ 88 $110[A] $ 95 $ 90 $ 95
10 YEARS[B] $153 $153 $166 $206 $166 $206
INTERMEDIATE BOND 1 YEAR $ 46 $ 37 $ 47[A] $ 28[A] $ 17 $ 18
3 YEARS $ 65 $ 57 $ 62[A] $ 55 $ 52 $ 55
5 YEARS[C] $ 85 $ 79 $ 81 $ 95 $ 81 $ 95
10 YEARS[C] $144 $142 $140 $206 $140 $206
SHORT FIXED-INCOME 1 YEAR $ 24 $ 24 ** $ 28[A] ** $ 18
3 YEARS $ 43 $ 43 ** $ 55 ** $ 55
5 YEARS $ 64 $ 64 ** $ 95 ** $ 95
10 YEARS $124 $123 ** $206 ** $206
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER SEVEN YEARS.
[C] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER FOUR YEARS.
</TABLE>
<PAGE>
MUNICIPAL FUNDS
<TABLE>
<CAPTION>
EXAMPLES
FULL REDEMPTION NO REDEMPTION
CLASS A CLASS T CLASS B CLASS C CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL INCOME 1 YEAR $ 56 $ 44 $ 66[A] $ 28[A] $ 16 $ 18
3 YEARS $ 75 $ 62 $ 79[A] $ 55 $ 49 $ 55
5 YEARS $ 95 $ 83 $105[A] $ 95 $ 85 $ 95
10 YEARS[B] $153 $141 $160 $206 $160 $206
INTERMEDIATE MUNICIPAL INCOME 1 YEAR $ 46 $ 37 $ 47[A] $ 28[A] $ 17 $ 18
3 YEARS $ 65 $ 58 $ 62[A] $ 55 $ 52 $ 55
5 YEARS[C] $ 85 $ 81 $ 81 $ 95 $ 81 $ 95
10 YEARS[C] $144 $147 $140 $206 $140 $206
SHORT-INTERMEDIATE MUNICIPAL INCOME 1 YEAR $ 24 $ 24 ** * ** *
3 YEARS $ 43 $ 43 ** * ** *
5 YEARS $ 64 $ 64 ** * ** *
10 YEARS $124 $124 ** * ** *
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER SEVEN YEARS.
[C] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER FOUR YEARS.
</TABLE>
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO SUGGEST
ACTUAL OR EXPECTED EXPENSES OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse Class A, Class T, Class B, and Class C
of each fund to the extent that total operating expenses, as a percentage of
their respective average net assets, exceed the following rates:
<TABLE>
<CAPTION>
CLASS A EFFECTIVE DATE CLASS T EFFECTIVE DATE CLASS B EFFECTIVE DATE
<S> <C> <C> <C> <C> <C> <C>
TECHNOQUANT GROWTH 1.75% 12/31/96 2.00% 12/31/96 2.50% 12/31/96
MID CAP 1.75%+ 8/30/96 2.00% 2/20/96 2.50% 2/20/96
EQUITY GROWTH 1.20% 11/1/97 1.45% 11/1/97 1.95%+ 11/1/97
GROWTH OPPORTUNITIES 1.10% 11/1/97 1.35% 11/1/97 1.85% 11/1/97
STRATEGIC OPPORTUNITIES 1.75%+ 3/1/97 2.00% 3/1/97 2.50% 3/1/97
LARGE CAP 1.75% 8/30/96 2.00% 2/20/96 2.50% 2/20/96
GROWTH & INCOME 1.50% 12/31/96 1.75% 12/31/96 2.25% 12/31/96
EQUITY INCOME 1.10% 11/1/97 1.35% 11/1/97 1.85% 11/1/97
BALANCED 1.05% 11/1/97 1.30% 11/1/97 1.80% 11/1/97
HIGH YIELD 1.25% 8/30/96 1.35% 7/1/95 2.00% 1/1/96
STRATEGIC INCOME 1.25% 8/30/96 1.35% 10/31/94 2.00% 1/1/96
MORTGAGE SECURITIES 0.90% 3/1/97 1.00% 3/1/97 1.65% 3/1/97
GOVERNMENT INVESTMENT 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96
INTERMEDIATE BOND 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96
SHORT FIXED-INCOME 0.90% 8/30/96 0.90% 8/30/96 ** **
MUNICIPAL INCOME 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96
INTERMEDIATE MUNICIPAL INCOME 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96
SHORT-INTERMEDIATE MUNICIPAL INCOME 0.90% 8/30/96 0.90% 7/1/95 ** **
</TABLE>
<TABLE>
<CAPTION>
CLASS C EFFECTIVE DATE
<S> <C> <C>
TECHNOQUANT GROWTH 2.50% 11/1/97
MID CAP 2.50% 11/1/97
EQUITY GROWTH 1.95% 11/1/97
GROWTH OPPORTUNITIES 1.85% 11/1/97
STRATEGIC OPPORTUNITIES * *
LARGE CAP 2.50% 11/1/97
GROWTH & INCOME 2.25% 11/1/97
EQUITY INCOME 1.85% 11/1/97
BALANCED 1.80% 11/1/97
HIGH YIELD 2.10% 11/1/97
STRATEGIC INCOME 2.10% 11/1/97
MORTGAGE SECURITIES * *
GOVERNMENT INVESTMENT 1.75% 11/1/97
INTERMEDIATE BOND 1.75% 11/1/97
SHORT FIXED-INCOME 1.75% 11/1/97
MUNICIPAL INCOME 1.75% 11/1/97
INTERMEDIATE MUNICIPAL INCOME 1.75% 11/1/97
SHORT-INTERMEDIATE MUNICIPAL INCOME * *
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
+ FMR ALSO REIMBURSED CERTAIN TRANSFER AGENT, REGISTRATION, AND OTHER
CLASS SPECIFIC EXPENSES.
</TABLE>
<PAGE>
If these agreements were not in effect, other expenses and total operating
expenses, as a percentage of average net assets, would have been the following
amounts:
<TABLE>
<CAPTION>
OTHER EXPENSES TOTAL OPERATING EXPENSES
CLASS A CLASS T CLASS B CLASS C[A] CLASS A CLASS T CLASS B CLASS C[A]
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TECHNOQUANT GROWTH 1.56% 1.11% 1.27% 1.34% 2.41% 2.21% 2.87% 2.94%
MID CAP 1.43% + + 1.11% 2.28% + + 2.71%
EQUITY GROWTH 0.49% + 0.41% 0.56% 1.34% + 2.01% 2.16%
STRATEGIC OPPORTUNITIES 3.06% + + * 3.71% + + *
LARGE CAP 2.28% + + 1.49% 3.13% + + 3.09%
GROWTH & INCOME 1.71% + 0.79% 0.92% 2.46% + 2.29% 2.42%
EQUITY INCOME 0.53% + + 0.38% 1.28% + + 1.88%
BALANCED 0.97% + 0.67% 0.94% 1.67% + 2.12% 2.39%
STRATEGIC INCOME 2.14% + + 0.85% 2.88% + + 2.44%
MORTGAGE SECURITIES 3.05%[A] 0.92%[A] 4.24%[A] * 3.64%[A] 1.61%[A] 5.58%[A] *
GOVERNMENT INVESTMENT 4.39% 0.34% 0.39% 2.35% 4.98% 1.03% 1.73% 3.79%
INTERMEDIATE BOND 1.83% + 0.40% 1.78% 2.42% + 1.74% 3.22%
SHORT FIXED-INCOME 1.23% + ** 1.29% 1.82% + ** 2.73%
MUNICIPAL INCOME 1.62% + + 1.54% 2.16% + + 2.93%
INTERMEDIATE MUNICIPAL INCOME 8.83% 0.40% 0.56% 1.39% 9.37% 1.04% 1.85% 2.78%
SHORT-INTERMEDIATE MUNICIPAL
INCOME 8.86% 0.69% ** * 9.40% 1.23% ** *
<FN>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
+ TOTAL OPERATING EXPENSES WERE LESS THAN THE VOLUNTARY EXPENSE CAPS
SHOWN IN THE TABLE ON THE PREVIOUS PAGE.
</TABLE>
Expenses eligible for reimbursement do not include interest, taxes, brokerage
commissions, and extraordinary expenses.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow contain annual information which has
been audited by Coopers & Lybrand L.L.P., or Price Waterhouse LLP, (TechnoQuant
Growth, Growth & Income, and Mortgage Securities only) independent accountants.
The funds' financial highlights, financial statements, and reports of the
auditors are included in each fund's Annual Report, and are incorporated by
reference into (are legally a part of) the funds' SAI. Contact FDC or your
investment professional for a free copy of an Annual Report or the SAI. Class C
of each fund (except Strategic Opportunities, Mortgage Securities, and
Short-Intermediate Municipal Income) commenced operations on November 3, 1997.
<TABLE>
<CAPTION>
TECHNOQUANT GROWTH - CLASS A
SELECTED PER-SHARE DATA AND RATIOS (D)
YEAR ENDED NOVEMBER 30 1997(G)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.07)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.45
TOTAL FROM INVESTMENT OPERATIONS 1.38
NET ASSET VALUE, END OF PERIOD $ 11.38
TOTAL RETURN, 13.80%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,376
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75%(A),(E)
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.73)%(A)
PORTFOLIO TURNOVER 213%(A)
AVERAGE COMMISSION RATE $ .0311
TECHNOQUANT GROWTH - CLASS T
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS (D)
YEAR ENDED NOVEMBER 30 1997(G)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.46
TOTAL FROM INVESTMENT OPERATIONS 1.36
NET ASSET VALUE, END OF PERIOD $ 11.36
TOTAL RETURN (B),(C) 13.60%
NET ASSETS, END OF PERIOD (000 OMITTED) $20,283
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00%(A),(E)
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.00)%(A)
PORTFOLIO TURNOVER 213%(A)
AVERAGE COMMISSION RATE (F) $ .0311
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
(G) FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS A AND
CLASS T SHARES) TO NOVEMBER 30, 1997.
</TABLE>
<PAGE>
KEY FACTS - CONTINUED
TECHNOQUANT GROWTH - CLASS B
<TABLE>
<CAPTION>
<S> <C>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEAR ENDED NOVEMBER 30 1997G
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.15)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.46
TOTAL FROM INVESTMENT OPERATIONS 1.31
NET ASSET VALUE, END OF PERIOD $ 11.31
TOTAL RETURN(B),(C) 13.10%
NET ASSETS, END OF PERIOD (000 OMITTED) $11,370
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50%A,E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.51)%A
PORTFOLIO TURNOVER 213%A
AVERAGE COMMISSION RATE(F) $ .0311
</TABLE>
TECHNOQUANT GROWTH - CLASS C
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEAR ENDED NOVEMBER 30 1997H
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.85
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) --
NET REALIZED AND UNREALIZED GAIN (LOSS) (.49)
TOTAL FROM INVESTMENT OPERATIONS (.49)
NET ASSET VALUE, END OF PERIOD $ 11.36
TOTAL RETURN(B),(C) (4.14)%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 48
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50%A,E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.60)%A
PORTFOLIO TURNOVER 213%A
AVERAGE COMMISSION RATEF $ .0311
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
(G) FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1997.
(H) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO
NOVEMBER 30, 1997.
</TABLE>
<PAGE>
MID CAP - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEARS ENDED NOVEMBER 30 1997 1996H
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.70 $10.74
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.09) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.64 .97
TOTAL FROM INVESTMENT OPERATIONS 2.55 .96
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.21) --
NET ASSET VALUE, END OF PERIOD $14.04 $11.70
TOTAL RETURN(B),(C) 22.24% 8.94%
NET ASSETS, END OF PERIOD (000 OMITTED) $4,670 $1,239
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.62%E 1.56%A,E
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.58%F 1.56%A
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.71)% (.33)%A
PORTFOLIO TURNOVER 208% 101%A
AVERAGE COMMISSION RATE(G) $.0401 $.0382
</TABLE>
MID CAP - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEARS ENDED NOVEMBER 30 1997 1996I
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.70 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.07) (.03)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.64 1.73
TOTAL FROM INVESTMENT OPERATIONS 2.57 1.70
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.18) --
NET ASSET VALUE, END OF PERIOD $ 14.09 $ 11.70
TOTAL RETURN (B),(C) 22.35% 17.00%
NET ASSETS, END OF PERIOD (000 OMITTED) $326,642 $187,040
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.48% 1.60%A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.44%F 1.60%A
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.53)% (.37)%A
PORTFOLIO TURNOVER 208% 101%A
AVERAGE COMMISSION RATE (G) $ .0401 $ .0382
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(G) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
(H) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
NOVEMBER 30, 1996.
(I) FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO
NOVEMBER 30, 1996.
</TABLE>
<PAGE>
MID CAP - CLASS B
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEARS ENDED NOVEMBER 30 1997 1996 G
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.61 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.14) (.10)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.62 1.71
TOTAL FROM INVESTMENT OPERATIONS 2.48 1.61
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.15) --
NET ASSET VALUE, END OF PERIOD $ 13.94 $ 11.61
TOTAL RETURN (B),(C) 21.67% 16.10%
NET ASSETS, END OF PERIOD (000 OMITTED) $58,758 $32,727
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.03% 2.38%A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.98%E 2.37%A,E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.08)% (1.14)%A
PORTFOLIO TURNOVER 208% 101%A
AVERAGE COMMISSION RATE (F) $ .0401 $ .0382
</TABLE>
MID CAP - CLASS C
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEAR ENDED NOVEMBER 30 1997 I
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $14.16
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) (.07)J
TOTAL FROM INVESTMENT OPERATIONS (.08)
NET ASSET VALUE, END OF PERIOD $14.08
TOTAL RETURN(B),(C) (.56)%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 345
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50%A,H
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.40%A,E
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (1.07)%A
PORTFOLIO TURNOVER 208%
AVERAGE COMMISSION RATE(F) $.0401
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
(E) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(F) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
(G) FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1996.
(H) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(I) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO
NOVEMBER 30, 1997.
(J) THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND
REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE
INVESTMENTS OF THE FUND.
</TABLE>
<PAGE>
EQUITY GROWTH - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS (E)
YEARS ENDED NOVEMBER 30 1997 1996F
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 44.80 $39.47
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.06) .04
NET REALIZED AND UNREALIZED GAIN (LOSS) 8.54 5.29
TOTAL FROM INVESTMENT OPERATIONS 8.48 5.33
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.36) --
FROM NET REALIZED GAIN (1.23) --
TOTAL DISTRIBUTIONS (1.59) --
NET ASSET VALUE, END OF PERIOD $ 51.69 $44.80
TOTAL RETURN(B),(C) 19.73% 13.50%
NET ASSETS, END OF PERIOD (000 OMITTED) $28,522 $4,423
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.32%G 1.52%A,D,G
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.30%H 1.50%A,H
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.12)% .38%A
PORTFOLIO TURNOVER 108% 76%
AVERAGE COMMISSION RATE (I) $ .0427 $.0414
</TABLE>
EQUITY GROWTH - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996 1995 1994 1993 1992J
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 44.81 $ 39.83 $ 28.52 $ 29.50 $ 26.33 $ 23.78
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.04)E .22E .06 .08 (.07)E .01
NET REALIZED AND UNREALIZED GAIN (LOSS) 8.60 6.90 11.54 .39 3.82 2.54
TOTAL FROM INVESTMENT OPERATIONS 8.56 7.12 11.60 .47 3.75 2.55
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.17) (.03)K (.08) -- (.08) --
FROM NET REALIZED GAIN (1.23) (2.11)K (.16) (1.45) (.50) --
IN EXCESS OF NET REALIZED GAIN -- -- (.05) -- -- --
TOTAL DISTRIBUTIONS (1.40) (2.14) (.29) (1.45) (.58) --
NET ASSET VALUE, END OF PERIOD $ 51.97 $ 44.81 $ 39.83 $ 28.52 $ 29.50 $ 26.33
TOTAL RETURN (B),(C) 19.81% 19.00% 41.11% 1.58% 14.52% 10.72%
NET ASSETS, END OF PERIOD (000 OMITTED) $4,205,772 $3,536,973 $2,051,429 $874,172 $377,894 $22,655
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.31%G 1.36% 1.55% 1.71% 1.85% 1.47%A
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.29%H 1.34%H 1.54%H 1.70%H 1.84%H 1.47%A
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS (.08)% .54% .21% .15% (.24)% .25%A
PORTFOLIO TURNOVER 108% 76% 97% 137% 160% 240%
AVERAGE COMMISSION RATE (I) $ .0427 $ .0414
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
(E) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
(F) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
NOVEMBER 30, 1996.
(G) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(H) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(I) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(J) FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T SHARES)
TO NOVEMBER 30, 1992.
(K) THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK AND TAX
DIFFERENCES.
</TABLE>
<PAGE>
EQUITY GROWTH - CLASS B
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEAR ENDED NOVEMBER 30 1997E
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 41.81
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.32)
NET REALIZED AND UNREALIZED GAIN (LOSS) 9.95
TOTAL FROM INVESTMENT OPERATIONS 9.63
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.03)
NET ASSET VALUE, END OF PERIOD $ 51.41
TOTAL RETURN(B),(C) 23.05%
NET ASSETS, END OF PERIOD (000 OMITTED) $71,496
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.93%A,H
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.90%A,F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.73)%A
PORTFOLIO TURNOVER 108%
AVERAGE COMMISSION RATE(G) $ .0427
</TABLE>
EQUITY GROWTH - CLASS C
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEAR ENDED NOVEMBER 30 1997I
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $51.84
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) .13
TOTAL FROM INVESTMENT OPERATIONS .11
NET ASSET VALUE, END OF PERIOD $51.95
TOTAL RETURN(B),(C) 0.21%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 965
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.95%A,H
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.89%A,F
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.82)%A
PORTFOLIO TURNOVER 108%
AVERAGE COMMISSION RATE(G) $.0427
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1997.
(F) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(G) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSIONS RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS
MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(H) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(I) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO
NOVEMBER 30, 1997.
</TABLE>
<PAGE>
GROWTH OPPORTUNITIES - CLASS A
194. SELECTED PER-SHARE DATA AND RATIOS D
<TABLE>
<CAPTION>
YEARS ENDED 1997M 1997L 1996E
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 42.57 $ 35.39 $ 32.86
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .04 .54 .09
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.41 8.80 2.44
TOTAL FROM INVESTMENT OPERATIONS 1.45 9.34 2.53
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME -- (.72) --
FROM NET REALIZED GAIN -- (1.44) --
TOTAL DISTRIBUTIONS -- (2.16) --
NET ASSET VALUE, END OF PERIOD $ 44.02 $ 42.57 $ 35.39
TOTAL RETURN(B),(C) 3.41% 27.58% 7.70%
NET ASSETS, END OF PERIOD (000 OMITTED) $142,754 $129,628 $10,185
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.10%A,F 1.05% 1.48%A,F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.09%A,G 1.04%G 1.47%A,G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.22%A 1.36% 1.74%A
PORTFOLIO TURNOVER 33%A 35% 33%
AVERAGE COMMISSION RATE(H) $ .0497 $ .0480 $ .0401
</TABLE>
GROWTH OPPORTUNITIES - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND
RATIOS
YEARS ENDED 1997M 1997L 1996L 1995L 1994L
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 42.76 $ 35.41 $ 30.89 $ 26.62 $ 25.39
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .03D .55D .61D .39 .22
NET REALIZED AND UNREALIZED
GAIN (LOSS) 1.41 8.78 4.72 5.31 1.92
TOTAL FROM INVESTMENT OPERATIONS 1.44 9.33 5.33 5.70 2.14
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME -- (.54) (.41) (.27) (.07)
FROM NET REALIZED GAIN -- (1.44) (.40) (1.16) (.84)
TOTAL DISTRIBUTIONS -- (1.98) (.81) (1.43) (.91)
NET ASSET VALUE, END OF PERIOD $ 44.20 $ 42.76 $ 35.41 $ 30.89 $ 26.62
TOTAL RETURN(B),(C) 3.37% 27.43% 17.61% 22.88% 8.71%
NET ASSETS, END OF PERIOD (000 OMITTED) $20,410,697 $19,651,539 $14,314,950 $9,690,992 $4,598,668
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.28%A 1.18% 1.34% 1.59% 1.63%
RATIO OF EXPENSES TO AVERAGE
NET ASSETS AFTER EXPENSE REDUCTIONS 1.27%A,G 1.17%G 1.34% 1.58%G 1.62%G
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS 1.03%A 1.39% 1.88% 1.56% 1.12%
PORTFOLIO TURNOVER 33%A 35% 33% 39% 43%
AVERAGE COMMISSION RATE(H) $ .0497 $ .0480 $ .0401
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND
RATIOS
YEARS ENDED 1993L 1992L 1991L 1990L 1989L 1988I
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .08 .14 .06 .18J .02 .05
NET REALIZED AND UNREALIZED
GAIN (LOSS) 5.56 2.04 7.70 (2.50) 3.03 4.22
TOTAL FROM INVESTMENT OPERATIONS 5.64 2.18 7.76 (2.32) 3.05 4.27
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.13) (.09) (.17) (.05) (.03) --
FROM NET REALIZED GAIN (1.26) (1.53) -- (1.17) (.76) --
TOTAL DISTRIBUTIONS (1.39) (1.62) (.17) (1.22) (.79) --
NET ASSET VALUE, END OF PERIOD $ 25.39 $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27
TOTAL RETURN(B),(C) 28.11% 12.09% 60.25% (15.05)% 22.69% 42.70%
NET ASSETS, END OF PERIOD (000 OMITTED) $2,054,988 $580,595 $213,095 $51,122 $34,351 $ 8,097
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65% 1.60% 1.73% 2.00% 2.45% 2.52%A,K
RATIO OF EXPENSES TO AVERAGE
NET ASSETS AFTER EXPENSE REDUCTIONS 1.64%G 1.60% 1.73% 2.00% 2.45% 2.52%A
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS .43% .80% .47% 1.49% .31% .82%A
PORTFOLIO TURNOVER 69% 94% 142% 136% 163% 143%A
AVERAGE COMMISSION RATE(H)
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
OCTOBER 31, 1996.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(H) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(I) FOR THE PERIOD NOVEMBER 18, 1987 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31,
1988.
(J) NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED
TO $.09 PER SHARE.
(K) EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. WITHOUT
THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(L) YEARS ENDED OCTOBER 31.
(M) ONE MONTH ENDED NOVEMBER 30, 1997.
</TABLE>
<PAGE>
GROWTH OPPORTUNITIES - CLASS B
SELECTED PER-SHARE DATA AND RATIOS(D)
<TABLE>
<CAPTION>
YEARS ENDED 1997J 1997F
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 42.60 $ 37.62
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .02 .13
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.40 4.85
TOTAL FROM INVESTMENT OPERATIONS 1.42 4.98
NET ASSET VALUE, END OF PERIOD $ 44.02 $ 42.60
TOTAL RETURN(B),(C) 3.33% 13.24%
NET ASSETS, END OF PERIOD (000 OMITTED) $422,511 $370,662
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.85%A,H 1.75%A
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.84%A,G 1.74%A,G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .47%A .48%A
PORTFOLIO TURNOVER 33%A 35%A
AVERAGE COMMISSION RATE(E) $ .0497 $ .0480
</TABLE>
GROWTH OPPORTUNITIES - CLASS C
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(D)
YEAR ENDED 1997I
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 43.62
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .02
NET REALIZED AND UNREALIZED GAIN (LOSS) .56
TOTAL FROM INVESTMENT OPERATIONS .58
NET ASSET VALUE, END OF PERIOD $ 44.20
TOTAL RETURN(B),(C) 1.33%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,845
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.85%A,H
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.84%A,G
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .74%A
PORTFOLIO TURNOVER 33%A
AVERAGE COMMISSION RATE(E) $ .0497
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(E) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
(F) FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1997.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(H) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS'S EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(I) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO
NOVEMBER 30, 1997.
(J) ONE MONTH ENDED NOVEMBER 30, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATEGIC OPPORTUNITIES - CLASS A
SELECTED PER-SHARE DATA AND RATIOS (E)
YEARS ENDED 1997(M) 1996(J)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 22.51 $ 23.48
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.13) .08
NET REALIZED AND UNREALIZED GAIN (LOSS) 6.00 1.26
TOTAL FROM INVESTMENT OPERATIONS 5.87 1.34
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME -- (.37)
FROM NET REALIZED GAIN (.87) (1.94)
TOTAL DISTRIBUTIONS (.87) (2.31)
NET ASSET VALUE, END OF PERIOD $ 27.51 $ 22.51
TOTAL RETURN (B), (C) $26.96% 5.80%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,309 $ 638
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.49%(A),(F) .99%(A),(I)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.47%(A),(G) .97%(A),(G)
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.59)%(A) 1.00%(A)
PORTFOLIO TURNOVER 61%(A) 151%
AVERAGE COMMISSION RATE(H) $ .0382 $ .0409
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC OPPORTUNITIES - CLASS T
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED 1997(M) 1996(O) 1995(O) 1994(K) 1994(N) 1993(L),(N)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF $22.69 $24.88 $18.70 $19.96 $22.52 $19.53
PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME (LOSS) (.07)(E) .17(E) .39 .10(E) .39(E) .33
NET REALIZED AND UNREALIZED 6.03 .18 6.73 (.75) (.81) 4.44
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 5.96 .35 7.12 (.65) (.42) 4.77
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME -- (.19) (.39) (.35) (.43) (.57)
FROM NET REALIZED GAIN (.87) (2.35) (.55) (.26) (1.71) (1.21)
TOTAL DISTRIBUTIONS (.87) (2.54) (.94) (.61) (2.14) (1.78)
NET ASSET VALUE, END OF PERIOD $27.78 $22.69 $24.88 $18.70 $19.96 $22.52
TOTAL RETURN(B), (C) 27.15% 1.53% 38.16% (3.26)% (2.24)% 26.33%
NET ASSETS, END OF PERIOD (IN $ 529 $ 561 $ 620 $ 376 $ 385 $ 270
MILLIONS)
RATIO OF EXPENSES TO AVERAGE NET 1.24%(A) 1.28% 1.61% 1.73%(A), (F) 1.85% 1.57%(D)
ASSETS
RATIO OF EXPENSES TO AVERAGE 1.23%(A), (G) 1.27%(G) 1.61% 1.73%(A) 1.84%(G) 1.57%
NET ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME (.29)(A) .70% 1.90% 2.03%(A) 1.89% 2.06%
(LOSS) TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER 61%(A) 151% 142% 228%(A) 159% 183%
AVERAGE COMMISSION RATE(H) $.0382 $.0409
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND
RATIOS
YEARS ENDED 1992(N) 1991(N) 1990(N) 1989(N) 1988(N) 1987(N)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF $21.38 $17.21 $19.55 $15.53 $19.06 $16.71
PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME (LOSS) .61 .66 .70 .50 .42 .46
NET REALIZED AND UNREALIZED .58 4.26 (2.49) 4.08 (1.80) 2.95
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 1.19 4.92 (1.79) 4.58 (1.38) 3.41
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.62) (.75) (.55) (.56) (.24) (.09)
FROM NET REALIZED GAIN (2.42) -- -- -- (1.91) (.97)
TOTAL DISTRIBUTIONS (3.04) (.75) (.55) (.56) (2.15) (1.06)
NET ASSET VALUE, END OF PERIOD $19.53 $21.38 $17.21 $19.55 $15.53 $19.06
TOTAL RETURN(B), (C) 7.26% 29.51% (9.49)% 30.45% (4.98)% 21.43%
NET ASSETS, END OF PERIOD (IN $ 195 $ 200 $ 172 $ 198 $ 191 $ 283
MILLIONS)
RATIO OF EXPENSES TO AVERAGE NET 1.46% 1.56% 1.59% 1.51% 1.71% 1.67%(F),(I)
ASSETS
RATIO OF EXPENSES TO AVERAGE 1.46% 1.56% 1.59% 1.51% 1.71% 1.67%
NET ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME 3.22% 3.61% 3.70% 3.23% 3.10% 2.36%
(LOSS) TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER 211% 223% 114% 89% 160% 225%
AVERAGE COMMISSION RATE(H)
<FN>
(A) ANNUALIZED.
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) INCLUDES REIMBURSEMENT OF $.03 PER SHARE FOR ADJUSTMENTS TO PRIOR PERIOD'S FEES.
(E) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
(H) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(I) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
(J) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO DECEMBER 31, 1996.
(K) THREE MONTHS ENDED DECEMBER 31, 1994.
(L) AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION ACCOUNTING.
(M) ELEVEN MONTHS ENDED NOVEMBER 30, 1997.
(N) YEARS ENDED SEPTEMBER 30.
(O) YEARS ENDED DECEMBER 31.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATEGIC OPPORTUNITIES - CLASS B
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED 1997(I) 1996(K) 1995(K) 1994(J) 1994(E)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 22.36 $ 24.56 $ 18.57 $ 19.98 $19.65
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.18)(D) .04(D) .38 .06(D) .05(D)
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.92 .18 6.54 (.74) .28
TOTAL FROM INVESTMENT OPERATIONS 5.74 .22 6.92 (.68) .33
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME -- (.07) (.38) (.47) --
FROM NET REALIZED GAIN (.87) (2.35) (.55) (.26) --
TOTAL DISTRIBUTIONS (.87) (2.42) (.93) (.73) --
NET ASSET VALUE, END OF PERIOD $ 27.23 $ 22.36 $ 24.56 $ 18.57 $19.98
TOTAL RETURN(B), (C) 26.55% 1.00% 37.35% (3.41)% 1.68%
NET ASSETS, END OF PERIOD (000 OMITTED) $109,646 $98,535 $87,566 $17,090 $8,824
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.78%(A) 1.80% 2.11% 2.58%(A) 2.63%(A), (F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.77%(A), (G) 1.79%(G) 2.10%(G) 2.53%(A), (G) 2.63%(A)
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS (.84)%(A) .18% 1.40% 1.22%(A) 1.11%(A)
PORTFOLIO TURNOVER 61%(A) 151% 142% 228%(A) 159%
AVERAGE COMMISSION RATE(H) $ .0382 $ .0409
<FN>
(A) ANNUALIZED.
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO SEPTEMBER 30, 1994.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
(H) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE
MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(I) ELEVEN MONTHS ENDED NOVEMBER 30, 1997.
(J) THREE MONTHS ENDED DECEMBER 31, 1994.
(K) YEARS ENDED DECEMBER 31.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LARGE CAP - CLASS A
SELECTED PER-SHARE DATA AND RATIOS(D)
YEARS ENDED NOVEMBER 30 1997 1996(G)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.83 $10.21
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.04) .00
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.25 1.62
TOTAL FROM INVESTMENT OPERATIONS 2.21 1.62
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.08) --
NET ASSET VALUE, END OF PERIOD $13.96 $11.83
TOTAL RETURN(B), (C) 18.82% 15.87%
NET ASSETS, END OF PERIOD (000 OMITTED) $2,330 $ 503
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75%(F) 1.75%(A), (F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.72%(E) 1.75%(A)
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.34)% .11%(A)
PORTFOLIO TURNOVER 93% 59%(A)
AVERAGE COMMISSION RATE(H) $.0412 $.0306
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP - CLASS T
SELECTED PER-SHARE DATA AND RATIOS(D)
YEARS ENDED NOVEMBER 30 1997 1996(I)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.82 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.02) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.24 1.83
TOTAL FROM INVESTMENT OPERATIONS 2.22 1.82
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.06) --
NET ASSET VALUE, END OF PERIOD $ 13.98 $ 11.82
TOTAL RETURN(B), (C) 18.89% 18.20%
NET ASSETS, END OF PERIOD (000 OMITTED) $42,753 $26,133
RATIO OF EXPENSES TO AVERAGE NET ASSETS H 1.62% 2.00%(A), (F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.60%(E) 2.00%(A)
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.18)% (.14)%(A)
PORTFOLIO TURNOVER 93% 59%(A)
AVERAGE COMMISSION RATE(H) $ .0412 $ .0306
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
(E) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
(G) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO NOVEMBER 30, 1996.
(H) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(I) FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO NOVEMBER 30, 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LARGE CAP - CLASS B
SELECTED PER-SHARE DATA AND RATIOS(D)
YEARS ENDED NOVEMBER 30 1997 1996(H)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.09) (.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.22 1.82
TOTAL FROM INVESTMENT OPERATIONS 2.13 1.77
LESS DISTRIBUTIONS
FROM NET REALIZED GAIN (.05) --
NET ASSET VALUE, END OF PERIOD $ 13.85 $11.77
TOTAL RETURN(B),(C) 18.18% 17.70%
NET ASSETS, END OF PERIOD (000 OMITTED) $20,926 $9,721
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.16% 2.50%(A),(E)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.14%(F) 2.50%(A)
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.73)% (.64)%(A)
PORTFOLIO TURNOVER 93% 59%(A)
AVERAGE COMMISSION RATE(G) $ .0412 $.0306
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP - CLASS C
SELECTED PER-SHARE DATA AND RATIOS(D)
YEAR ENDED NOVEMBER 30 1997(I)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.97
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.01)
NET REALIZED AND UNREALIZED GAIN (LOSS) .02
TOTAL FROM INVESTMENT OPERATIONS .01
NET ASSET VALUE, END OF PERIOD $13.98
TOTAL RETURN(B),(C) 0.07%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 41
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50% (A),(E)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.35% (A),(F)
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.62)%(A)
PORTFOLIO TURNOVER 93%
AVERAGE COMMISSION RATE(G) $.0412
<FN>
(A) ANNUALIZED.
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
(F) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
(G) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(H) FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO NOVEMBER 30, 1996.
(I) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO NOVEMBER 30, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME - CLASS A
SELECTED PER-SHARE DATA AND RATIOS (D)
YEAR ENDED NOVEMBER 30 1997 (G)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .04
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.46
TOTAL FROM INVESTMENT OPERATIONS 2.50
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.03)
NET ASSET VALUE, END OF PERIOD $ 12.47
TOTAL RETURN (B),(C) 25.04%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,977
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50% (A), (E)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .34% (A)
PORTFOLIO TURNOVER 82% (A)
AVERAGE COMMISSION RATE (F) $ .0345
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME - CLASS T
SELECTED PER-SHARE DATA AND RATIOS (D)
YEAR ENDED NOVEMBER 30 1997 (H)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .03
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.45
TOTAL FROM INVESTMENT OPERATIONS 2.48
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.02)
NET ASSET VALUE, END OF PERIOD $ 12.46
TOTAL RETURN (B), (C) 24.83%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 133,468
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.59% (A)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .24% (A)
PORTFOLIO TURNOVER 82% (A)
AVERAGE COMMISSION RATE (F) $ .0345
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
(G) FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
NOVEMBER 30, 1997.
(H) FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO
NOVEMBER 30, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME - CLASS B
SELECTED PER-SHARE DATA AND RATIOS (D)
YEAR ENDED NOVEMBER 30 1997 (G)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.46
TOTAL FROM INVESTMENT OPERATIONS 2.42
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.01)
NET ASSET VALUE, END OF PERIOD $ 12.41
TOTAL RETURN (B) ,(C) 24.22%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 28,825
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.25% (A), (E)
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS (.42)% (A)
PORTFOLIO TURNOVER 82% (A)
AVERAGE COMMISSION RATE (F) $ .0345
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME - CLASS C
SELECTED PER-SHARE DATA AND RATIOS (D)
YEAR ENDED NOVEMBER 30 1997 (H)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.22
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .00
NET REALIZED AND UNREALIZED GAIN (LOSS) .23
TOTAL FROM INVESTMENT OPERATIONS .23
NET ASSET VALUE, END OF PERIOD $ 12.45
TOTAL RETURN (B), (C) 1.88%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 391
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.24% (A),(E)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .19% (A)
PORTFOLIO TURNOVER 82% (A)
AVERAGE COMMISSION RATE (F) $ .0345
<FN>
(A) ANNUALIZED
(B) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(C) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(D) NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
(G) FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1997.
(H) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO
NOVEMBER 30, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITY INCOME - CLASS A
SELECTED PER-SHARE DATA AND RATIOS (E)
YEARS ENDED NOVEMBER 30 1997 1996 (I)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 22.78 $ 20.38
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .23 .06
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.61 2.44
TOTAL FROM INVESTMENT OPERATIONS 4.84 2.50
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.34) (.10)
FROM NET REALIZED GAIN (.59) --
TOTAL DISTRIBUTIONS (.93) (.10)
NET ASSET VALUE, END OF PERIOD $ 26.69 $ 22.78
TOTAL RETURN (B), (C) 22.05% 12.31%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 25,659 $ 3,306
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.26% (F) 1.46% (A), (D), (F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.25% (G) 1.44% (A), (G)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .93% 1.27% (A)
PORTFOLIO TURNOVER 55% 78%
AVERAGE COMMISSION RATE (H) $ .0430 $ .0424
</TABLE>
<TABLE>
<CAPTION>
EQUITY INCOME - CLASS T
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996 1995 1994 1993 1992 (J)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 22.83 $ 19.95 $ 15.96 $ 14.86 $ 12.86 $ 12.37
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .26 (E) .30 (E) .31 .28 (E) .33 .13
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.62 3.35 4.26 1.03 1.97 .47
TOTAL FROM INVESTMENT OPERATIONS 4.88 3.65 4.57 1.31 2.30 .60
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.27) (.31) (.30) (.21) (.30) (.11)
FROM NET REALIZED GAIN (.59) (.46) (.28) -- -- --
TOTAL DISTRIBUTIONS (.86) (.77) (.58) (.21) (.30) (.11)
NET ASSET VALUE, END OF PERIOD $ 26.85 $ 22.83 $ 19.95 $ 15.96 $ 14.86 $ 12.86
TOTAL RETURN (B), (C) 22.12% 18.89% 29.46% 8.84% 18.03% 4.88%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,190,070 $ 1,672,994 $ 880,054 $ 179,501 $ 42,326 $ 1,462
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.23% 1.27% 1.48% 1.67% 1.77% 1.55% (A)
RATIO OF EXPENSES TO AVERAGE 1.21% (G) 1.26% (G) 1.47% (G) 1.64% (G) 1.77% 1.55% (A)
NET ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO 1.05% 1.45% 1.78% 1.69% 2.02% 3.39% (A)
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 55% 78% 80% 140% 120% 51%
AVERAGE COMMISSION RATE(H) $ .0430 $ .0424
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
(E) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(H) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(I) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
NOVEMBER 30, 1996.
(J) FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO
NOVEMBER 30, 1992.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITY INCOME - CLASS B
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996 1995 1994(E)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 22.73 $ 19.90 $ 15.94 $ 15.21
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .13(D) .19(D) .26 .08(D)
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.61 3.33 4.23 .72
TOTAL FROM INVESTMENT OPERATIONS 4.74 3.52 4.49 .80
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.15) (.23) (.25) (.07)
FROM NET REALIZED GAIN (.59) (.46) (.28) --
TOTAL DISTRIBUTIONS (.74) (.69) (.53) (.07)
NET ASSET VALUE, END OF PERIOD $ 26.73 $ 22.73 $ 19.90 $ 15.94
TOTAL RETURN(B),(C) 21.52% 18.22% 28.95% 5.25%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 682,308 $ 500,447 $ 270,101 $ 35,373
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.74%(F) 1.81% 1.85% 2.24%(A)
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.73%(G) 1.79%(G) 1.84%(G) 2.18%(A),(G)
AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .53% .92% 1.41% 1.15%(A)
PORTFOLIO TURNOVER 55% 78% 80% 140%
AVERAGE COMMISSION RATE(H) $ .0430 $ .0424
</TABLE>
<TABLE>
<CAPTION>
EQUITY INCOME - CLASS C
SELECTED PER-SHARE DATA AND RATIOS(D)
YEAR ENDED NOVEMBER 30 1997(I)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 26.65
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .02
NET REALIZED AND UNREALIZED GAIN (LOSS) .17
TOTAL FROM INVESTMENT OPERATIONS .19
NET ASSET VALUE, END OF PERIOD $ 26.84
TOTAL RETURN (B),(C) .71%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 684
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.85%(A),(F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.81%(A,(G)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.24%(A)
PORTFOLIO TURNOVER 55%
AVERAGE COMMISSION RATE(H) $ .0430
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1994.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(H) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(I) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO
NOVEMBER 30, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED - CLASS A
SELECTED PER-SHARE DATA AND RATIOS (H)
YEARS ENDED OCTOBER 31 1997 1996(D)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.04 $ 15.22
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .48 .08
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.83 .88
TOTAL FROM INVESTMENT OPERATIONS 3.31 .96
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.49) (.14)
FROM NET REALIZED GAIN (.11) --
TOTAL DISTRIBUTIONS (.60) (.14)
NET ASSET VALUE, END OF PERIOD $ 18.75 $ 16.04
TOTAL RETURN (B), (C) 20.99% 6.34%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,565 $ 1,181
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.41%(E) 1.50% (A), (E)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.40%(F) 1.49% (A), (F)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.68% 3.07% (A)
PORTFOLIO TURNOVER 70% 223%
AVERAGE COMMISSION RATE (G) $ .0435 $ .0106
</TABLE>
<TABLE>
<CAPTION>
BALANCED - CLASS T
SELECTED PER-SHARE DATA
AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $ 16.07 $ 15.30 $ 14.67 $ 15.91 $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .53(H) .51(H) .59 .38 .48 .50 .51 .56 1.01I .62
NET REALIZED AND 2.84 .88 .54 (.79) 2.18 .85 3.74 (1.34) 1.27 1.56
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT 3.37 1.39 1.13 (.41) 2.66 1.35 4.25 (.78) 2.28 2.18
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (.54) (.59) (.50) (.28) (.56) (.46) (.53) (1.06) (.58) (.55)
INCOME
IN EXCESS OF NET -- -- -- (.02) -- -- -- -- -- --
INVESTMENT INCOME
FROM NET REALIZED GAIN (.11) (.03) -- (.49) (.60) (.61) -- (.52) -- --
RETURN OF CAPITAL -- -- -- (.04) -- -- -- -- -- --
TOTAL DISTRIBUTIONS (.65) (.62) (.50) (.83) (1.16) (1.07) (.53) (1.58) (.58) (.55)
NET ASSET VALUE, $ 18.79 $ 16.07 $ 15.30 $ 14.67 $ 15.91 $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07
END OF PERIOD
TOTAL RETURN (B), (C) 21.36% 9.30% 7.85% (2.69)% 19.66% 10.27% 41.73% (7.15)% 21.15% 23.66%
NET ASSETS, $ 2,901 $ 2,993 $ 3,441 $ 3,129 $ 1,654 $ 398 $ 136 $ 61 $ 46 $ 36
END OF PERIOD (IN MILLIONS)
RATIO OF EXPENSES 1.17% 1.26% 1.47% 1.59% 1.52% 1.60% 1.71% 1.85% 1.91% 2.06%
TO AVERAGE NET ASSETS
RATIO OF EXPENSES TO 1.17% 1.25%(F) 1.46%(F) 1.58%(F) 1.51%(F) 1.60% 1.71% 1.85% 1.91% 2.06%
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT 2.98% 3.32% 3.99% 3.79% 3.24% 3.97% 4.19% 5.29% 8.80% 5.83%
INCOME TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER 70% 223% 297% 202% 200% 389% 220% 297% 151% 204%
AVERAGE COMMISSION RATE (G) $ .0435 $ .0106
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
OCTOBER 31, 1996.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(G) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(H) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(I) NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.26 PER SHARE.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALANCED - CLASS B
SELECTED PER-SHARE DATA AND RATIOS(G)
YEAR ENDED OCTOBER 31 1997(C)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.36
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .29
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.38
TOTAL FROM INVESTMENT OPERATIONS 2.67
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.32)
NET ASSET VALUE, END OF PERIOD $ 18.71
TOTAL RETURN(B),(D) 16.40%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 15,958
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.12%(A)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 2.11%(A),(E)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.88%(A)
PORTFOLIO TURNOVER 70%
AVERAGE COMMISSION RATE(F) $ .0435
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
(C) FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1997.
(D) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(E) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(F) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(G) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIGH YIELD - CLASS A
SELECTED PER-SHARE DATA AND RATIOS (D)
YEARS ENDED OCTOBER 31 1997 1996 (E)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.300 $ 12.010
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME 1.058 .163
NET REALIZED AND UNREALIZED GAIN (LOSS) .710 .267
TOTAL FROM INVESTMENT OPERATIONS 1.768 .430
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (1.078) (.140)
FROM NET REALIZED GAIN (.060) --
TOTAL DISTRIBUTIONS (1.138) (.140)
NET ASSET VALUE, END OF PERIOD $ 12.930 $ 12.300
TOTAL RETURN (B), (C) 15.18% 3.58%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 44,236 $ 3,860
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.15% 1.25% (A), (F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.14% (H) 1.25% (A)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 8.58% 9.06% (A)
PORTFOLIO TURNOVER 105% 121%
AVERAGE COMMISSION RATE (G) $ .0431 $ .0388
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD - CLASS T
SELECTED PER-SHARE DATA
AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $ 12.310 $ 11.910 $ 11.220 $ 12.010 $ 11.070 $ 10.120 $ 8.150
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME 1.086 (D) 1.105 (D) .930 (D) .848 .980 1.146 1.115
NET REALIZED AND .686 .364 .680 (.537) 1.153 .975 1.948
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT 1.772 1.469 1.610 .311 2.133 2.121 3.063
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (1.082) (1.069) (.920) (.851) (.963) (1.171) (1.093)
INCOME
FROM NET REALIZED GAIN (.060) -- -- (.250) (.230) -- --
TOTAL DISTRIBUTIONS (1.142) (1.069) (.920) (1.101) (1.193) (1.171) (1.093)
NET ASSET VALUE, $ 12.940 $ 12.310 $ 11.910 $ 11.220 $ 12.010 $ 11.070 $ 10.120
END OF PERIOD
TOTAL RETURN(B),(C) 15.21% 12.92% 15.05% 2.64% 20.47% 21.96% 39.67%
NET ASSETS, END OF $ 2,208,172 $ 1,709,294 $ 1,200,495 $ 679,623 $ 485,559 $ 136,316 $ 38,681
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.09% 1.12% 1.15% 1.20% 1.11% 1.10% (F) 1.10%(F)
AVERAGE NET ASSETS
RATIO OF EXPENSES 1.08%(H) 1.11% (H) 1.15% 1.20% 1.11% 1.10% 1.10%
TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT 8.72% 9.20% 8.32% 6.92% 8.09% 9.95% 12.20%
INCOME TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER 105% 121% 112% 118% 79% 100% 103%
AVERAGE COMMISSION RATE(G) $ .0431 $ .0388
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD - CLASS T
SELECTED PER-SHARE DATA
AND RATIOS
YEARS ENDED OCTOBER 31 1990 1989 1988
<S> <C> <C> <C>
NET ASSET VALUE, $ 8.970 $ 9.860 $ 9.090
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME 1.144 1.237 1.165
NET REALIZED AND (.820) (.890) .770
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT .324 .347 1.935
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT (1.144) (1.237) (1.165)
INCOME
FROM NET REALIZED GAIN -- -- --
TOTAL DISTRIBUTIONS (1.144) (1.237) (1.165)
NET ASSET VALUE, $ 8.150 $ 8.970 $ 9.860
END OF PERIOD
TOTAL RETURN (B),(C) 3.58% 3.34% 22.14%
NET ASSETS, END OF $ 15,1300 $ 13,315 $ 11,900
PERIOD (000 OMITTED)
RATIO OF EXPENSES TO 1.10% (F) 1.10% (F) 1.10%
AVERAGE NET ASSETS
RATIO OF EXPENSES 1.10% 1.10% 1.10%
TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT 12.72% 12.98% 11.86%
INCOME TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER 90% 131% 135%
AVERAGE COMMISSION RATE(G)
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
OCTOBER 31, 1996.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
(H) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIGH YIELD - CLASS B
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 1995 1994(D)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 12.280 $ 11.890 $ 11.210 $ 11.300
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .998(C) 1.017(C) .794(C) .223
NET REALIZED AND UNREALIZED GAIN (LOSS) .674 .361 .721 (.118)
TOTAL FROM INVESTMENT OPERATIONS 1.672 1.378 1.515 .105
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (1.002) (.988) (.835) (.195)
FROM NET REALIZED GAIN (.060) -- -- --
TOTAL DISTRIBUTIONS (1.062) (.988) (.835) (.195)
NET ASSET VALUE, END OF PERIOD $ 12.890 $ 12.280 $ 11.890 $ 11.210
TOTAL RETURN(B) 14.34% 12.10% 14.12% 0.93%
NET ASSETS, END OF PERIOD 000 OMITTED $593,358 $344,328 $155,730 $ 16,959
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.74% 1.79% 2.01% 2.20%(A)
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.74% 1.79% 2.01% 2.20%(A)
AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO 8.04% 8.52% 7.46% 5.92%(A)
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 105% 121% 112% 118%
AVERAGE COMMISSION RATE(E) $ .0431 $ .0388
<FN>
(A) ANNUALIZED
(B) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(C) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(D) FOR THE PERIOD JUNE 30, 1994 COMMENCEMENT OF SALE OF CLASS B SHARES TO
OCTOBER 31, 1994.
(E) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY TRADES ON WHICH
COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD TO PERIOD AND FUND TO
FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING
PRACTICES AND COMMISSION RATE STRUCTURES MAY DIFFER.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATEGIC INCOME - CLASS A
SELECTED PER-SHARE DATA AND RATIOS(D)
YEARS ENDED DECEMBER 31 1997 1996 E
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.250 $ 11.010
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .802 .267
NET REALIZED AND UNREALIZED GAIN (LOSS) .198 .493
TOTAL FROM INVESTMENT OPERATIONS 1.000 .760
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.790) (.280)
FROM NET REALIZED GAIN (.370) (.240)
TOTAL DISTRIBUTIONS (1.160) (.520)
NET ASSET VALUE, END OF PERIOD $ 11.090 $ 11.250
TOTAL RETURN(B),(C) 9.24% 6.95%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,379 $ 587
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.25%(F) 1.25%(A),(F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.24%(G) 1.25%(A)
AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO AVERAGE 7.16% 7.32%(A)
NET ASSETS
PORTFOLIO TURNOVER 140% 119%
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC INCOME - CLASS T
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED DECEMBER 31 1997 1996 1995 1994(H)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.250 $ 11.000 $ 9.920 $ 10.000
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .814(D) .813(D) .885 .064(D)
NET REALIZED AND UNREALIZED GAIN (LOSS) .194 .542 1.231 (.046)
TOTAL FROM INVESTMENT OPERATIONS 1.008 1.355 2.116 .018
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.798) (.805) (.806) (.098)
FROM NET REALIZED GAIN (.370) (.300) (.230) --
TOTAL DISTRIBUTIONS (1.168) (1.105) (1.036) (.098)
NET ASSET VALUE, END OF PERIOD $ 11.090 $ 11.250 $ 11.000 $ 9.920
TOTAL RETURN(B),(C) 9.33% 12.89% 22.02% .17%
NET ASSETS, END OF PERIOD (000 OMITTED) $119,204 $ 99,327 $ 52,626 $ 10,687
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.20% 1.23% 1.35%(F) 1.35%(A),(F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.19%(G) 1.22%(G) 1.35% 1.35%(A)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 7.21% 7.34% 7.28% 5.80%(A)
PORTFOLIO TURNOVER 140% 119% 193% 104%(A)
<FN>
(A) ANNUALIZED
(B) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
(C) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
DECEMBER 31, 1996.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(H) FOR THE PERIOD OCTOBER 31, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1994.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATEGIC INCOME - CLASS B
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED DECEMBER 31 1997 1996 1995 1994(E)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.260 $ 11.010 $ 9.910 $10.000
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .740(D) .743(D) .820 .072(D)
NET REALIZED AND UNREALIZED GAIN (LOSS) .194 .538 1.237 (.078)
TOTAL FROM INVESTMENT OPERATIONS .934 1.281 2.057 (.006)
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.724) (.731) (.727) (.084)
FROM NET REALIZED GAIN (.370) (.300) (.230) --
TOTAL DISTRIBUTIONS (1.094) (1.031) (.957) (.084)
NET ASSET VALUE, END OF PERIOD $ 11.100 $ 11.260 $ 11.010 $ 9.910
TOTAL RETURN(B),(C) 8.60% 12.14% 21.35% (.06)%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 54,562 $ 37,403 $ 26,654 $ 9,379
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.86% 1.88% 2.10%(F) 2.10%(A),(F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.85%(G) 1.87%(G) 2.10% 2.10%(A)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.55% 6.69% 6.53% 5.06%(A)
PORTFOLIO TURNOVER 140% 119% 193% 104%(A)
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC INCOME - CLASS C
SELECTED PER-SHARE DATA AND RATIO(D)
YEAR ENDED DECEMBER 31 1997(H)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.400
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .105
NET REALIZED AND UNREALIZED GAIN (LOSS) .037
TOTAL FROM INVESTMENT OPERATIONS .142
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.152)
FROM NET REALIZED GAIN (.310)
TOTAL DISTRIBUTIONS (.462)
NET ASSET VALUE, END OF PERIOD $11.080
TOTAL RETURN(B),(C) 1.27%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 659
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.10%(A),(F)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.30%(A)
PORTFOLIO TURNOVER 140%
<FN>
(A) ANNUALIZED
(B) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(C) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD OCTOBER 31, 1994 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1994.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
(H) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO
DECEMBER 31, 1997.
</TABLE>
<PAGE>
MORTGAGE SECURITIES - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(F)
YEARS ENDED 1997(H) 1997(E)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.050 $10.830
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .170 .268
NET REALIZED AND UNREALIZED GAIN (LOSS) .048 .224
TOTAL FROM INVESTMENT OPERATIONS .218 .492
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.168) (.272)
FROM NET REALIZED GAIN (.080) --
TOTAL DISTRIBUTIONS (.248) (.272)
NET ASSET VALUE, END OF PERIOD $11.020 $11.050
TOTAL RETURN(B), (C) 2.00% 4.61%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,648 $ 1,586
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%(A), (D) .90%(A), (D)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.18%(A) 6.09%(A)
PORTFOLIO TURNOVER 125%(A) 149%
</TABLE>
MORTGAGE SECURITIES - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(F)
YEARS ENDED 1997(H) 1997(G)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.050 $10.830
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .167 .255
NET REALIZED AND UNREALIZED GAIN (LOSS) .048 .233
TOTAL FROM INVESTMENT OPERATIONS .215 .488
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.165) (.268)
FROM NET REALIZED GAIN (.080) --
TOTAL DISTRIBUTIONS (.245) (.268)
NET ASSET VALUE, END OF PERIOD $11.020 $11.050
TOTAL RETURN(B), (C) 1.98% 4.57%
NET ASSETS, END OF PERIOD (000 OMITTED) $14,649 $12,193
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.00%(A), (D) 1.00%(A), (D)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.10%(A) 5.99%(A)
PORTFOLIO TURNOVER 125%(A) 149%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
(D) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(E) FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO JULY
31, 1997.
(F) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(G) FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO JULY
31, 1997.
(H) THREE MONTHS ENDED OCTOBER 31, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MORTGAGE SECURITIES - CLASS B
SELECTED PER-SHARE DATA AND RATIOS(F)
YEARS ENDED 1997(G) 1997(D)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.040 $10.830
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .142 .234
NET REALIZED AND UNREALIZED GAIN (LOSS) .065 .214
TOTAL FROM INVESTMENT OPERATIONS .207 .448
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.147) (.238)
FROM NET REALIZED GAIN (.080) --
TOTAL DISTRIBUTIONS (.227) (.238)
NET ASSET VALUE, END OF PERIOD $11.020 $11.040
TOTAL RETURN(B), (C) 1.90% 4.20%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,587 $ 823
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65%(A), (E) 1.65%(A), (E)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.32%(A) 5.34%(A)
PORTFOLIO TURNOVER 125%(A) 149%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO JULY
31, 1997.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(G) THREE MONTHS ENDED OCTOBER 31, 1997.
</TABLE>
<PAGE>
GOVERNMENT INVESTMENT - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS (D)
YEARS ENDED OCTOBER 31 1997 1996 (E)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.490 $ 9.250
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .552 .090
NET REALIZED AND UNREALIZED GAIN (LOSS) .187 .241
TOTAL FROM INVESTMENT OPERATIONS .739 .331
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.559) (.091)
NET ASSET VALUE, END OF PERIOD $9.670 $ 9.490
TOTAL RETURN (B), (C) 8.09% 3.58%
NET ASSETS, END OF PERIOD (000 OMITTED) $1,582 $ 223
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% (F) .90% (A), (F)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.98% 6.28% (A)
PORTFOLIO TURNOVER 136% 153%
</TABLE>
GOVERNMENT INVESTMENT - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, $ 9.490 $ 9.670 $ 8.960 $ 10.140 $ 9.730
BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .558 (D) .586 (D) .594 .515 .567
NET REALIZED AND UNREALIZED GAIN (LOSS) .171 (.180) .701 (1.031) .601
TOTAL FROM INVESTMENT OPERATIONS .729 .406 1.295 (.516) 1.168
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.549) (.586) (.585) (.504) (.558)
FROM NET REALIZED GAIN -- -- -- (.130) (.200)
IN EXCESS OF NET REALIZED GAIN -- -- -- (.030) --
TOTAL DISTRIBUTIONS (.549) (.586) (.585) (.664) (.758)
NET ASSET VALUE, END OF PERIOD $ 9.670 $ 9.490 $ 9.670 $ 8.960 $10.140
TOTAL RETURN (B), (C) 7.97% 4.38% 14.91% (5.27)% 12.53%
NET ASSETS, END OF PERIOD (000 OMITTED) $144,948 $217,883 $208,620 $114,453 $69,876
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.00% (F) 1.00% .89% (F) .74% (F) .68% (F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.00% .99% (G) .89% .74% .68%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 5.88% 6.19% 6.34% 6.18% 6.11%
PORTFOLIO TURNOVER 136% 153% 261% 313% 333%
<CAPTION>
YEARS ENDED OCTOBER 31 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200
BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .666 .700 .735 .773 .769
NET REALIZED AND UNREALIZED GAIN (LOSS) .125 .419 (.160) .050 .060
TOTAL FROM INVESTMENT OPERATIONS .791 1.119 .575 .823 .829
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.651) (.679) (.735) (.773) (.769)
FROM NET REALIZED GAIN -- -- -- -- --
IN EXCESS OF NET REALIZED GAIN -- -- -- -- --
TOTAL DISTRIBUTIONS (.651) (.679) (.735) (.773) (.769)
NET ASSET VALUE, END OF PERIOD $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260
TOTAL RETURN (B), (C) 8.49% 12.65% 6.48% 9.37% 9.34%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 23,281 $ 13,058 $ 9,822 $ 8,203 $ 6,590
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.10% (F) 1.10% (F) 1.10% (F) 1.10% (F) 1.10% (F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS 1.10% 1.10% 1.10% 1.10% 1.10%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 6.98% 7.47% 8.04% 8.45% 8.30%
PORTFOLIO TURNOVER 315% 54% 31% 42% 44%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO OCTOBER 31, 1996.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A
PORTION OF THE CLASS' EXPENSES.
</TABLE>
<PAGE>
GOVERNMENT INVESTMENT - CLASS B
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 1995 1994(E)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.490 $ 9.670 $ 8.950 $9.100
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .494(D) .520(D) .542 .144
NET REALIZED AND UNREALIZED GAIN (LOSS) .166 (.177) .693 (.137)
TOTAL FROM INVESTMENT OPERATIONS .660 .343 1.235 .007
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.490) (.523) (.515) (.157)
NET ASSET VALUE, END OF PERIOD $ 9.660 $ 9.490 $ 9.670 $8.950
TOTAL RETURN(B),(C) 7.20% 3.69% 14.19% 0.10%
NET ASSETS, END OF PERIOD (000 OMITTED) $18,782 $17,355 $11,766 $2,062
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65%(F) 1.67%(F) 1.65%(F) 1.70%(A),(F)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.24% 5.51% 5.58% 5.22%(A)
PORTFOLIO TURNOVER 136% 153% 261% 313%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO OCTOBER 31, 1994.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT,
THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
</TABLE>
<PAGE>
INTERMEDIATE BOND - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS(G)
YEARS ENDED NOVEMBER 30 1997 1996(F)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.590 $10.350
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .615 .159
NET REALIZED AND UNREALIZED GAIN (LOSS) (.023) .235(I)
TOTAL FROM INVESTMENT OPERATIONS .592 .394
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.622) (.154)
NET ASSET VALUE, END OF PERIOD $10.560 $10.590
TOTAL RETURN(B), (C) 5.81% 3.83%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,819 $ 687
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%(E) .90%(A), (E)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.93% 6.45%(A)
PORTFOLIO TURNOVER 138% 200%
</TABLE>
INTERMEDIATE BOND - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996 1995 1994 1993 1992(D)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.610 $ 10.760 $ 10.260 $ 11.140 $10.640 $ 10.960
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .625(G) .671(G) .649 .609 .785 .170
NET REALIZED AND UNREALIZED GAIN (LOSS) (.058) (.147) .491 (.876) .511 (.320)
TOTAL FROM INVESTMENT OPERATIONS .567 .524 1.140 (.267) 1.296 (.150)
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.617) (.674) (.640) (.555) (.796) (.170)
FROM RETURN OF CAPITAL -- -- -- (.058) -- --
TOTAL DISTRIBUTIONS (.617) (.674) (.640) (.613) (.796) (.170)
NET ASSET VALUE, END OF PERIOD $ 10.560 $ 10.610 $ 10.760 $ 10.260 $11.140 $ 10.640
TOTAL RETURN(B), (C) 5.56% 5.10% 11.43% (2.44)% 12.50% (1.37)%
NET ASSETS, END OF PERIOD (000 OMITTED) $278,869 $262,103 $228,439 $141,866 $59,184 $ 2,583
RATIO OF EXPENSES TO AVERAGE NET ASSETS .96% .97% .94%(E) 1.02%(E) 1.23% .82%(A)
RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE REDUCTIONS .96% .96%(H) .94% 1.02% 1.23% .82%(A)
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 5.97% 6.38% 6.20% 6.04% 6.81% 7.67%(A)
PORTFOLIO TURNOVER 138% 200% 189% 68% 59% 7%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO NOVEMBER 30, 1992.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS'
EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO NOVEMBER 30, 1996.
(G) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
(H) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE
FUND'S EXPENSES.
(I) THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD
DUE TO THE TIMING OF SALES AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS
OF THE FUND.
</TABLE>
<PAGE>
INTERMEDIATE BOND - CLASS B
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996 1995 1994 (E)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.590 $10.750 $10.250 $10.430
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .551 (D) .597 (D) .579 .204
NET REALIZED AND UNREALIZED GAIN (LOSS) (.057) (.153) .483 (.178)
TOTAL FROM INVESTMENT OPERATIONS .494 .444 1.062 .026
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.544) (.604) (.562) (.187)
FROM RETURN OF CAPITAL -- -- -- (.019)
TOTAL DISTRIBUTIONS (.544) (.604) (.562) (.206)
NET ASSET VALUE, END OF PERIOD $10.540 $10.590 $10.750 $10.250
TOTAL RETURN (B), (C) 4.83% 4.32% 10.62% .24%
NET ASSETS, END OF PERIOD (000 OMITTED) $22,201 $18,972 $15,830 $ 3,156
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65% (F) 1.66% (F) 1.70% (F) 1.65% (A), (F)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.27% 5.69% 5.44% 5.42% A
PORTFOLIO TURNOVER 138% 200% 189% 68%
</TABLE>
INTERMEDIATE BOND - CLASS C
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS (D)
YEAR ENDED NOVEMBER 30 1997 (H)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.570
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .031
NET REALIZED AND UNREALIZED GAIN (LOSS) (.005)
TOTAL FROM INVESTMENT OPERATIONS .026
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.036)
NET ASSET VALUE, END OF PERIOD $10.560
TOTAL RETURN (B), (C) 0.25%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 160
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75% (A), (F)
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.73% (A), (G)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.42% (A)
PORTFOLIO TURNOVER 138%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO NOVEMBER 30, 1994.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE
CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION
OF THE CLASS' EXPENSES.
(H) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO NOVEMBER 30, 1997.
</TABLE>
<PAGE>
SHORT FIXED-INCOME - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS (D)
YEARS ENDED OCTOBER 31 1997 1996 (E)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.370 $ 9.290
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .532 .090
NET REALIZED AND UNREALIZED GAIN (LOSS) (.021) .081 (G)
TOTAL FROM INVESTMENT OPERATIONS .511 .171
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.571) (.091)
NET ASSET VALUE, END OF PERIOD $ 9.310 $ 9.370
TOTAL RETURN, (B), (C) 5.64% 1.85%
NET ASSET, END OF PERIOD (000 OMITTED) $19,726 $ 204
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% (F) .90% (A), (F)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.00% 6.27% (A)
PORTFOLIO TURNOVER 105% 124%
</TABLE>
SHORT FIXED-INCOME - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.380 $ 9.470 $ 9.480 $ 10.090 $ 9.950 $ 9.870 $ 9.620
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .578 (D) .594 (D) .403 .479 .732 .830 .848
NET REALIZED AND UNREALIZED GAIN (LOSS) (.036) (.094) .148 (.501) .146 .071 .270
TOTAL FROM INVESTMENT OPERATIONS .542 .500 .551 (.022) .878 .901 1.118
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.572) (.590) (.407) (.464) (.738) (.821) (.868)
IN EXCESS OF NET INVESTMENT INCOME -- -- -- (.044) -- -- --
FROM RETURN OF CAPITAL -- -- (.154) (.080) -- -- --
TOTAL DISTRIBUTIONS (.572) (.590) (.561) (.588) (.738) (.821) (.868)
NET ASSET VALUE, END OF PERIOD $ 9.350 $ 9.380 $ 9.470 $ 9.480 $ 10.090 $ 9.950 $ 9.870
TOTAL RETURN (B), (C) 5.97% 5.45% 6.05% (.22)% 9.13% 9.44% 12.19%
NET ASSETS, END OF PERIOD (000 OMITTED) $351,614 $416,700 $546,546 $787,926 $654,202 $170,558 $25,244
RATIO OF EXPENSES TO AVERAGE NET ASSETS .89% .88% .89% .97% .95% .90% (F) .90% (F)
RATIO OF NET INVESTMENT INCOME TO 6.19% 6.29% 6.05% 5.91% 6.77% 7.59% 8.50%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 105% 124% 179% 108% 58% 57% 127%
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1990 1989 1988
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.950 $ 9.940 $10.060
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .868 .832 .852
NET REALIZED AND UNREALIZED GAIN (LOSS) (.330) .010 (.120)
TOTAL FROM INVESTMENT OPERATIONS .538 .842 .732
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.868) (.832) (.852)
IN EXCESS OF NET INVESTMENT INCOME -- -- --
FROM RETURN OF CAPITAL -- -- --
TOTAL DISTRIBUTIONS (.868) (.832) (.852)
NET ASSET VALUE, END OF PERIOD $ 9.620 $ 9.950 $ 9.940
TOTAL RETURN (B), (C) 5.59% 8.89% 7.56%
NET ASSETS, END OF PERIOD (000 OMITTED) $13,062 $12,394 $13,433
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% (F) .90% (F) .90% (F)
RATIO OF NET INVESTMENT INCOME TO 8.86% 8.45% 8.39%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 144% 157% 178%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
(D) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(E) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
OCTOBER 31, 1996.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND
REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE
INVESTMENTS OF THE FUND.
</TABLE>
<PAGE>
MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 (G)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.740 $11.630
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .583 (E) .105 (E),(F)
NET REALIZED AND UNREALIZED GAIN (LOSS) .445 .109
TOTAL FROM INVESTMENT OPERATIONS 1.028 .214
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.616) (F) (.104)
IN EXCESS OF NET INTEREST INCOME (.002) (H) --
TOTAL DISTRIBUTIONS (.618) (.104)
NET ASSET VALUE, END OF PERIOD $12.150 $11.740
TOTAL RETURN (B),(C) 9.02% 1.84%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,755 $ 202
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% (D) .90% (A),(D)
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.87% 5.73% (A)
PORTFOLIO TURNOVER 36% 49%
</TABLE>
MUNICIPAL INCOME - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 1995 1994(I) 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.760 $ 11.880 $ 11.220 $ 12.720 $11.650 $ 11.410 $10.870
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .597 (E) .677 (E), (F) .700 .689 .710 .774 .803
NET REALIZED AND UNREALIZED GAIN (LOSS) .407 (.136) .660 (1.430) 1.100 .250 .660
TOTAL FROM INVESTMENT OPERATIONS 1.004 .541 1.360 (.741) 1.810 1.024 1.463
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.612) (F) (.661) (.700) (.689) (.710) (.774) (.803)
IN EXCESS OF NET INTEREST INCOME (.002) (H) -- -- -- -- -- --
FROM NET REALIZED GAIN -- -- -- (.060) (.030) (.010) (.120)
IN EXCESS OF NET REALIZED GAIN -- -- -- (.010) -- -- --
TOTAL DISTRIBUTIONS (.614) (.661) (.700) (.759) (.740) (.784) (.923)
NET ASSET VALUE, END OF PERIOD $ 12.150 $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650 $11.410
TOTAL RETURN (B),(C) 8.89% 4.68% 12.50% (6.03)% 15.95% 9.21% 14.02%
NET ASSETS, END OF PERIOD (000 OMITTED) $392,075 $480,432 $565,131 $544,422 $497,575 $156,659 $67,135
RATIO OF EXPENSES TO AVERAGE NET ASSETS .89% .89% .91% .89% .92% .90% (D) .90% (D)
RATIO OF NET INTEREST INCOME TO 5.04% 5.74% 6.06% 5.78% 5.59% 6.59% 7.08%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 36% 49% 37% 38% 27% 13% 10%
</TABLE>
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1990 1989 1988
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.820 $10.460 $ 9.850
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .811 .800 .750
NET REALIZED AND UNREALIZED GAIN (LOSS) .150 .410 .610
TOTAL FROM INVESTMENT OPERATIONS .961 1.210 1.360
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.811) (.800) (.750)
IN EXCESS OF NET INTEREST INCOME -- -- --
FROM NET REALIZED GAIN (.100) (.050) --
IN EXCESS OF NET REALIZED GAIN -- -- --
TOTAL DISTRIBUTIONS (.911) (.850) (.750)
NET ASSET VALUE, END OF PERIOD $10.870 $10.820 $10.460
TOTAL RETURN (B), (C) 9.28% 12.05% 14.22%
NET ASSETS, END OF PERIOD (000 OMITTED) $22,702 $ 6,669 $ 3,290
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% (D) .90% (D) .89% (D)
RATIO OF NET INTEREST INCOME TO 7.37% 7.60% 7.33%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER 11% 27% 19%
<FN>
(A) ANNUALIZED
(B) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
(C) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(D) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(E) NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(F) NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
(G) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
OCTOBER 31, 1996.
(H) THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
(I) EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DISTRIBUTION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A
RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX DIFFERENCES. MUNICIPAL INCOME - CLASS B
</TABLE>
<PAGE>
MUNICIPAL INCOME - CLASS B
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED OCTOBER 31 1997 1996 1995 1994 (G)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.740 $11.860 $11.210 $11.610
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .515 (E) .596 (E),(F) .612 .188
NET REALIZED AND UNREALIZED GAIN (LOSS) .416 (.136) .650 (.400)
TOTAL FROM INVESTMENT OPERATIONS .931 .460 1.262 (.212)
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.539) (F) (.580) (.612) (.188)
IN EXCESS OF NET INTEREST INCOME (.002) (H) -- -- --
TOTAL DISTRIBUTIONS (.541) (.580) (.612) (.188)
NET ASSET VALUE, END OF PERIOD $12.130 $11.740 $11.860 $11.210
TOTAL RETURN (B), (C) 8.15% 3.98% 11.57% (1.86)
NET ASSETS, END OF PERIOD (000 OMITTED) $41,024 $39,389 $32,395 $ 9,968
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.56% 1.57% 1.86% (D) 2.09% (A)
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.35% 5.06% 5.18% 4.58% (A)
PORTFOLIO TURNOVER 36% 49% 37% 38%
<FN>
(A) ANNUALIZED
(B) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(C) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(D) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(E) NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
(F) NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
(G) FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
OCTOBER 31, 1994.
(H) THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES. INTERMEDIATE MUNICIPAL INCOME - CLASS A
</TABLE>
<PAGE>
INTERMEDIATE MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996(E)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.410 $ 10.160
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .459 .113
NET REALIZED AND UNREALIZED GAIN (LOSS) .191 .250(G)
TOTAL FROM INVESTMENT OPERATIONS .650 .363
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.459) (.113)
FROM NET REALIZED GAIN (.001) --
TOTAL DISTRIBUTIONS (.460) (.113)
NET ASSET VALUE, END OF PERIOD $ 10.600 $ 10.410
TOTAL RETURN (B),(C) 6.42% 3.59%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 442 $ 103
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%(D) .90%(A),(D)
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.37% 4.60%(A)
PORTFOLIO TURNOVER 18% 35%
</TABLE>
INTERMEDIATE MUNICIPAL INCOME - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996 1995 1994(H) 1993 1992(F)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080 $ 11.010
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .449 .461 .451 .455 .508 .131
NET REALIZED AND UNREALIZED GAIN (LOSS) .181 .030G .980 (1.040) .260 .070
TOTAL FROM INVESTMENT OPERATIONS .630 .491 1.431 (.585) .768 .201
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.449) (.461) (.451) (.455) (.508) (.131)
FROM NET REALIZED GAIN (.001) -- -- -- (.880) --
IN EXCESS OF NET REALIZED GAIN -- -- -- (.020) -- --
TOTAL DISTRIBUTIONS (.450) (.461) (.451) (.475) (1.388) (.131)
NET ASSET VALUE, END OF PERIOD $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080
TOTAL RETURN (B), (C) 6.21% 4.89% 15.49% (5.78)% 7.72% 1.37%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 48,830 $ 56,729 $ 62,852 $ 57,382 $ 39,800 $ 1,752
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.00%(D) 1.00%(D) .94%(D) .90%(D) .90%(D) 1.04%(A),(D)
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.32% 4.42% 4.56% 4.49% 4.76% 5.65%(A)
PORTFOLIO TURNOVER 18% 35% 53% 53% 46% 36%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
(D) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(E) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
NOVEMBER 30, 1996.
(F) FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO
NOVEMBER 30, 1992.
(G) THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND
REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE
INVESTMENTS OF THE FUND.
(H) EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DISTRIBUTION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A
RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS
RELATED TO BOOK TO TAX DIFFERENCES.
</TABLE>
<PAGE>
INTERMEDIATE MUNICIPAL INCOME - CLASS B
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996 1995 1994D
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.410 $ 10.380 $ 9.400 $ 9.890
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .382 .394 .373 .155
NET REALIZED AND UNREALIZED GAIN (LOSS) .181 .030F .980 (.490)
TOTAL FROM INVESTMENT OPERATIONS .563 .424 1.353 (.335)
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.382) (.394) (.373) (.155)
FROM NET REALIZED GAIN (.001) -- -- --
TOTAL DISTRIBUTIONS (.383) (.394) (.373) (.155)
NET ASSET VALUE, END OF PERIOD $ 10.590 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN(B),(C) 5.54% 4.21% 14.60% (3.44)%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,917 $ 7,445 $ 6,226 $ 1,682
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65%E 1.66%E 1.68%E 1.65%A,E
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.67% 3.76% 3.71% 3.74%A
PORTFOLIO TURNOVER 18% 35% 53% 53%
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE MUNICIPAL INCOME - CLASS C
SELECTED PER-SHARE DATA AND RATIOS
YEAR ENDED NOVEMBER 30 1997G
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.550
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .027
NET REALIZED AND UNREALIZED GAIN (LOSS) .040
TOTAL FROM INVESTMENT OPERATIONS .067
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.027)
NET ASSET VALUE, END OF PERIOD $ 10.590
TOTAL RETURN(B),(C) 0.63%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 13
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75%A,E
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.33%A
PORTFOLIO TURNOVER 18%
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(D) FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES) TO
NOVEMBER 30, 1994.
(E) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(F) THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES AND
REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF THE
INVESTMENTS OF THE FUND.
(G) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C SHARES) TO
NOVEMBER 30, 1997.
</TABLE>
<PAGE>
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996D
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.210 $ 10.100
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .406 .100
NET REALIZED AND UNREALIZED GAIN (LOSS) .020 .110
TOTAL FROM INVESTMENT OPERATIONS .426 .210
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.406) (.100)
FROM NET REALIZED GAIN (.030) --
TOTAL DISTRIBUTIONS (.436) (.100)
NET ASSET VALUE, END OF PERIOD $ 10.200 $ 10.210
TOTAL RETURN(B),(C) 4.28% 2.09%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 639 $ 186
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%F .90%A,F
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.00% 4.06%A
PORTFOLIO TURNOVER 41% 62%
</TABLE>
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T
<TABLE>
<CAPTION>
SELECTED PER-SHARE DATA AND RATIOS
YEARS ENDED NOVEMBER 30 1997 1996 1995 1994E
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.210 $ 10.240 $ 9.770 $ 10.000
INCOME FROM INVESTMENT OPERATIONS
NET INTEREST INCOME .405 .404 .430 .259
NET REALIZED AND UNREALIZED GAIN (LOSS) .030 .000 .470 (.230)
TOTAL FROM INVESTMENT OPERATIONS .435 .404 .900 .029
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.405) (.404) (.430) (.259)
FROM NET REALIZED GAIN (.030) (.030) -- --
TOTAL DISTRIBUTIONS (.435) (.434) (.430) (.259)
NET ASSET VALUE, END OF PERIOD $ 10.210 $ 10.210 $ 10.240 $ 9.770
TOTAL RETURN(B),(C) 4.37% 4.06% 9.38% .27%
NET ASSETS, END OF PERIOD (000 OMITTED) $ 21,916 $ 29,887 $ 29,274 $ 16,563
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%F .90%F .82%F .75%A,F
RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS .90% .89%G .82% .75%A
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.99% 3.97% 4.25% 3.74%A
PORTFOLIO TURNOVER 41% 62% 80% 111%A
<FN>
(A) ANNUALIZED
(B) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
(C) TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS
THAN ONE YEAR ARE NOT ANNUALIZED.
(D) FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A SHARES) TO
NOVEMBER 30, 1996.
(E) FOR THE PERIOD MARCH 16, 1994 (COMMENCEMENT OF SALE OF CLASS T SHARES) TO
NOVEMBER 30, 1994.
(F) FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE PERIOD.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
(G) FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO
EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES. KEY FACTS
</TABLE>
<PAGE>
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or YIELD.
For Balanced, High Yield, Mortgage Securities, Government Investment, Short
Fixed-Income, and Municipal Income, the fiscal year runs from November 1 to
October 31. For TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth & Income, Equity
Income, Intermediate Bond, Intermediate Municipal Income, and Short-Intermediate
Municipal Income, the fiscal year runs from December 1 to November 30. For
Strategic Income the fiscal year end runs from January 1 to December 31. The
tables below show the performance of each class of each fund over past fiscal
periods. The charts in Appendix B, beginning on page , present calendar year
performance for each class compared to different measures, including a
competitive funds average.
EQUITY FUNDS - CLASS A
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
TECHNOQUANT GROWTH - CLASS A [C] N/A N/A N/A N/A N/A 13.80%
TECHNOQUANT GROWTH - CLASS A (LOAD ADJ.) [A] [C] N/A N/A N/A N/A N/A 7.26%
MID CAP - CLASS A [C] 22.24% N/A 22.29% 22.24% N/A 43.02%
MID CAP - CLASS A (LOAD ADJ.) [A] [C] 15.21% N/A 18.29% 15.21% N/A 34.80%
EQUITY GROWTH - CLASS A [C] 19.73% 18.52% 24.10% 19.73% 133.83% 766.65%
EQUITY GROWTH - CLASS A (LOAD ADJ.) [A] [C] 12.84% 17.12% 23.37% 12.84% 120.38% 716.82%
GROWTH OPPORTUNITIES - CLASS A [C] 22.32% 20.41% 22.36% 22.32% 153.15% 652.56%
GROWTH OPPORTUNITIES - CLASS A (LOAD ADJ.) [A] [C] 15.28% 19.00% 21.64% 15.28% 138.60% 609.28%
STRATEGIC OPPORTUNITIES - CLASS A [C] 26.87% 15.15% 15.58% 26.87% 102.41% 325.58%
STRATEGIC OPPORTUNITIES - CLASS A (LOAD ADJ.) [A] [C] 19.58% 13.79% 14.90% 19.58% 90.77% 301.11%
LARGE CAP - CLASS A [C] 18.82% N/A 21.11% 18.82% N/A 40.57%
LARGE CAP - CLASS A (LOAD ADJ.) [A] [C] 11.99% N/A 17.14% 11.99% N/A 32.49%
GROWTH & INCOME - CLASS A [C] N/A N/A N/A N/A N/A 25.04%
GROWTH & INCOME - CLASS A (LOAD ADJ.) [A] [C] N/A N/A N/A N/A N/A 17.85%
EQUITY INCOME - CLASS A [C] 22.05% 19.25% 16.35% 22.05% 141.13% 354.83%
EQUITY INCOME - CLASS A (LOAD ADJ.) [A] [C] 15.03% 17.84% 15.67% 15.03% 127.27% 328.68%
BALANCED - CLASS A [B] 20.99% 10.67% 13.69% 20.99% 65.98% 260.84%
BALANCED - CLASS A (LOAD ADJ.) [A] [B] 14.03% 9.36% 13.02% 14.03% 56.44% 240.09%
</TABLE>
<PAGE>
TAXABLE BOND FUNDS - CLASS A
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS A [B] 15.18% 13.05% 15.19% 15.18% 84.67% 311.25%
HIGH YIELD - CLASS A (LOAD ADJ.) [A] [B] 9.71% 11.96% 14.63% 9.71% 75.89% 291.72%
STRATEGIC INCOME - CLASS A [D] 9.24% N/A 13.81% 9.24% N/A 50.64%
STRATEGIC INCOME - CLASS A (LOAD ADJ.) [A] [D] 4.05% N/A 12.08% 4.05% N/A 43.48%
MORTGAGE SECURITIES - CLASS A [B] 8.74% 8.03% 9.01% 8.74% 47.12% 136.92%
MORTGAGE SECURITIES - CLASS A (LOAD ADJ.) [A] [B] 3.57% 6.98% 8.48% 3.57% 40.13% 125.67%
GOVERNMENT INVESTMENT - CLASS A [B] 8.09% 6.69% 7.96% 8.09% 38.22% 115.08%
GOVERNMENT INVESTMENT - CLASS A (LOAD ADJ.) [A] [B] 2.95% 5.65% 7.44% 2.95% 31.66% 104.86%
INTERMEDIATE BOND - CLASS A [C] 5.81% 6.31% 8.09% 5.81% 35.77% 117.76%
INTERMEDIATE BOND - CLASS A (LOAD ADJ.) [A] [C] 1.84% 5.50% 7.68% 1.84% 30.67% 109.60%
SHORT FIXED-INCOME - CLASS A [B] 5.64% 5.14% 6.91% 5.64% 28.50% 95.13%
SHORT FIXED-INCOME - CLASS A (LOAD ADJ.) [A] [B] 4.05% 4.83% 6.75% 4.05% 26.57% 92.20%
</TABLE>
MUNICIPAL FUNDS - CLASS A
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL INCOME- CLASS A [B] 9.02% 6.90% 9.29% 9.02% 39.63% 143.16%
MUNICIPAL INCOME- CLASS A(LOAD ADJ.) [A] [B] 3.84% 5.87% 8.76% 3.84% 32.99% 131.61%
INTERMEDIATE MUNICIPAL INCOME - CLASS A [C] 6.42% 5.53% 6.70% 6.42% 30.87% 91.25%
INTERMEDIATE MUNICIPAL INCOME - CLASS A (LOAD ADJ.) [A] [C] 2.43% 4.72% 6.29% 2.43% 25.96% 84.08%
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A [C] 4.28% N/A 4.81% 4.28% N/A 19.03%
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A 2.72% N/A 4.38% 2.72% N/A 17.25%
(LOAD ADJ.) [A] [C]
</TABLE>
<PAGE>
EQUITY FUNDS - CLASS T
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
TECHNOQUANT GROWTH - CLASS T [C] N/A N/A N/A N/A N/A 13.60%
TECHNOQUANT GROWTH - CLASS T (LOAD ADJ.) [A] [C] N/A N/A N/A N/A N/A 9.62%
MID CAP - CLASS T [C] 22.35% N/A 22.35% 22.35% N/A 43.15%
MID CAP - CLASS T (LOAD ADJ.) [A] [C] 18.07% N/A 19.93% 18.07% N/A 38.14%
EQUITY GROWTH - CLASS T [C] 19.81% 18.54% 24.11% 19.81% 134.04% 767.43%
EQUITY GROWTH - CLASS T (LOAD ADJ.) [A] [C] 15.62% 17.70% 23.67% 15.62% 125.84% 737.07%
GROWTH OPPORTUNITIES - CLASS T [C] 22.13% 20.39% 22.35% 22.13% 152.90% 651.81%
GROWTH OPPORTUNITIES - CLASS T (LOAD ADJ.) [A] [C] 17.86% 19.54% 21.92% 17.86% 144.05% 625.50%
STRATEGIC OPPORTUNITIES - CLASS T [C] 27.00% 15.18% 15.60% 27.00% 102.70% 326.19%
STRATEGIC OPPORTUNITIES - CLASS T (LOAD ADJ.) [A] [C] 22.56% 14.36% 15.19% 22.56% 95.61% 311.27%
LARGE CAP - CLASS T [C] 18.89% N/A 21.09% 18.89% N/A 40.53%
LARGE CAP - CLASS T (LOAD ADJ.) [A] [C] 14.73% N/A 18.69% 14.73% N/A 35.61%
GROWTH & INCOME - CLASS T [C] N/A N/A N/A N/A N/A 24.83%
GROWTH & INCOME - CLASS T (LOAD ADJ.) [A] [C] N/A N/A N/A N/A N/A 20.46%
EQUITY INCOME - CLASS T [C] 22.12% 19.28% 16.37% 22.12% 141.45% 355.43%
EQUITY INCOME - CLASS T (LOAD ADJ.) [A] [C] 17.84% 18.43% 15.96% 17.84% 133.00% 339.49%
BALANCED - CLASS T [B] 21.36% 10.75% 13.73% 21.36% 66.59% 262.16%
BALANCED - CLASS T (LOAD ADJ.) [A] [B] 17.11% 9.96% 13.33% 17.11% 60.76% 249.48%
</TABLE>
TAXABLE BOND FUNDS - CLASS T
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS T [B] 15.21% 13.10% 15.21% 15.21% 85.08% 312.17%
HIGH YIELD - CLASS T (LOAD ADJ.) [A] [B] 11.18% 12.30% 14.80% 11.18% 78.60% 297.75%
STRATEGIC INCOME - CLASS T [D] 9.33% N/A 13.87% 9.33% N/A 50.86%
STRATEGIC INCOME - CLASS T (LOAD ADJ.) [A] [D] 5.50% N/A 12.59% 5.50% N/A 45.58%
MORTGAGE SECURITIES - CLASS T [B] 8.67% 8.01% 9.00% 8.67% 47.03% 136.78%
MORTGAGE SECURITIES - CLASS T (LOAD ADJ.) [A] [B] 4.87% 7.25% 8.61% 4.87% 41.89% 128.50%
GOVERNMENT INVESTMENT - CLASS T [B] 7.97% 6.66% 7.95% 7.97% 38.06% 114.82%
GOVERNMENT INVESTMENT - CLASS T (LOAD ADJ.) [A] [B] 4.20% 5.91% 7.56% 4.20% 33.23% 107.31%
INTERMEDIATE BOND - CLASS T [C] 5.56% 6.29% 8.09% 5.56% 35.68% 117.63%
INTERMEDIATE BOND - CLASS T (LOAD ADJ.) [A] [C] 2.65% 5.70% 7.79% 2.65% 31.95% 111.65%
SHORT FIXED-INCOME - CLASS T [B] 5.97% 5.23% 6.96% 5.97% 29.04% 95.95%
SHORT FIXED-INCOME - CLASS T (LOAD ADJ.) [A] [B] 4.38% 4.91% 6.80% 4.38% 27.11% 93.01%
</TABLE>
<PAGE>
MUNICIPAL FUNDS - CLASS T
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS
LIFE OF FUND+
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME- CLASS T [B] 8.89% 6.92% 9.30% 8.89% 39.73%
MUNICIPAL INCOME- CLASS T (LOAD ADJ.) [A] [B] 5.08% 6.16% 8.91% 5.08% 34.84%
INTERMEDIATE MUNICIPAL INCOME - CLASS T [C] 6.21% 5.48% 6.68% 6.21% 30.58%
INTERMEDIATE MUNICIPAL INCOME - CLASS T (LOAD ADJ.) [A] [C] 3.29% 4.89% 6.38% 3.29% 26.99%
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T [C] 4.37% N/A 4.83% 4.37% N/A
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T 2.81% N/A 4.40% 2.81% N/A
(LOAD ADJ.) [A] [C]
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
10 YEARS/
LIFE OF FUND+
<S> <C>
MUNICIPAL INCOME- CLASS T [B] 143.34%
MUNICIPAL INCOME- CLASS T (LOAD ADJ.) [A] [B] 134.83%
INTERMEDIATE MUNICIPAL INCOME - CLASS T [C] 90.83%
INTERMEDIATE MUNICIPAL INCOME - CLASS T (LOAD ADJ.) [A] [C] 85.58%
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T [C] 19.12%
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T 17.33%
(LOAD ADJ.) [A] [C]
</TABLE>
EQUITY FUNDS - CLASS B
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
TECHNOQUANT GROWTH - CLASS B [C] N/A N/A N/A N/A N/A 13.10%
TECHNOQUANT GROWTH - CLASS B (LOAD ADJ.) [A] [C] N/A N/A N/A N/A N/A 8.10%
MID CAP - CLASS B [C] 21.67% N/A 21.45% 21.67% N/A 41.26%
MID CAP - CLASS B (LOAD ADJ.) [A] [C] 16.67% N/A 19.50% 16.67% N/A 37.26%
EQUITY GROWTH - CLASS B [C] 19.09% 18.39% 24.04% 19.09% 132.62% 762.19%
EQUITY GROWTH - CLASS B (LOAD ADJ.) [A] [C] 14.09% 18.19% 24.04% 14.09% 130.62% 762.19%
GROWTH OPPORTUNITIES - CLASS B [C] 21.63% 20.29% 22.30% 21.63% 151.87% 648.75%
GROWTH OPPORTUNITIES - CLASS B (LOAD ADJ.) [A] [C] 16.63% 20.10% 22.30% 16.63% 149.87% 648.75%
STRATEGIC OPPORTUNITIES - CLASS B [C] 26.33% 14.80% 15.41% 26.33% 99.42% 319.29%
STRATEGIC OPPORTUNITIES - CLASS B (LOAD ADJ.) [A] [C] 21.33% 14.57% 15.41% 21.33% 97.42% 319.29%
LARGE CAP - CLASS B [C] 18.18% N/A 20.40% 18.18% N/A 39.10%
LARGE CAP - CLASS B (LOAD ADJ.) [A] [C] 13.18% N/A 18.44% 13.18% N/A 35.10%
GROWTH & INCOME - CLASS B [C] N/A N/A N/A N/A N/A 24.22%
GROWTH & INCOME - CLASS B (LOAD ADJ.) [A] [C] N/A N/A N/A N/A N/A 19.22%
EQUITY INCOME - CLASS B [C] 21.52% 18.92% 16.19% 21.52% 137.80% 348.55%
EQUITY INCOME - CLASS B (LOAD ADJ.) [A] [C] 16.52% 18.72% 16.19% 16.52% 135.80% 348.55%
BALANCED - CLASS B [B] 20.54% 10.60% 13.66% 20.54% 65.46% 259.70%
BALANCED - CLASS B (LOAD ADJ.) [A] [B] 15.54% 10.33% 13.66% 15.54% 63.46% 259.70%
</TABLE>
<PAGE>
TAXABLE BOND FUNDS - CLASS B
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS B [B] 14.34% 12.47% 14.89% 14.34% 79.96.% 300.76%
HIGH YIELD - CLASS B (LOAD ADJ.) [A] [B] 9.34% 12.22% 14.89% 9.34% 77.96% 300.76%
STRATEGIC INCOME - CLASS B [D] 8.60% N/A 13.11% 8.60% N/A 47.70%
STRATEGIC INCOME - CLASS B (LOAD ADJ.) [A] [D] 3.67% N/A 12.38% 3.67% N/A 44.70%
MORTGAGE SECURITIES - CLASS B [B] 8.20% 7.92% 8.95% 8.20% 46.39% 135.75%
MORTGAGE SECURITIES - CLASS B (LOAD ADJ.) [A] [B] 3.20% 7.62% 8.95% 3.20% 44.39% 135.75%
GOVERNMENT INVESTMENT - CLASS B [B] 7.20% 6.14% 7.68% 7.20% 34.74% 109.65%
GOVERNMENT INVESTMENT - CLASS B (LOAD ADJ.) [A] [B] 2.20% 5.83% 7.68% 2.20% 32.75% 109.65%
INTERMEDIATE BOND - CLASS B [B] 4.83% 5.73% 7.80% 4.83% 32.13% 111.93%
INTERMEDIATE BOND - CLASS B (LOAD ADJ.) [A] [B] 1.85% 5.73% 7.80% 1.85% 32.13% 111.93%
</TABLE>
MUNICIPAL FUNDS - CLASS B
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS
LIFE OF FUND+
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME- CLASS B [B] 8.15% 6.35% 9.01% 8.15% 36.06%
MUNICIPAL INCOME- CLASS B (LOAD ADJ.) [A] [B] 3.15% 6.04% 9.01% 3.15% 34.06%
INTERMEDIATE MUNICIPAL INCOME - CLASS B [C] 5.54% 4.97% 6.41% 5.54% 27.42%
INTERMEDIATE MUNICIPAL INCOME - CLASS B (LOAD ADJ.) [A] [C] 2.54% 4.97% 6.41% 2.54% 27.42%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
10 YEARS/
LIFE OF FUND+
<S> <C>
MUNICIPAL INCOME- CLASS B [B] 136.95%
MUNICIPAL INCOME- CLASS B (LOAD ADJ.) [A] [B] 136.95%
INTERMEDIATE MUNICIPAL INCOME - CLASS B [C] 86.22%
INTERMEDIATE MUNICIPAL INCOME - CLASS B (LOAD ADJ.) [A] [C] 86.22%
</TABLE>
<PAGE>
EQUITY FUNDS - CLASS C
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
TECHNOQUANT GROWTH - CLASS C [C] N/A N/A N/A N/A N/A 13.12%
TECHNOQUANT GROWTH - CLASS C (LOAD ADJ.) [A] [C] N/A N/A N/A N/A N/A 12.12%
MID CAP - CLASS C [C] 21.68% N/A 21.45% 21.68% N/A 41.27%
MID CAP - CLASS C (LOAD ADJ.) [A] [C] 20.68% N/A 21.45% 20.68% N/A 41.27%
EQUITY GROWTH - CLASS C [C] 19.08% 18.39% 24.04% 19.08% 132.62% 762.17%
EQUITY GROWTH - CLASS C (LOAD ADJ.) [A] [C] 18.08% 18.39% 24.04% 18.08% 132.62% 762.17%
GROWTH OPPORTUNITIES - CLASS C [C] 21.68% 20.30% 22.31% 21.68% 151.98% 649.06%
GROWTH OPPORTUNITIES - CLASS C (LOAD ADJ.) [A] [C] 20.68% 20.30% 22.31% 20.68% 151.98% 649.06%
LARGE CAP - CLASS C [C] 18.18% N/A 20.40% 18.18% N/A 39.10%
LARGE CAP - CLASS C (LOAD ADJ.) [A] [C] 17.18% N/A 20.40% 17.18% N/A 39.10%
GROWTH & INCOME - CLASS C [C] N/A N/A N/A N/A N/A 24.21%
GROWTH & INCOME - CLASS C (LOAD ADJ.) [A] [C] N/A N/A N/A N/A N/A 23.21%
EQUITY INCOME - CLASS C [C] 21.56% 18.93% 16.20% 21.56% 137.88% 348.71%
EQUITY INCOME - CLASS C (LOAD ADJ.) [A] [C] 20.56% 18.93% 16.20% 20.56% 137.88% 348.71%
BALANCED - CLASS C [B] 20.54% 10.60% 13.66% 20.54% 65.46% 259.70%
BALANCED - CLASS C (LOAD ADJ.) [A] [B] 19.54% 10.60% 13.66% 19.54% 65.46% 259.70%
</TABLE>
TAXABLE BOND FUNDS - CLASS C
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
<S> <C> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS C [B] 14.37% 12.45% 14.89% 14.37% 79.83% 300.77%
HIGH YIELD - CLASS C (LOAD ADJ.) [A] [B] 13.37% 12.45% 14.89% 13.37% 79.83% 300.77%
STRATEGIC INCOME - CLASS C [D] 8.55% N/A 13.09% 8.55% N/A 47.61%
STRATEGIC INCOME - CLASS C (LOAD ADJ.) [A] [D] 7.55% N/A 13.09% 7.55% N/A 47.61%
GOVERNMENT INVESTMENT - CLASS C [B] 7.21% 6.16% 7.69% 7.21% 34.82% 109.81%
GOVERNMENT INVESTMENT - CLASS C (LOAD ADJ.) [A] [B] 6.21% 6.16% 7.69% 6.21% 34.82% 109.81%
INTERMEDIATE BOND - CLASS C [C] 4.82% 5.74% 7.80% 4.82% 32.19% 112.02%
INTERMEDIATE BOND - CLASS C (LOAD ADJ.) [A] [C] 3.82% 5.74% 7.80% 3.82% 32.19% 112.02%
SHORT FIXED-INCOME - CLASS C [B] 5.97% 5.23% 6.96% 5.97% 29.04% 95.95%
SHORT FIXED-INCOME - CLASS C (LOAD ADJ.) [A] [B] 4.97% 5.23% 6.96% 4.97% 29.04% 95.95%
</TABLE>
<PAGE>
MUNICIPAL FUNDS - CLASS C
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 1 YEAR PAST 5 YEARS
LIFE OF FUND+
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME - CLASS C [B] 8.17% 6.36% 9.01% 8.17% 36.10%
MUNICIPAL INCOME - CLASS C (LOAD ADJ.) [A] [B] 7.17% 6.36% 9.01% 7.17% 36.10%
INTERMEDIATE MUNICIPAL INCOME - CLASS C [C] 5.54% 4.97% 6.42% 5.54% 27.44%
INTERMEDIATE MUNICIPAL INCOME - CLASS C (LOAD ADJ.) [A] [C] 4.54% 4.97% 6.42% 4.54% 27.44%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN [E] CUMULATIVE TOTAL RETURN [E]
10 YEARS/
LIFE OF FUND+
<S> <C>
MUNICIPAL INCOME - CLASS C [B] 136.95%
MUNICIPAL INCOME - CLASS C (LOAD ADJ.) [A] [B] 136.95%
INTERMEDIATE MUNICIPAL INCOME - CLASS C [C] 86.26%
INTERMEDIATE MUNICIPAL INCOME - CLASS C (LOAD ADJ.) [A] [C] 86.26%
<FN>
+ LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS (OCTOBER 31, 1994 FOR
STRATEGIC INCOME; MARCH 16, 1994 FOR SHORT-INTERMEDIATE MUNICIPAL INCOME;
FEBRUARY 20, 1996 FOR MID CAP, AND LARGE CAP, AND DECEMBER 31, 1996 FOR
TECHNOQUANT GROWTH AND GROWTH & INCOME) THROUGH THE ANNUAL PERIOD ENDED 1997.
[A] LOAD ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING CLASS A'S MAXIMUM
FRONT-END SALES CHARGE OF 5.75% FOR THE EQUITY FUNDS; 4.75% FOR THE BOND FUNDS;
3.75% FOR THE INTERMEDIATE-TERM BOND FUNDS; AND 1.50% FOR THE SHORT-TERM BOND
FUNDS. LOAD ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING CLASS T'S MAXIMUM
FRONT-END SALES CHARGE OF 3.50% FOR THE EQUITY FUNDS AND BOND FUNDS; 2.75% FOR
THE INTERMEDIATE-TERM BOND FUNDS; AND 1.50% FOR THE SHORT-TERM BOND FUNDS.
CLASS B'S AND CLASS C'S CDSC INCLUDED IN THE TOTAL RETURN FIGURES ARE
CALCULATED PURSUANT TO THE CDSC INFORMATION BEGINNING ON PAGE 80 .
[B] PERIOD ENDED OCTOBER 31, 1997.
[C] PERIOD ENDED NOVEMBER 30, 1997.
[D] PERIOD ENDED DECEMBER 31, 1997.
[E] INITIAL OFFERING OF CLASS A FOR EACH FUND (EXCEPT MORTGAGE SECURITIES,
TECHNOQUANT GROWTH, AND GROWTH & INCOME) TOOK PLACE ON SEPTEMBER 3, 1996. CLASS
A RETURNS PRIOR TO SEPTEMBER 3, 1996 (EXCEPT FOR EQUITY GROWTH, EQUITY INCOME,
INTERMEDIATE BOND, AND INTERMEDIATE MUNICIPAL INCOME) ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996) FOR EQUITY FUNDS,
0.25% FOR BOND FUNDS, AND 0.15% FOR SHORT-TERM BOND FUNDS. IF CLASS A'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996 FOR THE EQUITY
FUNDS AND THE BOND FUNDS WOULD HAVE BEEN HIGHER.
</TABLE>
FOR EQUITY GROWTH, EQUITY INCOME, INTERMEDIATE BOND, AND INTERMEDIATE
MUNICIPAL INCOME, CLASS A RETURNS FROM SEPTEMBER 3, 1996 THROUGH SEPTEMBER 10,
1992 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO
JANUARY 1, 1996) FOR EQUITY GROWTH AND EQUITY INCOME AND 0.25% FOR INTERMEDIATE
BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS A RETURNS PRIOR TO SEPTEMBER 10,
1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS A'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996 THROUGH
SEPTEMBER 10, 1992 WOULD HAVE BEEN HIGHER AND TOTAL RETURNS PRIOR TO SEPTEMBER
10, 1992 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS A, CLASS T, AND CLASS B OF MORTGAGE
SECURITIES TOOK PLACE ON MARCH 3, 1997. CLASS A, CLASS T, AND CLASS B RETURNS
PRIOR TO MARCH 3, 1997 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE. IF
CLASS A'S, CLASS T'S, AND CLASS B'S RESPECTIVE 12B-1 FEES HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO MARCH 3, 1997 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS T OF EQUITY GROWTH, EQUITY INCOME,
INTERMEDIATE BOND, AND INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON SEPTEMBER 10,
1992. CLASS T RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL
CLASS WHICH HAS NO 12B-1 FEE. IF CLASS T'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL
RETURNS PRIOR TO SEPTEMBER 10, 1992 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF EQUITY GROWTH TOOK PLACE ON DECEMBER 31,
1996. CLASS B RETURNS PRIOR TO DECEMBER 31, 1996 THROUGH SEPTEMBER 10, 1992 ARE
THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1,
1996). CLASS B RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL
CLASS WHICH HAS NO 12B-1 FEE. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL
RETURNS PRIOR TO DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF BALANCED TOOK PLACE ON DECEMBER 31,
1996. CLASS B RETURNS PRIOR TO DECEMBER 31, 1996 ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996). IF CLASS B'S
12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO DECEMBER 31, 1996 WOULD
HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF GROWTH OPPORTUNITIES TOOK PLACE ON MARCH
3, 1997. CLASS B RETURNS PRIOR TO MARCH 3, 1997 ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.50%(0.65% PRIOR TO JANUARY 1, 1996). IF CLASS B'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO MARCH 3, 1997 WOULD HAVE BEEN
LOWER.
INITIAL OFFERING OF CLASS B OF EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON JUNE 30, 1994. CLASS B RETURNS PRIOR
TO JUNE 30, 1994 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT
A12B-1 FEE OF 0.65% FOR EQUITY INCOME, AND 0.25% FOR INTERMEDIATE BOND AND
INTERMEDIATE MUNICIPAL INCOME. CLASS B RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE
THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS B'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF STRATEGIC OPPORTUNITIES TOOK PLACE ON
JUNE 30, 1994. CLASS B RETURNS PRIOR TO JUNE 30, 1994 ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.65%. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL
RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF HIGH YIELD, GOVERNMENT INVESTMENT, AND
MUNICIPAL INCOME TOOK PLACE ON JUNE 30, 1994. CLASS B RETURNS PRIOR TO JUNE 30,
1994 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.25%. IF CLASS B'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN
LOWER.
INITIAL OFFERING OF CLASS C OF TECHNOQUANT GROWTH, MID CAP, LARGE CAP,
AND GROWTH & INCOME TOOK PLACE ON NOVEMBER 3, 1997. CLASS C RETURNS PRIOR TO
NOVEMBER 3, 1997 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%.
INITIAL OFFERING OF CLASS C OF STRATEGIC INCOME TOOK PLACE ON NOVEMBER
3, 1997. CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 ARE THOSE OF CLASS B WHICH
REFLECT A 12B-1 FEE OF 0.90%(1.00% PRIOR TO JANUARY 1, 1996). IF CLASS C'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH
JANUARY 1, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF EQUITY GROWTH TOOK PLACE ON NOVEMBER
3,1997. CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH DECEMBER 31, 1996 ARE
THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%. CLASS C RETURNS PRIOR TO
DECEMBER 31, 1996 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT
A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996). CLASS C RETURNS PRIOR TO
SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF
CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO DECEMBER 31, 1996
WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF GROWTH OPPORTUNITIES TOOK PLACE ON
NOVEMBER 3, 1997. CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH MARCH 3,
1997 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%. CLASS C RETURNS
PRIOR TO MARCH 3, 1997 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50%
(0.65% PRIOR TO JANUARY 1, 1996). IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO MARCH 3, 1997 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF BALANCED TOOK PLACE ON NOVEMBER 3, 1997.
CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH DECEMBER 31, 1996 ARE THOSE OF
CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%. CLASS C RETURNS PRIOR TO DECEMBER
31, 1996 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO
JANUARY 1, 1996). IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR
TO DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF HIGH YIELD, GOVERNMENT INVESTMENT, AND
MUNICIPAL INCOME TOOK PLACE ON NOVEMBER 3, 1997. CLASS C RETURNS PRIOR TO
NOVEMBER 3, 1997
<PAGE>
THROUGH JUNE 30, 1994 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 0.90%
(1.00% PRIOR TO JANUARY 1, 1996). CLASS C RETURNS PRIOR TO JUNE 30, 1994 ARE
THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.25%. IF CLASS C'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH JANUARY 1, 1996
AND PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF SHORT FIXED-INCOME TOOK PLACE ON
NOVEMBER 3, 1997. CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.15%. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON NOVEMBER 3, 1997. CLASS C RETURNS
PRIOR TO NOVEMBER 3, 1997 THROUGH JUNE 30, 1994 ARE THOSE OF CLASS B WHICH
REFLECT A 12B-1 FEE OF 1.00% FOR EQUITY INCOME AND 0.90% (1.00% PRIOR TO JANUARY
1, 1996) FOR INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS C
RETURNS PRIOR TO JUNE 30, 1994 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.65% FOR EQUITY INCOME AND 0.25% FOR INTERMEDIATE
BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS C RETURNS PRIOR TO SEPTEMBER 10,
1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS C'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS FOR EQUITY INCOME PRIOR TO JUNE 30, 1994
WOULD HAVE BEEN LOWER. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS
FOR INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL INCOME PRIOR TO NOVEMBER 3,
1997 THROUGH JANUARY 1, 1996 AND PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
The exclusion of any applicable sales charge from a performance calculation
produces a higher return.
If FMR had not reimbursed certain class expenses during these periods, total
returns would have been lower.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given period,
assuming reinvestment of any dividends and capital gains. A CUMULATIVE TOTAL
RETURN reflects actual performance over a stated period of time. An AVERAGE
ANNUAL TOTAL RETURN is a hypothetical rate of return that, if achieved annually,
would have produced the same cumulative total return if performance had been
constant over the entire period. Average annual total returns smooth out
variations in performance; they are not the same as actual year-by-year results.
Average annual total returns covering periods of less than one year assume that
performance will remain constant for the rest of the year.
Average annual and cumulative total returns usually will include the effect of
paying the maximum applicable sales charge.
YIELD refers to the income generated by an investment in a fund over a given
period of time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond funds. Because
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders.
This difference may be significant for funds whose investments are denominated
in foreign currencies.
In calculating yield, a fund may from time to time use a security's coupon rate
instead of its yield to maturity in order to reflect the risk premium on that
security. This practice will have the effect of reducing a fund's yield.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before taxes to
equal a tax-free yield.
THE COMPETITIVE FUNDS AVERAGE is each fund's applicable Lipper Funds Average,
which reflects the performance of mutual funds with similar objectives. These
averages, published by Lipper Analytical Services, Inc., exclude the effect of
sales loads.
STANDARD & POOR'S 500 INDEX (S&P 500(registered trademark)) is a widely
recognized, unmanaged index of common stocks.
STANDARD & POOR'S MIDCAP 400 INDEX is a widely recognized, unmanaged index of
400 medium-capitalization stocks.
MERRILL LYNCH HIGH YIELD MASTER INDEX is a market capitalization weighted index
of all domestic and yankee high-yield bonds. Issues included in the index have
maturities of at least one year and have a credit rating lower than BBB-/Baa3,
but are not in default.
LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX is a market value
weighted performance benchmark for government and corporate fixed-rate debt
issues with maturities between one and three years.
LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is a market capitalization
weighted benchmark of 15- and 30-year fixed-rate securities backed by mortgage
pools of the Government National Mortgage Association (GNMA), Fannie Mae and
Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with
fixed-rate coupons.
LEHMAN BROTHERS GOVERNMENT BOND INDEX is a market value weighted index
of U.S. Government and government agency securities (other than mortgage
securities) with maturities of one year or more.
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is a market value
weighted performance benchmark for government and corporate fixed-rate debt
issues with maturities between one and 10 years.
LEHMAN BROTHERS MUNICIPAL BOND INDEX is a total return performance benchmark
for investment grade municipal bonds with maturities of at least one year.
Unlike each class's returns, the total returns of each comparative index do not
include the effect of any brokerage commissions, transaction fees, or other
costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation calculated
by the U.S. Government.
Other illustrations of equity fund performance may show moving averages over
specified periods.
The funds' recent strategies, performance, and holdings are detailed twice a
year in financial reports, which are sent to all shareholders. For current
performance or a free annual report, please contact your investment professional
or, if you are investing through a broker-dealer or insurance representative,
call 1-800-522-7297 or, if you are investing through a bank representative, call
1-800-843-3001.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
<PAGE>
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money and
invests it toward a specified goal. TechnoQuant Growth, Mid Cap, Equity Growth,
Growth Opportunities, Strategic Opportunities, Large Cap, and Growth & Income
are diversified funds of Fidelity Advisor Series I, a Massachusetts business
trust organized on June 24, 1983. Balanced, High Yield, Government Investment,
and Short Fixed-Income are diversified funds and Strategic Income is a
non-diversified fund of Fidelity Advisor Series II, a Massachusetts business
trust organized on April 23, 1986. Equity Income is a diversified fund of
Fidelity Advisor Series III, a Massachusetts business trust organized on May 17,
1982. Intermediate Bond is a diversified fund of Fidelity Advisor Series IV, a
Massachusetts business trust organized on May 6, 1983. Municipal Income is a
diversified fund of Fidelity Advisor Series V, a Massachusetts business trust
organized on April 23, 1986. Intermediate Municipal Income is a diversified fund
and Short-Intermediate Municipal Income is a non-diversified fund of Fidelity
Advisor Series VI, a Massachusetts business trust organized on June 1, 1983.
Mortgage Securities is a diversified fund of Fidelity Income Fund, a
Massachusetts business trust organized on August 7, 1984. Each trust is an
open-end management investment company. There is a remote possibility that one
fund might become liable for a misstatement in the prospectus about another
fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for protecting
the interests of shareholders. The trustees are experienced executives who meet
periodically throughout the year to oversee the funds' activities, review
contractual arrangements with companies that provide services to the funds, and
review the funds' performance. The trustees serve as trustees for other Fidelity
funds. The majority of trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not attending
these meetings are encouraged to vote by proxy. The transfer agent will mail
proxy materials in advance, including a voting card and information about the
proposals to be voted on. The number of votes you are entitled to is based upon
the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a matter
affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management organizations
in the United States and has its principal business address at 82 Devonshire
Street, Boston, Massachusetts 02109. It includes a number of different
subsidiaries and divisions which provide a variety of financial services and
products. The funds employ various Fidelity companies to perform activities
required for their operation.
The funds are managed by FMR, which chooses each fund's investments and handles
its business affairs. FMR chooses investments with the assistance of foreign
affiliates for all funds except Government Investment, Municipal Income,
Intermediate Municipal Income, and Short-Intermediate Municipal Income.
Beginning January 1, 1999, Fidelity Investments Money Management, Inc.
(FIMM), located in Merrimack, New Hampshire, will select certain types of
investments for Balanced and Strategic Income. Beginning January 1, 1999, FIMM
will have primary responsibility for providing investment management services
for Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income.
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR U.K.), in
London, England, serves as a sub-adviser for TechnoQuant Growth, Mid Cap, Equity
Growth, Growth Opportunities, Strategic Opportunities, Large Cap, Growth &
Income, Equity Income, Balanced, High Yield, Strategic Income, Mortgage
Securities, Intermediate Bond, and Short Fixed-Income.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR Far
East), in Tokyo, Japan, serves as a sub-adviser for TechnoQuant Growth, Mid Cap,
Equity Growth, Growth Opportunities, Strategic Opportunities, Large Cap, Growth
& Income, Equity Income, Balanced, High Yield, Strategic Income, Mortgage
Securities, Intermediate Bond, and Short Fixed-Income.
(small solid bullet) Fidelity International Investment Advisors (FIIA), in
Pembroke, Bermuda, serves as a sub-adviser for Strategic Income.
(small solid bullet) Fidelity International Investment Advisors (U.K.) Limited
(FIIA(U.K.)L), in London, England, serves as a sub-adviser for Strategic Income.
(small solid bullet) Fidelity Investment Japan Limited (FIJ), in Tokyo,
Japan , serves as a sub-adviser for Strategic Income.
As of December 31, 1997, FMR advised funds having approximately 34
million shareholder accounts with a total value of more than $ 529
billion.
John Avery is lead manager of Advisor Balanced, which he has managed since
January 1998. He has been a co-manager of the fund since September 1997 .
He also manages another Fidelity fund. Mr. Avery joined Fidelity as an analyst
in 1995. Previously, he was an analyst for Putnam Investments from 1993 to 1994.
Mr. Avery received his MBA from The Wharton School at the University of
Pennsylvania in 1993.
John Carlson is Vice President and lead manager of Advisor Strategic Income,
which he has managed since August 1995. He also manages several other Fidelity
funds. Prior to joining Fidelity in 1995, Mr. Carlson was Executive Director of
emerging markets at Lehman Brothers International from 1992 through 1995.
Robert Chow is manager of Advisor Equity Income, which he has managed since
March 1996. Previously, he managed other Fidelity funds. Since joining Fidelity
in 1989, Mr. Chow has worked as an analyst, portfolio assistant, and manager.
<PAGE>
Katherine Collins is manager of Advisor Mid Cap, which she has managed since
January 1997. She also manages another Fidelity fund. Since joining Fidelity in
1990, Ms. Collins has worked as an analyst and manager.
Andrew Dudley is manager of Advisor Short Fixed-Income, which he has managed
since February 1997. He also manages other Fidelity funds. Prior to
joining Fidelity as a manager in 1996, Mr. Dudley was a portfolio manager with
Putnam Investments from 1991 to 1996.
Margaret Eagle is Vice President and manager of Advisor High Yield and Advisor
Strategic Income, which she has managed since January 1987 and January 1996,
respectively. Ms. Eagle manages the high yield investments for Advisor Strategic
Income. In addition, she is a Senior Vice President of Fidelity Trust Company.
Ms. Eagle joined Fidelity in 1980.
Karen Firestone will be manager of Advisor Large Cap effective April 1, 1998.
She will also manage another Fidelity fund. Since joining Fidelity in 1983, Ms.
Firestone has worked as an analyst and manager.
Kevin Grant is Vice President and manager of Advisor Intermediate Bond and
Advisor Balanced, which he has managed since October 1995 and March 1996,
respectively. Mr. Grant manages the fixed-income investments for Advisor
Balanced. He also manages several other Fidelity funds. Prior to joining
Fidelity in 1993, Mr. Grant was a vice president and chief mortgage strategist
at Morgan Stanley for three years.
Brian Hogan is manager of Advisor Strategic Income's emerging market securities,
which he has managed since September 1997. Since joining Fidelity in 1994, Mr.
Hogan has worked as a fixed-income analyst, research analyst, and manager.
Previously, he worked as an analyst for Conseco Capital Management from 1993 to
1994 and Aegon USA Investment Management from 1990 to 1993.
Curt Hollingsworth is Vice President and manager of Advisor Government
Investment and Advisor Strategic Income, both of which he has managed since
February 1997. Mr. Hollingsworth manages the domestic investment-grade and U.S.
Government investments for Advisor Strategic Income. He also manages several
other Fidelity funds. Since joining Fidelity in 1983, Mr. Hollingsworth has
worked as a fixed-income trader and portfolio manager.
Jonathan Kelly is manager of Advisor Strategic Income's foreign bond investments
in developed markets, which he has managed since January 1996. Previously, he
managed other Fidelity funds. Since joining Fidelity in 1991, Mr. Kelly has
worked as a foreign bond analyst and manager.
Tim Krochuk is manager of Advisor TechnoQuant Growth, which he has managed since
inception. He also manages another Fidelity fund. Since joining Fidelity as a
research associate in 1992, Mr. Krochuk has worked as a quantitative analyst and
manager.
Harris Leviton is Vice President and manager of Advisor Strategic Opportunities,
which he has managed since March 1996. Previously, he managed other Fidelity
funds. Since joining Fidelity in 1986, he has worked as an analyst and manager.
Norm Lind is Vice President and manager of Advisor Short-Intermediate Municipal
Income and Advisor Intermediate Municipal Income , which he has managed
since October 1995 and January 1998, respectively . He also manages
several other Fidelity funds. Since joining Fidelity in 1986, Mr. Lind has
worked as an analyst and manager.
Charles Mangum will provide assistance in managing Advisor Growth
Opportunities from time to time. He also manages another Fidelity fund. Since
joining Fidelity in 1990, Mr. Mangum has worked as an analyst and manager.
Jonathan Short is Vice President and manager of Advisor Municipal Income,
which he has managed since January 1998. He also manages several other Fidelity
funds. Since joining Fidelity in 1990, Mr. Short has worked as an analyst and
manager.
Thomas Silvia is manager of Advisor Mortgage Securities. He has been a
co-manager of the fund since February 1997. Mr. Silvia joined Fidelity as a
senior mortgage trader in 1993. Previously, he was a quantitative analyst with
Donaldson, Lufkin & Jenrette in New York from 1990 to 1993.
Thomas Sprague is Vice President and manager of Advisor Large Cap, which he has
managed since March 1996 and will manage until March 31, 1998 . He also
manages another Fidelity fund. Since joining Fidelity in 1989, he has worked as
an analyst and manager.
Beth Terrana is Vice President and manager of Advisor Growth & Income, which she
has managed since inception. She also manages other Fidelity funds. Since
joining Fidelity in 1983, Ms. Terrana has worked as an analyst, portfolio
assistant, and manager.
Jennifer Uhrig is Vice President and manager of Advisor Equity Growth, which she
has managed since January 1997. She also manages another Fidelity fund. Since
joining Fidelity in 1987, Ms. Uhrig has worked as an analyst and manager.
George Vanderheiden is Vice President and manager of Advisor Growth
Opportunities, which he has managed since November 1987. He also manages
other Fidelity funds. Mr. Vanderheiden joined Fidelity in 1971.
Fidelity investment personnel may invest in securities for their own accounts
pursuant to a code of ethics that establishes procedures for personal investing
and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services.
Fidelity Investments Institutional Operations Company, Inc. (FIIOC) performs
transfer agent servicing functions for each class of the Equity Funds, High
Yield, Strategic Income, Mortgage Securities, Government Investment,
Intermediate Bond, and Short Fixed-Income. UMB Bank, n.a. (UMB) is the transfer
agent for Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, although it employs FIIOC to perform these
functions for each class of each fund. UMB is located at 1010 Grand Avenue,
Kansas City, Missouri.
FMR Corp. is the ultimate parent company of FMR, FIMM, FMR U.K., and FMR
Far East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR
<PAGE>
Corp. Under the Investment Company Act of 1940 (the 1940 Act), control of a
company is presumed where one individual or group of individuals owns more than
25% of the voting stock of that company; therefore, the Johnson family may be
deemed under the 1940 Act to form a controlling group with respect to FMR Corp.
Fidelity International Limited (FIL), is the parent company of FIIA, FIJ, and
FIIA(U.K.)L. The Johnson family group also owns, directly or indirectly, more
than 25% of the voting common stock of FIL.
FMR may use its broker-dealer affiliates and other firms that sell fund shares
to carry out a fund's transactions, provided that the fund receives brokerage
services and commission rates comparable to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The value of each fund's investments varies in response to many factors. Stock
values fluctuate in response to the activities of individual companies and
general market and economic conditions.
The yield and share price of a bond fund change daily based on changes in
interest rates and market conditions, and in response to other economic,
political or financial events. The types and maturities of the securities a bond
fund purchases and the credit quality of their issuers will impact a bond fund's
reaction to these events.
The total return from a bond includes both income and price gains or losses.
While income is the most important component of bond returns over time, a bond
fund's emphasis on income does not mean the fund invests only in the
highest-yielding bonds available, or that it can avoid losses of principal.
In general, bond prices rise when interest rates fall and fall when interest
rates rise. Longer-term bonds are usually more sensitive to interest rate
changes. In other words, the longer the maturity of a bond, the greater the
impact a change in interest rates is likely to have on the bond's price. In
addition, short-term interest rates and long-term interest rates do not
necessarily move in the same amount or in the same direction. A short-term bond
tends to react to changes in short-term interest rates and a long-term bond
tends to react to changes in long-term interest rates.
The price of a bond is affected by the credit quality of its issuer. Changes in
the financial condition of an issuer, changes in general economic conditions,
and changes in specific economic conditions that affect a particular type of
issuer can impact the credit quality of an issuer. Lower quality bonds generally
tend to be more sensitive to these changes than higher quality bonds.
Many types of debt securities, including mortgage securities, are subject to
prepayment risk. Prepayment risk occurs when the issuer of a security can prepay
principal prior to the security's maturity. Securities subject to prepayment
risk generally offer less potential for gains during a declining interest rate
environment, and similar or greater potential for loss in a rising interest rate
environment. In addition, the potential impact of prepayment features on the
price of a debt security may be difficult to predict and result in greater
volatility.
Municipal securities are backed by the entity that issued them and/or other
revenue streams. Municipal security values may be significantly affected by
political changes as well as uncertainties in the municipal market related to
taxation or the rights of municipal securities holders.
Funds which invest in foreign securities have increased economic and political
risks as they are exposed to events and factors in the various world markets.
This is especially true for funds that invest in emerging markets. Also, because
certain of the funds' investments are denominated in foreign currencies, changes
in the value of foreign currencies can significantly affect a fund's share
price. FMR may use a variety of investment techniques to either increase or
decrease a fund's investment exposure to any currency.
FMR may use various investment techniques to hedge a portion of the funds'
risks, but there is no guarantee that these strategies will work as FMR intends.
When you sell your shares, they may be worth more or less than what you paid for
them.
TECHNOQUANT GROWTH FUND seeks growth of capital by investing mainly in common
stocks. However, the fund has the flexibility to invest in other types of equity
securities and debt securities as well. The fund's security selection process
utilizes computer-aided, quantitative analysis. FMR's computer models use many
types of data, but emphasize technical factors such as historical price and
volume relationships. Fundamental criteria, such as earnings estimates, and
dividend yield may also be considered.
FMR's emphasis on technical analysis can result in the fund holding different
types of stocks at different times. For example, the fund may hold stocks of
companies with large or small market capitalization or high or low
price/earnings ratios. The fund's focus may change rapidly based on FMR's
analysis of the most current information. At times, the fund may be concentrated
in a small number of market sectors or securities.
MID CAP FUND seeks long-term growth of capital by investing primarily in equity
securities of companies with medium market capitalizations. FMR normally invests
at least 65% of the fund's total assets in these securities. The fund has the
flexibility, however, to invest the balance in other market capitalizations and
security types.
Medium market capitalization companies are those whose market capitalization
falls within the capitalization range of the S&P MidCap 400 at the time of the
fund's investment. The S&P MidCap 400 Index is an unmanaged index of
medium-capitalization stocks. Companies whose capitalization falls outside this
range after purchase continue to be considered medium-capitalized for purposes
of the 65% policy. As of December 31, 1997, the S&P MidCap 400 included
companies with capitalizations of between $ 213 million and $ 13.7
billion. The capitalization range of the S&P MidCap 400 changes with market
conditions and the composition of the Index.
Investing in medium capitalization stocks may involve greater risk than
investing in large capitalization stocks, since they can be subject to more
abrupt or erratic movements. However, they tend to involve less risk than stocks
of small capitalization companies.
EQUITY GROWTH FUND seeks capital appreciation by investing primarily in common
and preferred stock and securities convertible into the common stock of
companies with above-average growth characteristics. FMR normally invests at
least 65% of the fund's total assets in common and preferred stock. The fund
looks for domestic and foreign companies with above-average growth
characteristics
<PAGE>
compared to the average of the companies included in the S&P 500. The S&P 500 is
a registered trademark of Standard & Poor's.
Growth may be measured by factors such as earnings or gross sales. Companies
with strong growth potential often have new products, technologies, distribution
channels, or other opportunities. As a general rule, these companies may include
smaller, less well-known companies, and companies whose stocks have higher than
average price/earnings (P/E) ratios. The market prices of these stocks may be
particularly sensitive to economic, market, or company news. FMR may also pursue
growth in larger or revitalized companies or companies that hold a strong
position in the market. These growth characteristics may be found in mature or
declining industries.
GROWTH OPPORTUNITIES FUND seeks capital growth by investing primarily in common
stocks and securities convertible into common stocks. FMR normally invests at
least 65% of the fund's total assets in securities of companies that FMR
believes have long-term growth potential. Although the fund invests primarily in
common stock and securities convertible into common stock, it has the ability to
purchase other securities, such as preferred stock and bonds, that may produce
capital growth. The fund may invest in foreign securities without limitation.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing primarily
in securities of companies believed by FMR to involve a "special situation." FMR
normally invests at least 65% of the fund's total assets in these securities.
The term "special situation" refers to FMR's identification of an unusual, and
possibly non-repetitive, development taking place in a company or a group of
companies in an industry.
A special situation may involve one or more of the following characteristics:
(small solid bullet) A technological advance or discovery, the offering of a new
or unique product or service, or changes in consumer demand or consumption
forecasts.
(small solid bullet) Changes in the competitive outlook or growth potential of
an industry or a company within an industry, including changes in the scope or
nature of foreign competition or the development of an emerging industry.
(small solid bullet) New or changed management, or material changes in
management policies or corporate structure.
(small solid bullet) Significant economic or political occurrences abroad,
including changes in foreign or domestic import and tax laws or other
regulations.
(small solid bullet) Other events, including natural disasters, favorable
litigation settlements, or a major change in demographic patterns.
"Special situations" often involve breaks with past experience. They can be
relatively aggressive investments. In seeking capital appreciation, the fund
also may invest in securities of companies not involving a special situation,
but which are companies with valuable fixed assets and whose securities are
believed by FMR to be undervalued in relation to the companies' assets,
earnings, or growth potential. FMR intends to invest primarily in common stocks
and securities that are convertible into common stocks; however, it also may
invest in debt securities of all types and quality if FMR believes that
investing in these securities will result in capital appreciation. The fund may
invest up to 30% of its assets in foreign investments.
LARGE CAP FUND seeks long-term growth of capital by investing primarily in
equity securities of companies with large market capitalizations. FMR normally
invests at least 65% of the fund's total assets in these securities. The fund
has the flexibility, however, to invest the balance in other market
capitalizations and security types.
FMR defines large market capitalization companies as those with market
capitalizations of $1 billion or more at the time of the fund's investment.
Companies whose capitalization falls below this level after purchase continue to
be considered large-capitalized for purposes of the 65% policy.
Companies with large market capitalizations typically have a large number of
publicly held shares and a high trading volume, resulting in a high degree of
liquidity. These tend to be quality companies with strong management
organizations. However, large capitalization companies may have less growth
potential than smaller companies and may be able to react less quickly to
changes in the marketplace.
GROWTH & INCOME FUND seeks high total return through a combination of current
income and capital appreciation. The fund invests mainly in equity securities.
The fund expects to invest the majority of its assets in domestic and foreign
equity securities, with a focus on those that pay current dividends and show
potential earnings growth. However, the fund may buy debt securities as well as
equity securities that are not currently paying dividends, but offer prospects
for capital appreciation or future income.
EQUITY INCOME FUND seeks a yield which exceeds the composite dividend yield of
securities comprising the S&P 500. In addition, consistent with the primary
objective of obtaining income, the fund will consider the potential for
achieving capital appreciation. FMR normally invests at least 65% of the fund's
total assets in income-producing equity securities. For purposes of this policy,
equity securities are defined as common and preferred stocks. The balance of the
fund's assets will tend to be invested in debt securities, a high percentage of
which are expected to be convertible into common stocks.
The fund seeks to achieve a yield that beats that of the S&P 500. The fund does
not intend to invest in securities of issuers without proven earnings and/or
credit histories. Because the fund invests for income, as well as capital
appreciation, investors should not expect capital appreciation comparable with
funds which seek only capital appreciation. The yield on the fund's assets
generally will increase or decrease from year to year in accordance with market
conditions and in relation to the changes in yields of the stocks included in
the S&P 500.
BALANCED FUND seeks both income and growth of capital by investing in a
diversified portfolio of equity and fixed-income securities with income, growth
of income, and capital appreciation potential. FMR manages the fund to maintain
a balance between
<PAGE>
stocks and bonds. When FMR's outlook is neutral, it will invest approximately
60% of the fund's assets in stocks and other equity securities and the remainder
in bonds and other fixed-income securities. FMR may vary from this target if it
believes stocks or bonds offer more favorable opportunities, but will always
invest at least 25% of the fund's total assets in fixed-income senior securities
(including debt securities and preferred stock).
The fund may buy securities that are not currently paying income but offer
prospects for future income. The fund may invest in securities of foreign
issuers. In selecting investments for the fund, FMR will consider such factors
as the issuer's financial strength, its outlook for increased dividend or
interest payments, and the potential for capital gains.
HIGH YIELD FUND seeks a combination of a high level of income and the potential
for capital gains by investing in a diversified portfolio consisting primarily
of high-yielding, fixed-income and zero coupon securities, such as bonds,
debentures and notes, convertible securities and preferred stocks. FMR normally
invests at least 65% of the fund's total assets in these securities.
The fund may also invest in securities issued or guaranteed by the U.S.
Government, any state or any of their respective subdivisions, agencies or
instrumentalities, and securities of foreign issuers, including securities of
foreign governments. The fund may invest up to 35% of its total assets in equity
securities, including common stocks, warrants, and rights.
STRATEGIC INCOME FUND seeks a high level of current income by investing
primarily in debt securities. The fund may also seek capital appreciation. The
fund invests primarily in fixed-income securities, allocated among four general
investment categories: high yield securities, U.S. Government and
investment-grade securities, emerging market securities, and foreign developed
market securities. The fund's neutral mix, or the benchmark for its combination
of investments in each category over time, is approximately 40% high yield, 30%
U.S. Government and investment-grade, 15% emerging markets and 15% foreign
developed markets.
FMR regularly reviews the fund's allocation and makes changes gradually over
time to favor investments that it believes provide the most favorable outlook
for achieving the fund's objective. In normal market environments, FMR expects
the fund's asset allocation to approximate the neutral mix within a range of
plus or minus 10% of assets per category. There are no absolute limits on the
percent of assets invested in each category, however, and FMR reserves the right
to change the neutral mix from time to time.
The HIGH YIELD category includes high-yielding, lower-quality debt securities
consisting mainly of U.S. securities of a quality grade lower than BBB. The U.S.
GOVERNMENT AND INVESTMENT-GRADE category includes mortgage securities, U.S.
Government securities, government agency securities and other U.S.
dollar-denominated securities of investment-grade quality. The EMERGING MARKET
category includes corporate and governmental debt securities of issuers located
in emerging markets. The FOREIGN DEVELOPED MARKET category includes corporate
and governmental debt securities of issuers located in developed foreign
markets. These investment categories are only general guidelines, and FMR may
use its judgment as to which category an investment falls within. The fund may
also make investments that do not fall within these categories.
By allocating its investments across different types of fixed-income securities,
the fund attempts to moderate the significant risks of each investment category
through diversification. Diversification, when successful, can mean higher
returns with decreased volatility. However, each of the fund's four investment
categories may experience periods of volatile returns, and it is possible for
all investment categories to decline at the same time.
MORTGAGE SECURITIES FUND seeks high current income, consistent with prudent
investment risk, by investing primarily in mortgage-related securities. When
consistent with its goal, the fund may also consider the potential for capital
gain. FMR normally invests at least 65% of the fund's total assets in
mortgage-related securities. The fund may also invest in U.S. Government
securities and instruments related to U.S. Government securities. Instruments
related to U.S. Government securities may include futures or options on U.S.
Government securities or interests in U.S. Government securities that have been
repackaged by dealers or other third parties.
In managing the fund, FMR selects a benchmark index which is representative of
the universe of securities in which the fund invests. FMR uses this benchmark as
a guide in structuring the fund and selecting its investments. The benchmark
index for the fund is the Lehman Brothers Mortgage-Backed Securities Index, a
market capitalization weighted benchmark of 15- and 30- year fixed-rate
securities backed by mortgage pools of the Government National Mortgage
Association (GNMA), Fannie Mae and Federal Home Loan Mortgage Corporation
(FHLMC), and balloon mortgages with fixed-rate coupons. FMR manages the fund to
have similar overall interest rate risk to the Index. As of October 31, 1997,
the dollar-weighted average maturity of the fund and the Index was approximately
5.8 and 6.01 years, respectively.
FMR allocates assets among different market sectors (for example, fixed-rate or
adjustable rate mortgages) and different maturities based on its view of the
relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that it believes
will provide the best balance between risk and return within the universe of
securities in which the fund invests. FMR's evaluation of a potential investment
includes an analysis of the credit quality of the issuer, its structural
features, its current price compared to FMR's estimate of its long-term value,
and any short-term trading opportunities resulting from market inefficiencies.
In determining a security's maturity for purposes of calculating the fund's
average maturity, an estimate of the average time for its principal to be paid
may be used. This could be substantially shorter than its stated final maturity.
<PAGE>
GOVERNMENT INVESTMENT FUND seeks high current income by investing in U.S.
Government securities and instruments related to U.S. Government securities
under normal conditions. FMR normally invests the fund's assets only in U.S.
Government securities, repurchase agreements, and other instruments related to
U.S. Government securities. Under normal conditions, FMR invests at least 65% of
the fund's total assets in U.S. Government securities and repurchase agreements
for U.S. Government securities. Other instruments may include futures or options
on U.S. Government securities or interests in U.S. Government securities that
have been repackaged by dealers or other third parties. It is important to note
that neither the fund nor its yield is guaranteed by the U.S. Government.
In managing the fund, FMR selects a benchmark index which is representative of
the universe of securities in which the fund invest s . FMR uses this
benchmark as a guide in structuring the fund and selecting its investments. The
benchmark index for the fund is the Lehman Brothers Government Bond Index, a
market value weighted benchmark of U.S. Government and government
agency securities (other than mortgage securities) with maturities of one
year or more. FMR manages the fund to have similar overall interest rate
risk to the Index. As of October 31, 1997, the dollar-weighted average maturity
of the fund and the Index was approximately 8.2 and 8.67 years,
respectively.
FMR allocates assets among different market sectors (for example, U.S. Treasury
or U.S. Government agency securities) and different maturities based on its view
of the relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that it believes
will provide the best balance between risk and return within the universe of
securities in which the fund invests. FMR's evaluation of a potential investment
includes an analysis of the credit quality of the issuer, its structural
features, its current price compared to FMR's estimate of its long-term value,
and any short-term trading opportunities resulting from market inefficiencies.
In determining a security's maturity for purposes of calculating the fund's
average maturity, an estimate of the average time for its principal to be paid
may be used. This could be substantially shorter than its stated final maturity.
INTERMEDIATE BOND FUND seeks high current income by investing in U.S.
dollar-denominated investment-grade debt securities under normal conditions.
When consistent with its primary objective, the fund may also seek capital
appreciation.
In managing the fund, FMR selects a benchmark index which is representative of
the universe of securities in which the fund invests. FMR uses this benchmark as
a guide in structuring the fund and selecting its investments. The benchmark
index for the fund is the Lehman Brothers Intermediate Government/Corporate Bond
Index, a market value weighted benchmark for government and corporate fixed-rate
debt issues with maturities between one and 10 years. FMR manages the fund to
have similar overall interest rate risk to the Index. As of November 30, 1997,
the dollar-weighted average maturity of the fund and the Index was approximately
5.9 and 4.30 years, respectively. In addition, the fund normally
maintains a dollar-weighted average maturity between three and 10 years.
FMR allocates assets among different market sectors (for example, corporate or
government securities) and different maturities based on its view of the
relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that it believes
will provide the best balance between risk and return within the universe of
securities in which the fund invests. FMR's evaluation of a potential investment
includes an analysis of the credit quality of the issuer, its structural
features, its current price compared to FMR's estimate of its long-term value,
and any short-term trading opportunities resulting from market inefficiencies.
In determining a security's maturity for purposes of calculating the fund's
average maturity, an estimate of the average time for its principal to be paid
may be used. This can be substantially shorter than its stated final maturity.
SHORT FIXED-INCOME FUND seeks high current income, consistent with the
preservation of capital, by investing in U.S. dollar-denominated
investment-grade debt securities under normal conditions. Where appropriate the
fund will take advantage of opportunities to realize capital appreciation. FMR
normally invests at least 65% of the fund's total assets in fixed-income
securities of all types which may include convertible and zero coupon
securities.
In managing the fund, FMR selects a benchmark index which is representative of
the universe of securities in which the fund invests. FMR uses this benchmark as
a guide in structuring the fund and selecting its investments. The benchmark
index for the fund is the Lehman Brothers 1-3 Year Government/Corporate Bond
Index, a market value weighted benchmark for government and corporate fixed-rate
debt issues with maturities between one and three years. FMR manages the fund to
have similar overall interest rate risk to the Index. As of October 31, 1997,
the dollar-weighted average maturity of the fund and the Index was approximately
2.2 and 2.09 years, respectively. In addition, the fund normally
maintains a dollar-weighted average maturity of three years or less.
FMR allocates assets among different market sectors (for example, corporate or
government securities) and different maturities based on its view of the
relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that it believes
will provide the best balance between risk and return within the universe of
securities in which the fund invests. FMR's evaluation of a potential investment
includes an analysis of the credit quality of the issuer, its structural
features, its current price compared to FMR's estimate of its long-term value,
and any short-term trading opportunities resulting from market inefficiencies.
In determining a security's maturity for purposes of calculating the fund's
average maturity, an estimate of the average time for its principal to be paid
may be used. This can be substantially shorter than its stated final maturity.
<PAGE>
MUNICIPAL INCOME FUND seeks high current income that is free from federal income
tax by investing primarily in investment-grade municipal securities. FMR
normally invests at least 80% of the fund's assets in municipal securities whose
interest is free from federal income tax.
In managing the fund, FMR selects a benchmark index which is representative of
the universe of securities in which the fund invests. FMR uses this benchmark as
a guide in structuring the fund and selecting its investments. The benchmark
index for the fund is the Lehman Brothers Municipal Bond Index, a benchmark of
investment-grade municipal bonds with maturities of one year or more. FMR
manages the fund to have similar overall interest rate risk to the Index. As of
October 31, 1997, the dollar-weighted average maturity of the fund and the Index
was approximately 13.2 and
13.97 years, respectively.
FMR allocates assets among different market sectors (for example, general
obligation bonds of a state or bonds financing a specific project) and different
maturities based on its view of the relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that it believes
will provide the best balance between risk and return within the universe of
securities in which the fund invests. FMR's evaluation of a potential investment
includes an analysis of the credit quality of the issuer, its structural
features, its current price compared to FMR's estimate of its long-term value,
and any short-term trading opportunities resulting from market inefficiencies.
In addition, FMR may invest all of the fund's assets in municipal securities
issued to finance private activities. The interest from these securities is a
tax preference item for the purposes of the federal alternative minimum tax.
INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income that is free from
federal income tax, consistent with the preservation of capital, by investing in
investment-grade municipal securities under normal conditions. FMR normally
invests at least 80% of the fund's assets in municipal securities whose interest
is free from federal income tax.
In managing the fund, FMR selects a benchmark index which is representative of
the universe of securities in which the fund invests. FMR uses this benchmark as
a guide in structuring the fund and selecting its investments. The benchmark
index for the fund is the Lehman Brothers 1-17 Year Municipal Bond Index, a
benchmark of investment-grade municipal bonds with maturities between one and 17
years. FMR manages the fund to have similar overall interest rate risk to the
Index. As of November 30, 1997, the dollar-weighted average maturity of the fund
and the Index was approximately 7.6 and 8.49 years, respectively.
In addition, the fund normally maintains a dollar-weighted average maturity
between three and 10 years.
FMR allocates assets among different market sectors (for example, general
obligation bonds of a state or bonds financing a specific project) and different
maturities based on its view of the relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that it believes
will provide the best balance between risk and return within the universe of
securities in which the fund invests. FMR's evaluation of a potential investment
includes an analysis of the credit quality of the issuer, its structural
features, its current price compared to FMR's estimate of its long-term value,
and any short-term trading opportunities resulting from market inefficiencies.
In addition, FMR may invest all of the fund's assets in municipal securities
issued to finance private activities. The interest from these securities is a
tax preference item for the purposes of the federal alternative minimum tax.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income that is free
from federal income tax, consistent with preservation of capital, by investing
in investment-grade municipal securities under normal conditions. FMR normally
invests at least 80% of the fund's assets in municipal securities whose interest
is free from federal income tax.
In managing the fund, FMR selects a benchmark index which is representative of
the universe of securities in which the fund invests. FMR uses this benchmark as
a guide in structuring the fund and selecting its investments. The benchmark
index for the fund is the Lehman Brothers 1-5 Year Municipal Bond Index, a
benchmark of investment-grade municipal bonds with maturities between one and
five years. FMR manages the fund to have similar overall interest rate risk to
the Index. As of November 30, 1997 the dollar-weighted average maturity of the
fund and the Index was approximately 3.2 and 3.69 years,
respectively. In addition, the fund normally maintains a dollar-weighted average
maturity between two and five years.
FMR allocates assets among different market sectors (for example, general
obligation bonds of a state or bonds financing a specific project) and different
maturities based on its view of the relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that it believes
will provide the best balance between risk and return within the universe of
securities in which the fund invests. FMR's evaluation of a potential investment
includes an analysis of the credit quality of the issuer, its structural
features, its current price compared to FMR's estimate of its long-term value,
and any short-term trading opportunities resulting from market inefficiencies.
In addition, FMR may invest all of the fund's assets in municipal securities
issued to finance private activities. The interest from these securities is a
tax preference item for the purposes of the federal alternative minimum tax.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets according
to its investment strategy.
Each of the Equity Funds, High Yield, and Strategic Income reserves the right to
invest without limitation in preferred stocks and investment-grade debt
instruments for temporary, defensive purposes.
<PAGE>
Each of Mortgage Securities, Government Investment, Intermediate Bond, and Short
Fixed-Income reserves the right to invest without limitation in investment-grade
money market or short-term debt instruments for temporary, defensive purposes.
Each of Municipal Income, Intermediate Municipal Income, and Short-Intermediate
Municipal Income do not expect to invest in federally taxable obligations. Each
of Municipal Income, Intermediate Municipal Income, and Short-Intermediate
Municipal Income, 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 taxable obligations for temporary, defensive
purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of instruments
in which a fund may invest, strategies FMR may employ in pursuit of a fund's
investment objective, and a summary of related risks. Any restrictions listed
supplement those discussed earlier in this section. A complete listing of each
fund's limitations and more detailed information about each fund's investments
are contained in the funds' SAI. Policies and limitations are considered at the
time of purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques unless
it believes that they are consistent with a fund's investment objective and
policies and that doing so will help a fund achieve its goal. Fund holdings and
recent investment strategies are detailed in each fund's financial reports,
which are sent to shareholders twice a year. For a free SAI or financial report,
call your investment professional.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent an
equity (ownership) interest in a corporation. Although equity securities have a
history of long-term growth in value, their prices fluctuate based on changes in
a company's financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of total assets, each of the Equity Funds,
High Yield, Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, and Intermediate Municipal Income may not
purchase more than 10% of the outstanding voting securities of a single issuer.
For TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, and Growth & Income, this limitation does not apply to
securities of other investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to borrow
money from investors. The issuer generally pays the investor a fixed, variable,
or floating rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current interest,
but are sold at a discount from their face values.
Debt securities have varying levels of sensitivity to changes in interest rates
and varying degrees of credit quality. In general, bond prices rise when
interest rates fall, and fall when interest rates rise. Longer-term bonds and
zero coupon bonds are generally more sensitive to interest rate changes. In
addition, bond prices are also affected by the credit quality of the issuer.
Lower-quality debt securities are considered to have speculative
characteristics, and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness, or they may already be in default. The
market prices of these securities may fluctuate more than higher-quality
securities and may decline significantly in periods of general or regional
economic difficulty. Lower-quality securities may be thinly traded, making them
difficult to sell promptly at an acceptable price. Adverse publicity and
changing investor perceptions may affect the ability to obtain prices for, or to
sell these securities.
The default rate of lower-quality debt securities is likely to be higher when
issuers have difficulty meeting projected goals or obtaining additional
financing. This could occur during economic recessions or periods of high
interest rates. If an issuer defaults, the fund may try to protect the interests
of security holders if it determines such action to be in the interest of its
shareholders.
The table on the following page provides a summary of ratings assigned to
debt holdings (not including money market instruments) in the funds' portfolios.
These figures are dollar-weighted averages of month-end portfolio holdings
during the fiscal period ended 1997, and are presented as a percentage of
total security investments. These percentages are historical and do not
necessarily indicate a fund's current or future debt holdings.
FISCAL PERIOD ENDED 1997 DEBT HOLDINGS (AS A % OF INVESTMENTS), BY RATING
<PAGE>
<TABLE>
<CAPTION>
MID** EQUITY** GROWTH* GROWTH**** STRATEGIC** LARGE** GROWTH &** EQUITY**
S&P RATING CAP GROWTH OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES CAP INCOME INCOME
(AVERAGE OF TOTAL INVESTMENTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE
HIGHEST QUALITY AAA
HIGH QUALITY AA -- -- 14.00% 12.10% -- -- 0.20% 1.35%
UPPER-MEDIUM GRADE A
MEDIUM GRADE BBB -- -- -- -- -- -- 0.36% --
LOWER QUALITY
MODERATELY SPECULATIVE BB -- -- -- -- -- -- 0.35% 0.25%
SPECULATIVE B 0.01% -- -- -- -- 0.06% -- 0.14% --
HIGHLY SPECULATIVE CCC -- -- -- -- -- -- -- --
POOR QUALITY CC -- -- -- -- -- -- -- --
LOWEST QUALITY, NO INTEREST C -- -- -- -- -- -- -- --
IN DEFAULT, IN ARREARS D -- -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
HIGH* STRATEGIC***
S&P RATING BALANCED* YIELD INCOME
(AVERAGE OF TOTAL INVESTMENTS)
<S> <C> <C> <C>
INVESTMENT GRADE
HIGHEST QUALITY AAA
HIGH QUALITY AA 22.57% -- 41.93%
UPPER-MEDIUM GRADE A
MEDIUM GRADE BBB 7.19% 0.32% 0.85%
LOWER QUALITY
MODERATELY SPECULATIVE BB 0.87% 6.39% 8.66%
SPECULATIVE B 0.01% 3.92% 51.18% 25.32%
HIGHLY SPECULATIVE CCC 0.33% 7.13% 2.85%
POOR QUALITY CC 0.04% 1.14% 0.30%
LOWEST QUALITY, NO INTEREST C -- -- --
IN DEFAULT, IN ARREARS D -- -- --
</TABLE>
<TABLE>
<CAPTION>
MID EQUITY GROWTH GROWTH STRATEGIC LARGE GROWTH &
MOODY'S RATING CAP GROWTH OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES CAP INCOME
(AVERAGE OF TOTAL INVESTMENTS)
INVESTMENT GRADE
<S> <C> <C> <C> <C> <C> <C> <C>
HIGHEST QUALITY AAA
HIGH QUALITY AA -- -- 14.00% 12.10% -- -- 0.10%
UPPER-MEDIUM GRADE A
MEDIUM GRADE BAA -- -- -- -- -- -- 0.13%
LOWER QUALITY
MODERATELY SPECULATIVE BA -- -- -- -- -- -- 0.57%
SPECULATIVE B 0.01% -- -- -- 0.38% -- 0.23%
HIGHLY SPECULATIVE CAA -- -- -- -- -- -- --
POOR QUALITY CA -- -- -- -- -- -- --
LOWEST QUALITY, NO INTEREST C -- -- -- -- -- -- --
IN DEFAULT, IN ARREARS -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
EQUITY HIGH STRATEGIC
MOODY'S RATING INCOME BALANCED YIELD INCOME
(AVERAGE OF TOTAL INVESTMENTS)
INVESTMENT GRADE
<S> <C> <C> <C> <C>
HIGHEST QUALITY AAA
HIGH QUALITY AA 1.35% 23.89% -- 41.40%
UPPER-MEDIUM GRADE A
MEDIUM GRADE BAA -- 4.64% -- 0.15%
LOWER QUALITY
MODERATELY SPECULATIVE BA 0.24% 2.19% 5.98% 7.98%
SPECULATIVE B 0.01% 3.90% 50.69% 27.95%
HIGHLY SPECULATIVE CAA -- 0.37% 11.11% 3.17%
POOR QUALITY CA -- -- 0.03% --
LOWEST QUALITY, NO INTEREST C -- -- -- --
IN DEFAULT, IN ARREARS -- -- -- --
<FN>
* FISCAL YEAR ENDED OCTOBER 31, 1997.
** FISCAL YEAR ENDED NOVEMBER 30, 1997.
*** FISCAL YEAR ENDED DECEMBER 31, 1997.
**** FOR THE ONE MONTH PERIOD ENDED NOVEMBER 30, 1997.
</TABLE>
REFER TO THE APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.
THE FUNDS DO NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH THEIR DEBT QUALITY POLICIES. SECURITIES NOT RATED BY
MOODY'S AND S&P AMOUNTED TO 0.66% OF BALANCED INVESTMENTS, 5.72% OF HIGH
YIELD INVESTMENTS, 9.16% OF STRATEGIC INCOME INVESTMENTS, AND 0.59% OF STRATEGIC
OPPORTUNITIES INVESTMENTS. THESE PERCENTAGES MAY INCLUDE SECURITIES
RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS, AS WELL
AS UNRATED SECURITIES. UNRATED LOWER-QUALITY SECURITIES AMOUNTED TO 0.51% OF
BALANCED
INVESTMENTS, 5.66% OF HIGH YIELD INVESTMENTS, 9.09% OF STRATEGIC INCOME
INVESTMENTS, AND 0.59% OF STRATEGIC OPPORTUNITIES INVESTMENTS.
FOR FOREIGN GOVERNMENT OBLIGATIONS NOT INDIVIDUALLY RATED BY A NATIONALLY
RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE RATING OF THE
SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
<PAGE>
RESTRICTIONS: For all of the Equity Funds, purchase of a debt security is
consistent with a fund's debt quality policy if it is rated at or above the
stated level by Moody's Investors Service (Moody's) or rated in the equivalent
categories by Standard & Poor's (S&P), or is unrated but judged to be of
equivalent quality by FMR.
Each of Mid Cap, Equity Growth, Growth Opportunities, Strategic Opportunities,
Large Cap, Growth & Income, Equity Income, and Balanced currently intends to
limit its investments in lower than Baa-quality debt securities to less than 35%
of its assets.
TechnoQuant Growth currently intends to limit its investments in lower than
Baa-quality debt securities to 5% of its assets.
Each of Intermediate Bond, Mortgage Securities, Short Fixed-Income, Municipal
Income, Intermediate Municipal Income, and Short-Intermediate Municipal Income
normally invests in investment-grade securities, but reserves the right to
invest up to 5% of its assets in below investment-grade securities. A security
is considered to be investment-grade if it is rated investment-grade by Moody's,
S&P, Duff & Phelps Credit Rating Co., or Fitch IBCA In c., or is unrated
but judged by FMR to be of equivalent quality.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S.
Government. Not all U.S. Government securities are backed by the full faith and
credit of the United States. For example, U.S. Government securities such as
those issued by Fannie Mae are supported by the instrumentality's right to
borrow money from the U.S. Treasury under certain circumstances. Other U.S.
Government securities, such as those issued by the Federal Farm Credit Banks
Funding Corporation, are supported only by the credit of the entity that issued
them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public or
private purposes, including general financing for state and local governments,
or financing for specific projects or public facilities. They may be fully or
partially backed by the local government, or by the credit of a private issuer
or the current or anticipated revenues from specific projects or assets. Because
many municipal securities are issued to finance similar types of projects,
especially those relating to education, health care, housing, transportation,
and utilities, the municipal markets can be affected by conditions in those
sectors. In addition, all municipal securities may be affected by uncertainties
regarding their tax status, legislative changes, or rights of municipal
securities holders. A municipal security may be owned directly or through a
participation interest.
<PAGE>
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms of credit and
liquidity enhancement, including letters of credit, guarantees, puts and demand
features, and insurance, provided by foreign or domestic entities such as banks
and other financial institutions. These arrangements expose a fund to the credit
risk of the entity providing the credit or liquidity support. Changes in the
credit quality of the provider could affect the value of the security and a
fund's share price.
OTHER INSTRUMENTS may include securities of closed-end investment companies.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating to
political , economic , or regulatory conditions in foreign
countries ; fluctuations in foreign currencies ; withholding or
other taxes ; trading, settlement, custodial, and other operational
risks ; and the potentially less stringent investor protection and
disclosure standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay principal
when due and may require that the conditions for payment be renegotiated. All of
these factors can make foreign investments, especially those in emerging
markets , more volatile and potentially less liquid than U.S.
investments.
ASSET-BACKED SECURITIES include interests in pools of purchase contracts,
financing leases, or sales agreements entered into by municipalities, debt
securities, or consumer loans. The value of these securities depends on many
factors, including changes in interest rates, the availability of information
concerning the pool and its structure, the credit quality of the underlying
assets, the market's perception of the servicer of the pool, and any credit
enhancement provided. In addition, these securities may be subject to prepayment
risk.
MORTGAGE SECURITIES include interests in pools of commercial or residential
mortgages, and may include complex instruments such as collateralized mortgage
obligations and stripped mortgage-backed securities. Mortgage securities may be
issued by agencies or instrumentalities of the U.S. Government or by private
entities. The price of a mortgage security may be significantly affected by
changes in interest rates. Some mortgage securities may have a structure that
makes their reaction to interest rates and other factors difficult to predict,
making their price highly volatile. Also, mortgage securities, especially
stripped mortgage-backed securities, are subject to prepayment risk. Securities
subject to prepayment risk generally offer less potential for gains during a
declining interest rate environment, and similar or greater potential for loss
in a rising interest rate environment.
RESTRICTIONS: Government Investment does not currently intend to invest more
than 40% of its assets in mortgage securities.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are periodically
adjusted either at specific intervals or whenever a benchmark rate changes.
Inverse floaters have interest rates that move in the opposite direction from a
benchmark, often making the security's market value more volatile.
STRIPPED SECURITIES are the separate income or principal components of a debt
security. The risks associated with stripped securities are similar to those of
other debt securities, although stripped securities may be more volatile, and
the value of certain types of stripped securities may move in the same direction
as interest rates. U.S. Treasury securities that have been stripped by a Federal
Reserve Bank are obligations issued by the U.S. Treasury.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at one
price and simultaneously agrees to sell it back at a higher price. Delays or
losses could result if the other party to the agreement defaults or becomes
insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party in
return for cash. This could increase the risk of fluctuation in the fund's yield
or in the market value of its assets.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or transfers
its obligations to a private entity, the obligation could lose value or become
taxable.
PUT FEATURES entitle the holder to put (sell back) an instrument to the issuer
or another party. In exchange for this benefit, a fund may accept a lower
interest rate. Demand features and standby commitments are types of put
features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource recovery
bonds often involve private corporations. The viability of a project or tax
incentives could affect the value and credit quality of these securities.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such as
changes in real estate values and property taxes, interest rates, cash flow of
underlying real estate assets, overbuilding, and the management skill and
creditworthiness of the issuer. Real estate-related instruments may also be
affected by tax and regulatory requirements, such as those relating to the
environment.
<PAGE>
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to increase or
decrease its exposure to changing security prices, interest rates, currency
exchange rates, commodity prices, or other factors that affect security values.
These techniques may involve derivative transactions such as buying and selling
options and futures contracts, entering into currency exchange contracts or swap
agreements, purchasing indexed securities, and selling securities short.
FMR can use these practices to adjust the risk and return characteristics of a
fund's portfolio of investments. If FMR judges market conditions incorrectly or
employs a strategy that does not correlate well with a fund's investments, these
techniques could result in a loss, regardless of whether the intent was to
reduce risk or increase return. These techniques may increase the volatility of
a fund and may involve a small investment of cash relative to the magnitude of
the risk assumed. In addition, these techniques could result in a loss if the
counterparty to the transaction does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in amounts
owed to another party by a company, government, or other borrower. They have
additional risks beyond conventional debt securities because they may entail
less legal protection for a fund, or there may be a requirement that the fund
supply additional cash to a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by FMR,
under the supervision of the Board of Trustees, to be illiquid, which means that
they may be difficult to sell promptly at an acceptable price. The sale of some
illiquid securities, and some other securities, may be subject to legal
restrictions. Difficulty in selling securities may result in a loss or may be
costly to a fund.
RESTRICTIONS: Each fund (except High Yield and Strategic Income) may not
purchase a security if, as a result, more than 10% of its assets would be
invested in illiquid securities.
Each of High Yield and Strategic Income may not purchase a security if, as a
result, more than 15% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading practices in
which payment and delivery for the security take place at a later date than is
customary for that type of security. The market value of the security could
change during this period.
CASH MANAGEMENT. A fund may invest in money market securities, in repurchase
agreements, and in a money market fund available only to funds and accounts
managed by FMR or its affiliates, whose goal is to seek a high level of current
income (exempt from federal income tax in the case of a municipal money market
fund) while maintaining a stable $1.00 share price. A major change in interest
rates or a default on the money market fund's investments could cause its share
price to change.
RESTRICTIONS: Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, do not currently intend to invest in
repurchase agreements.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the risks
of investing. This may include limiting the amount of money invested in any one
issuer or, on a broader scale, in any one industry or type of project. Economic,
business, or political changes can affect all securities of a similar type. A
fund that is not diversified may be more sensitive to changes in the market
value of a single issuer or industry.
RESTRICTIONS: With respect to 75% of its total assets, each of the Equity Funds,
High Yield, Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, and Intermediate Municipal Income may not
purchase a security if, as a result, more than 5% would be invested in the
securities of any issuer. This limitation does not apply to U.S. Government
securities or, for TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, and Growth & Income, to
securities of other investment companies.
Strategic Income and Short-Intermediate Municipal Income, are considered
non-diversified. Generally, to meet federal tax requirements at the close of
each quarter, each fund does not invest more than 25% of its total assets in any
issuer and, with respect to 50% of total assets, does not invest more than 5% of
its total assets in any issuer. These limitations do not apply to U.S.
Government securities or to securities of other investment companies.
A fund may not invest more than 25% of its total assets in any one industry.
This limitation does not apply to U.S. Government securities.
Each of Municipal Income, Intermediate Municipal Income, and Short-Intermediate
Municipal Income, may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. Each fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its share
price may be subject to greater fluctuation until the borrowing is paid off. If
a fund makes additional investments while borrowings are outstanding, this may
be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency purposes, but
not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a means of earning
income. This practice could result in a loss or a delay in recovering a fund's
securities. A fund may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33 1/3% of a fund's total
assets; however, Government Investment, Municipal Income, Intermediate Municipal
Income, and Short-Intermediate Municipal Income do not currently intend to make
loans.
<PAGE>
FUNDAMENTAL INVESTMENT POLICIES AND
RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies stated
throughout this prospectus, other than those identified in the following
paragraphs, can be changed without shareholder approval.
TECHNOQUANT GROWTH FUND seeks capital growth.
MID CAP FUND seeks long-term growth of capital.
EQUITY GROWTH FUND seeks to achieve capital appreciation by investing primarily
in common and preferred stock and securities convertible into the common stock
of companies with above-average growth characteristics.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing primarily
in common stocks and securities convertible into common stocks.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing primarily
in securities of companies believed by FMR to involve a "special situation."
Under normal conditions, the fund will invest at least 65% of its total assets
in companies involving a special situation. FMR intends to invest primarily in
common stocks and securities that are convertible into common stocks; however,
it also may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital appreciation. The fund
may invest up to 30% of its assets in foreign investments.
LARGE CAP FUND seeks long-term growth of capital.
GROWTH & INCOME FUND seeks high total return through a combination of current
income and capital appreciation.
EQUITY INCOME FUND seeks a yield from dividend and interest income
which exceeds the composite dividend yield on securities comprising the S&P 500.
In addition, consistent with the primary objective of obtaining dividend and
interest income, the fund will consider the potential for achieving capital
appreciation.
BALANCED FUND seeks both income and growth of capital by investing
in a diversified portfolio of equity and fixed-income securities with income,
growth of income, and capital appreciation potential.
HIGH YIELD FUND seeks a combination of a high level of income and the potential
for capital gains by investing in a diversified portfolio consisting primarily
of high-yielding, fixed-income and zero coupon securities, such as bonds,
debentures and notes, convertible securities and preferred stocks.
STRATEGIC INCOME FUND seeks a high level of current income by investing
primarily in debt securities. The fund may also seek capital appreciation.
MORTGAGE SECURITIES FUND seeks a high level of current income, consistent with
prudent investment risk, by investing primarily in mortgage-related securities.
In seeking current income, the fund may also consider the potential for capital
gain.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by investing
primarily in obligations issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities.
INTERMEDIATE BOND FUND seeks to provide a high rate of income through investment
primarily in investment-grade fixed-income obligations.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current income,
consistent with the preservation of capital, by investing primarily in a broad
range of investment-grade fixed-income securities. Where appropriate the fund
will take advantage of opportunities to realize capital appreciation.
MUNICIPAL INCOME FUND seeks to provide a high current yield by investing in a
diversified portfolio of municipal obligations whose interest is not included in
gross income for purposes of calculating federal income tax. The fund normally
invests at least 80% of its assets in municipal obligations whose interest is
free from federal income tax.
INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of income
exempt from federal income taxes that can be obtained consistent with the
preservation of capital. The fund normally invests at least 80% of its assets in
securities whose interest is free from federal income tax.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks as high a level of current
income, exempt from federal income tax, as is consistent with preservation of
capital. The fund normally invests at least 80% of its assets in municipal
obligations whose interest is free from federal income tax.
With respect to 75% of its total assets, each of the Equity Funds, High Yield,
Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, and Intermediate Municipal Income may not
purchase a security if, as a result, more than 5% would be invested in the
securities of any one issuer and may not purchase more than 10% of the
outstanding voting securities of a single issuer. These limitations do not apply
to U.S. Government securities or, for TechnoQuant Growth, Mid Cap, Equity
Growth, Growth Opportunities, Strategic Opportunities, Large Cap, and Growth &
Income, to securities of other investment companies.
Each fund may not invest more than 25% of its total assets in any one industry.
This limitation does not apply to U.S. Government securities.
Each fund may borrow only for temporary or emergency purposes, but not in an
amount exceeding 33 1/3% of its total assets.
Loans, in the aggregate, may not exceed 33 1/3% of each fund's total assets.
<PAGE>
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily operations.
Expenses paid out of each class's assets are reflected in that class's share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and business
affairs. FMR in turn pays fees to affiliates who provide assistance with these
services for certain of the funds. Each fund also pays OTHER EXPENSES, which are
explained on page .
FMR may, from time to time, agree to reimburse a fund for management fees and
other expenses above a specified limit. FMR retains the ability to be repaid by
a fund if expenses fall below the specified limit prior to the end of the fiscal
year. Reimbursement arrangements, which may be terminated at any time without
notice, can decrease a fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month.
Equity Income pays a monthly management fee at an annual rate of 0.50% of its
average net assets.
For each of TechnoQuant Growth, Mid Cap, Equity Growth, Large Cap, Growth &
Income, Balanced, High Yield, Strategic Income, Mortgage Securities, Government
Investment, Intermediate Bond, Short Fixed-Income, Municipal Income,
Intermediate Municipal Income, and Short-Intermediate Municipal Income, the fee
is calculated by adding a group fee rate to an individual fund fee rate,
multiplying the result by the fund's monthly average net assets , and
dividing by twelve.
For Growth Opportunities and Strategic Opportunities, the fee is calculated
by calculating a basic fee and then applying a performance adjustment. The
performance adjustment either increases or decreases the management fee,
depending on how well each fund has performed relative to the S&P 500. The basic
fee is calculated by adding a group fee rate to an individual fund fee rate,
multiplying the result by the fund's monthly average net assets, and dividing by
twelve.
The group fee rate is based on the average net assets of all the mutual funds
advised by FMR. This rate cannot rise above 0.52% for TechnoQuant Growth, Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities, Large Cap,
Growth & Income, and Balanced or 0.37% for High Yield, Strategic Income,
Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, and it drops as total assets under
management increase. For December 1997, the group fee rate for the Equity
Funds was 0.29%, and the group fee rate for the Bond Funds, the
Intermediate-Term Bond Funds, and the Short-Term Bond Funds was 0.14%.
The performance adjustment rate is calculated monthly by comparing Growth
Opportunities' and Strategic Opportunities' performance to that of the S&P 500
over the most recent 36-month period. The difference is translated into a dollar
amount that is added to or subtracted from the basic fee. The maximum annualized
performance adjustment rate is (plus/minus) 0.20% of a fund's average net assets
over the performance period.
For the purposes of calculating the performance adjustment for each of Growth
Opportunities and Strategic Opportunities, the fund's investment performance
will be based on the average performance of all classes of the fund weighted
according to their average assets for each month in the performance period.
The individual fund fee rates for each of TechnoQuant Growth, Mid Cap, Equity
Growth, Growth Opportunities, Strategic Opportunities, Large Cap, Mortgage
Securities, Government Investment, Intermediate Bond, and Short-Fixed Income is
0.30%. The individual fund fee rate for Growth & Income is 0.20%. The individual
fund fee rate for Balanced is 0.15%. The individual fund fee rate for each of
High Yield and Strategic Income is 0.45%. The individual fund fee rate for each
of Municipal Income, Intermediate Municipal Income, and Short-Intermediate
Municipal Income is 0.25%.
The following table states the management fee , as a percentage of each fund's
average net assets, for each fund for its most recent fiscal year
end ed 1997:
<TABLE>
<CAPTION>
TOTAL
MANAGEMENT FEE
<S> <C>
MID CAP 0.60%
EQUITY GROWTH 0.60%
GROWTH OPPORTUNITIES 0.52%[A][B][C]
STRATEGIC OPPORTUNITIES 0.40%[A][B][C]
LARGE CAP 0.60%
EQUITY INCOME 0.50%
BALANCED 0.45%
HIGH YIELD 0.59%
STRATEGIC INCOME 0.59%
MORTGAGE SECURITIES 0.44%[B][D]
GOVERNMENT INVESTMENT 0.44%
INTERMEDIATE BOND 0.44%
SHORT FIXED-INCOME 0.44%
MUNICIPAL INCOME 0.39%
INTERMEDIATE MUNICIPAL INCOME 0.39%
SHORT-INTERMEDIATE MUNICIPAL INCOME 0.39%
</TABLE>
[A] THE ANNUALIZED BASIC FEE, AS A PERCENTAGE OF EACH FUND'S AVERAGE NET
ASSETS, FOR THE FISCAL PERIOD ENDED NOVEMBER 30, 1997 WAS 0.60% FOR GROWTH
OPPORTUNITIES AND 0.60% FOR STRATEGIC OPPORTUNITIES.
[B] ANNUALIZED
[C] FOR THE FISCAL PERIOD ENDED NOVEMBER 30, 1997.
[D] FOR THE FISCAL PERIOD ENDED OCTOBER 31, 1997.
The total management fee for Growth Opportunities for the fiscal year ended
October 31, 1997 was 0.49% of the fund's average net assets. The basic fee for
Growth Opportunities for the fiscal year ended October 31, 1997 was 0.60% of the
fund's average net assets.
<PAGE>
The total management fee for Mortgage Securities for the fiscal year ended
July 31, 1997 was 0.44% of the fund's average net assets.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR Far East,
FIJ and FIIA. FIIA in turn has a sub-advisory agreement with FIIA(U.K.)L. These
sub-advisers are compensated for providing FMR with investment research and
advice on issuers based outside the United States. FMR pays FMR U.K. and FMR Far
East fees equal to 110% and 105%, respectively, of the costs of providing these
services. FMR pays FIJ and FIIA a fee equal to 30% of its management fee rate
associated with investments for which the sub-adviser provided investment
advice.
The sub-advisers may also provide investment management services. In return, FMR
pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to 50% of its management
fee rate with respect to a fund's investments that the sub-adviser manages on a
discretionary basis. FIIA pays FIIA(U.K.)L a fee equal to 110% of the cost of
providing these services.
For the fiscal period ended 1997, FMR, on behalf of each fund with
sub-advisory agreements paid FMR U.K., FMR Far East, FIJ, and FIIA fees equal to
less than 0.01 % of each fund's average net assets (annualized for
periods of less than one year). The numbers for Growth Opportunities and
Strategic Opportunities are for the fiscal period ended November 30, 1997 and
the number for Mortgage Securities is for the fiscal period ended October 31,
1997.
For the fiscal year ended October 31, 1997, FMR on behalf of Growth
Opportunities paid FMR U.K., and FMR Far East fees equal to less than 0.01% of
the fund's average net assets.
Beginning January 1, 1999, FIMM will select certain investments for Balanced
and Strategic Income.
Beginning January 1, 1999, FIMM, will have primary responsibility for
managing Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income. FMR will pay FIMM 50% of its management fee
(before expense reimbursements) for FIMM's services.
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder servicing
functions for each class of the Equity Funds, High Yield, Strategic Income,
Mortgage Securities, Government Investment, Intermediate Bond, and Short
Fixed-Income (the Taxable Funds). Fidelity Service Company, Inc. (FSC)
calculates the net asset value per share (NAV) and dividends for each class of
the Taxable Funds and maintains the general accounting records and administers
the securities lending program for the Taxable Funds.
For the fiscal period ended 1997, transfer agency and pricing and
bookkeeping fees paid (as a percentage of average net assets) amounted to the
following. These amounts (annualized for periods of less than one year)
are before expense reductions, if any.
<TABLE>
<CAPTION>
TRANSFER AGENCY FEES PRICING AND
PAID BY BOOKKEEPING
FEES PAID
BY FUND
CLASS A CLASS T CLASS B
<S> <C> <C> <C> <C>
TECHNOQUANT GROWTH 0.22% 0.32% 0.25% 0.24%
MID CAP 0.32% 0.24% 0.25% 0.06%
EQUITY GROWTH 0.27% 0.18% 0.26% 0.02%
GROWTH OPPORTUNITIES[A] 0.26% 0.18% 0.26% 0.00%
STRATEGIC OPPORTUNITIES[A] 0.36% 0.22% 0.25% 0.05%
LARGE CAP 0.28% 0.22% 0.24% 0.10%
GROWTH & INCOME 0.28% 0.21% 0.24% 0.09%
EQUITY INCOME 0.24% 0.18% 0.20% 0.03%
BALANCED 0.24% 0.18% 0.25% 0.03%
HIGH YIELD 0.21% 0.19% 0.19% 0.03%
STRATEGIC INCOME 0.37% 0.21% 0.20% 0.04%
MORTGAGE SECURITIES[B] 0.29% 0.52% 0.42% 0.04%
GOVERNMENT INVESTMENT 0.50% 0.24% 0.23% 0.04%
INTERMEDIATE BOND 0.34% 0.20% 0.26% 0.04%
SHORT FIXED-INCOME 0.27% 0.22% * 0.04%
<FN>
* FUND DOES NOT OFFER CLASS B SHARES.
[A] FOR THE FISCAL PERIOD ENDED NOVEMBER 30, 1997.
[B] FOR THE FISCAL PERIOD ENDED OCTOBER 31, 1997.
</TABLE>
The transfer agency fees paid by Class A, Class T, and Class B of Growth
Opportunities for the fiscal year ended October 31, 1997 were 0.24%, 0.17%, and
0.24%. The transfer agency fees paid by Class A, Class T, and Class B of
Mortgage Securities for the fiscal year ended July 31, 1997 were 0.22%, 0.14%,
and 0.57%, respectively.
The pricing and bookkeeping fees paid by Growth Opportunities for the fiscal
year ended October 31, 1997 were 0.00%. The pricing and bookkeeping fees paid by
Mortgage Securities for the fiscal year ended July 31, 1997 were 0.04%.
UMB is the transfer and service agent for Municipal Income, Intermediate
Municipal Income, and Short-Intermediate Municipal Income, (the Municipal
Funds). UMB has entered into a sub-agreement with FIIOC. FIIOC performs transfer
agency, dividend disbursing and shareholder servicing functions for each class
of the Municipal Funds. UMB has also entered into a sub-agreement with FSC. FSC
calculates the NAV and dividends for each class of the Municipal Funds, and
maintains the general accounting records for each fund. Under the terms of the
sub-agreements, FIIOC and FSC receive all related fees paid to UMB by the
applicable class.
For the fiscal year ended 1997, transfer agency and pricing and bookkeeping fees
paid (as a percentage of average net assets) amounted to the following. These
amounts are before expense reductions, if any.
<PAGE>
<TABLE>
<CAPTION>
TRANSFER AGENCY FEES PRICING AND
PAID BY BOOKKEEPING
FEES PAID
BY FUND
CLASS A CLASS T CLASS B
<S> <C> <C> <C> <C>
MUNICIPAL INCOME 0.21 % 0.18 % 0.18 % 0.04 %
INTERMEDIATE MUNICIPAL INCOME 0.36 % 0.20 % 0.19 % 0.09 %
SHORT-INTERMEDIATE MUNICIPAL INCOME 0.39 % 0.21 % * 0.26 %
</TABLE>
* FUND DOES NOT OFFER CLASS B SHARES.
Each fund also pays other expenses, such as legal, audit, and custodian fees;
in some instances, proxy solicitation costs; and the compensation of trustees
who are not affiliated with Fidelity. A broker-dealer may use a portion of the
commissions paid by a fund to reduce that fund's custodian or transfer agent
fees.
Class A shares of each fund have adopted a DISTRIBUTION AND SERVICE PLAN. Under
the plans, Class A of each fund is authorized to pay FDC a monthly distribution
fee as compensation for its services and expenses in connection with the
distribution of Class A shares. Class A of the Equity Funds may pay FDC a
distribution fee at an annual rate of 0.75% of its average net assets, or such
lesser amount as the Trustees may determine from time to time. Class A of the
Bond Funds, the Intermediate-Term Bond Funds, and the Short-Term Bond Funds may
pay FDC a distribution fee at an annual rate of 0.40% of its average net assets,
or such lesser amount as the Trustees may determine from time to time. Class A
of the Equity Funds currently pays FDC a monthly distribution fee at an annual
rate of 0.25% of its average net assets throughout the month; Class A of each of
the Bond Funds, the Intermediate-Term Bond Funds, and the Short-Term Bond Funds
currently pays FDC a monthly distribution fee at an annual rate of 0.15% of its
average net assets throughout the month. Class A distribution fee rates may be
increased only when the Trustees believe that it is in the best interests of
Class A shareholders to do so.
Class T shares of each fund have adopted a DISTRIBUTION AND SERVICE PLAN. Under
the plans, Class T of each fund is authorized to pay FDC a monthly distribution
fee as compensation for its services and expenses in connection with the
distribution of Class T shares. Class T of TechnoQuant Growth, Mid Cap, Equity
Growth, Equity Income, Large Cap, and Growth & Income may pay FDC a distribution
fee at an annual rate of 0.75% of its average net assets, or such lesser amount
as the Trustees may determine from time to time. Class T of Growth
Opportunities, Strategic Opportunities, and Balanced may pay FDC a distribution
fee at an annual rate of 0.65% of its average net assets, or such lesser amount
as the Trustees may determine from time to time. Class T of High Yield,
Strategic Income, Mortgage Securities, Government Investment, Intermediate Bond,
Municipal Income, Intermediate Municipal Income, and Short-Intermediate
Municipal Income, may pay FDC a distribution fee at an annual rate of 0.40% of
its average net assets, or such lesser amount as the Trustees may determine from
time to time. Class T of Short Fixed-Income may pay FDC a distribution fee at an
annual rate of 0.15% of its average net assets, or such lesser amount as the
Trustees may determine from time to time. Class T of each of the Equity Funds
currently pays FDC a monthly distribution fee at an annual rate of
0.50% o f its average net assets throughout the month; Class T of each of
the Bond Funds and the Intermediate-Term Bond Funds currently pays FDC a monthly
distribution fee at an annual rate of 0.25% of its average net assets throughout
the month; and Class T of each of the Short-Term Bond Funds currently pays FDC a
monthly distribution fee at an annual rate of 0.15% of its average net assets
throughout the month. Class T distribution fee rates for all funds except Short
Fixed-Income may be increased only when the Trustees believe that it is in the
best interests of Class T shareholders to do so.
Up to the full amount of the Class A and Class T distribution fees may be
reallowed to investment professionals, as compensation for their services in
connection with the distribution of Class A and Class T shares and for providing
support services to Class A and Class T shareholders, based upon the level of
such services provided. These services may include, without limitation,
answering investor inquiries regarding the funds; providing assistance to
investors in changing dividend options, account designations, and addresses;
performing subaccounting and maintaining Class A and Class T shareholder
accounts; processing purchase and redemption transactions, including automatic
investment and redemption of investor account balances; providing periodic
statements showing an investor's account balance and integrating other
transactions into such statements; and performing other administrative services
in support of the shareholder.
Class B shares of each Equity Fund, Bond Fund, and Intermediate-Term Bond Fund
have adopted a DISTRIBUTION AND SERVICE PLAN. Under the plans, Class B of each
fund is authorized to pay FDC a monthly distribution fee as compensation for its
services and expenses in connection with the distribution of Class B shares.
Class B of each fund may pay FDC a distribution fee at an annual rate of 0.75%
of its average net assets, or such lesser amount as the Trustees may determine
from time to time. Class B of the Equity Funds currently pays FDC a monthly
distribution fee at an annual rate of 0.75% of its average net assets throughout
the month. Class B of each of the Bond Funds and the Intermediate-Term Bond
Funds pays FDC a monthly distribution fee at an annual rate of 0.65% of its
average net assets, or such lesser amount as the Trustees may determine from
time to time. Class B distribution fee rates for each of the Bond Funds and
Intermediate-Term Bond Funds may be increased only when the Trustees believe
that it is in the best interests of Class B shareholders to do so.
In addition, pursuant to each Class B plan, Class B of each fund pays FDC a
monthly service fee at an annual rate of 0.25% of Class B's average net assets
throughout the month. The full amount of the Class B service fee is reallowed to
investment professionals for providing personal service to and/or maintenance of
Class B shareholder accounts.
Class C shares of each fund (except Strategic Opportunities, Mortgage
Securities, and Short-Intermediate Municipal Income) have adopted a DISTRIBUTION
AND SERVICE PLAN. Under the plans,
<PAGE>
Class C of each fund is authorized to pay FDC a monthly distribution fee as
compensation for its services and expenses in connection with the distribution
of Class C shares. Class C of each fund may pay FDC a distribution fee at an
annual rate of 0.75% of its average net assets, or such lesser amount as the
Trustees may determine from time to time. Class C of each fund currently pays
FDC a monthly distribution fee at an annual rate of 0.75% of its average net
assets throughout the month. After the first year of investment, up to the full
amount of the Class C distribution fee may be reallowed to investment
professionals as compensation for their services in connection with the
distribution of Class C shares.
In addition, pursuant to each Class C plan, Class C of each fund pays FDC a
monthly service fee at an annual rate of 0.25% of Class C's average net assets
throughout the month. After the first year of investment, the full amount of the
Class C service fee is reallowed to investment professionals for providing
personal service to and/or maintenance of Class C shareholder accounts.
The Class A, Class T, Class B, and Class C plans specifically recognize that FMR
may make payments from its management fee revenue, past profits, or other
resources to FDC for expenses incurred in connection with the distribution of
the applicable class's shares, including payments made to investment
professionals that provide shareholder support services or engage in the sale of
the applicable class's shares. Currently, the Board of Trustees of each fund has
authorized such payments.
The portfolio turnover rate (annualized for periods of less than
oneyear) for the fiscal period ended 1997 was 213 % for
TechnoQuantGrowth, 208 % for Mid Cap, 108 % for Equity Growth,
33 % forGrowth Opportunities (for the fiscal period ended November 30,
1997) , 61 % for Strategic Opportunities (for the fiscal period
ended November30, 1997) , 93 % for Large Cap, 82 % for Growth &
Income, 55 % for Equity Income, 70 % for Balanced, 105 % for
HighYield, 140 % for Strategic Income, 125 % for
Mortgage Securities (for the fiscal period ended October 31, 1997) ,
136 % for Government Investment, 138 % for Intermediate Bond,
105 % for Short Fixed-Income, 36 % for Municipal Income, 18 %
for Intermediate Municipal Income, and 41 % for Short-Intermediate
Municipal Income.
The portfolio turnover rate for Growth Opportunities for the fiscal year
ended October 31, 1997 was 35%. The portfolio turnover rate for Mortgage
Securities for the fiscal year ended July 31, 1997 was 149%.
Portfolio turnover rates vary from year to year. High turnover rates increase
transaction costs and may increase taxable capital gains. FMR considers these
effects when evaluating the anticipated benefits of short-term investing.
<PAGE>
YOUR ACCOUNT
TYPES OF ACCOUNTS
When you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may charge you
a transaction fee with respect to the purchase and sale of fund shares. Read
your investment professional's program materials in conjunction with this
prospectus for additional service features or fees that may apply. Certain
features of the funds, such as minimum initial or subsequent investment amounts,
may be modified.
The different ways to set up (register) your account with Fidelity are listed at
right.
The account guidelines that follow may not apply to certain funds or to certain
retirement accounts. For instance, municipal funds are not available for
purchase in retirement accounts. If you are investing through a retirement
account or if your employer offers a fund through a retirement program, you may
be subject to additional fees. For more information, please refer to your
program materials, contact your employer, or call your retirement benefits
number or your investment professional directly, as appropriate.
If you have selected Fidelity Advisor funds as an investment option through an
insurance company group pension program, please contact the provider directly.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or more
owners (tenants).
- -------------------------------------------------------------------------------
RETIREMENT (ONLY TAXABLE FUNDS ARE AVAILABLE FOR THE FOLLOWING ACCOUNTS)
FOR TAX-ADVANTAGED RETIREMENT SAVINGS
Retirement plans provid e individuals with tax-advantaged ways to save
for retirement, either with tax-deductible contributions or tax-free growth .
Retirement accounts require special applications and typically have lower
minimums.
(solid bullet) T RADITIONAL INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow
individuals under age 70 1/2 with compensation to contribute up to $2,000
per tax year. Married couples can contribute up to $4,000 per tax year, provided
no more than $2,000 is contributed on behalf of either spouse. (These limits are
aggregate for Traditional and Roth IRAs.) Contributions may be tax deductible,
subject to certain income limits.
(solid bullet) ROTH IRAS allow individuals to make non-deductible
contributions of up to $2,000 per tax year. Married couples can contribute up to
$4,000 per tax year, provided no more than $2,000 is contributed on behalf of
either spouse. (These limits are aggregate for Traditional and Roth IRAs.)
Eligibility is subject to certain income limits. Qualified distributions are
tax-free.
(solid bullet) ROTH CONVERSION IRAS allow individuals with assets held in a
Traditional IRA or Rollover IRA to convert those assets to a Roth Conversion
IRA. Eligibility is subject to certain income limits. Qualified distributions
are tax-free.
(solid bullet) ROLLOVER IRAS help retain special tax advantages for
certain eligible rollover distributions from employer-sponsored retirement
plans.
(solid bullet) PROFIT SHARING OR MONEY PURCHASE PENSION PLANS (KEOGHS ) allow
self-employed individuals or small business owners to make tax-deductible
contributions for themselves and any eligible employees.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employ ment income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) SALARY REDUCTION SEP-IRAS (SARSEPS) allow employees of
businesses with 25 or fewer employees to contribute a percentage of their wages
on a tax-deferred basis. These plans must have been established by the employer
prior to January 1, 1997.
(solid bullet) SIMPLE IRAS provide small business owners and those with
self-employ ment income (and their eligible employees) with many of the
advantages of a 401(k) plan, but with fewer administrative requirements.
(solid bullet) 401(K) PLANS allow employees of organizations of all
sizes to contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
- -------------------------------------------------------------------------------
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain tax
benefits. An individual can give up to $10,000 a year per child without paying
federal gift tax. Depending on state laws, you can set up a custodial account
under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors
Act (UTMA). Contact your investment professional.
- -------------------------------------------------------------------------------
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
- -------------------------------------------------------------------------------
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Contact your investment professional.
<PAGE>
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of Class A or Class T is the class's offering price
or the class's net asset value per share (NAV), depending on whether you pay a
front-end sales charge. If you pay a front-end sales charge, your price will be
Class A's or Class T's offering price. When you buy Class A or Class T shares at
the offering price, Fidelity deducts the appropriate sales charge and invests
the rest in Class A or Class T shares of the fund. If you qualify for a
front-end sales charge waiver, your price will be Class A's or Class T's NAV.
See "Transactions Details," page , and "Sales Charge Reductions and
Waivers," page , for explanations of how and when the sales charge and
waivers apply.
For Class B and Class C, the PRICE TO BUY ONE SHARE is the class's NAV. Class B
and Class C shares are sold without a front-end sales charge, but may be subject
to a CDSC upon redemption. See "Transaction Details," page , for
information on how the CDSC is calculated.
Your shares will be purchased at the next offering price or NAV, as applicable,
calculated after your order is received in proper form. Each class's
offering price and NAV, as applicable, are normally calculated each business day
at 4:00 p.m. Eastern time. Shares of Short-Intermediate Municipal Income are
offered to current shareholders only.
Each fund reserves the right to reject any specific purchase order, including
certain purchases by exchange. See "Exchange Restrictions" on page . Purchase
orders may be refused if, in FMR's opinion, they would disrupt management of a
fund.
It is the responsibility of your investment professional to transmit your order
to buy shares to Fidelity before the close of business on the day you place your
order.
Fidelity must receive payment within three business days after an order for
shares is placed; otherwise your purchase order may be canceled and you could be
held liable for resulting fees and/or losses.
Share certificates are not available for Class A, Class T, Class B, or Class C
shares.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an account
application and mail it along with your check. If there is no account
application accompanying this prospectus, call your investment professional or,
if you are investing through a broker-dealer or insurance representative, call
1-800-522-7279 or, if you are investing through a bank representative, call
1-800-843-3001.
If you are investing through a tax- advantaged retirement plan, such as an
IRA, for the first time, you will need a special application. Contact your
investment professional for more information and a retirement account
application.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place an order and wire money into your account,
(small solid bullet) Open your account by exchanging from the same class of
another Fidelity Advisor fund or from another Fidelity fund, or
(small solid bullet) Contact your investment professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For certain Fidelity Advisor retirement accounts(double dagger) $500
Through regular investment plans* $1,000
TO ADD TO AN ACCOUNT $250
For certain Fidelity Advisor retirement accounts(double dagger) $100
Through regular investment plans* $100
MINIMUM BALANCE $1,000
For certain Fidelity Advisor retirement accounts(double dagger) None
(double dagger) THESE LOWER MINIMUMS APPLY TO FIDELITY TRADITIONAL IRA, ROTH
IRA, ROTH CONVERSION IRA, ROLLOVER IRA, SEP-IRA, AND KEOGH ACCOUNTS.
* AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $1,000, PROVIDED THAT A REGULAR
INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS OPENED. FOR MORE
INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE REFER TO "INVESTOR SERVICES,"
PAGE
.
Investment and account minimums are waived for purchases of Class T shares with
distributions from a Fidelity Defined Trust account.
There is no minimum account balance or initial or subsequent investment minimum
for certain retirement accounts funded through salary deduction, or accounts
opened with the proceeds of distributions from such Fidelity retirement
accounts. Refer to the program materials for details.
PURCHASE AMOUNTS OF MORE THAN $250,000 WILL NOT BE ACCEPTED FOR CLASS B SHARES.
PURCHASE AMOUNTS OF MORE THAN $1 MILLION WILL NOT BE ACCEPTED FOR CLASS C
SHARES. THIS LIMIT DOES NOT APPLY TO PURCHASES OF CLASS C SHARES MADE BY AN
EMPLOYEE BENEFIT PLAN.
For further information on opening an account, please consult your investment
professional or refer to the account application.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TO OPEN AN ACCOUNT
PHONE (small solid bullet) Contact your investment professional or, if
YOUR INVESTMENT you are investing through a broker-dealer or insurance
PROFESSIONAL representative, call 1-800-522-7297. If you are investing through
a bank representative, call 1-800-843-3001.
(Phone_graphic) (small solid bullet) Exchange from the same class of another
Fidelity Advisor fund or from another Fidelity fund account with
the same registration, including name, address, and taxpayer ID
number.
Mail (mail_graphic) (small solid bullet) Complete and sign the account application.
Make your check payable to the complete name of the fund of your
choice and note the applicable class. Mail to the address
indicated on the application.
In Person (hand_graphic) (small solid bullet) Bring your account application and check to
your investment professional.
Wire (wire_graphic) (small solid bullet) Not available
Automatically (small solid bullet) Not available
(automatic_graphic)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
TO ADD TO AN ACCOUNT
PHONE (small solid bullet) Contact your investment professional or, if
YOUR INVESTMENT you are investing through a broker-dealer or insurance
PROFESSIONAL representative, call 1-800-522-7297. If you are investing through
a bank representative, call 1-800-843-3001.
(Phone_graphic) (small solid bullet) Exchange from the same class of another
Fidelity Advisor fund or from another Fidelity fund account with
the same registration, including name, address, and taxpayer ID
number.
Mail (mail_graphic) (small solid bullet) Make your check payable to the complete name
of the fund of your choice and note the applicable class.
Indicate your fund account number on your check and mail to the
address printed on your account statement.
(small solid bullet) Exchange by mail: call, your investment
professional for instructions.
In Person (hand_graphic) (small solid bullet) Bring your check to your investment
professional.
Wire (wire_graphic) (small solid bullet) Wire to:
Banker's Trust Co.
Routing # 021001033
Fidelity DART Depository
Account # 00159759
FBO: (Account name)
(Account number)
Specify the complete name of the fund of your choice, note the
applicable class, and include your account number and your
name.
Automatically (automatic_graphic) (small solid bullet) Use Fidelity Advisor Systematic Investment Program. Sign up
for this service when opening your account, or call your investment professional
to begin the program.
</TABLE>
<PAGE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by selling
(redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of each class is the class's NAV, minus any
applicable CDSC.
Your shares will be sold at the next NAV calculated after your order is
received in proper form, minus any applicable CD SC. Each class's NAV is
normally calculated each business day at 4:00 p.m. Eastern time.
It is the responsibility of your investment professional to transmit your order
to sell shares to Fidelity before the close of business on the day you place
your order.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request must be
made in writing, except for exchanges to shares of the same class of another
Fidelity Advisor fund or shares of other Fidelity funds, which can be requested
by phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000 worth
of shares in the account to keep it open (account minimum balances do not apply
to retirement and Fidelity Defined Trust accounts).
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service in
advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to protect
you and Fidelity from fraud. Your request must be made in writing and include a
signature guarantee if any of the following situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of shares,
(small solid bullet) Your account registration has changed within the last 30
days,
(small solid bullet) The check is being mailed to a different address than the
one on your account (record address),
(small solid bullet) The check is being made payable to someone other than the
account owner,
(small solid bullet) The redemption proceeds are being transferred to a Fidelity
Advisor account with a different registration,
(small solid bullet) You wish to set up the bank wire feature, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank, broker, dealer,
credit union (if authorized under state law), securities exchange or
association, clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be redeemed,
signed certificates (if previously issued), and
(small solid bullet) Any other applicable requirements listed in the following
table.
Deliver your letter to your investment professional, or mail it to the following
address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
Unless otherwise instructed, Fidelity will send a check to the record address.
CHECKWRITING
If you have a checkbook for your account in Short Fixed-Income or
Short-Intermediate Municipal Income, you may write an unlimited number of
checks. The minimum amount for a check is $500. Do not, however, try to close
out your account by check.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ACCOUNT TYPE SPECIAL REQUIREMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PHONE All account types except retirement - Maximum check request: $100,000
YOUR INVESTMENT All account types - You may exchange to the same class of other Fidelity
Advisor funds or to other Fidelity funds if both
PROFESSIONAL accounts are registered address with the same name(s),
(phone graphic) and taxpayer ID number.
- ----------------------------------------------------------------------------------------------------------------------------------
MAIL OR IN PERSON Individual, Joint Tenant, Sole Proprietorship, - The letter of instruction must be signed by all
(mail graphic) UGMA, UTMA persons required to sign for transactions, exactly as
their names appear on the account and sent to your
investment professional.
(hand graphic) - The account owner should complete a retirement
Retirement account distribution form. Contact your investment
professional or, if you purchased your shares through
a broker-dealer or insurance representative, call
1-800-522-7297. If you purchased your shares through a
bank representative, call 1-800-843-3001.
Trust - The trustee must sign the letter indicating capacity
as trustee. If the trustee's name is not in the
account registration, provide a copy of the trust
document certified within the last 60 days.
Business or Organization - At least one person authorized by corporate resolution
to act on the account must sign the letter.
Executor, Administrator, Conservator/Guardian - For instructions, contact your investment professional
or, if you purchased your shares through a
broker-dealer or insurance representative, call
1-800-522-7297. If you purchased your shares through a
bank representative, call 1-800-843-3001.
- ----------------------------------------------------------------------------------------------------------------------------------
WIRE All account types except retirement - You must sign up for the wire feature before using it.
(wire graphic) To verify that it is in place, contact your investment
professional or, if you purchased your shares through
a broker-dealer or insurance representative, call
1-800-522-7297. If you purchased your shares through a
bank representative, call 1-800-843-3001. Minimum
wire: $500.
- Your wire redemption request must be received in
proper form by Fidelity before 4:00 p.m. Eastern time
for money to be wired on the next business day.
- ----------------------------------------------------------------------------------------------------------------------------------
CHECK For all non-retirement Short Fixed-Income and - Minimum check: $500.
(check graphic) Short-Intermediate Municipal Income accounts only.
- All account owners must sign a signature card to
receive a checkbook.
INVESTOR SERVICES TRANSACTION SERVICES
Fidelity Advisor funds provide a variety of services to help EXCHANGE PRIVILEGE. You may sell your Class A or Class T
you manage your account. shares and buy the same class of shares of other Fidelity
Advisor funds or Daily Money Class shares of Treasury Fund,
INFORMATION SERVICES Prime Fund, and Tax-Exempt Fund by telephone or in writing.
You may sell your Class B shares and buy Class B shares of
STATEMENTS AND REPORTS that Fidelity sends to you include the other Fidelity Advisor funds or Advisor B Class shares of
following: Treasury Fund by telephone or in writing. You may sell your
Class C shares and buy Class C shares of other Fidelity
- - Confirmation statements after certain transactions Advisor funds or Advisor C Class shares of Treasury Fund by
- - Account statements (quarterly) telephone or in writing. The shares you exchange will carry
- - Financial reports (every six months) credit for any front-end sales charge you previously paid in
connection with their purchase.
To reduce expenses, only one copy of most financial reports
and prospectuses will be mailed, even if you have more than Note that exchanges out of a fund are limited to four per
one account in a fund. Call your investment professional if calendar year, and that they may have tax consequences for
you need additional copies of financial reports and you. For details on policies and restrictions governing
prospectuses. exchanges, including circumstances under which a shareholder's
exchange privilege may be suspended or revoked, see "Exchange
Restrictions," page 82.
</TABLE>
75
<PAGE>
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM lets you set up periodic
redemptions from your Class A, Class T, Class B, or Class C account. Accounts
with a value of $10,000 or more in Class A, Class T, Class B, or Class C shares
are eligible for this program. Aggregate redemptions per 12-month period from
your Class B or Class C account may not exceed 10% of the account value and are
not subject to a CDSC. Because of Class A's and Class T's front-end sales
charge, you may not want to set up a systematic withdrawal plan during a period
when you are buying Class A or Class T shares on a regular basis.
One easy way to pursue your financial goals is to invest money regularly.
Fidelity Advisor funds offer convenient services that let you transfer money
into your fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against loss
in a declining market, they can be an excellent way to invest for retirement, a
home, educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call your investment professional
for more information.
<TABLE>
<CAPTION>
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY ADVISOR FUND
<S> <C> <C> <C>
MINIMUM MINIMUM
INITIAL ADDITIONAL FREQUENCY SETTING UP OR CHANGING SMALL SOLID BULLET) FOR A NEW
$1,000 $100 MONTHLY, BIMONTHLY, QUARTERLY, ACCOUNT, COMPLETE THE APPROPRIATE SECTION ON THE
OR SEMI-ANNUALLY APPLICATION.
(SMALL SOLID BULLET) FOR EXISTING ACCOUNTS, CALL YOUR
INVESTMENT PROFESSIONAL FOR AN APPLICATION.
SMALL SOLID BULLET) TO CHANGE THE AMOUNT OR FREQUENCY OF YOUR
INVESTMENT, CONTACT YOUR INVESTMENT PROFESSIONAL DIRECTLY OR, IF YOU
PURCHASED YOUR SHARES THROUGH A BROKER-DEALER OR INSURANCE
REPRESENTATIVE, CALL 1-800-522-7297. IF YOU PURCHASED YOUR SHARES
THROUGH A BANK REPRESENTATIVE, CALL 1-800-843-3001. CALL AT LEAST 10
BUSINESS DAYS PRIOR TO YOUR NEXT SCHEDULED INVESTMENT DATE (20
BUSINESS DAYS IF YOU PURCHASED YOUR SHARES THROUGH A BANK).
TO DIRECT DISTRIBUTIONS FROM A FIDELITY DEFINED TRUST TO CLASS T OF A FIDELITY ADVISOR FUND
MINIMUM MINIMUM
INITIAL ADDITIONAL SETTING UP OR CHANGING
NOT NOT (SMALL SOLID BULLET) FOR A NEW OR EXISTING ACCOUNT, ASK YOUR INVESTMENT
APPLICABLE APPLICABLE PROFESSIONAL FOR THE APPROPRIATE ENROLLMENT FORM.
(SMALL SOLID BULLET) TO CHANGE THE FUND TO WHICH YOUR DISTRIBUTIONS
ARE DIRECTED, CONTACT YOUR INVESTMENT PROFESSIONAL FOR INSTRUCTIONS.
</TABLE>
<TABLE>
<CAPTION>
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM
TO DIRECT DISTRIBUTIONS FROM A FIDELITY DEFINED TRUST TO CLASS T OF A FIDELITY
ADVISOR FUND
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, quarterly, (small solid bullet) To establish, call your investment
semi-annually, or annually professional after both accounts are opened.
(small solid bullet) To change the amount or frequency of your
investment, contact your investment professional directly or, if you
purchased your shares through a broker-dealer or insurance
representative, call 1-800-522-7297. If you purchased your shares
through a bank representative, call 1-800-843-3001.
(small solid bullet) The account from which the exchanges are to be
processed must have a minimum balance of $10,000. The account into
which the exchange is being processed must have a minimum of $1,000.
(small solid bullet) Both accounts must have the same registrations
and taxpayer ID numbers.
(small solid bullet) Call at least 2 business days prior to your next
scheduled exchange date.
</TABLE>
<PAGE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital gains to
shareholders each year. Each fund pays capital gains, if any, in December and
may pay additional capital gains after the close of its fiscal year. Normally,
dividends for Growth & Income, Equity Income, and Balanced are distributed in
March, June, September and December; dividends for TechnoQuant Growth, Mid Cap,
Equity Growth, Growth Opportunities, Strategic Opportunities, and Large Cap are
distributed in December and January; dividends for Strategic Income, High Yield,
Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, are declared daily and paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want to
receive your distributions. The funds offer four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund. If you do not indicate a choice on your application, you will be
assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be automatically
reinvested in additional shares of the same class of the fund, but you will
be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(registered trademark) PROGRAM. Your dividend
distributions will be automatically invested in the same class of shares of
another identically registered Fidelity Advisor fund. You will be sent a
check for your capital gain distributions or your capital gain
distributions will be automatically reinvested in additional shares of the
same class of the fund.
I f you select distribution option 2, 3, or 4 and the U.S. Postal Service
cannot deliver your checks, or if your checks remain uncashed for six months,
those checks will be reinvested in your account at the current NAV and your
election may be converted to the Reinvestment Option. To change your
distribution option, call your investment professional directly, or if you
purchased your shares through a broker-dealer or insurance representative, call
1-800-522-7297. If you purchased your shares through a bank representative, call
1-800-843-3001.
Shares purchased through reinvestment of dividend and capital gain distributions
are not subject to a sales charge. If you direct Class A or Class T
distributions to a fund/class with a front-end sales charge, you will not pay a
sales charge on those purchases.
When each of the Equity Funds deducts a distribution from its NAV, the
reinvestment price is the applicable class's NAV at the close of business that
day. Dividends from the Bond Funds, the Intermediate-Term Bond Funds and the
Short-Term Bond Funds will be reinvested at the applicable class's NAV on the
last day of the month. Capital gain distributions from the Bond Funds, the
Intermediate-Term Bond Funds, and the Short-Term Bond Funds will be reinvested
at the NAV as of the date the applicable fund deducts the distributions from its
NAV. The mailing of distribution checks will begin within seven days, or longer
for a December ex-dividend date.
TAXES
As with any investment, you should consider how an investment in the funds could
affect you. Below are some of the funds' tax implications. If your account is
not a tax-a dvantaged retirement account, be aware of these tax
implications.
TAXES ON DISTRIBUTIONS. Interest income that the Municipal Funds earn is
distributed to shareholders as income dividends. Interest that is federally
tax-free remains tax-free when it is distributed. Distributions from each fund
(except the Municipal Funds), however, are subject to federal income tax. Each
fund may also be subject to state or local taxes. If you live outside the United
States, your distributions from these funds could also be taxed by the country
in which you reside.
For federal tax purposes, income and short-term capital gains from the Taxable
Funds are distributed as dividends and taxed as ordinary income; capital gain
distributions are taxed as long-term capital gains.
However, for shareholders of the Municipal Funds, gain on the sale of tax-free
bonds results in taxable distributions. Short-term capital gains and a portion
of the gain on bonds purchased at a discount are distributed as dividends and
taxed as ordinary income; capital gain distributions, if any, are taxed as
long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally free from
state and local income taxes. However, particular states may limit this benefit,
and some types of securities, such as repurchase agreements and some
agency-backed securities, may not qualify for the benefit. Ginnie Mae securities
and other mortgage-backed securities are notable exceptions in most states. In
addition, some states may impose intangible property taxes. You should consult
your own tax adviser for details and up-to-date information on the tax laws in
your state.
Distributions are taxable when they are paid, whether you take them in cash or
reinvest them. However, distributions declared in December and paid in January
are taxable as if they were paid on December 31.
Every January, Fidelity will send you and the IRS a statement showing the tax
characterization of distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each of the Municipal Funds may invest up to 100% of
its assets in these securities. Individuals who are subject to the tax must
report this interest on their tax returns.
A portion of the dividends from each of the Municipal Funds may be free from
state or local taxes. Income from investments in your state are often tax-free
to you. Each year, Fidelity will send you a
<PAGE>
breakdown of each of these funds' income from each state to help you calculate
your taxes.
During the fiscal period ended 1997, 100% of the income dividends from
Municipal Income, Intermediate Municipal Income, and Short-Intermediate
Municipal Income was free from federal income tax. During the fiscal year ended
1997, 18.90% of Municipal Income's, 8.72% of Intermediate Municipal Income's,
and 19.53% of Short-Intermediate Municipal Income's dividends were subject to
the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions-including exchanges-are subject to
capital gains tax. A capital gain or loss is the difference between the cost of
your shares and the price you receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price.
You will also receive a consolidated transaction statement at least quarterly.
However, it is up to you or your tax preparer to determine whether this sale
resulted in a capital gain and, if so, the amount of tax to be paid. BE SURE TO
KEEP YOUR REGULAR ACCOUNT STATEMENTS; the information they contain will be
essential in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a class has realized but not yet
distributed income or capital gains, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
CURRENCY CONSIDERATIONS. For funds that can invest in foreign securities, if a
fund's dividends exceed its taxable income in any year, which is sometimes the
result of currency-related losses, all or a portion of the fund's dividends may
be treated as a return of capital to shareholders for tax purposes. To minimize
the risk of a return of capital, a fund may adjust its dividends to take
currency fluctuations into account, which may cause the dividends to vary. Any
return of capital will reduce the cost basis of your shares, which will result
in a higher reported capital gain or a lower reported capital loss when you sell
your shares. The statement you receive in January will specify if any
distributions included a return of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund and its
investments, and these taxes generally will reduce a fund's distributions.
However, if you meet certain holding period requirements with respect to your
fund shares, an offsetting tax credit may be available to you. If you do not
meet such holding period requirements, you may still be entitled to a deduction
for certain foreign taxes. In either case, your tax statement will show more
taxable income or capital gains than were actually distributed by the fund, but
will also show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid federal
taxation. In its effort to adhere to these requirements, a fund may have to
limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE) is
open. FSC normally calculates each class's NAV and offering price, as
applicable, as of the close of business of the NYSE, normally 4:00 p.m. Eastern
time.
A CLASS'S NAV is the value of a single share. The NAV of each class is computed
by adding that class's pro rata share of the value of the applicable fund's
investments, cash, and other assets, subtracting that class's pro rata share of
the value of the applicable fund's liabilities, subtracting the liabilities
allocated to that class, and dividing the result by the number of shares of that
class that are outstanding.
Each fund's assets are valued primarily on the basis of market quotations or on
the basis of information furnished by a pricing service. Short-term securities
with remaining maturities of sixty days or less for which quotations and
information furnished by a pricing service are not readily available are valued
on the basis of amortized cost. This method minimizes the effect of changes in a
security's market value. Foreign securities are valued on the basis of
quotations from the primary market in which they are traded, and are translated
from the local currency into U.S. dollars using current exchange rates. In
addition, if quotations and information furnished by a pricing service are not
readily available, or if the values have been materially affected by events
occurring after the closing of a foreign market, assets may be valued by another
method that the Board of Trustees believes accurately reflects fair value.
THE OFFERING PRICE of Class A or Class T is its NAV divided by the difference
between one and the applicable front-end sales charge percentage. Class A has a
maximum front-end sales charge of 5.75% of the offering price for the Equity
Funds; 4.75% of the offering price for the Bond Funds; 3.75% of the offering
price for the Intermediate-Term Bond Funds; and 1.50% of the offering price for
the Short-Term Bond Funds. Class T has a maximum front-end sales charge of 3.50%
of the offering price for the Equity Funds and the Bond Funds; 2.75% of the
offering price for the Intermediate-Term Bond Funds; and 1.50% of the offering
price for the Short-Term Bond Funds.
<TABLE>
<CAPTION>
SALES CHARGES AND INVESTMENT PROFESSIONAL
CONCESSIONS - CLASS A
EQUITY FUNDS: Sales Charge:
As a % of As an Investment
Offering Price approximate % Professional
of Net Amount Concession as % of
Invested Offering Price
<S> <C> <C> <C>
Up to $49,999 5.75% 6.10% 5.00%
$50,000 to $99,999 4.50% 4.71% 3.75%
$100,000 to $249,999 3.50% 3.63% 2.75%
$250,000 to $499,999 2.50% 2.56% 2.00%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 to $24,999,999 1.00% 1.01% 0.75%
$25,000,000 or more None* None* *
</TABLE>
* SEE SECTION ENTITLED FINDER'S FEE.
<PAGE>
<TABLE>
<CAPTION>
BOND FUNDS: Sales Charge: Investment
Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
<S> <C> <C> <C>
Up to $49,999 4.75% 4.99% 4.25%
$50,000 to $99,999 4.50% 4.71% 4.00%
$100,000 to $249,999 3.50% 3.63% 3.00%
$250,000 to $499,999 2.50% 2.56% 2.25%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 to $24,999,999 0.50% 0.50% 0.50%
$25,000,000 or more None* None* *
<FN>
* SEE SECTION ENTITLED FINDER'S FEE.
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM Sales Charge: Investment
BOND FUNDS: Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
<S> <C> <C> <C>
Up to $49,999 3.75% 3.91% 3.00%
$50,000 to $99,999 3.00% 3.10% 2.25%
$100,000 to $249,999 2.25% 2.30% 1.75%
$250,000 to $499,999 1.75% 1.78% 1.50%
$500,000 to $999,999 1.50% 1.52% 1.25%
$1,000,000 to $24,999,999 0.50% 0.50% 0.50%
$25,000,000 or more None* None* *
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM BOND FUNDS: Sales Charge:
Investment
As an Professional
approximate % Concession as % of
As a % of of Net Amount Concession as % of
Offering Price Invested Offering Price
<S> <C> <C> <C>
Up to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
<TABLE>
<CAPTION>
SALES CHARGES AND INVESTMENT PROFESSIONAL
CONCESSIONS - CLASS T
EQUITY FUNDS: Sales Charge: Investment
Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
<S> <C> <C> <C>
Up to $49,999 3.50% 3.63% 3.00%
$50,000 to $99,999 3.00% 3.09% 2.50%
$100,000 to $249,999 2.50% 2.56% 2.00%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
<TABLE>
<CAPTION>
BOND FUNDS: Sales Charge: Investment
Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
<S> <C> <C> <C>
Up to $49,999 3.50% 3.63% 3.00%
$50,000 to $99,999 3.00% 3.09% 2.50%
$100,000 to $249,999 2.50% 2.56% 2.00%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM Sales Charge: Investment
BOND FUNDS: Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
<S> <C> <C> <C>
Up to $49,999 2.75% 2.83% 2.25%
$50,000 to $99,999 2.25% 2.30% 2.00%
$100,000 to $249,999 1.75% 1.78% 1.50%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM BOND FUNDS: Sales Charge: Investment
Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
<C> <S> <S> <S>
Up to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
<FN>
* SEE SECTION ENTITLED FINDER'S FEE.
</TABLE>
FINDER'S FEE. For all funds except the Short-Term Bond Funds, on eligible
purchases of (i) Class A shares in amounts of $1 million or more that qualify
for a Class A load waiver, (ii) Class A shares in amounts of $25 million or
more, or (iii) Class T shares in amounts of $1 million or more, investment
professionals will be compensated with a fee at the rate of 0.25% of the
purchase amount. For the Short-Term Bond Funds, on eligible purchases of Class A
or Class T shares in amounts of $1 million or more, investment professionals
will be compensated with a fee at the rate of 0.25% of the purchase amount.
Any assets on which a finder's fee has been paid will bear a CDSC (Class A or
Class T CDSC) if they do not remain in Class A or Class T shares of the Fidelity
Advisor funds, or Daily Money Class shares of Treasury Fund, Prime Fund, or
Tax-Exempt Fund, for a period of at least one uninterrupted year. The Class A or
Class T CDSC will be 0.25% of the lesser of the cost of the Class A or Class T
shares, as applicable, at the initial date of purchase or the value of the Class
A or Class T shares, as applicable, at redemption, not including any reinvested
dividends or capital gains. Class A and Class T shares acquired through
distributions (dividends or capital gains) will not be subject to a Class A or
Class T CDSC. In determining the
<PAGE>
applicability and rate of any Class A or Class T CDSC at redemption, Class A or
Class T shares representing reinvested dividends and capital gains, if any, will
be redeemed first, followed by those Class A or Class T shares that have been
held for the longest period of time. Shares held by an insurance company
separate account will be aggregated at the client (e.g., the contract holder or
plan sponsor) level, not at the separate account level. Upon request, anyone
claiming eligibility for the 0.25% fee with respect to shares held by an
insurance company separate account must provide FDC access to records detailing
purchases at the client level.
With respect to employee benefit plans, the Class A or Class T CDSC does not
apply to the following types of redemptions: (i) plan loans or distributions or
(ii) exchanges to non-Advisor fund investment options. With respect to
Individual Retirement Accounts, the Class A or Class T CDSC does not apply to
redemptions made for disability, payment of death benefits, or required partial
distributions starting at age 70. Your investment professional should advise
Fidelity at the time your redemption order is placed if you qualify for a waiver
of the Class A or Class T CDSC.
CONTINGENT DEFERRED SALES CHARGE. Class B shares may, upon redemption, be
assessed a CDSC based on the following schedule:
EQUITY FUNDS:
From Date of Purchase Contingent Deferred
Sales Charge
Less than 1 year 5%
1 year to less than 2 years 4%
2 years to less than 3 years 3%
3 years to less than 4 years 3%
4 years to less than 5 years 2%
5 years to less than 6 years 1%
6 years to less than 7 years [A] 0%
BOND FUNDS:
From Date of Purchase Contingent Deferred
Sales Charge
Less than 1 year 5%
1 year to less than 2 years 4%
2 years to less than 3 years 3%
3 years to less than 4 years 3%
4 years to less than 5 years 2%
5 years to less than 6 years 1%
6 years to less than 7 years [A] 0%
INTERMEDIATE-TERM BOND FUNDS:
From Date Of Purchase Contingent Deferred
Sales Charge
Less than 1 year 3%
1 year to less than 2 years 2%
2 years to less than 3 years 1%
3 years to less than 4 years [B] 0%
[A] AFTER A HOLDING PERIOD OF SEVEN YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND. SEE
"CONVERSION FEATURE" BELOW FOR MORE INFORMATION.
[B] AFTER A HOLDING PERIOD OF FOUR YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND. SEE
"CONVERSION FEATURE" BELOW FOR MORE INFORMATION.
When exchanging Class B shares of one fund for Class B shares of another
Fidelity Advisor fund or Advisor B Class shares of Treasury Fund, your Class B
shares retain the CDSC schedule in effect when they were originally purchased.
At the time of sale, investment professionals with whom FDC has agreements
receive as compensation from FDC a concession equal to 4.00% (2.00% for the
Intermediate-Term Bond Funds) of your purchase of Class B shares.
Class C shares may, upon redemption within one year of purchase, be assessed a
CDSC of 1.00%.
At the time of sale, investment professionals with whom FDC has agreements
receive as compensation from FDC a concession equal to 1.00% of your purchase of
Class C shares.
The CDSC for Class B and Class C shares will be calculated based on the lesser
of the cost of the Class B or Class C shares, as applicable, at the initial date
of purchase or the value of those Class B or Class C shares, as applicable, at
redemption, not including any reinvested dividends or capital gains. Class B and
Class C shares acquired through distributions (dividends or capital gains) will
not be subject to a CDSC. In determining the applicability and rate of any CDSC
at redemption, Class B or Class C shares representing reinvested dividends and
capital gains, if any, will be redeemed first, followed by those Class B or
Class C shares that have been held for the longest period of time.
CONVERSION FEATURE. After a holding period of seven years (four years for the
Intermediate-Term Bond Funds) from the initial date of purchase, Class B shares
and any capital appreciation associated with those shares, convert automatically
to Class A shares of the same Fidelity Advisor fund. Conversion to Class A
shares will be made at NAV. At the time of conversion, a portion of the Class B
shares purchased through the reinvestment of dividends or capital gains
(Dividend Shares) will also convert to Class A shares. The portion of Dividend
Shares that will convert is determined by the ratio of your converting Class B
non-Dividend Shares to your total Class B non-Dividend Shares. For more
information about the CDSC, including the conversion feature and the permitted
circumstances for CDSC waivers, contact your investment professional.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class A, Class T,
Class B, or Class C shares of a fund, you may reinvest an amount equal to all or
a portion of the redemption proceeds in the same class of the fund or any of the
other Fidelity Advisor funds, at the NAV next determined after receipt in
proper form of your investment order, provided that such reinvestment is
made within 90 days of redemption. Under these circumstances, the dollar amount
of the CDSC, if any, you paid on Class A, Class T, Class B, or Class C shares
will be reimbursed to you by reinvesting that amount in Class A, Class T, Class
B, or Class C shares, as applicable. You must reinstate your shares into an
account with the same registration. This privilege may be exercised only once by
a shareholder with respect to a fund and certain restrictions may apply. For
purposes of the CDSC holding period schedule, the
<PAGE>
holding period of your Class A, Class T, Class B, or Class C shares will
continue as if the shares had not been redeemed.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that your
social security or taxpayer identification number is correct and that you are
not subject to 31% backup withholding for failing to report income to the IRS.
If you violate IRS regulations, the IRS can require a fund to withhold 31% of
your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY. Fidelity will
not be responsible for any losses resulting from unauthorized transactions if it
follows reasonable security procedures designed to verify the identity of the
investor. Fidelity will request personalized security codes or other
information, and may also record calls. For transactions conducted through the
Internet, Fidelity recommends the use of an Internet browser with 128-bit
encryption. You should verify the accuracy of your confirmation statements
immediately after you receive them. If you do not want the ability to redeem and
exchange by telephone, call Fidelity for instructions. Additional documentation
may be required from corporations, associations, and certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods of
unusual market activity), consider placing your order by mail.
EACH FUND RESERVES THE RIGHT to suspend the offering of shares for a
period of time.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the next
offering price or NAV, as applicable, calculated after your order is received in
proper form. Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check, each check
must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees a fund or Fidelity has
incurred.
(small solid bullet) Automated Purchase Orders: For shares of the Bond Funds,
the Intermediate-Term Bond Funds, and the Short-Term Bond Funds, you begin to
earn dividends as of the day your funds are received.
(small solid bullet) Other Purchases: For shares of the Bond Funds, the
Intermediate-Term Bond Funds, and the Short-Term Bond Funds, you begin to earn
dividends as of the first business day following the day your funds are
received.
AUTOMATED PURCHASE ORDERS. Class A, Class T, Class B, and Class C shares can be
purchased or sold through investment professionals utilizing an automated order
placement and settlement system that guarantees payment for orders on a
specified date.
CONFIRMED PURCHASES. Certain financial institutions that meet FDC's
creditworthiness criteria may enter confirmed purchase orders on behalf of
customers by phone, with payment to follow no later than close of business on
the next business day. If payment is not received by the next business day, the
order will be canceled and the financial institution will be liable for any
losses.
TO AVOID THE COLLECTION PERIOD associated with check purchases, consider buying
shares by bank wire, U.S. Postal money order, U.S. Treasury check, Federal
Reserve check, or automatic investment plans.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the next NAV
calculated after your order is received in proper form, minus any applicable
CDSC. Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on the
next business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(small solid bullet) Shares of the Bond Funds, the Intermediate-Term Bond Funds,
and the Short-Term Bond Funds will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday will
continue to earn dividends until the next business day.
(small solid bullet) Each fund may hold payment on redemptions until it is
reasonably satisfied that investments made by check have been collected, which
can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates postponed
when the NYSE is closed (other than weekends or holidays), when trading on the
NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares of Short Fixed-Income and
Short-Intermediate Municipal Income by writing a check and the amount of the
check is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of $12.00 from
accounts with a value of less than $2,500 (including any amount paid as a sales
charge), subject to an annual maximum charge of $60.00 per shareholder. Accounts
opened after September 30 will not be subject to the fee for that year. The fee,
which is payable to the transfer agent, is designed to offset in part the
relatively higher costs of servicing smaller accounts. The fee will not be
deducted from retirement accounts (except non-prototype retirement accounts),
accounts using a systematic investment program, certain (Network Level I and
III) accounts which are maintained through National Securities Clearing
Corporation (NSCC), or if total assets in Fidelity mutual funds exceed $50,000.
Eligibility for the $50,000 waiver is determined by aggregating Fidelity mutual
fund accounts (excluding contractual plans) maintained (i) by FIIOC and (ii)
through NSCC; provided those accounts are registered under the same primary
social security number.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30
days' notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the proceeds
to you. Your
<PAGE>
shares will be redeemed at the NAV, minus any applicable CDSC, on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing historical
account documents, that are beyond the normal scope of its services.
FDC will, at its expense, provide promotional incentives such as sales contests
and luxury trips to investment professionals who support the sale of shares of
the funds. In some instances, these incentives will be offered only to certain
types of investment professionals, such as bank-affiliated or non-bank
affiliated broker-dealers, or to investment professionals whose representatives
provide services in connection with the sale or expected sale of significant
amounts of shares.
EXCHANGE RESTRICTIONS As a shareholder, you have the privilege of exchanging
Class A, Class T, Class B, or Class C shares of a fund for the same class of
shares of other Fidelity Advisor funds; Class A or Class T shares for Daily
Money Class shares of Treasury Fund, Prime Fund, or Tax-Exempt Fund; Class B
shares for Advisor B Class shares of Treasury Fund; and Class C shares for
Advisor C Class shares of Treasury Fund. If you purchased your Class T shares
through certain investment professionals that have signed an agreement with FDC,
you also have the privilege of exchanging your Class T shares for shares of
Fidelity Capital Appreciation Fund. However, you should note the following:
(small solid bullet) The fund or class you are exchanging into must be available
for sale in your state.
(small solid bullet) You may only exchange between accounts that are registered
in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) If you have held Class A or Class T shares of Short
Fixed-Income or Short-Intermediate Municipal Income for less than six months and
you exchange into Class A or Class T of another Advisor fund, you pay the
difference between that fund's Class A or Class T front-end sales charge and any
Class A or Class T front-end sales charge you may have previously paid in
connection with the shares you are exchanging.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of a fund per calendar year. Accounts under common ownership or
control, including accounts with the same taxpayer identification number, will
be counted together for purposes of the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and Department
of Labor regulations. See your plan materials for further information.
(small solid bullet) Each fund reserves the right to refuse exchange purchases
by any person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and policies,
or would otherwise potentially be adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions of
the fund's assets. In particular, a pattern of exchanges that coincides with a
"market timing" strategy may be disruptive to a fund.
(small solid bullet) Any exchanges of Class A, Class T, Class B, or Class C
shares are not subject to a CDSC.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time. The
funds reserve the right to terminate or modify these exchange privileges in the
future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose trading
fees of up to 1.00% of the amount exchanged. Check each fund's prospectus for
details.
SALES CHARGE REDUCTIONS AND WAIVERS
If your purchase qualifies for one of the following sales charge reduction
plans, the front-end sales charge will be reduced for purchases of Class A and
Class T shares according to the Sales Charge schedule beginning on page . Please
refer to the funds' SAI for more details about each plan or call your investment
professional.
If you purchased your shares through a broker-dealer or insurance
representative, call 1-800-522-7297. If you purchased your shares through a bank
representative, call 1-800-843-3001.
Your purchases and existing balances of Class A, Class T, Class B, and Class C
shares may be included in the following programs for purposes of qualifying for
a Class A or Class T front-end sales charge reduction.
QUANTITY DISCOUNTS apply to purchases of Class A or Class T shares of a single
Fidelity Advisor fund or to combined purchases of (i) Class A, Class T, Class B,
and Class C shares of any Fidelity Advisor fund, (ii) Advisor B Class shares and
Advisor C Class shares of Treasury Fund, and (iii) Daily Money Class shares of
Treasury Fund, Prime Fund, and Tax-Exempt Fund acquired by exchange from any
Fidelity Advisor fund. The minimum investment eligible for a quantity discount
is $50,000, except that the minimum investment for the Short-Term Bond Funds is
$500,000.
To qualify for a quantity discount, investing in a fund's Class A, Class T,
Class B, and Class C shares for several accounts at the same time will be
considered a single transaction (Combined Purchase), as long as shares are
purchased through one investment professional and the total is at least $50,000
(or at least $500,000 for the Short-Term Bond Funds).
RIGHTS OF ACCUMULATION let you determine your front-end sales charge on Class A
and Class T shares by adding to your new purchase of Class A and Class T shares
the value of all of the Fidelity Advisor fund Class A, Class T, Class B, and
Class C shares held by you, your spouse, and your children under age 21. You can
also add the value of Advisor B Class shares and Advisor C Class shares of
Treasury Fund, and Daily Money Class shares of Treasury
<PAGE>
Fund, Prime Fund, and Tax-Exempt Fund acquired by exchange from any Fidelity
Advisor fund.
A LETTER OF INTENT (Letter) lets you receive the same reduced front-end sales
charge on purchases of Class A and Class T shares made during a 13-month period
as if the total amount invested during the period had been invested in a single
lump sum (see Quantity Discounts above). Purchases of Class B and Class C shares
during the 13-month period will count toward the completion of your Letter. You
must file your non-binding Letter with Fidelity within 90 days of the start of
your purchases. Your initial investment must be at least 5% of the amount you
plan to invest. Out of the initial investment, Class A or Class T shares equal
to 5% of the dollar amount specified in your Letter will be registered in your
name and held in escrow. You will earn income dividends and capital gain
distributions on escrowed Class A and Class T shares. Reinvested income and
capital gain distributions do not count toward the completion of your Letter.
The escrow will be released when your purchase of the total amount has been
completed. You are not obligated to complete your Letter, and in such a case,
sufficient escrowed Class A or Class T shares will be redeemed to pay any
applicable front-end sales charges.
A FRONT-END SALES CHARGE WILL NOT APPLY TO THE FOLLOWING CLASS A SHARES:
1. Purchased for an insurance company separate account used to fund annuity
contracts for employee benefit plans;
2. Purchased by a trust institution or bank trust department for a managed
account that is charged an asset-based fee. Employee benefit plans and accounts
managed by third parties do not qualify for this waiver;
3. Purchased by a broker-dealer for a managed account that is charged an
asset-based fee. Employee benefit plans do not qualify for this waiver;
4. Purchased by a registered investment advisor that is not part of an
organization primarily engaged in the brokerage business for an account that is
managed on a discretionary basis and is charged an asset-based fee. Employee
benefit plans do not qualify for this waiver;
5. Purchased for an employee benefit plan that has $25 million or more in plan
assets; or
6. Purchased prior to December 31, 1998 by shareholders who have closed their
Class A Municipal Bond, Class A California Municipal Income, or Class A New York
Municipal Income accounts prior to December 31, 1997. This waiver is limited to
purchases of up to $10,000; shareholders are entitled to this waiver after the
original load waiver certificate is received in proper form by FIIOC.
A FRONT-END SALES CHARGE WILL NOT APPLY TO THE FOLLOWING CLASS T SHARES:
1. Purchased for an insurance company separate account used to fund annuity
contracts for employee benefit plans;
2. Purchased by a trust institution or bank trust department for a managed
account that is charged an asset-based fee. Accounts managed by third parties do
not qualify for this waiver;
3. Purchased by a broker-dealer for a managed account that is charged an
asset-based fee;
4. Purchased by a registered investment advisor that is not part of an
organization primarily engaged in the brokerage business for an account that is
managed on a discretionary basis and is charged an asset-based fee;
5. Purchased for an employee benefit plan;
6. Purchased for a Fidelity or Fidelity Advisor account with the proceeds of a
distribution from (i) an insurance company separate account used to fund annuity
contracts for employee benefit plans that are invested in Fidelity Advisor or
Fidelity funds, or (ii) an employee benefit plan that is invested in Fidelity
Advisor or Fidelity funds. (Distributions other than those transferred to an IRA
account must be transferred directly into a Fidelity account.);
7. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency;
8. Purchased with redemption proceeds from other mutual fund complexes on which
you have previously paid a front-end sales charge or CDSC;
9. Purchased by a current or former trustee or officer of a Fidelity fund
or a current or retired officer, director or regular employee of FMR Corp. or
FIL or their direct or indirect subsidiaries (a Fidelity trustee or employee),
the spouse of a Fidelity trustee or employee, a Fidelity trustee or employee
acting as custodian for a minor child, or a person acting as trustee of a trust
for the sole benefit of the minor child of a Fidelity trustee or employee;
10. Purchased by a charitable organization (as defined for purposes of Section
501(c)(3) of the Internal Revenue Code) investing $100,000 or more;
11. Purchased by a bank trust officer, registered representative, or other
employee (or a member of one of their immediate families) of investment
professionals having agreements with FDC;
12. Purchased for a charitable remainder trust or life income pool established
for the benefit of a charitable organization (as defined for purposes of Section
501(c)(3) of the Internal Revenue Code);
13. Purchased with distributions of income, principal, and capital gains from
Fidelity Defined Trusts; or
14. Purchased prior to December 31, 1998 by shareholders who have closed their
Class T Municipal Bond, Class T California Municipal Income, or Class T New York
Municipal Income accounts prior to December 31, 1997. This waiver is limited to
purchases of up to $10,000; shareholders are entitled to this waiver after the
original load waiver certificate is received in proper form by FIIOC.
You must notify FDC in advance if you qualify for a front-end sales charge
waiver. Employee benefit plan investors must meet additional requirements
specified in the funds' SAI.
<PAGE>
If you are investing through an insurance company separate account, if you are
investing through a trust department, if your are investing through an account
managed by a broker-dealer, or if you have authorized an investment adviser to
make investment decisions for you, you may qualify to purchase Class A shares
without a sales charge (as described in (1), (2), (3) and (4) on the previous
page ), Class T shares without a sales charge (as described in (1), (2), (3)
and (4) on the previous page ), or Institutional Class shares. Because
Institutional Class shares have no sales charge, and do not pay a 12b-1 fee,
Institutional Class shares are expected to have a higher total return than Class
A, Class T, Class B, and Class C shares. Contact your investment professional to
discuss if you qualify.
THE CDSC ON CLASS B AND CLASS C SHARES MAY BE WAIVED:
1. In cases of disability or death, provided that the shares are redeemed within
one year following the death or the initial determination of disability;
2. In connection with a total or partial redemption related to certain
distributions from retirement plans or accounts at age 701/2, which are
permitted without penalty pursuant to the Internal Revenue Code;
3. In connection with redemptions through the Fidelity Advisor Systematic
Withdrawal Program; or
4. (APPLICABLE TO CLASS C ONLY) In connection with any redemptions from an
employee benefit plan. Employee benefit plan investors must meet additional
requirements specified in the funds' SAI.
Your investment professional should call Fidelity for more information.
No dealer, sales representative, or any other person has been authorized to give
any information or to make any representations, other than those contained in
this Prospectus and in the related SAI, in connection with the offer contained
in this Prospectus. If given or made, such other information or representations
must not be relied upon as having been authorized by the funds or FDC. This
Prospectus and the related SAI do not constitute an offer by the funds or by FDC
to sell or to buy shares of the funds to any person to whom it is unlawful to
make such offer.
APPENDIX A
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF CORPORATE BONDS
Moody's ratings for obligations with an original remaining maturity in excess of
one year fall within nine categories. They range from Aaa (highest quality) to C
(lowest quality). Moody applies numerical modifiers of 1, 2, or 3 to each
generic rating classification from Aa through B. The modifier 1 indicates that
the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA - Bonds that are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS
Debt issues may be designated by Standard & Poor's as either investment grade
("AAA" through "BBB") or speculative grade ("BB" through "D"). While speculative
grade debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to adverse conditions.
<PAGE>
Ratings from AA to CCC may be modified by the addition of a plus sign (+) or
minus sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed but debt service
payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is being
paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
<PAGE>
APPENDIX B TECHNOQUANT GROWTH - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
TECHNOQUANT GROWTH - CLASS A 12.12%
Lipper Capital Appreciation Funds Average A 20.36%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
MID CAP - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
MID CAP - CLASS A 27.36%
Lipper Mid Cap Funds Average B 19.63%
S&P 400 32.25%
Consumer Price Index 1.70%
</TABLE>
EQUITY GROWTH - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY GROWTH - CLASS A 15.57% 44.84% 6.93% 64.71% 9.89% 14.85% -0.89% 39.14% 16.21% 23.89%
Lipper Growth Funds Average C 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24% 25.30%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) EQUITY GROWTH - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.51
ROW: 2, COL: 1, VALUE: -0.5700000000000001
ROW: 3, COL: 1, VALUE: 15.57
ROW: 4, COL: 1, VALUE: 44.84
ROW: 5, COL: 1, VALUE: 6.930000000000001
ROW: 6, COL: 1, VALUE: 64.71000000000001
ROW: 7, COL: 1, VALUE: 9.890000000000001
ROW: 8, COL: 1, VALUE: 14.85
ROW: 9, COL: 1, VALUE: -0.8900000000000001
ROW: 10, COL: 1, VALUE: 39.14
ROW: 11, COL: 1, VALUE: 16.21
ROW: 12, COL: 1, VALUE: 23.89
GROWTH OPPORTUNITIES - CLASS A
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES - CLASS A 33.28% 24.14% -1.65% 42.68% 15.03%
Lipper Growth Funds AverageC 14.79% 26.91% -4.49% 36.70% 8.08%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES - CLASS A 22.17% 2.86% 33.04% 17.69% 28.73%
Lipper Growth Funds Average C 10.63% -2.17% 30.79% 19.24% 25.30%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 33.28
ROW: 4, COL: 1, VALUE: 24.14
ROW: 5, COL: 1, VALUE: -1.65
ROW: 6, COL: 1, VALUE: 42.68
ROW: 7, COL: 1, VALUE: 15.03
ROW: 8, COL: 1, VALUE: 22.17
ROW: 9, COL: 1, VALUE: 2.86
ROW: 10, COL: 1, VALUE: 33.04
ROW: 11, COL: 1, VALUE: 17.69
ROW: 12, COL: 1, VALUE: 28.73
(LARGE SOLID BOX) GROWTH OPPORTUNITIES - CLASS A
STRATEGIC OPPORTUNITIES - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
STRATEGIC OPPORTUNITIES - CLASS A 22.25% 32.60% -7.17% 23.08% 12.87%
Lipper Capital Appreciation FundsA 14.09% 26.60% -8.24% 39.91% 8.78%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
STRATEGIC OPPORTUNITIES - CLASS A 20.44% -7.17% 38.16% 1.53% 25.92%
Lipper Capital Appreciation Funds A 15.68% -3.38% 30.34% 16.31% 20.36%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 27.92
ROW: 2, COL: 1, VALUE: -6.33
ROW: 3, COL: 1, VALUE: 22.25
ROW: 4, COL: 1, VALUE: 32.6
ROW: 5, COL: 1, VALUE: -7.17
ROW: 6, COL: 1, VALUE: 23.08
ROW: 7, COL: 1, VALUE: 12.87
ROW: 8, COL: 1, VALUE: 20.44
ROW: 9, COL: 1, VALUE: -7.17
ROW: 10, COL: 1, VALUE: 38.16
ROW: 11, COL: 1, VALUE: 1.53
ROW: 12, COL: 1, VALUE: 25.92
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES - CLASS A
LARGE CAP - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
LARGE CAP - CLASS A 23.76%
Lipper Growth Funds Average C 25.30%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
<PAGE>
GROWTH & INCOME - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
GROWTH & INCOME - CLASS A 28.00%
Lipper Growth & Income Funds Average D 27.14%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
EQUITY INCOME - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
EQUITY INCOME - CLASS A 23.23% 18.43% -14.28% 29.81% 14.68%
Lipper Equity Income Funds Average E 16.74% 22.18% -6.78% 26.86% 9.77%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
EQUITY INCOME - CLASS A 18.03% 6.46% 32.55% 14.47% 25.85%
Lipper Equity Income Funds Average E 13.66% -2.54% 30.17% 18.85% 27.51%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) EQUITY INCOME - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 17.44
ROW: 2, COL: 1, VALUE: -2.24
ROW: 3, COL: 1, VALUE: 23.23
ROW: 4, COL: 1, VALUE: 18.43
ROW: 5, COL: 1, VALUE: -14.28
ROW: 6, COL: 1, VALUE: 29.81
ROW: 7, COL: 1, VALUE: 14.68
ROW: 8, COL: 1, VALUE: 18.03
ROW: 9, COL: 1, VALUE: 6.46
ROW: 10, COL: 1, VALUE: 32.55
ROW: 11, COL: 1, VALUE: 14.47
ROW: 12, COL: 1, VALUE: 25.85
BALANCED - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
BALANCED - CLASS A 20.89% 24.60% -2.94% 34.48% 9.20% 19.66%
Lipper Balanced Funds Average F 12.34% 19.57% -0.57% 26.69% 7.07% 10.91%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
BALANCED - CLASS A -5.09% 14.06% 8.31% 22.10%
Lipper Balanced Funds Average F -2.50% 25.16% 13.76% 19.00%
S&P 500 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) BALANCED - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 20.89
ROW: 4, COL: 1, VALUE: 24.6
ROW: 5, COL: 1, VALUE: -2.94
ROW: 6, COL: 1, VALUE: 34.48
ROW: 7, COL: 1, VALUE: 9.199999999999999
ROW: 8, COL: 1, VALUE: 19.66
ROW: 9, COL: 1, VALUE: -5.09
ROW: 10, COL: 1, VALUE: 14.06
ROW: 11, COL: 1, VALUE: 8.310000000000001
ROW: 12, COL: 1, VALUE: 22.1
HIGH YIELD - CLASS A
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS A 17.24% 3.64% 7.30% 34.94% 23.09%
Lipper High Current Yield Funds AverageG 12.89% -0.58% -10.13% 36.91% 17.51%
Merrill Lynch High Yield Master Index 13.47% 4.23% -4.35% 34.58% 18.16%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS A 20.45% -1.49% 19.27% 13.05% 15.07%
Lipper High Current Yield Funds AverageG 18.95% -3.85% 16.43% 13.67% 12.96%
Merrill Lynch High Yield Master Index 17.18% -1.17% 19.91% 11.06% 12.82%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) HIGH YIELD - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 17.24
ROW: 4, COL: 1, VALUE: 3.64
ROW: 5, COL: 1, VALUE: 7.3
ROW: 6, COL: 1, VALUE: 34.94
ROW: 7, COL: 1, VALUE: 23.09
ROW: 8, COL: 1, VALUE: 20.45
ROW: 9, COL: 1, VALUE: -1.49
ROW: 10, COL: 1, VALUE: 19.27
ROW: 11, COL: 1, VALUE: 13.05
ROW: 12, COL: 1, VALUE: 15.07
STRATEGIC INCOME - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1995 1996 1997
<S> <C> <C> <C>
STRATEGIC INCOME - CLASS A 22.02% 12.81% 9.24%
Lipper Multi-Sector Income Funds AverageH 16.92% 11.74% 8.77%
Merrill Lynch High Yield Master Index 19.91% 11.06% 12.82%
Consumer Price Index 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) STRATEGIC INCOME - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 22.02
ROW: 9, COL: 1, VALUE: 12.81
ROW: 10, COL: 1, VALUE: 9.239999999999998
MORTGAGE SECURITIES - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
MORTGAGE SECURITIES - CLASS A 6.72% 13.64% 10.36% 13.61% 5.45%
Lipper U.S. Mortgage Funds AverageI 7.47% 12.71% 9.52% 15.00% 6.38%
Lehman Brothers Mortgage-Backed 8.72% 15.35% 10.72% 15.72% 6.97%
Securities Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
MORTGAGE SECURITIES - CLASS A 6.71% 1.94% 17.02% 5.43% 8.87%
Lipper U.S. Mortgage Funds AverageI 7.58% -4.83% 16.29% 3.87% 8.58%
Lehman Brothers Mortgage-Backed 6.84% -1.61% 16.80% 5.35% 9.49%
Securities Index
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) MORTGAGE SECURITIES - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.7
ROW: 2, COL: 1, VALUE: 6.72
ROW: 3, COL: 1, VALUE: 13.64
ROW: 4, COL: 1, VALUE: 10.36
ROW: 5, COL: 1, VALUE: 13.61
ROW: 6, COL: 1, VALUE: 5.45
ROW: 7, COL: 1, VALUE: 6.71
ROW: 8, COL: 1, VALUE: 1.94
ROW: 9, COL: 1, VALUE: 17.02
ROW: 10, COL: 1, VALUE: 5.430000000000001
ROW: 11, COL: 1, VALUE: 8.870000000000001
GOVERNMENT INVESTMENT - CLASS A
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
GOVERNMENT INVESTMENT - CLASS A 6.57% 11.75% 8.37% 13.45% 6.48% 9.36%
Lipper General U.S. Government Bond 6.67% 12.46% 8.22% 14.44% 6.41% 9.42%
Funds Average J
Lehman Brothers Government Bond Index 7.03% 14.22% 8.72% 15.32% 7.23% 10.66%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
GOVERNMENT INVESTMENT - CLASS A -3.85% 17.65% 2.04% 9.01%
Lipper General U.S. Government Bond -4.64% 17.34% 1.72% 8.84%
Funds Average J
Lehman Brothers Government Bond Index -3.37% 18.34% 2.77% 9.59%
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) GOVERNMENT INVESTMENT - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.57
ROW: 4, COL: 1, VALUE: 11.75
ROW: 5, COL: 1, VALUE: 8.370000000000001
ROW: 6, COL: 1, VALUE: 13.45
ROW: 7, COL: 1, VALUE: 6.48
ROW: 8, COL: 1, VALUE: 9.360000000000001
ROW: 9, COL: 1, VALUE: -3.85
ROW: 10, COL: 1, VALUE: 17.65
ROW: 11, COL: 1, VALUE: 1.99
ROW: 12, COL: 1, VALUE: 9.01
INTERMEDIATE BOND - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
INTERMEDIATE BOND - CLASS A 7.84% 12.11% 7.91% 15.16% 7.13% 11.49%
Lipper Short-Intermediate Investment 6.16% 9.94% 8.11% 14.01% 6.24% 7.51%
Grade Bond Funds AverageK
Lehman Brothers Intermediate 6.67% 12.77% 9.16% 14.62% 7.17% 8.79%
Government/Corporate Bond Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
INTERMEDIATE BOND - CLASS A -2.47% 12.19% 3.21% 7.20%
Lipper Short-Intermediate Investment -2.08% 12.88% 4.17% 6.62%
Grade Bond Funds AverageK
Lehman Brothers Intermediate -1.93% 15.33% 4.05% 7.87%
Government/Corporate Bond Index
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) INTERMEDIATE BOND - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.33
ROW: 2, COL: 1, VALUE: 2.32
ROW: 3, COL: 1, VALUE: 7.84
ROW: 4, COL: 1, VALUE: 12.11
ROW: 5, COL: 1, VALUE: 7.91
ROW: 6, COL: 1, VALUE: 15.16
ROW: 7, COL: 1, VALUE: 7.13
ROW: 8, COL: 1, VALUE: 11.49
ROW: 9, COL: 1, VALUE: -2.47
ROW: 10, COL: 1, VALUE: 12.19
ROW: 11, COL: 1, VALUE: 3.16
ROW: 12, COL: 1, VALUE: 7.2
SHORT FIXED-INCOME - CLASS A
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
SHORT FIXED-INCOME - CLASS A 6.19% 10.31% 5.87% 13.37% 7.61%
Lipper Short Investment Grade Bond
6.86% 10.22% 7.87% 12.88% 5.97%
Funds AverageL
Lehman Brothers 1-3 Year 6.34% 10.97% 9.69% 11.83% 6.35%
Government/Corporate Bond Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
SHORT FIXED-INCOME - CLASS A 9.49% -3.37% 9.81% 4.13% 6.22%
Lipper Short Investment Grade Bond
6.45% -0.44% 10.84% 4.64% 6.19%
Funds AverageL
Lehman Brothers 1-3 Year 5.55% 0.55% 10.96% 5.14% 6.66%
Government/Corporate Bond Index
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) SHORT FIXED-INCOME - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.19
ROW: 4, COL: 1, VALUE: 10.31
ROW: 5, COL: 1, VALUE: 5.87
ROW: 6, COL: 1, VALUE: 13.37
ROW: 7, COL: 1, VALUE: 7.609999999999999
ROW: 8, COL: 1, VALUE: 9.49
ROW: 9, COL: 1, VALUE: -3.37
ROW: 10, COL: 1, VALUE: 9.810000000000001
ROW: 11, COL: 1, VALUE: 4.07
ROW: 12, COL: 1, VALUE: 6.22
MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME - CLASS A 11.80% 13.09% 10.29% 12.18% 11.11%
Lipper General Municipal Debt
Funds Average M 11.53% 9.65% 6.05% 12.09% 8.79%
Lehman Brothers Municipal Bond Index 10.16% 10.79% 7.29% 12.14% 8.81%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME - CLASS A 13.79% -8.05% 16.65% 3.04% 9.99%
Lipper General Municipal Debt
Funds Average M 12.47% -6.50% 16.84% 3.30% 9.11%
Lehman Brothers Municipal Bond Index 12.29% -5.17% 17.45% 4.43% 9.19%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) MUNICIPAL INCOME - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 11.8
ROW: 4, COL: 1, VALUE: 13.09
ROW: 5, COL: 1, VALUE: 10.29
ROW: 6, COL: 1, VALUE: 12.18
ROW: 7, COL: 1, VALUE: 11.11
ROW: 8, COL: 1, VALUE: 13.79
ROW: 9, COL: 1, VALUE: -8.050000000000001
ROW: 10, COL: 1, VALUE: 16.65
ROW: 11, COL: 1, VALUE: 2.99
ROW: 12, COL: 1, VALUE: 9.99
INTERMEDIATE MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME - CLASS A 7.38% 7.79% 6.37% 9.64% 7.31%
Lipper Intermediate Municipal Debt
Funds Average N 7.57% 8.26% 6.59% 10.52% 7.80%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME - CLASS A 9.43% -5.68% 14.20% 3.82% 8.02%
Lipper Intermediate Municipal Debt
Funds Average N 10.18% -3.51% 12.89% 3.70% 7.16%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL INCOME -
CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 2.33
ROW: 3, COL: 1, VALUE: 7.38
ROW: 4, COL: 1, VALUE: 7.79
ROW: 5, COL: 1, VALUE: 6.37
ROW: 6, COL: 1, VALUE: 9.639999999999999
ROW: 7, COL: 1, VALUE: 7.31
ROW: 8, COL: 1, VALUE: 9.43
ROW: 9, COL: 1, VALUE: -5.68
ROW: 10, COL: 1, VALUE: 14.2
ROW: 11, COL: 1, VALUE: 3.78
ROW: 12, COL: 1, VALUE: 8.02
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1995 1996 1997
<S> <C> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL INCOME - 8.68% 3.53% 5.14%
CLASS A
Lipper Short-Intermediate Municipal 7.43% 3.53% 5.20%
Debt Funds Average O
Consumer Price Index 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) SHORT-INTERMEDIATE MUNICIPAL
INCOME - CLASS A
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 0.0
ROW: 9, COL: 1, VALUE: 0.0
ROW: 10, COL: 1, VALUE: 8.68
ROW: 11, COL: 1, VALUE: 3.53
ROW: 12, COL: 1, VALUE: 5.14
TECHNOQUANT GROWTH - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
TECHNOQUANT GROWTH - CLASS T 11.82%
Lipper Capital Appreciation Funds Average A 20.36%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
MID CAP - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
MID CAP - CLASS T 27.25%
Lipper Mid Cap Funds Average B 19.63%
S&P 400 32.25%
Consumer Price Index 1.70%
</TABLE>
<PAGE>
EQUITY GROWTH - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
EQUITY GROWTH - CLASS T 15.57% 44.84% 6.93% 64.71% 9.89% 14.85%
Lipper Growth Funds Average C 14.79% 26.91% -4.49% 36.70% 8.08% 10.63%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
EQUITY GROWTH - CLASS T -0.89% 39.14% 16.24% 23.93%
Lipper Growth Funds AverageC -2.17% 30.79% 19.24% 25.30%
S&P 500 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) EQUITY GROWTH - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.51
ROW: 2, COL: 1, VALUE: -0.5700000000000001
ROW: 3, COL: 1, VALUE: 15.57
ROW: 4, COL: 1, VALUE: 44.84
ROW: 5, COL: 1, VALUE: 6.930000000000001
ROW: 6, COL: 1, VALUE: 64.71000000000001
ROW: 7, COL: 1, VALUE: 9.890000000000001
ROW: 8, COL: 1, VALUE: 14.85
ROW: 9, COL: 1, VALUE: -0.8900000000000001
ROW: 10, COL: 1, VALUE: 39.14
ROW: 11, COL: 1, VALUE: 16.24
ROW: 12, COL: 1, VALUE: 23.93
GROWTH OPPORTUNITIES - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES - CLASS T 33.28% 24.14% -1.65% 42.68% 15.03%
Lipper Growth Funds Average C 14.79% 26.91% -4.49% 36.70% 8.08%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES - CLASS T 22.17% 2.86% 33.04% 17.73% 28.56%
Lipper Growth Funds Average C 10.63% -2.17% 30.79% 19.24% 25.30%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) GROWTH OPPORTUNITIES - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 33.28
ROW: 4, COL: 1, VALUE: 24.14
ROW: 5, COL: 1, VALUE: -1.65
ROW: 6, COL: 1, VALUE: 42.68
ROW: 7, COL: 1, VALUE: 15.03
ROW: 8, COL: 1, VALUE: 22.17
ROW: 9, COL: 1, VALUE: 2.86
ROW: 10, COL: 1, VALUE: 33.04
ROW: 11, COL: 1, VALUE: 17.73
ROW: 12, COL: 1, VALUE: 28.56
STRATEGIC OPPORTUNITIES - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
STRATEGIC OPPORTUNITIES - CLASS T 22.25% 32.60% -7.17% 23.08% 12.87%
Lipper Capital Appreciation Funds A 14.09% 26.60% -8.24% 39.91% 8.78%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
STRATEGIC OPPORTUNITIES - CLASS T 20.44% -7.17% 38.16% 1.53% 26.01%
Lipper Capital Appreciation Funds A 15.68% -3.38% 30.34% 16.31% 20.36%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 27.92
ROW: 2, COL: 1, VALUE: -6.33
ROW: 3, COL: 1, VALUE: 22.25
ROW: 4, COL: 1, VALUE: 32.6
ROW: 5, COL: 1, VALUE: -7.17
ROW: 6, COL: 1, VALUE: 23.08
ROW: 7, COL: 1, VALUE: 12.87
ROW: 8, COL: 1, VALUE: 20.44
ROW: 9, COL: 1, VALUE: -7.17
ROW: 10, COL: 1, VALUE: 38.16
ROW: 11, COL: 1, VALUE: 1.53
ROW: 12, COL: 1, VALUE: 26.01
LARGE CAP - CLASS T
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
LARGE CAP - CLASS T 23.82%
Lipper Growth Funds Average C 25.30%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
GROWTH & INCOME - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
GROWTH & INCOME - CLASS T 27.69%
Lipper Growth and Income Funds AverageD 27.14%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
EQUITY INCOME - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
EQUITY INCOME - CLASS T 23.23% 18.43% -14.28% 29.81% 14.68%
Lipper Equity Income Funds Average E 16.74% 22.18% -6.78% 26.86% 9.77%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
EQUITY INCOME - CLASS T 18.03% 6.46% 32.55% 14.61% 25.89%
Lipper Equity Income Funds Average E 13.66% -2.54% 30.17% 18.85% 27.51%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) EQUITY INCOME - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 17.44
ROW: 2, COL: 1, VALUE: -2.24
ROW: 3, COL: 1, VALUE: 23.23
ROW: 4, COL: 1, VALUE: 18.43
ROW: 5, COL: 1, VALUE: -14.28
ROW: 6, COL: 1, VALUE: 29.81
ROW: 7, COL: 1, VALUE: 14.68
ROW: 8, COL: 1, VALUE: 18.03
ROW: 9, COL: 1, VALUE: 6.46
ROW: 10, COL: 1, VALUE: 32.55
ROW: 11, COL: 1, VALUE: 14.61
ROW: 12, COL: 1, VALUE: 25.89
BALANCED - CLASS T
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
BALANCED - CLASS T 20.89% 24.60% -2.94% 34.48% 9.20% 19.66%
Lipper Balanced Funds Average F 12.34% 19.57% -0.57% 26.69% 7.07% 10.91%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
BALANCED - CLASS T -5.09% 14.06% 8.43% 22.33%
Lipper Balanced Funds Average F -2.50% 25.16% 13.76% 19.00%
S&P 500 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) BALANCED - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 20.89
ROW: 4, COL: 1, VALUE: 24.6
ROW: 5, COL: 1, VALUE: -2.94
ROW: 6, COL: 1, VALUE: 34.48
ROW: 7, COL: 1, VALUE: 9.199999999999999
ROW: 8, COL: 1, VALUE: 19.66
ROW: 9, COL: 1, VALUE: -5.09
ROW: 10, COL: 1, VALUE: 14.06
ROW: 11, COL: 1, VALUE: 8.43
ROW: 12, COL: 1, VALUE: 22.33
HIGH YIELD - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS T 17.24% 3.64% 7.30% 34.94% 23.09%
Lipper High Current Yield Funds Average G 12.89% -0.58% -10.13% 36.91% 17.51%
Merrill Lynch High Yield Master Index 13.47% 4.23% -4.35% 34.58% 18.16%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS T 20.45% -1.49% 19.27% 13.26% 15.09%
Lipper High Current Yield Funds Average G 18.95% -3.85% 16.43% 13.67% 12.96%
Merrill Lynch High Yield Master Index 17.18% -1.17% 19.91% 11.06% 12.82%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) HIGH YIELD - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 17.24
ROW: 4, COL: 1, VALUE: 3.64
ROW: 5, COL: 1, VALUE: 7.3
ROW: 6, COL: 1, VALUE: 34.94
ROW: 7, COL: 1, VALUE: 23.09
ROW: 8, COL: 1, VALUE: 20.45
ROW: 9, COL: 1, VALUE: -1.49
ROW: 10, COL: 1, VALUE: 19.27
ROW: 11, COL: 1, VALUE: 13.26
ROW: 12, COL: 1, VALUE: 15.09
STRATEGIC INCOME - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1995 1996 1997
<S> <C> <C> <C>
STRATEGIC INCOME - CLASS T 22.02% 12.89% 9.33%
Lipper Multi-Sector Income Funds Average H 16.92% 11.74% 8.77%
Merrill Lynch High Yield Master Index 19.91% 11.06% 12.82%
Consumer Price Index 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) STRATEGIC INCOME - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 22.02
ROW: 9, COL: 1, VALUE: 12.89
ROW: 10, COL: 1, VALUE: 9.33
MORTGAGE SECURITIES - CLASS T
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
MORTGAGE SECURITIES - CLASS T 6.72% 13.64% 10.36% 13.61% 5.45%
Lipper U.S. Mortgage Funds Average I 7.47% 12.71% 9.52% 15.00% 6.38%
Lehman Brothers Mortgage - Backed 8.72% 15.35% 10.72% 15.72% 6.97%
Securities Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
MORTGAGE SECURITIES - CLASS T 6.71% 1.94% 17.02% 5.43% 8.88%
Lipper U.S. Mortgage Funds Average I 7.58% -4.83% 16.29% 3.87% 8.58%
Lehman Brothers Mortgage - Backed 6.84% -1.61% 16.80% 5.35% 9.49%
Securities Index
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) MORTGAGE SECURITIES - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.7
ROW: 2, COL: 1, VALUE: 6.72
ROW: 3, COL: 1, VALUE: 13.64
ROW: 4, COL: 1, VALUE: 10.36
ROW: 5, COL: 1, VALUE: 13.61
ROW: 6, COL: 1, VALUE: 5.45
ROW: 7, COL: 1, VALUE: 6.71
ROW: 8, COL: 1, VALUE: 1.94
ROW: 9, COL: 1, VALUE: 17.02
ROW: 10, COL: 1, VALUE: 5.430000000000001
ROW: 11, COL: 1, VALUE: 8.880000000000001
GOVERNMENT INVESTMENT - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
GOVERNMENT INVESTMENT - CLASS T 6.57% 11.75% 8.37% 13.45% 6.48% 9.36%
Lipper General U.S. Government Bond 6.67% 12.46% 8.22% 14.44% 6.41% 9.42%
Funds Average J
Lehman Brothers Government Bond Index 7.03% 14.22% 8.72% 15.32% 7.23% 10.66%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
GOVERNMENT INVESTMENT - CLASS T -3.85% 17.65% 2.12% 8.71%
Lipper General U.S. Government Bond -4.64% 17.34% 1.72% 8.84%
Funds Average J
Lehman Brothers Government Bond Index -3.37% 18.34% 2.77% 9.59%
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) GOVERNMENT INVESTMENT - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.57
ROW: 4, COL: 1, VALUE: 11.75
ROW: 5, COL: 1, VALUE: 8.370000000000001
ROW: 6, COL: 1, VALUE: 13.45
ROW: 7, COL: 1, VALUE: 6.48
ROW: 8, COL: 1, VALUE: 9.360000000000001
ROW: 9, COL: 1, VALUE: -3.85
ROW: 10, COL: 1, VALUE: 17.65
ROW: 11, COL: 1, VALUE: 2.12
ROW: 12, COL: 1, VALUE: 8.709999999999999
INTERMEDIATE BOND - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
INTERMEDIATE BOND - CLASS T 7.84% 12.11% 7.91% 15.16% 7.13%
Lipper Short- Intermediate Investment 6.16% 9.94% 8.11% 14.01% 6.24%
Grade Bond Funds Average K
Lehman Brothers Intermediate 6.67% 12.77% 9.16% 14.62% 7.17%
Government/Corporate Bond Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
INTERMEDIATE BOND - CLASS T 11.49% -2.47% 12.19% 3.41% 7.03%
Lipper Short- Intermediate Investment 7.51% -2.08% 12.88% 4.17% 6.62%
Grade Bond Funds Average K
Lehman Brothers Intermediate 8.79% -1.93% 15.33% 4.05% 7.87%
Government/Corporate Bond Index
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) INTERMEDIATE BOND - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.33
ROW: 2, COL: 1, VALUE: 2.32
ROW: 3, COL: 1, VALUE: 7.84
ROW: 4, COL: 1, VALUE: 12.11
ROW: 5, COL: 1, VALUE: 7.91
ROW: 6, COL: 1, VALUE: 15.16
ROW: 7, COL: 1, VALUE: 7.13
ROW: 8, COL: 1, VALUE: 11.49
ROW: 9, COL: 1, VALUE: -2.47
ROW: 10, COL: 1, VALUE: 12.19
ROW: 11, COL: 1, VALUE: 3.41
ROW: 12, COL: 1, VALUE: 7.03
SHORT FIXED-INCOME - CLASS T
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHORT FIXED-INCOME - CLASS T 6.19% 10.31% 5.87% 13.37% 7.61% 9.49% -3.37% 9.81% 4.57%
Lipper Short Investment Grade Bond 6.86% 10.22% 7.87% 12.88% 5.97% 6.45% -0.44% 10.84% 4.64%
Funds Average L
Lehman Brothers 1-3 Year 6.34% 10.97% 9.69% 11.83% 6.35% 5.55% 0.55% 10.96% 5.14%
Government/Corporate Bond Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
SHORT FIXED-INCOME - CLASS T 6.18%
Lipper Short Investment Grade Bond 6.19%
Funds Average L
Lehman Brothers 1-3 Year 6.66%
Government/Corporate Bond Index
Consumer Price Index 1.70%
</TABLE>
(LARGE SOLID BOX) SHORT FIXED-INCOME - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.19
ROW: 4, COL: 1, VALUE: 10.31
ROW: 5, COL: 1, VALUE: 5.87
ROW: 6, COL: 1, VALUE: 13.37
ROW: 7, COL: 1, VALUE: 7.609999999999999
ROW: 8, COL: 1, VALUE: 9.49
ROW: 9, COL: 1, VALUE: -3.37
ROW: 10, COL: 1, VALUE: 9.810000000000001
ROW: 11, COL: 1, VALUE: 4.57
ROW: 12, COL: 1, VALUE: 6.18
MUNICIPAL INCOME - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME - CLASS T 11.80% 13.09% 10.29% 12.18% 11.11%
Lipper General Municipal Debt 11.53% 9.65% 6.05% 12.09% 8.79%
Funds Average M
Lehman Brothers Municipal Bond Index 10.16% 10.79% 7.29% 12.14% 8.81%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME - CLASS T 13.79% -8.05% 16.65% 2.95% 10.13%
Lipper General Municipal Debt 12.47% -6.50% 16.84% 3.30% 9.11%
Funds Average M
Lehman Brothers Municipal Bond Index 12.29% -5.17% 17.45% 4.43% 9.19%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) MUNICIPAL INCOME - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 11.8
ROW: 4, COL: 1, VALUE: 13.09
ROW: 5, COL: 1, VALUE: 10.29
ROW: 6, COL: 1, VALUE: 12.18
ROW: 7, COL: 1, VALUE: 11.11
ROW: 8, COL: 1, VALUE: 13.79
ROW: 9, COL: 1, VALUE: -8.050000000000001
ROW: 10, COL: 1, VALUE: 16.65
ROW: 11, COL: 1, VALUE: 2.95
ROW: 12, COL: 1, VALUE: 10.13
INTERMEDIATE MUNICIPAL INCOME - CLASS T
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME - CLASS T 7.38% 7.79% 6.37% 9.64% 7.31%
Lipper Intermediate Municipal Debt
7.57% 8.26% 6.59% 10.52% 7.80%
Funds Average N
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME - CLASS T 9.43% -5.68% 14.20% 3.89% 7.80%
Lipper Intermediate Municipal Debt
10.18% -3.51% 12.89% 3.70% 7.16%
Funds Average N
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL INCOME -
CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 2.33
ROW: 3, COL: 1, VALUE: 7.38
ROW: 4, COL: 1, VALUE: 7.79
ROW: 5, COL: 1, VALUE: 6.37
ROW: 6, COL: 1, VALUE: 9.639999999999999
ROW: 7, COL: 1, VALUE: 7.31
ROW: 8, COL: 1, VALUE: 9.43
ROW: 9, COL: 1, VALUE: -5.68
ROW: 10, COL: 1, VALUE: 14.2
ROW: 11, COL: 1, VALUE: 3.89
ROW: 12, COL: 1, VALUE: 7.8
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1995 1996 1997
<S> <C> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL INCOME - 8.68% 3.64% 5.03%
CLASS T
Lipper Short-Intermediate Municipal 7.43% 3.53% 5.20%
Debt Funds Average O
Consumer Price Index 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) SHORT-INTERMEDIATE MUNICIPAL
INCOME - CLASS T
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 8.68
ROW: 9, COL: 1, VALUE: 3.64
ROW: 10, COL: 1, VALUE: 5.03
TECHNOQUANT GROWTH - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
TECHNOQUANT GROWTH - CLASS B 11.31%
Lipper Capital Appreciation Funds Average A 20.36%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
MID CAP - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
MID CAP - CLASS B 26.68%
Lipper Mid Cap Funds Average B 19.63%
S&P 400 32.25%
Consumer Price Index 1.70%
</TABLE>
<PAGE>
EQUITY GROWTH - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
EQUITY GROWTH - CLASS B 15.57% 44.84% 6.93% 64.71% 9.89% 14.85%
Lipper Growth Funds Average C 14.79% 26.91% -4.49% 36.70% 8.08% 10.63%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
EQUITY GROWTH - CLASS B 14.85% -0.89% 39.14% 15.69% 23.11%
Lipper Growth Funds Average C 10.63% -2.17% 30.79% 19.24% 25.30%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) EQUITY GROWTH - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -0.5700000000000001
ROW: 3, COL: 1, VALUE: 15.57
ROW: 4, COL: 1, VALUE: 44.84
ROW: 5, COL: 1, VALUE: 6.930000000000001
ROW: 6, COL: 1, VALUE: 64.71000000000001
ROW: 7, COL: 1, VALUE: 9.890000000000001
ROW: 8, COL: 1, VALUE: 14.85
ROW: 9, COL: 1, VALUE: -0.8900000000000001
ROW: 10, COL: 1, VALUE: 39.14
ROW: 11, COL: 1, VALUE: 15.69
ROW: 12, COL: 1, VALUE: 23.11
GROWTH OPPORTUNITIES - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES - CLASS B 33.28% 24.14% -1.65% 42.68% 15.03%
Lipper Growth Funds Average C 14.79% 26.91% -4.49% 36.70% 8.08%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES - CLASS B 22.17% 2.86% 33.04% 17.73% 27.96%
Lipper Growth Funds Average C 10.63% -2.17% 30.79% 19.24% 25.30%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) GROWTH OPPORTUNITIES - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 33.28
ROW: 4, COL: 1, VALUE: 24.14
ROW: 5, COL: 1, VALUE: -1.65
ROW: 6, COL: 1, VALUE: 42.68
ROW: 7, COL: 1, VALUE: 15.03
ROW: 8, COL: 1, VALUE: 22.17
ROW: 9, COL: 1, VALUE: 2.86
ROW: 10, COL: 1, VALUE: 33.04
ROW: 11, COL: 1, VALUE: 17.73
ROW: 12, COL: 1, VALUE: 27.96
STRATEGIC OPPORTUNITIES - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
STRATEGIC OPPORTUNITIES - CLASS B 22.25% 32.60% -7.17% 23.08% 12.87%
Lipper Capital Appreciation Funds A 14.09% 26.60% -8.24% 39.91% 8.78%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
STRATEGIC OPPORTUNITIES - CLASS B 20.44% -7.22% 37.35% 1.00% 25.47%
Lipper Capital Appreciation Funds A 15.68% -3.38% 30.34% 16.31% 20.36%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 27.92
ROW: 2, COL: 1, VALUE: -6.33
ROW: 3, COL: 1, VALUE: 22.25
ROW: 4, COL: 1, VALUE: 32.6
ROW: 5, COL: 1, VALUE: -7.17
ROW: 6, COL: 1, VALUE: 23.08
ROW: 7, COL: 1, VALUE: 12.87
ROW: 8, COL: 1, VALUE: 20.44
ROW: 9, COL: 1, VALUE: -7.22
ROW: 10, COL: 1, VALUE: 37.34999999999999
ROW: 11, COL: 1, VALUE: 1.0
ROW: 12, COL: 1, VALUE: 25.47
LARGE CAP - CLASS B
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
LARGE CAP - CLASS B 23.21%
Lipper Growth Funds Average C 25.30%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
GROWTH & INCOME - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
GROWTH & INCOME - CLASS B 27.07%
Lipper Growth and Income Funds Average D 27.14%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
EQUITY INCOME - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY INCOME - CLASS B 23.23% 18.43% -14.28% 29.81% 14.68% 18.03% 6.39% 31.96% 14.00%
Lipper Equity Income Funds Average E 16.74% 22.18% -6.78% 26.86% 9.77% 13.66% -2.54% 30.17% 18.85%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
EQUITY INCOME - CLASS B 25.25%
Lipper Equity Income Funds Average E 27.51%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
(LARGE SOLID BOX) EQUITY INCOME - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 17.44
ROW: 2, COL: 1, VALUE: -2.24
ROW: 3, COL: 1, VALUE: 23.23
ROW: 4, COL: 1, VALUE: 18.43
ROW: 5, COL: 1, VALUE: -14.28
ROW: 6, COL: 1, VALUE: 29.81
ROW: 7, COL: 1, VALUE: 14.68
ROW: 8, COL: 1, VALUE: 18.03
ROW: 9, COL: 1, VALUE: 6.39
ROW: 10, COL: 1, VALUE: 31.96
ROW: 11, COL: 1, VALUE: 14.0
ROW: 12, COL: 1, VALUE: 25.25
<PAGE>
BALANCED - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
BALANCED - CLASS B 20.89% 24.60% -2.94% 34.48% 9.20% 19.66%
Lipper Balanced Funds AverageF 12.34% 19.57% -0.57% 26.69% 7.07% 10.91%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
BALANCED - CLASS B -5.09% 14.06% 8.29% 21.40%
Lipper Balanced Funds AverageF -2.50% 25.16% 13.76% 19.00%
S&P 500 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) BALANCED - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 20.89
ROW: 4, COL: 1, VALUE: 24.6
ROW: 5, COL: 1, VALUE: -2.94
ROW: 6, COL: 1, VALUE: 34.48
ROW: 7, COL: 1, VALUE: 9.199999999999999
ROW: 8, COL: 1, VALUE: 19.66
ROW: 9, COL: 1, VALUE: -5.09
ROW: 10, COL: 1, VALUE: 14.06
ROW: 11, COL: 1, VALUE: 8.289999999999999
ROW: 12, COL: 1, VALUE: 21.4
HIGH YIELD - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS B 17.24% 3.64% 7.30% 34.94% 23.09%
Lipper High Current Yield 12.89% -0.58% -10.13% 36.91% 17.51%
Funds AverageG
Merrill Lynch High Yield Master Index 13.47% 4.23% -4.35% 34.58% 18.16%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS B 20.45% -2.11% 18.34% 12.45% 14.32%
Lipper High Current Yield 18.95% -3.85% 16.43% 13.67% 12.96%
Funds AverageG
Merrill Lynch High Yield Master Index 17.18% -1.17% 19.91% 11.06% 12.82%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) HIGH YIELD - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 17.24
ROW: 4, COL: 1, VALUE: 3.64
ROW: 5, COL: 1, VALUE: 7.3
ROW: 6, COL: 1, VALUE: 34.94
ROW: 7, COL: 1, VALUE: 23.09
ROW: 8, COL: 1, VALUE: 20.45
ROW: 9, COL: 1, VALUE: -2.11
ROW: 10, COL: 1, VALUE: 18.34
ROW: 11, COL: 1, VALUE: 12.45
ROW: 12, COL: 1, VALUE: 14.32
STRATEGIC INCOME - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1995 1996 1997
<S> <C> <C> <C>
STRATEGIC INCOME - CLASS B 21.35% 12.14% 8.60%
Lipper Multi-Sector Income Funds AverageH 16.92% 11.74% 8.77%
Merrill Lynch High Yield Master Index 19.91% 11.06% 12.82%
Consumer Price Index 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) STRATEGIC INCOME - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 21.35
ROW: 9, COL: 1, VALUE: 12.14
ROW: 10, COL: 1, VALUE: 8.6
MORTGAGE SECURITIES - CLASS B
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
MORTGAGE SECURITIES - CLASS B 6.72% 13.64% 10.36% 13.61% 5.45% 6.71%
Lipper U.S. Mortgage Funds Average I 7.47% 12.71% 9.52% 15.00% 6.38% 7.58%
Lehman Brothers Mortgage-Backed 8.72% 15.35% 10.72% 15.72% 6.97% 6.84%
Securities Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
MORTGAGE SECURITIES - CLASS B 1.94% 17.02% 5.43% 8.19%
Lipper U.S. Mortgage Funds Average I -4.83% 16.29% 3.87% 8.58%
Lehman Brothers Mortgage-Backed -1.61% 16.80% 5.35% 9.49%
Securities Index
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) MORTGAGE SECURITIES - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.7
ROW: 2, COL: 1, VALUE: 6.72
ROW: 3, COL: 1, VALUE: 13.64
ROW: 4, COL: 1, VALUE: 10.36
ROW: 5, COL: 1, VALUE: 13.61
ROW: 6, COL: 1, VALUE: 5.45
ROW: 7, COL: 1, VALUE: 6.71
ROW: 8, COL: 1, VALUE: 1.94
ROW: 9, COL: 1, VALUE: 17.02
ROW: 10, COL: 1, VALUE: 5.430000000000001
ROW: 11, COL: 1, VALUE: 8.19
GOVERNMENT INVESTMENT - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
GOVERNMENT INVESTMENT - CLASS B 6.57% 11.75% 8.37% 13.45% 6.48% 9.36%
Lipper General U.S. Government Bond 6.67% 12.46% 8.22% 14.44% 6.41% 9.42%
Funds Average J
Lehman Brothers Government Bond Index 7.03% 14.22% 8.72% 15.32% 7.23% 10.66%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
GOVERNMENT INVESTMENT - CLASS B -4.38% 16.92% 1.37% 8.02%
Lipper General U.S. Government Bond -4.64% 17.34% 1.72% 8.84%
Funds Average J
Lehman Brothers Government Bond Index -3.37% 18.34% 2.77% 9.59%
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) GOVERNMENT INVESTMENT - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.57
ROW: 4, COL: 1, VALUE: 11.75
ROW: 5, COL: 1, VALUE: 8.370000000000001
ROW: 6, COL: 1, VALUE: 13.45
ROW: 7, COL: 1, VALUE: 6.48
ROW: 8, COL: 1, VALUE: 9.360000000000001
ROW: 9, COL: 1, VALUE: -4.38
ROW: 10, COL: 1, VALUE: 16.92
ROW: 11, COL: 1, VALUE: 1.37
ROW: 12, COL: 1, VALUE: 8.02
INTERMEDIATE BOND - CLASS B
<PAGE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
INTERMEDIATE BOND - CLASS B 7.84% 12.11% 7.91% 15.16% 7.13% 11.49%
Lipper Short-Intermediate Investment 6.16% 9.94% 8.11% 14.01% 6.24% 7.51%
GradeBond Funds Average K
Lehman Brothers Intermediate 6.67% 12.77% 9.16% 14.62% 7.17% 8.79%
Government/Corporate Bond Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
INTERMEDIATE BOND - CLASS B -3.12% 11.51% 2.63% 6.30%
Lipper Short-Intermediate Investment- 2.08% 12.88% 4.17% 6.62%
Grade Bond Funds AverageK
Lehman Brothers Intermediate -1.93% 15.33% 4.05% 7.87%
Government/Corporate Bond Index
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) INTERMEDIATE BOND - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.33
ROW: 2, COL: 1, VALUE: 2.32
ROW: 3, COL: 1, VALUE: 7.84
ROW: 4, COL: 1, VALUE: 12.11
ROW: 5, COL: 1, VALUE: 7.91
ROW: 6, COL: 1, VALUE: 15.16
ROW: 7, COL: 1, VALUE: 7.13
ROW: 8, COL: 1, VALUE: 11.49
ROW: 9, COL: 1, VALUE: -3.1
ROW: 10, COL: 1, VALUE: 11.51
ROW: 11, COL: 1, VALUE: 2.63
ROW: 12, COL: 1, VALUE: 6.3
MUNICIPAL INCOME - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME - CLASS B 11.80% 13.09% 10.29% 12.18% 11.11%
Lipper General Municipal Debt 11.53% 9.65% 6.05% 12.09% 8.79%
Funds Average M
Lehman Brothers Municipal Bond Inde x 10.16% 10.79% 7.29% 12.14% 8.81%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME - CLASS B 13.79% -8.54% 15.60% 2.28% 9.38%
Lipper General Municipal Debt 12.47% -6.50% 16.84% 3.30% 9.11%
Funds Average M
Lehman Brothers Municipal Bond Index 12.29% -5.17% 17.45% 4.43% 9.19%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) MUNICIPAL INCOME - CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 11.8
ROW: 4, COL: 1, VALUE: 13.09
ROW: 5, COL: 1, VALUE: 10.29
ROW: 6, COL: 1, VALUE: 12.18
ROW: 7, COL: 1, VALUE: 11.11
ROW: 8, COL: 1, VALUE: 13.79
ROW: 9, COL: 1, VALUE: -8.52
ROW: 10, COL: 1, VALUE: 15.6
ROW: 11, COL: 1, VALUE: 2.28
ROW: 12, COL: 1, VALUE: 9.380000000000001
INTERMEDIATE MUNICIPAL INCOME - CLASS B
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME - CLASS B 7.38% 7.79% 6.37% 9.64% 7.32% 9.43% -6.13% 13.22% 3.23% 7.22%
Lipper Intermediate Municipal Debt 7.57% 8.26% 6.59% 10.52% 7.80% 10.18% -3.51% 12.89% 3.70% 7.16%
Funds Average N
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
<PAGE>
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL INCOME -
CLASS B
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 13.71
ROW: 2, COL: 1, VALUE: 2.33
ROW: 3, COL: 1, VALUE: 7.38
ROW: 4, COL: 1, VALUE: 7.79
ROW: 5, COL: 1, VALUE: 6.37
ROW: 6, COL: 1, VALUE: 9.639999999999999
ROW: 7, COL: 1, VALUE: 7.319999999999999
ROW: 8, COL: 1, VALUE: 9.43
ROW: 9, COL: 1, VALUE: -6.119999999999999
ROW: 10, COL: 1, VALUE: 13.22
ROW: 11, COL: 1, VALUE: 2.84
ROW: 12, COL: 1, VALUE: 7.22
TECHNOQUANT GROWTH - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
TECHNOQUANT GROWTH - CLASS C 11.35%
Lipper Capital Appreciation Funds AverageA 20.36%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
MID CAP - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
MID CAP - CLASS C 26.67%
Lipper Mid Cap Funds Average B 19.63%
S&P 400 32.25%
Consumer Price Index 1.70%
</TABLE>
EQUITY GROWTH - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
EQUITY GROWTH - CLASS C 15.57% 44.84% 6.93% 64.71% 9.89% 14.85%
Lipper Growth Funds AverageC 14.79% 26.91% -4.49% 36.70% 8.08% 10.63%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1994 1995 1996 1997
<S> <C> <C> <C> <C>
EQUITY GROWTH - CLASS C -0.89% 39.14% 15.69% 23.11%
Lipper Growth Funds AverageC -2.17% 30.79% 19.24% 25.30%
S&P 500 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.67% 2.54% 3.32% 1.70%
</TABLE>
<PAGE>
(LARGE SOLID BOX) EQUITY GROWTH - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -0.5700000000000001
ROW: 3, COL: 1, VALUE: 15.57
ROW: 4, COL: 1, VALUE: 44.84
ROW: 5, COL: 1, VALUE: 6.930000000000001
ROW: 6, COL: 1, VALUE: 64.71000000000001
ROW: 7, COL: 1, VALUE: 9.890000000000001
ROW: 8, COL: 1, VALUE: 14.85
ROW: 9, COL: 1, VALUE: -0.8900000000000001
ROW: 10, COL: 1, VALUE: 39.14
ROW: 11, COL: 1, VALUE: 15.69
ROW: 12, COL: 1, VALUE: 23.11
GROWTH OPPORTUNITIES - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES - CLASS C 33.28% 24.14% -1.65% 42.68% 15.03%
Lipper Growth Funds AverageC 14.79% 26.91% -4.49% 36.70% 8.08%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
GROWTH OPPORTUNITIES - CLASS C 22.17% 2.86% 33.04% 17.73% 28.00%
Lipper Growth Funds AverageC 10.63% -2.17% 30.79% 19.24% 25.30%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) GROWTH OPPORTUNITIES - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 33.28
ROW: 4, COL: 1, VALUE: 24.14
ROW: 5, COL: 1, VALUE: -1.65
ROW: 6, COL: 1, VALUE: 42.68
ROW: 7, COL: 1, VALUE: 15.03
ROW: 8, COL: 1, VALUE: 22.17
ROW: 9, COL: 1, VALUE: 2.86
ROW: 10, COL: 1, VALUE: 33.04
ROW: 11, COL: 1, VALUE: 17.73
ROW: 12, COL: 1, VALUE: 28.0
LARGE CAP - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
LARGE CAP - CLASS C 23.12%
Lipper Growth Funds AverageC 25.30%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
GROWTH & INCOME - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1997
<S> <C>
GROWTH & INCOME - CLASS C 27.06%
Lipper Growth and Income Funds AverageD 27.14%
S&P 500 33.36%
Consumer Price Index 1.70%
</TABLE>
<PAGE>
EQUITY INCOME - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
EQUITY INCOME - CLASS C 23.23% 18.43% -14.28% 29.81% 14.68%
Lipper Equity Income Funds AverageE 16.74% 22.18% -6.78% 26.86% 9.77%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
EQUITY INCOME - CLASS C 18.03% 6.39% 31.96% 14.00% 25.29%
Lipper Equity Income Funds AverageE 13.66% -2.54% 30.17% 18.85% 27.51%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) EQUITY INCOME - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -2.24
ROW: 3, COL: 1, VALUE: 23.23
ROW: 4, COL: 1, VALUE: 18.43
ROW: 5, COL: 1, VALUE: -14.28
ROW: 6, COL: 1, VALUE: 29.81
ROW: 7, COL: 1, VALUE: 14.68
ROW: 8, COL: 1, VALUE: 18.03
ROW: 9, COL: 1, VALUE: 6.39
ROW: 10, COL: 1, VALUE: 31.96
ROW: 11, COL: 1, VALUE: 14.0
ROW: 12, COL: 1, VALUE: 25.29
BALANCED - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
BALANCED - CLASS C 20.89% 24.60% -2.94% 34.48% 9.20%
Lipper Balanced Funds AverageF 12.34% 19.57% -0.57% 26.69% 7.07%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
BALANCED - CLASS C 19.66% -5.09% 14.06% 8.29% 21.51%
Lipper Balanced Funds AverageF 10.91% -2.50% 25.16% 13.76% 19.00%
S&P 500 10.08% 1.32% 37.58% 22.96% 33.36%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) BALANCED - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 20.89
ROW: 4, COL: 1, VALUE: 24.6
ROW: 5, COL: 1, VALUE: -2.94
ROW: 6, COL: 1, VALUE: 34.48
ROW: 7, COL: 1, VALUE: 9.199999999999999
ROW: 8, COL: 1, VALUE: 19.66
ROW: 9, COL: 1, VALUE: -5.09
ROW: 10, COL: 1, VALUE: 14.06
ROW: 11, COL: 1, VALUE: 8.289999999999999
ROW: 12, COL: 1, VALUE: 21.51
HIGH YIELD - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS C 17.24% 3.64% 7.30% 34.94% 23.09%
Lipper High Current Yield Funds AverageG 12.89% -0.58% -10.13% 36.91% 17.51%
Merrill Lynch High Yield Master Index 13.47% 4.23% -4.35% 34.58% 18.16%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
HIGH YIELD - CLASS C 20.45% -2.11% 18.34% 12.45% 14.18%
Lipper High Current Yield Funds AverageG 18.95% -3.85% 16.43% 13.67% 12.96%
Merrill Lynch High Yield Master Index 17.18% -1.17% 19.91% 11.06% 12.82%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
<PAGE>
(LARGE SOLID BOX) HIGH YIELD - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 17.24
ROW: 4, COL: 1, VALUE: 3.64
ROW: 5, COL: 1, VALUE: 7.3
ROW: 6, COL: 1, VALUE: 34.94
ROW: 7, COL: 1, VALUE: 23.09
ROW: 8, COL: 1, VALUE: 20.45
ROW: 9, COL: 1, VALUE: -2.11
ROW: 10, COL: 1, VALUE: 18.34
ROW: 11, COL: 1, VALUE: 12.45
ROW: 12, COL: 1, VALUE: 14.18
STRATEGIC INCOME - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1995 1996 1997
<S> <C> <C> <C>
STRATEGIC INCOME - CLASS C 21.35% 12.14% 8.55%
Lipper Multi-Sector Income Funds AverageH 16.92% 11.74% 8.77%
Merrill Lynch High Yield Master Index 19.91% 11.06% 12.82%
Consumer Price Index 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) STRATEGIC INCOME - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 0.0
ROW: 9, COL: 1, VALUE: 0.0
ROW: 10, COL: 1, VALUE: 21.35
ROW: 11, COL: 1, VALUE: 12.14
ROW: 12, COL: 1, VALUE: 8.550000000000001
GOVERNMENT INVESTMENT - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
GOVERNMENT INVESTMENT - CLASS C 6.57% 11.75% 8.37% 13.45% 6.48%
Lipper General U.S. Government Bond 6.67% 12.46% 8.22% 14.44% 6.41%
Funds AverageJ
Lehman Brothers Government Bond Index 7.03% 14.22% 8.72% 15.32% 7.23%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
GOVERNMENT INVESTMENT - CLASS C 9.36% -4.38% 16.92% 1.37% 8.00%
Lipper General U.S. Government Bond 9.42% -4.64% 17.34% 1.72% 8.84%
Funds AverageJ
Lehman Brothers Government Bond Index 10.66% -3.37% 18.34% 2.77% 9.59%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) GOVERNMENT INVESTMENT -
CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.57
ROW: 4, COL: 1, VALUE: 11.75
ROW: 5, COL: 1, VALUE: 8.370000000000001
ROW: 6, COL: 1, VALUE: 13.45
ROW: 7, COL: 1, VALUE: 6.48
ROW: 8, COL: 1, VALUE: 9.360000000000001
ROW: 9, COL: 1, VALUE: -4.38
ROW: 10, COL: 1, VALUE: 16.92
ROW: 11, COL: 1, VALUE: 1.37
ROW: 12, COL: 1, VALUE: 8.0
INTERMEDIATE BOND - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
INTERMEDIATE BOND - CLASS C 7.84% 12.11% 7.91% 15.16% 7.13%
Lipper Short-Intermediate Investment 6.16% 9.94% 8.11% 14.01% 6.24%
Grade Bond Funds AverageK
Lehman Brothers Intermediate 6.67% 12.77% 9.16% 14.62% 7.17%
Government/Corporate Bond Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
INTERMEDIATE BOND - CLASS C 11.49% -3.12% 11.51% 2.63% 6.27%
Lipper Short-Intermediate Investment 7.51% -2.08% 12.88% 4.17% 6.62%
Grade Bond Funds AverageK
Lehman Brothers Intermediate 8.79% -1.93% 15.33% 4.05% 7.87%
Government/Corporate Bond Index
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
<PAGE>
(LARGE SOLID BOX) INTERMEDIATE BOND - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 2.32
ROW: 3, COL: 1, VALUE: 7.84
ROW: 4, COL: 1, VALUE: 12.11
ROW: 5, COL: 1, VALUE: 7.91
ROW: 6, COL: 1, VALUE: 15.16
ROW: 7, COL: 1, VALUE: 7.13
ROW: 8, COL: 1, VALUE: 11.49
ROW: 9, COL: 1, VALUE: -3.12
ROW: 10, COL: 1, VALUE: 11.51
ROW: 11, COL: 1, VALUE: 2.63
ROW: 12, COL: 1, VALUE: 6.270000000000001
SHORT FIXED-INCOME - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
SHORT FIXED-INCOME - CLASS C 6.19% 10.31% 5.87% 13.37% 7.61%
Lipper Short Investment Grade Bond 6.86% 10.22% 7.87% 12.88% 5.97%
Funds AverageL
Lehman Brothers 1-3 Year 6.84% 10.97% 9.69% 11.83% 6.35%
Government/Corporate Bond Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
SHORT FIXED-INCOME - CLASS C 9.49% -3.37% 9.81% 4.57% 6.01%
Lipper Short Investment Grade Bond 6.45% -0.44% 10.84% 4.64% 6.19%
Funds AverageL
Lehman Brothers 1-3 Year 5.55% 0.55% 10.96% 5.26% 6.66%
Government/Corporate Bond Index
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) SHORT FIXED-INCOME - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.19
ROW: 4, COL: 1, VALUE: 10.31
ROW: 5, COL: 1, VALUE: 5.87
ROW: 6, COL: 1, VALUE: 13.37
ROW: 7, COL: 1, VALUE: 7.609999999999999
ROW: 8, COL: 1, VALUE: 9.49
ROW: 9, COL: 1, VALUE: -3.37
ROW: 10, COL: 1, VALUE: 9.810000000000001
ROW: 11, COL: 1, VALUE: 4.57
ROW: 12, COL: 1, VALUE: 6.01
MUNICIPAL INCOME - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME- CLASS C 11.80% 13.09% 10.29% 12.18% 11.11%
Lipper General Municipal Debt 11.53% 9.65% 6.05% 12.09% 8.79%
Funds Average M
Lehman Brothers Municipal Bond Index 10.16% 10.79% 7.29% 12.14% 8.81%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
MUNICIPAL INCOME- CLASS C 13.79% -8.54% 15.60% 2.28% 9.34%
Lipper General Municipal Debt 12.47% -6.50% 16.84% 3.30% 9.11%
Funds Average M
Lehman Brothers Municipal Bond Index 12.29% -5.17% 17.45% 4.43% 9.19%
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
(LARGE SOLID BOX) MUNICIPAL INCOME - CLASS C
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 11.8
ROW: 4, COL: 1, VALUE: 13.09
ROW: 5, COL: 1, VALUE: 10.29
ROW: 6, COL: 1, VALUE: 12.18
ROW: 7, COL: 1, VALUE: 11.11
ROW: 8, COL: 1, VALUE: 13.79
ROW: 9, COL: 1, VALUE: -8.539999999999999
ROW: 10, COL: 1, VALUE: 15.6
ROW: 11, COL: 1, VALUE: 2.28
ROW: 12, COL: 1, VALUE: 9.34
INTERMEDIATE MUNICIPAL INCOME - CLASS C
<TABLE>
<CAPTION>
Calendar year total returns+ 1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME - CLASS C 7.38% 7.79% 6.37% 9.64% 7.32%
Lipper Intermediate Municipal Debt 7.57% 8.26% 6.59% 10.52% 7.80%
Funds AverageN
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90%
</TABLE>
<TABLE>
<CAPTION>
Calendar year total returns+ 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME - CLASS C 9.43% -6.13% 13.22% 3.23% 7.21%
Lipper Intermediate Municipal Debt 10.18% -3.51% 12.89% 3.70% 7.16%
Funds AverageN
Consumer Price Index 2.75% 2.67% 2.54% 3.32% 1.70%
</TABLE>
<PAGE>
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL INCOME -
CLASS C
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 2.33
Row: 3, Col: 1, Value: 7.38
Row: 4, Col: 1, Value: 7.79
Row: 5, Col: 1, Value: 6.37
Row: 6, Col: 1, Value: 9.639999999999999
Row: 7, Col: 1, Value: 7.319999999999999
Row: 8, Col: 1, Value: 9.43
Row: 9, Col: 1, Value: -6.13
Row: 10, Col: 1, Value: 13.22
Row: 11, Col: 1, Value: 3.23
Row: 12, Col: 1, Value: 7.21
+ RETURNS DO NOT INCLUDE THE EFFECT OF PAYING CLASS A OR CLASS T'S MAXIMUM
FRONT-END SALES CHARGE OR CLASS B AND CLASS C'S APPLICABLE CONTINGENT DEFERRED
SALES CHARGE.
INITIAL OFFERING OF CLASS A FOR EACH FUND (EXCEPT TECHNOQUANT GROWTH,
GROWTH & INCOME, AND MORTGAGE SECURITIES )TOOK PLACE ON SEPTEMBER 3, 1996.
CLASS A RETURNS PRIOR TO SEPTEMBER 3, 1996 (EXCEPT FOR EQUITY GROWTH, EQUITY
INCOME, INTERMEDIATE BOND, AND INTERMEDIATE MUNICIPAL INCOME) ARE THOSE OF CLASS
T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996) FOR EQUITY
FUNDS, 0.25% FOR BOND FUND S, AND 0.15% FOR SHORT-TERM BOND FUNDS. IF
CLASS A'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996
FOR THE EQUITY FUNDS AND THE B OND FUNDS WOULD HAVE BEEN HIGHER.
FOR EQUITY GROWTH, EQUITY INCOME, INTERMEDIATE BOND, AND INTERMEDIATE
MUNICIPAL INCOME, CLASS A RETURNS FROM SEPTEMBER 3, 1996 THROUGH SEPTEMBER 10,
1992 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO
JANUARY 1, 1996) FOR EQUITY GROWTH AND EQUITY INCOME AND 0.25% FOR INTERMEDIATE
BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS A RETURNS PRIOR TO SEPTEMBER 10,
1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS A'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996 THROUGH
SEPTEMBER 10, 1992 WOULD HAVE BEEN HIGHER AND TOTAL RETURNS PRIOR TO SEPTEMBER
10, 1992 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS A, CLASS T, AND CLASS B OF MORTGAGE SECURITIES
TOOK PLACE ON MARCH 3, 1997. CLASS A, CLASS T, AND CLASS B RETURNS PRIOR TO
MARCH 3, 1997 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS A'S,
CLASS T'S, AND CLASS B'S RESPECTIVE 12B-1 FEES HAD BEEN REFLECTED, TOTAL RETURNS
PRIOR TO MARCH 3, 1997 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS T OF EQUITY GROWTH, EQUITY INCOME, INTERMEDIATE
BOND, AND INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON SEPTEMBER 10, 1992. CLASS
T RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS
NO 12B-1 FEE. IF CLASS T'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO
SEPTEMBER 10, 1992 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF EQUITY GROWTH TOOK PLACE ON DECEMBER 31,
1996. CLASS B RETURNS FROM DECEMBER 31, 1996 THROUGH SEPTEMBER 10, 1992 ARE
THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1,
1996). CLASS B RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL
CLASS WHICH HAS NO 12B-1 FEE. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL
RETURNS PRIOR TO DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF BALANCED TOOK PLACE ON DECEMBER 31, 1996.
CLASS B RETURNS PRIOR TO DECEMBER 31, 1996 ARE THOSE OF CLASS T WHICH REFLECT A
12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996). IF CLASS B'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO DECEMBER 31, 1996 WOULD HAVE BEEN
LOWER.
INITIAL OFFERING OF CLASS B OF GROWTH OPPORTUNITIES TOOK PLACE ON MARCH 3,
1997. CLASS B RETURNS PRIOR TO MARCH 3, 1997 ARE THOSE OF CLASS T WHICH REFLECT
A 12B-1 FEE OF 0.50%(0.65% PRIOR TO JANUARY 1, 1996). IF CLASS B'S 12B-1 FEE HAD
BEEN REFLECTED , TOTAL RETURNS PRIOR TO MARCH 3, 199 7 WOULD HAVE
BEEN LOWER.
INITIAL OFFERING OF CLASS B OF EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON JUNE 30, 1994. CLASS B RETURNS PRIOR
TO JUNE 30, 1994 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT A
12B-1 FEE OF 0.65% FOR EQUITY INCOME, AND 0.25% FOR INTERMEDIATE BOND AND
INTERMEDIATE MUNICIPAL INCOME. CLASS B RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE
THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS B'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF STRATEGIC OPPORTUNITIES TOOK PLACE ON JUNE
30, 1994. CLASS B RETURNS PRIOR TO JUNE 30, 1994 ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.65%. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL
RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF HIGH YIELD, GOVERNMENT INVESTMENT, AND
MUNICIPAL INCOME TOOK PLACE ON JUNE 30, 1994. CLASS B RETURNS PRIOR TO JUNE 30,
1994 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.25%. IF CLASS B'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN
LOWER.
INITIAL OFFERING OF CLASS C OF STRATEGIC INCOME TOOK PLACE ON NOVEMBER 3,
1997. CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 ARE THOSE OF CLASS B WHICH
REFLECT A 12B-1 FEE OF 0.90%(1.00% PRIOR TO JANUARY 1, 1996). IF CLASS C'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH
JANUARY 1, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF EQUITY GROWTH TOOK PLACE ON NOVEMBER 3,
1997. CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH DECEMBER 31, 1996 ARE
THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%. CLASS C RETURNS PRIOR TO
DECEMBER 31, 1996 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT
A 12B-1 FEE OF 0.65%. CLASS C RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF
INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS C'S 12B-1 FEE HAD BEEN
REFLECTED, TOTAL RETURNS PRIOR TO DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF GROWTH OPPORTUNITIES TOOK PLACE ON NOVEMBER
3, 1997. CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH MARCH 3, 1997 ARE
THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%. CLASS C RETURNS PRIOR TO
MARCH 3, 1997 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65%
PRIOR TO JANUARY 1, 1996). IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL
RETURNS PRIOR TO MARCH 3, 1997 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF BALANCED TOOK PLACE ON NOVEMBER 3, 1997.
CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 THROUGH DECEMBER 31, 1996 ARE THOSE OF
CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%. CLASS C RETURNS PRIOR TO DECEMBER
31, 1996 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO
JANUARY 1, 1996). IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR
TO DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF HIGH YIELD, GOVERNMENT INVESTMENT, AND
MUNICIPAL INCOME TOOK PLACE ON NOVEMBER 3, 1997. CLASS C RETURNS PRIOR TO
NOVEMBER 3, 1997 THROUGH JUNE 30, 1994 ARE THOSE OF CLASS B WHICH REFLECT A
12B-1 FEE OF 0.90% (1.00% PRIOR TO JANUARY 1, 1996). CLASS C RETURNS PRIOR TO
JUNE 30, 1994 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.25%. IF CLASS
C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO NOVEMBER 3, 1997
THROUGH JANUARY 1, 1996 AND PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF TECHNOQUANT GROWTH, MID CAP, LARGE CAP, AND
GROWTH & INCOME TOOK PLACE ON NOVEMBER 3, 1997. CLASS C RETURNS PRIOR TO
NOVEMBER 3, 1997 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%.
INITIAL OFFERING OF CLASS C OF SHORT FIXED-INCOME TOOK PLACE ON
NOVEMBER 3, 1997. CLASS C RETURNS PRIOR TO NOVEMBER 3, 1997 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.15%. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS C OF EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON NOVEMBER 3, 1997. CLASS C RETURNS
PRIOR TO NOVEMBER 3, 1997 THROUGH JUNE 30, 1994 ARE THOSE OF CLASS B WHICH
REFLECT A 12B-1 FEE OF 1.00% FOR EQUITY INCOME AND 0.90% (1.00% PRIOR TO JANUARY
1, 1996) FOR INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS C
RETURNS PRIOR TO JUNE 30, 1994 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.65% FOR EQUITY INCOME AND 0.25% FOR INTERMEDIATE
BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS C RETURNS PRIOR TO SEPTEMBER 10,
1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS C'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS FOR EQUITY INCOME PRIOR TO JUNE 30, 1994
WOULD HAVE BEEN LOWER. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS
FOR INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL INCOME PRIOR TO NOVEMBER 3,
1997 THROUGH JANUARY 1, 1996 AND PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN
LOWER.
[A] THE LIPPER CAPITAL APPRECIATION FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 231 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[B] THE LIPPER MID CAP FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 249 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[C ] THE LIPPER GROWTH FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 820 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[D] THE LIPPER GROWTH AND INCOME FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 611 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[E] THE LIPPER EQUITY INCOME FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 182 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[F] THE LIPPER BALANCED FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 350 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[G] THE LIPPER HIGH CURRENT YIELD FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 181 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[H] THE LIPPER MULTI-SECTOR INCOME FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 81 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[I] THE LIPPER U.S. MORTGAGE FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 59 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[J] THE LIPPER GENERAL U.S. GOVERNMENT BOND FUNDS AVERAGE
CURRENTLY REFLECTS THE PERFORMANCE OF OVER
179 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[K ] THE LIPPER SHORT- INTERMEDIATE INVESTMENT GRADE BOND FUNDS
AVERAGE CURRENTLY REFLECTS THE PERFORMANCE OF OVER 195 MUTUAL FUNDS WITH
SIMILAR OBJECTIVES.
[L] THE LIPPER SHORT INVESTMENT GRADE BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 101 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[M] THE LIPPER GENERAL MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 235 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[N] THE LIPPER INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 140 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[O] THE LIPPER SHORT-INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE
CURRENTLY REFLECTS THE PERFORMANCE OF OVER
33 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
TECHNOQUANT IS A TRADEMARK OF FMR CORP.
FIDELITY ADVISOR FUNDS INSTITUTIONAL CLASS PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b,c .............................. *
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Performance
4 a i............................. Charter
ii........................... Investment Principles and Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Charter
ii........................... Charter
iii.......................... Breakdown of Expenses
c .............................. Charter
d .............................. Charter; Breakdown of Expenses
e .............................. Charter; Breakdown of Expenses
f .............................. Expenses
g i............................. Charter
ii............................. *
5A .............................. *
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions
iii.......................... Charter
b ............................. Charter
c .............................. Transactions Details; Exchange Restrictions
d .............................. Who May Want to Invest
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
h .............................. Who May Want to Invest
7 a .............................. Cover Page; Charter
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. Breakdown of Expenses; Transaction Details
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY ADVISOR FUNDS
INSTITUTIONAL CLASS
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of a fund's most recent financial report and portfolio listing or
a copy of the Statement of Additional Information (SAI) dated February
28, 1998. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is available along with other related materials
on the SEC's Internet Web site (http://www.sec.gov). The SAI is
incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity
Distributors Corporation (FDC), 82 Devonshire Street, Boston, MA
02109, or your investment professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
HIGH YIELD AND STRATEGIC INCOME MAY INVEST SIGNIFICANTLY IN
LOWER-QUALITY DEBT SECURITIES, SOMETIMES CALLED "JUNK BONDS." THESE
SECURITIES CARRY GREATER RISKS, SUCH AS THE RISK OF DEFAULT, THAN
OTHER DEBT SECURITIES.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
ACOMI-PRO-0298
GROWTH FUNDS:
Fidelity Advisor TechnoQuantSM Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS:
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS:
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS:
Fidelity Advisor Municipal Income Fund
(formerly Fidelity Advisor High Income Municipal Fund)
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
PROSPECTUS
FEBRUARY 28, 1998(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON,
MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Institutional Class's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's financial data.
PERFORMANCE How each fund has done over time.
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's overall approach
to investing.
BREAKDOWN OF EXPENSES How operating costs are calculated
and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your account,
including tax- advantaged retirement plans.
HOW TO BUY SHARES Opening an account and making additional
investments.
HOW TO SELL SHARES Taking money out and closing your account.
INVESTOR SERVICES Services to help you manage your account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
APPENDIX A
APPENDIX B
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Institutional Class shares are offered to:
1. Broker-dealer managed account programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans must have at least $50 million in plan assets;
2. Registered investment advisor managed account programs, provided
the registered investment advisor is not part of an organization
primarily engaged in the brokerage business, and the program (i)
charges an asset-based fee and (ii) will have at least $1 million
invested in the Institutional Class of the Advisor funds. In addition,
non-employee benefit plan accounts in the program must be managed on a
discretionary basis;
3. Trust institution and bank trust department managed account
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds; and
5. Fidelity Trustees and employees.
For purchases made by managed account programs or insurance company
separate accounts, FDC reserves the right to waive the requirement
that $1 million be invested in the Institutional Class of the Advisor
funds. Employee benefit plan investors must meet additional
requirements specified in the funds' SAI.
TechnoQuantSM Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
Balanced, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, Municipal Income, and
Intermediate Municipal Income are diversified funds.
Strategic Income and Short-Intermediate Municipal Income are
non-diversified funds. Non-diversified funds may invest a greater
portion of their assets in securities of individual issuers than
diversified funds. As a result, changes in the market value of a
single issuer could cause greater fluctuations in share value than
would occur in a more diversified fund.
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
and Balanced are designed for investors who are willing to ride out
stock market fluctuations in pursuit of potentially high long-term
returns. TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, and Large Cap are designed for
investors who want to be invested in the stock market for its
long-term growth potential. These funds invest for growth and do not
pursue income. Growth & Income, Equity Income, and Balanced are
designed for those investors who seek a combination of growth and
income from equity and some bond investments.
TechnoQuant Growth is designed to provide an alternative to more
traditional styles of investing for growth-oriented investors. The
fund utilizes computer-aided quantitative analysis emphasizing
technical factors, such as historical price and volume relationships.
High Yield and Strategic Income are designed for investors who want
high current income with some potential for capital growth from a
portfolio of debt instruments with a focus on lower-quality debt
securities and income-producing equity securities. These funds may be
appropriate for long-term, aggressive investors who understand the
potential risks and rewards of investing in lower-quality debt
securities, including defaulted securities.
Strategic Income may also be appropriate for investors who want to
pursue their investment goals in markets outside of the United States.
By including international investments in your portfolio, you can
achieve additional diversification and participate in growth
opportunities around the world.
Mortgage Securities is designed for investors who seek high current
income from a portfolio of mortgage-related securities of all types.
Government Investment is designed for investors who seek high current
income from a portfolio of U.S. Government securities in a manner
consistent with preserving principal.
Intermediate Bond and Short Fixed-Income are designed for investors
who seek high current income from a portfolio of investment-grade debt
securities consistent with capital preservation.
Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income are designed for investors in
higher tax brackets who seek high current income that is free from
federal income tax. Intermediate Municipal Income and
Short-Intermediate Municipal Income also invest consistent with
consideration of capital preservation.
The value of each fund's investments and, as applicable, the income
they generate, will vary from day to day, and generally reflect
changes in market conditions, interest rates and other company,
political, and economic news. In the short term, stock prices can
fluctuate dramatically in response to these factors. The securities of
small, less well-known companies may be more volatile than those of
larger companies. Bond values fluctuate based on changes in interest
rates and the credit quality of the issuer, and may be subject to
prepayment risk, which can limit their price appreciation potential in
periods of declining interest rates. Over time, however, stocks,
although more volatile, have shown greater growth potential than other
types of securities. Investments in foreign securities may involve
risks in addition to those of U.S. investments, including increased
political and economic risk, as well as exposure to currency
fluctuations.
Each fund is not in itself a balanced investment plan. You should
consider your investment objective and tolerance for risk when making
an investment decision. When you sell your fund shares, they may be
worth more or less than what you paid for them.
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio. Each
fund offers Institutional Class shares, Class A shares, and Class T
shares. Certain of the funds also offer Class B shares and Class C
shares. Class A and Class T shares have a front-end sales charge and
pay a 12b-1 fee. Class A and Class T shares may be subject to a
contingent deferred sales charge (CDSC). Class B and Class C shares do
not have a front-end sales charge, but do have a CDSC, and pay a 12b-1
fee. You may obtain more information about Class A, Class T, Class B,
and Class C shares, which are not offered through this prospectus, by
calling 1-800-843-3001 or from your investment professional.
The performance of one class of shares of a fund may be different from
the performance of another class of shares of the same fund because of
different sales charges and class expenses. For example, because
Institutional Class shares have no sales charge, and do not pay a
12b-1 fee, Institutional Class shares are expected to have a higher
total return than Class A, Class T, Class B, and Class C shares.
The Board of Trustees of Fidelity Advisor Short-Intermediate Municipal
Income Fund has unanimously approved an Agreement and Plan of
Reorganization ("Agreement") between Fidelity Advisor
Short-Intermediate Municipal Income Fund and Fidelity Advisor
Intermediate Municipal Income Fund, a fund of Fidelity Advisor Series
VI. The Agreement will be presented to Fidelity Advisor
Short-Intermediate Municipal Income Fund shareholders for their vote
of approval or disapproval at a special meeting to be held on May 4,
1998. If the proposal is approved at the Meeting by a
majority of Fidelity Advisor Short-Intermediate Municipal Income
Fund's shareholders and certain conditions required by the
Agreement are satisfied, the Reorganization is expected to become
effective on or about May 28, 1998.
Effective January 1, 1998 , Fidelity Advisor Short-Intermediate
Municipal Income Fund was closed to new accounts pending the
reorganization.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell Institutional Class shares of a fund. In addition, you may be
charged an annual account maintenance fee if your account balance
falls below $2,500. See "Transaction Details," page , for an
explanation of how and when these charges apply.
Sales charge on purchases and reinvested distributions None
Deferred sales charge on redemptions None
Annual account maintenance fee (for accounts under $2,500) $12.00
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to Fidelity Management & Research Company
(FMR) that, for Growth Opportunities and Strategic Opportunities,
varies based on performance. Each fund also incurs other expenses for
services such as maintaining shareholder records and furnishing
shareholder statements and financial reports.
Institutional Class's expenses are factored into its share price or
dividends and are not charged directly to shareholder accounts (see
"Breakdown of Expenses" on page ).
The following figures are based on estimated or historical expenses
of the Inst itutional Class of each fund and are calculated as a
percentage of average net assets of the Institutional Class of each
fund.
EXPENSE TABLE EXAMPLE: You would pay the following amount in total
expenses on a $1,000 investment in Institutional Class shares of a
fund, assuming a 5% annual return and full redemption at the end of
each time period. Total expenses shown on the next page include any
shareholder transaction expenses and Institutional Class's annual
operating expenses.
EQUITY FUNDS
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TECHNOQUANT GROWTH Management fee 0.60% 1 year $ 15
12b-1 fee None 3 years $ 47
Other expenses (after reimbursement) 0.90% 5 years $ 82
Total operating expenses 1.50% 10 years $ 179
MID CAP Management fee 0.60% 1 year $ 9
12b-1 fee None 3 years $ 29
Other expenses 0.31% 5 years $ 50
Total operating expenses 0.91% 10 years $ 112
EQUITY GROWTH Management fee 0.60% 1 year $ 8
12b-1 fee None 3 years $ 25
Other expenses 0.17% 5 years $ 43
Total operating expenses 0.77% 10 years $ 95
GROWTH OPPORTUNITIES Management fee 0.49% 1 year $ 7
12b-1 fee None 3 years $ 21
Other expenses 0.17% 5 years $ 37
Total operating expenses 0.66% 10 years $ 82
STRATEGIC OPPORTUNITIES Management fee 0.40% 1 year $ 11
12b-1 fee None 3 years $ 34
Other expenses 0.66% 5 years $ 58
Total operating expenses 1.06% 10 years $ 129
LARGE CAP Management fee 0.60% 1 year $ 12
12b-1 fee None 3 years $ 37
Other expenses 0.55% 5 years $ 63
Total operating expenses 1.15% 10 years $ 140
GROWTH & INCOME Management fee 0.50% 1 year $ 12
12b-1 fee None 3 years $ 38
Other expenses 0.69% 5 years $ 65
Total operating expenses 1.19% 10 years $ 144
EQUITY INCOME Management fee 0.50% 1 year $ 7
12b-1 fee None 3 years $ 22
Other expenses 0.19% 5 years $ 38
Total operating expenses 0.69% 10 years $ 86
BALANCED Management fee 0.45% 1 year $ 7
12b-1 fee None 3 years $ 22
Other expenses 0.24% 5 years $ 38
Total operating expenses 0.69% 10 years $ 86
</TABLE>
TAXABLE INCOME FUNDS
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HIGH YIELD Management fee 0.59% 1 year $ 9
12b-1 fee None 3 years $ 27
Other expenses 0.26% 5 years $ 47
Total operating expenses 0.85% 10 years $ 105
STRATEGIC INCOME Management fee 0.59% 1 year $ 11
12b-1 fee None 3 years $ 35
Other expenses (after reimbursement) 0.51% 5 years $ 61
Total operating expenses 1.10% 10 years $ 134
MORTGAGE SECURITIES Management fee 0.44% 1 year $ 8
12b-1 fee None 3 years $ 24
Other expenses (after reimbursement) 0.31%[A] 5 years $ 42
Total operating expenses 0.75% 10 years $ 93
GOVERNMENT INVESTMENT Management fee 0.44% 1 year $ 8
12b-1 fee None 3 years $ 24
Other expenses (after reimbursement) 0.31% 5 years $ 42
Total operating expenses 0.75% 10 years $ 93
INTERMEDIATE BOND Management fee 0.44% 1 year $ 7
12b-1 fee None 3 years $ 21
Other expenses 0.23% 5 years $ 37
Total operating expenses 0.67% 10 years $ 83
SHORT FIXED-INCOME Management fee 0.44% 1 year $ 8
12b-1 fee None 3 years $ 24
Other expenses (after reimbursement) 0.31% 5 years $ 42
Total operating expenses 0.75% 10 years $ 93
</TABLE>
MUNICIPAL FUNDS
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MUNICIPAL INCOME Management fee 0.39% 1 year $ 8
12b-1 fee None 3 years $ 24
Other expenses (after reimbursement) 0.36% 5 years $ 42
Total operating expenses 0.75% 10 years $ 93
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME Management fee 0.39% 1 year $ 8
12b-1 fee None 3 years $ 24
Other expenses (after reimbursement) 0.36% 5 years $ 42
Total operating expenses 0.75% 10 years $ 93
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL INCOME Management fee 0.39% 1 year $ 8
12b-1 fee None 3 years $ 24
Other expenses (after reimbursement) 0.36% 5 years $ 42
Total operating expenses 0.75% 10 years $ 93
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED EXPENSES OR RETURNS, ALL OF WHICH MAY VARY.
A portion of the brokerage commissions that certain of the funds pay
is used to reduce fund expenses. In addition, certain funds have
entered into arrangements with their custodian and transfer agent
whereby credits realized as a result of uninvested cash balances are
used to reduce custodian and transfer agent expenses. Including these
reductions, the total Institutional Class operating expenses presented
in the preceding tables would have been:
Institutional Class
Mid Cap 0.84%
Equity Growth 0.75 %
Growth Opportunities 0.65 %
Strategic Opportunities 1.05 %
Large Cap 1.12 %
Equity Income 0.67 %
Strategic Income 1.09%
FMR has voluntarily agreed to reimburse the Institutional Class of
each fund to the extent that total operating expenses, as a percentage
of their respective average net assets, exceed the following rates:
Effective
Date
TechnoQuant Growth 1.50% 12/31/96
Mid Cap 1.50% 2/20/96
Equity Growth 0.95% 11/1/97
Growth Opportunities 0.85% 11/1/97
Strategic Opportunities 1.50% 3/1/97
Large Cap 1.50% 2/20/96
Growth & Income 1.25% 12/31/96
Equity Income 0.85% 11/1/97
Balanced 0.80% 11/1/97
High Yield 1.10% 7/1/95
Strategic Income 1.10% 7/1/95
Mortgage Securities 0.75% 3/1/97
Government Investment 0.75% 7/1/95
Intermediate Bond 0.75% 7/1/95
Short Fixed Income 0.75% 8/30/96
Municipal Income 0.75% 7/1/95
Intermediate Municipal Income 0.75% 7/1/95
Short-Intermediate Municipal Income 0.75% 7/1/95
If these agreements were not in effect, other expenses and total
operating expenses of the Institutional Class of each fund, as a
percentage of average net assets, would have been the following
amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Other Expenses Total Operating
Expenses
TechnoQuant Growth 3.84% 4.44%
Strategic Income 0.62% 1.21%
Mortgage Securities 0.69%[A] 1.13%[A]
Government Investment 0.34% 0.78%
Short Fixed-Income 0.58% 1.02%
Municipal Income 1.56% 1.95%
Intermediate Municipal Income 0.58% 0.97%
Short-Intermediate Municipal
Income 3.84% 4.23%
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, and extraordinary expenses.
KEY FACTS
FINANCIAL HIGHLIGHTS
TECHNOQUANT GROWTH - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C>
Selected Per-Share Data and RatiosD
Year ended November 30 1997G
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income (loss) (.04)
Net realized and unrealized gain (loss) 1.44
Total from Investment Operations 1.40
Net asset value, end of period $ 11.40
Total returnB,C 14.00%
Net assets, end of period (000 omitted) $ 1,459
Ratio of expenses to average net assets 1.50%A,E
Ratio of net investment income (loss) to average net assets (.42)%A
Portfolio turnover 213%A
Average commission rateF $ .0311
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO NOVEMBER 30, 1997.
MID CAP - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
Selected Per-Share Data and RatiosD
Years ended November 30 1997 1996H
Net asset value, beginning of period $ 11.70 $ 10.00
Income from Investment Operations
Net investment income (loss) .01 (.02)
Net realized and unrealized gain (loss) 2.63 1.72
Total from investment operations 2.64 1.70
Less Distributions
From net realized gain (.22) --
Net asset value, end of period $ 14.12 $ 11.70
Total returnB,C 23.04% 17.00%
Net assets, end of period (000 omitted) $ 30,542 $ 3,600
Ratio of expenses to average net assets .91% 1.50%A,E
Ratio of expenses to average net assets after expense reductions .84%F 1.50%A
Ratio of net investment income (loss) to average net assets .08% (.27)%A
Portfolio turnover 208% 101%A
Average commission rateG $ .0401 $ .0382
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
H FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO NOVEMBER 30, 1996.
EQUITY GROWTH - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended November 30
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net asset value, beginning of period
$ 45.52 $ 40.39 $ 28.90 $ 29.74 $ 26.37 $ 24.28 $ 15.55 $ 17.32 $ 12.02 $ 9.92
Income from Investment Operations
Net investment income
.22D .45D .28 .30 .19D .17 .04 .01 .06 .28A
Net realized and unrealized gain (loss)
8.72 7.00 11.69 .42 3.78 4.55 8.69 .34 5.50 2.59
Total from investment operations
8.94 7.45 11.97 .72 3.97 4.72 8.73 .35 5.56 2.87
Less Distributions
From net investment income
(.37) (.21)E (.27) (.11) (.10) (.03) -- (.08) (.26) (.01)
From net realized gain
(1.23) (2.11)E (.16) (1.45) (.50) (2.60) -- (2.04) -- (.76)
In excess of net realized gain
-- -- (.05) -- -- -- -- -- -- --
Total distributions
(1.60) (2.32) (.48) (1.56) (.60) (2.63) -- (2.12) (.26) (.77)
Net asset value, end of period
$ 52.86 $ 45.52 $ 40.39 $ 28.90 $ 29.74 $ 26.37 $ 24.28 $ 15.55 $ 17.32 $ 12.02
Total returnC
20.46% 19.68% 42.15% 2.46% 15.36% 21.14% 56.14% 2.75% 47.18% 29.77%
Net assets, end of period (000 omitted)
$ 1,032,453 $ 1,323,526 $ 791,074 $ 410,450 $ 296,466 $ 179,325 $ 68,766 $ 27,473 $ 24,523 $ 20,182
Ratio of expenses to average net assets
.77% .79% .83% .86% .95% .98% 1.13% 1.74% 1.60% 1.47%
Ratio of expenses to average net
.75%F .77%F .83% .84%F .94%F .98% 1.13% 1.74% 1.60% 1.47%
assets after expense reductions
Ratio of net investment income to
.46% 1.11% .92% 1.00% .66% .73% .25% .07% .38% 1.20%
average net assets
Portfolio turnover
108% 76% 97% 137% 160% 240% 254% 262% 269% 331%
Average commission rateB
$ .0427 $ .0414
</TABLE>
A DURING THE PERIOD, A SIGNIFICANT SHAREHOLDER REDEMPTION CAUSED AN
UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
B FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended 1997I 1997H 1996H 1995E
Net asset value, beginning of period $ 42.85 $ 35.47 $ 30.97 $ 29.04
Income from Investment Operations
Net investment income .05D .75D .77D .12
Net realized and unrealized gain (loss) 1.41 8.78 4.74 1.81
Total from investment operations 1.46 9.53 5.51 1.93
Less Distributions
From net investment income -- (.71) (.61) --
From net realized gain -- (1.44) (.40) --
Total distributions -- (2.15) (1.01) --
Net asset value, end of period $ 44.31 $ 42.85 $ 35.47 $ 30.97
Total returnB,C 3.41% 28.07% 18.25% 6.65%
Net assets, end of period (000 omitted) $ 391,713 $ 374,978 $ 250,283 $ 71,953
Ratio of expenses to average net assets .71%A .66% .85% .82%A
Ratio of expenses to average net assets after expense reductions .70%A,F .65%F .84%F .81%A,F
Ratio of net investment income to average net assets 1.60%A 1.91% 2.38% 2.33%A
Portfolio turnover 33%A 35% 33% 39%
Average commission rateG $ .0497 $ .0480 $ .0401
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H YEAR ENDED OCTOBER 31
I ONE MONTH ENDED NOVEMBER 30, 1997
STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended 1997H 1996I 1995E
Net asset value, beginning of period $ 22.57 $ 24.80 $ 22.35
Income from Investment Operations
Net investment income (loss) (.05)D .29D .55
Net realized and unrealized gain (loss) 5.98 .17 3.00
Total from investment operations 5.93 .46 3.55
Less Distributions
From net investment income -- (.34) (.55)
From net realized gain (.87) (2.35) (.55)
Total distributions (.87) (2.69) (1.10)
Net asset value, end of period $ 27.63 $ 22.57 $ 24.80
Total returnB,C 27.16% 1.99% 15.96%
Net assets, end of period (000 omitted) $ 5,564 $ 41,832 $ 20,429
Ratio of expenses to average net assets 1.06%A .78% .97%A
Ratio of expenses to average net assets after expense reductions 1.05%A,F .76%F .96%A,F
Ratio of net investment income (loss) to average net assets (.21)%A 1.21% 2.55%A
Portfolio turnover 61%A 151% 142%
Average commission rateG $ .0382 $ .0409
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO DECEMBER 31, 1995.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H ELEVEN MONTHS ENDED NOVEMBER 30, 1997
I YEAR ENDED DECEMBER 31, 1996
LARGE CAP - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
Selected Per-Share Data and RatiosD
Years ended November 30 1997 1996H
Net asset value, beginning of period $ 11.86 $ 10.00
Income from Investment Operations
Net investment income .04I .03
Net realized and unrealized gain (loss) 2.24 1.83
Total from investment operations 2.28 1.86
Less Distributions
From net realized gain (.09) --
Net asset value, end of period $ 14.05 $ 11.86
Total returnB,C 19.39% 18.60%
Net assets, end of period (000 omitted) $ 6,560 $ 9,144
Ratio of expenses to average net assets 1.15% 1.50%A,E
Ratio of expenses to average net assets after expense reductions 1.12%F 1.48%A,F
Ratio of net investment income to average net assets .32% .38%A
Portfolio turnover 93% 59%A
Average commission rateG $ .0412 $ .0306
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
H FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO NOVEMBER 30, 1996.
I DURING THE PERIOD, A SIGNIFICANT SHAREHOLDER REDEMPTION CAUSED AN
UNUSUALLY HIGH LEVEL INVESTMENT INCOME PER SHARE.
GROWTH & INCOME - INSTITUTIONAL CLASS
Selected Per-Share Data and RatiosD
Year ended November 30 1997F
Net asset value, beginning of period $ 10.00
Income from Investment Operations
Net investment income .07
Net realized and unrealized gain (loss) 2.45
Total from investment operations 2.52
Less Distributions
From net investment income (.05)
Net asset value, end of period $ 12.47
Total returnB,C 25.26%
Net assets, end of period (000 omitted) $ 73,911
Ratio of expenses to average net assets 1.19%A
Ratio of net investment income to average net assets .64%A
Portfolio turnover 82%A
Average commission rateE $ .0345
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
F FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO NOVEMBER 30, 1997.
EQUITY INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended November 30
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net asset value, beginning of period
$ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08 $ 9.52 $ 12.27 $ 11.10 $ 10.93
Income from Investment Operations
Net investment income
.39B .42B .45 .41B .39 .49 .63F .69 .75 .75
Net realized and unrealized gain (loss)
4.68 .3.37 4.28 1.05 2.02 1.79 1.52 (2.42) 1.17 1.81
Total from investment operations
5.07 3.79 4.73 1.46 2.41 2.28 2.15 (1.73) 1.92 2.56
Less Distributions
From net investment income
(.41) (.42) (.43) (.32) (.36) (.48) (.59) (.72) (.75) (.74)
From net realized gain
(.59) (.46) (.28) -- -- -- -- (.30) -- (1.65)
Total distributions
(1.00) (.88) (.71) (.32) (.36) (.48) (.59) (1.02) (.75) (2.39)
Net asset value, end of period
$ 27.07 $ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08 $ 9.52 $ 12.27 $ 11.10
Total returnA
22.87% 19.54% 30.43% 9.82% 18.90% 20.91% 22.97% (14.90)% 17.58% 26.99%
Net assets, end of period (000 omitted)
$ 464,031 $ 343,867 $ 297,453 $ 197,533 $ 191,138 $ 139,391 $ 168,590 $ 253,049 $ 463,696 $ 436,753
Ratio of expenses to average net assets
.69% .71% .74% .73% .80% .71%D .67%D .61%D .55%D .55%D
Ratio of expenses to average net assets
.67%C .70%C .73%C .71%C .79%C .71% .67% .61% .55% .55%
after expense reductions
Ratio of net investment income to average net assets
1.60% 2.02% 2.52% 2.62% 3.00% 3.77% 5.66% 6.11% 6.09% 6.86%
Portfolio turnover
55% 78% 80% 140% 120% 51% 91% 103% 93 78%
Average commission rateE
$ .0430 $ .0424
</TABLE>
A THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
F INCLUDES $.04 PER SHARE FROM FOREIGN TAXES RECOVERED.
BALANCED - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended October 31 1997 1996 1995D
Net asset value, beginning of period $ 16.11 $ 15.40 $ 15.23
Income from Investment Operations
Net investment income .61H .54H .25
Net realized and unrealized gain (loss) 2.86 .87 .09
Total from investment operations 3.47 1.41 .34
Less Distributions
From net investment income (.62) (.67) (.17)
From net realized gain (.11) (.03) --
Total distributions (.73) (.70) (.17)
Net asset value, end of period $ 18.85 $ 16.11 $ 15.40
Total returnB,C 21.97% 9.41% 2.22%
Net assets, end of period (000 omitted) $ 38,924 $ 21,819 $ 993
Ratio of expenses to average net assets .69% 1.06% .92%A,E
Ratio of expenses to average net assets after expense reductions .69% 1.03%F .91%A,F
Ratio of net investment income to average net assets 3.42% 3.54% 4.54%A
Portfolio turnover 70% 223% 297%
Average commission rateG $ .0435 $ .0106
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
HIGH YIELD - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and RatiosG
Years ended October 31 1997 1996 1995D
Net asset value, beginning of period $ 12.120 $ 11.760 $ 11.560
Income from Investment Operations
Net investment income 1.094 1.070 .390
Net realized and unrealized gain (loss) .671 .368 .193
Total from investment operations 1.765 1.438 .583
Less Distributions
From net investment income (1.115) (1.078) (.383)
From net realized gain (.060) -- --
Total distributions (1.175) (1.078) (.383)
Net asset value, end of period $ 12.710 $ 12.120 $ 11.760
Total returnB,C 15.42% 12.81% 5.07%
Net assets, end of period (000 omitted) $ 75,827 $ 37,632 $ 126
Ratio of expenses to average net assets .85% 1.10% .70%A
Ratio of expenses to average net assets after expense reductions .85% 1.05%E .70%A
Ratio of net investment income to average net assets 8.96% 9.26% 8.77%A
Portfolio turnover 105% 121% 112%
Average commission rateF $ .0431 $ .0388
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
STRATEGIC INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended December 31 1997 1996 1995E
Net asset value, beginning of period $ 11.300 $ 11.030 $ 10.890
Income from Investment Operations
Net investment income .830D .826D .456
Net realized and unrealized gain (loss) .186 .548 .340
Total from investment operations 1.016 1.374 .796
Less Distributions
From net investment income (.806) (.804) (.426)
From net realized gain (.370) (.300) (.230)
Total distributions (1.176) (1.104) (.656)
Net asset value, end of period $ 11.140 $ 11.300 $ 11.030
Total returnB,C 9.36% 13.04% 7.47%
Net assets, end of period (000 omitted) $ 6,289 $ 6,107 $ 107
Ratio of expenses to average net assets 1.10%F 1.10%F 1.10%A,F
Ratio of expenses to average net assets after expense reductions 1.09%G 1.10% 1.10%A
Ratio of net investment income to average net assets 7.31% 7.47% 7.53%A
Portfolio turnover 140% 119% 193%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO DECEMBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARIOUS ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
MORTGAGE SECURITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
Selected Per-Share Data and RatiosF
Years ended 1997H 1997E
Net asset value, beginning of period $ 11.040 $ 10.830
Income from Investment Operations
Net investment income .172 .263
Net realized and unrealized gain (loss) .050 .226
Total from investment operations .222 .489
Less Distributions
From net investment income (.172) (.279)
From net realized gain (.080) --
Total distributions (.252) (.279)
Net asset value, end of period $ 11.010 $ 11.040
Total returnB,C 2.05% 4.59%
Net assets, end of period (000 omitted) $ 19,718 $ 13,177
Ratio of expenses to average net assets .75%A,D .75%A,D
Ratio of expenses to average net assets after expense reductions .75%A .70%A,G
Ratio of net investment income to average net assets 6.35%A 6.29%A
Portfolio turnover 125%A 149%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO JULY 31, 1997.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H THREE MONTHS ENDED OCTOBER 31, 1997
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended October 31 1997 1996 1995E
Net asset value, beginning of period $ 9.480 $ 9.670 $ 9.560
Income from Investment Operations
Net investment income .580D .604D .197
Net realized and unrealized gain (loss) .165 (.180) .108
Total from investment operations .745 .424 .305
Less Distributions
From net investment income (.575) (.614) (.195)
Net asset value, end of period $ 9.650 $ 9.480 $ 9.670
Total returnB,C 8.18% 4.58% 3.23%
Net assets, end of period (000 omitted) $ 20,366 $ 27,660 $ 14,588
Ratio of expenses to average net assets .75%F .75% .75%A,F
F
Ratio of net investment income to average net assets 6.12% 6.43% 6.48%A
Portfolio turnover 136% 153% 261%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
INTERMEDIATE BOND - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended November 30
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net asset value, beginning of period
$ 10.620 $ 10.770 $ 10.270 $ 11.160 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180 $ 10.250
Income from Investment Operations
Net investment income
.658B .705B .671 .602 .832 .840 .884 .901 .937 .944
Net realized and unrealized gain (loss)
(.060) (.151) .499 (.833) .531 .102 .411 (.270) .230 (.070)
Total from investment operations
.598 .554 1.170 (.231) 1.363 .942 1.295 .631 1.167 .874
Less Distributions
From net investment income
(.648) (.704) (.670) (.597) (.843) (.852) (.885) (.901) (.937) (.944)
From net realized gain
-- -- -- -- -- -- -- -- -- --
From return of capital
-- -- -- (.062) -- -- -- -- -- --
Total distributions
(.648) (.704) (.670) (.659) (.843) (.852) (.885) (.901) (.937) (.944)
Net asset value, end of period
$ 10.570 $ 10.620 $ 10.770 $ 10.270 $ 11.160 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180
Total returnA
5.86% 5.40% 11.73% (2.10)% 13.17% 9.21% 13.35% 6.46% 12.03% 8.81%
Net assets, end of period (000 omitted)
$ 177,427 $ 211,866 $ 208,861 $ 172,122 $ 183,790 $ 160,156 $ 327,756 $ 356,564 $ 426,832 $ 418,929
Ratio of expenses to average net assets
.67% .66% .67%C .61% .64% .57% .57% .58% .54% .54%
Ratio of net investment income to
6.27% 6.69% 6.47% 6.45% 7.41% 7.96% 8.59% 8.90% 9.16% 9.16%
average net assets
Portfolio turnover
138% 200% 189% 68% 59% 7% 60% 59% 87% 48%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
SHORT FIXED-INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended October 31 1997 1996 1995E
Net asset value, beginning of period $ 9.370 $ 9.470 $ 9.450
Income from Investment Operations
Net investment income .589D .598D .137
Net realized and unrealized gain (loss) (.023) (.098) .067
Total from investment operations .566 .500 .204
Less Distributions
From net investment income (.586) (.600) (.136)
From return of capital -- -- (.048)
Total distributions (.586) (.600) (.184)
Net asset value, end of period $ 9.350 $ 9.370 $ 9.470
Total returnB,C 6.24% 5.45% 2.18%
Net assets, end of period (000 omitted) $ 6,750 $ 9,200 $ 9,827
Ratio of expenses to average net assets .75%F .80%F .85%A,
F
Ratio of net investment income to average net assets 6.30% 6.37% 6.10%A
Portfolio turnover 105% 124% 179%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended October 31 1997 1996 1995G
Net asset value, beginning of period $ 11.720 $ 11.880 $ 11.700
Income from Investment Operations
Net interest income .609E .707E,F .232
Net realized and unrealized gain (loss) .464 (.197) .180
Total from investment operations 1.073 .510 .412
Less Distributions
From net interest income (.671)F (.670) (.232)
In excess of net interest income (.002)H -- --
Total distributions (.673) (.670) (.232)
Net asset value, end of period $ 12.120 $ 11.720 $ 11.880
Total returnB,C 9.44% 4.41% 3.55%
Net assets, end of period (000 omitted) $ 1,511 $ 927 $ 154
Ratio of expenses to average net assets .75%D .75%D .75%A,D
Ratio of net interest income to average net assets 5.11% 5.88% 5.89%A
Portfolio turnover 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
G FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended November 30
1997 1996 1995 1994D 1993 1992 1991 1990 1989 1988
Net asset value, beginning of period
$ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080 $ 10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380
Income from Investment Operations
Net interest income
.475 .487 .477 .481 .536 .666 .682 .689 .674 .650
Net realized and unrealized gain (loss)
.181 .050 .950 (1.030) .260 .280 .160 .030 .090 .140
Total from investment operations
.656 .537 1.427 (.549) .796 .946 .842 .719 .764 .790
Less Distributions
From net interest income
(.475) (.487) (.477) (.481) (.536) (.666) (.682) (.689) (.674) (.650)
From net realized gain
(.001) -- -- -- (.880) -- -- -- -- --
In excess of net realized gain
-- -- -- (.020) -- -- -- -- -- --
Total distributions
(.476) (.487) (.477) (.501) (1.416) (.666) (.682) (.689) (.674) (.650)
Net asset value, end of period
$ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080 $ 10.800 $ 10.640 $ 10.610 $ 10.520
Total returnA
6.48% 5.36% 15.44% (5.43)% 8.01% 9.01% 8.15% 7.04% 7.50% 7.77%
Net assets, end of period (000 omitted)
$ 6,098 $ 6,455 $ 11,085 $ 11,702 $ 15,076 $ 28,428 $ 100,294 $ 111,506 $ 121,418 $ 132,443
Ratio of expenses to average net assets
.75%B .75% .70% .65% .65% .66% .61% .62% .65% .63%
B B B B B
Ratio of expenses to average net assets
.75% .74%C .70% .65% .65% .66% .61% .62% .65% .63%
after expense reductions
Ratio of net interest income to
4.57% 4.68% 4.96% 4.75% 5.01% 6.05% 6.40% 6.53% 6.45% 6.20%
average net assets
Portfolio turnover
18% 35% 53% 53% 46% 36% 20% 32% 31% 24%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
D EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAINS, AND RETURNS OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INTEREST INCOME PER SHARE MAY
REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
SHORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended November 30 1997 1996 1995D
Net asset value, beginning of period $ 10.210 $ 10.230 $ 10.070
Income from Investment Operations
Net interest income .420 .407 .178
Net realized and unrealized gain (loss) .030 .010 .160
Total from investment operations .450 .417 .338
Less Distributions
From net interest income (.420) (.407) (.178)
From net realized gain (.030) (.030) --
Total distributions (.450) (.437) (.178)
Net asset value, end of period $ 10.210 $ 10.210 $ 10.230
Total returnB,C 4.52% 4.19% 3.37%
Net assets, end of period (000 omitted) $ 636 $ 487 $ 134
Ratio of expenses to average net assets .75%E .75%E .75%A,E
Ratio of expenses to average net assets after expense reductions .75% .74%F .75%A
Ratio of net interest income to average net assets 4.14% 4.03% 4.18%A
Portfolio turnover 41% 62% 80%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO NOVEMBER 30, 1995.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
The financial highlights tables that follow contain annual
information which has been audited by Coopers & Lybrand, L.L.P., or
Price Waterhouse LLP, (TechnoQuant Growth, Growth & Income, and
Mortgage Securities only) independent accountants. The funds'
financial highlights, financial statements, and reports of the
auditors are included in each fund's Annual Report, and are
incorporated by reference into (are legally a part of) the funds' SAI.
Contact FDC or your investment professional for a free copy of an
Annual Report or the SAI.
KEY FACTS
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or
YIELD.
For Balanced, High Yield, Mortgage Securities, Government Investment,
Short Fixed-Income, and Municipal Income, the fiscal year runs from
November 1 to October 31. For TechnoQuant Growth, Mid Cap, Equity
Growth, Growth Opportunities, Strategic Opportunities, Large Cap,
Growth & Income, Equity Income, Intermediate Bond, Intermediate
Municipal Income, and Short-Intermediate Municipal Income, the fiscal
year runs from December 1 to November 30. For Strategic Income the
fiscal year runs from January 1 to December 31. The tables below show
the performance of Institutional Class of each fund over past fiscal
periods . The charts in Appendix B, beginning on page , present
Institutional Class's calendar year performance compared to different
measures, including a competitive funds average.
GROWTH FUNDS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Return* Cumulative Total Return*
Past 1 year Past 5 years 10 Years/ Past 1 year Past 5 years 10 Years/
Life of fund+ Life of fund+
TECHNOQUANT GROWTH[B] n/a n/a n/a n/a n/a 14.00%
MID CAP[B] 23.04% n/a 22.74% 23.04% n/a 43.96%
EQUITY GROWTH[B] 20.46% 19.35% 24.56% 20.46% 142.20% 799.06%
GROWTH OPPORTUNITIES[B] 22.75% 20.71% 22.52% 22.75% 156.32% 661.97%
STRATEGIC OPPORTUNITIES[B] 27.07% 15.74% 16.14% 27.07% 107.66% 346.58%
LARGE CAP[B] 19.39% n/a 21.61% 19.39% n/a 41.60%
GROWTH & INCOME[B] n/a n/a n/a n/a n/a 25.26%
EQUITY INCOME[B] 22.87% 20.13% 16.80% 22.87% 150.15% 372.57%
BALANCED[A] 21.97% 11.07% 13.90% 21.97% 69.00% 267.41%
</TABLE>
TAXABLE INCOME FUNDS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Return* Cumulative Total Return*
Past 1 year Past 5 years 10 Years/ Past 1 year Past 5 years 10 Years/
Life of fund+ Life of fund+
HIGH YIELD[A] 15.42% 13.01% 15.17% 15.42% 84.31% 310.46%
STRATEGIC INCOME[C] 9.36% n/a 14.03% 9.36% n/a 51.55%
MORTGAGE SECURITIES[A] 8.75% 8.03% 9.01% 8.75% 47.15% 136.96%
GOVERNMENT INVESTMENT[A] 8.18% 6.76% 8.00% 8.18% 38.72% 115.85%
INTERMEDIATE BOND[B] 5.86% 6.67% 8.30% 5.86% 38.13% 121.90%
SHORT FIXED-INCOME[A] 6.24% 5.29% 6.99% 6.24% 29.42% 96.53%
</TABLE>
MUNICIPAL FUNDS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Return* Cumulative Total Return*
Past 1 year Past 5 years 10 Years/ Past 1 year Past 5 years 10 Years/
Life of fund+ Life of fund+
MUNICIPAL INCOME[A] 9.44% 6.99% 9.34% 9.44% 40.18% 144.13%
INTERMEDIATE MUNICIPAL INCOME[B] 6.48% 5.75% 6.82% 6.48% 32.28% 93.39%
SHORT-INTERMEDIATE MUNICIPAL
INCOME[B] 4.52% n/a 4.89% 4.52% n/a 19.40%
</TABLE>
[A] PERIOD ENDED OCTOBER 31, 1997
[B] PERIOD ENDED NOVEMBER 30, 1997
[C] PERIOD ENDED DECEMBER 31, 1997
+ LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS (OCTOBER
31, 1994 FOR STRATEGIC INCOME; MARCH 16, 1994 FOR SHORT-INTERMEDIATE
MUNICIPAL INCOME; FEBRUARY 20, 1996 FOR MID CAP AND LARGE CAP; AND
DECEMBER 31, 1996 FOR TECHNOQUANT GROWTH AND GROWTH & INCOME) THROUGH
THE ANNUAL PERIO D ENDED 1997.
* INITIAL OFFERING OF INSTITUTIONAL CLASS OF GROWTH OPPORTUNITIES,
BALANCED, HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, SHORT
FIXED-INCOME, MUNICIPAL INCOME, AND SHORT-INTERMEDIATE MUNICIPAL
INCOME TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS PRIOR
TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.65% FOR GROWTH OPPORTU NITIES AND BALA NCED, 0.25% FOR HIGH
YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, AND MUNICIPAL INCOME,
AND 0.15% FOR SHORT FIXED-INCOME AND SHORT-INTERMEDIATE MUNICIPAL
INCOME. TOTAL RETURNS FOR INSTITUTIONAL CLASS PRIOR TO JULY 3, 1995
WOULD HAVE BEEN HIGHER IF CLASS T'S 12B-1 FEE HAD NOT BEEN REFLECTED.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF STRATEGIC OPPORTUNITIES
TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS PRIOR TO JULY
3, 1995 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF MORTGAGE SECURITIES TOOK
PLACE ON MARCH 3, 1997. INSTITUTIONAL CLASS RETURNS PRIOR TO MARCH 3,
1997 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
If FMR had not reimbursed certain class expenses during these periods,
total returns would have been lower.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
Average annual total returns covering periods of less than one year
assume that performance will remain constant for the rest of the year.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields
are calculated according to a standard that is required for all stock
and bond funds. Because this differs from other accounting methods,
the quoted yield may not equal the income actually paid to
shareholders.
This difference may be significant for funds whose investments are
denominated in foreign currencies .
In calculating yield, a fund may from time to time use a security's
coupon rate instead of its yield to maturity in order to reflect the
risk premium on that security. This practice will have the effect of
reducing a fund's yield.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn
before taxes to equal a tax-free yield.
THE COMPETITIVE FUNDS AVERAGE is each fund's applicable Lipper Funds
Average, which reflects the performance of mutual funds with similar
investment objectives. These averages, published by Lipper Analytical
Services, Inc., exclude the effect of sales loads.
STANDARD & POOR'S 500 INDEX (S&P 500(registered trademark)) is a
widely recognized, unmanaged index of common stocks.
STANDARD & POOR'S MIDCAP 400 INDEX is a widely recognized, unmanaged
index of 400 medium-capitalization stocks.
MERRILL LYNCH HIGH YIELD MASTER INDEX is a market capitalization
weighted index of all domestic and yankee high-yield bonds. Issues
included in the index have maturities of at least one year and have a
credit rating lower than BBB-/Baa3, but are not in default.
LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX is a market
value weighted performance benchmark for government and corporate
fixed-rate debt issues with maturities between one and three years.
LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX is a market
capitalization weighted index of 15- and 30-year fixed-rate securities
backed by mortgage pools of the Government National Mortgage
Association (GNMA), Fannie Mae and Federal Home Loan Mortgage
Corporation (FHLMC), and balloon mortgages with fixed-rate coupons.
LEHMAN BROTHERS GOVERNMENT BOND INDEX is a market value weighted
index of U.S. G overnment and government agency securities
(other than mortgage securities) with maturities of one year or
more.
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is a
market value weighted performance benchmark for government and
corporate fixed-rate debt issues with maturities between one and 10
years.
LEHMAN BROTHERS MUNICIPAL BOND INDEX is a total return performance
benchmark for investment-grade municipal bonds with maturities of at
least one year.
Unlike Institutional Class's returns, the total returns of each
comparative index do not include the effect of any brokerage
commissions, transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Governmen t.
Other illustrations of equity fund performance may show moving
averages over specified periods.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please contact your
investment professional, or call 1-800-843-3001.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. TechnoQuant Growth, Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities,
Large Cap, and Growth & Income are diversified funds of Fidelity
Advisor Series I, a Massachusetts business trust organized on June 24,
1983. Balanced, High Yield, Government Investment, and Short
Fixed-Income are diversified funds and Strategic Income is a
non-diversified fund of Fidelity Advisor Series II, a Massachusetts
business trust organized on April 23, 1986. Equity Income is a
diversified fund of Fidelity Advisor Series III, a Massachusetts
business trust organized on May 17, 1982. Intermediate Bond is a
diversified fund of Fidelity Advisor Series IV, a Massachusetts
business trust organized on May 6, 1983. Municipal Income is a
diversified fund of Fidelity Advisor Series V, a Massachusetts
business trust organized on April 23, 1986. Intermediate Municipal
Income is a diversified fund and Short-Intermediate Municipal Income
is a non-diversified fund of Fidelity Advisor Series VI, a
Massachusetts business trust organized on June 1, 1983. Mortgage
Securities is a diversified fund of Fidelity Income Fund, a
Massachusetts business trust organized on August 7, 1984. Each trust
is an open-end management investment company. There is a remote
possibility that one fund might become liable for a misstatement in
the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
funds' activities, review contractual arrangements with companies that
provide services to the funds, and review the funds' performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. The transfer agent will mail proxy
materials in advance, including a voting card and information about
the proposals to be voted on. The number of votes you are entitled to
is based upon the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust,
respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business
address at 82 Devonshire Street, Boston, Massachusetts 02109. It
includes a number of different subsidiaries and divisions which
provide a variety of financial services and products. The funds employ
various Fidelity companies to perform activities required for their
operation.
The funds are managed by FMR, which chooses each fund's investments
and handles its business affairs. FMR chooses investments with the
assistance of foreign affiliates for all funds except Government
Investment, Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income.
Beginning January 1, 1999, Fidelity Investments Money Management,
Inc. (FIMM), located in Merrimack, New Hampshire, will select certain
types of investments for Balanced, and Strategic Income. Beginning
January 1, 1998, FIMM will have primary responsibility for providing
investment management services for Mortgage Securities, Government
Investment, Intermediate Bond, Short Fixed-Income, Municipal Income,
Intermediate Municipal Income, and Short-Intermediate Municipal
Income.
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for TechnoQuant
Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, Balanced,
High Yield, Strategic Income, Mortgage Securities, Intermediate Bond,
and Short Fixed-Income.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for TechnoQuant
Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, Balanced,
High Yield, Strategic Income, Mortgage Securities, Intermediate Bond,
and Short Fixed-Income.
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda, serves as a sub-adviser for Strategic
Income.
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L), in London, England, serves as a sub-adviser for
Strategic Income.
(small solid bullet) Fidelity Investment Japan Limited (FIJ), in
Tokyo, Japan, serves as a sub-adviser for Strategic Income.
As of December 31, 199 7 , FMR advised funds having
approximately 3 4 million shareholder accounts with a total
value of more than $ 529 billion .
John Avery is lead manager of Advisor Balanced, which he has managed
since January 1998. He was a co-manager of the fund since September
1997 . He also manages another Fidelity fund. Mr. Avery joined
Fidelity as an analyst in 1995. Previously, he was an analyst for
Putnam Investments from 1993 to 1994. Mr. Avery received his MBA from
The Wharton School at the University of Pennsylvania in 1993.
John Carlson is Vice President and lead manager of Advisor Strategic
Income, which he has managed since August 1995. He also manages
several other Fidelity funds. Prior to joining Fidelity in 1995, Mr.
Carlson was Executive Director of emerging markets at Lehman Brothers
International from 1992 through 1995.
Robert Chow is manager of Advisor Equity Income, which he has managed
since March 1996. Previously, he managed other Fidelity funds. Since
joining Fidelity in 1989, Mr. Chow has worked as an analyst, portfolio
assistant, and manager.
Katherine Collins is manager of Advisor Mid Cap, which she has managed
since January 1997. She also manages another Fidelity fund. Since
joining Fidelity in 1990, Ms. Collins has worked as an analyst and
manager.
Andrew Dudley is manager of Advisor Short Fixed-Income, which he has
managed since February 1997. He also manages other Fidelity funds.
Prior to joining Fidelity as a manager in 1996, Mr. Dudley was a
portfolio manager with Putnam Investments from 1991 to 1996.
Margaret Eagle is Vice President and manager of Advisor High Yield and
Advisor Strategic Income, which she has managed since January 1987 and
January 1996, respectively. Ms. Eagle manages the high yield
investments for Advisor Strategic Income. In addition, she is a Senior
Vice President of Fidelity Trust Company. Ms. Eagle joined Fidelity in
1980.
Karen Firestone will be manager of Advisor Large Cap effective
April 1, 1998. She will also manage another Fidelity fund. Since
joining Fidelity in 1983, Ms. Firestone has worked as an analyst and
manager.
Kevin Grant is Vice President and manager of Advisor Intermediate Bond
and Advisor Balanced, which he has managed since October 1995 and
March 1996, respectively. Mr. Grant manages the fixed-income
investments for Advisor Balanced. He also manages several other
Fidelity funds. Prior to joining Fidelity in 1993, Mr. Grant was a
vice president and chief mortgage strategist at Morgan Stanley for
three years.
Brian Hogan is manager of Advisor Strategic Income's emerging market
securities, which he has managed since September 1997. Since joining
Fidelity in 1994, Mr. Hogan has worked as a fixed-income analyst,
research analyst, and manager. Previously, he worked as an analyst for
Conseco Capital Management from 1993 to 1994 and Aegon USA Investment
Management from 1990 to 1993.
Curt Hollingsworth is Vice President and manager of Advisor Government
Investment and Advisor Strategic Income, both of which he has managed
since February 1997. Mr. Hollingsworth manages the domestic investment
grade and U.S. Government investments for Advisor Strategic Income. He
also manages several other Fidelity funds. Since joining Fidelity in
1983, Mr. Hollingsworth has worked as a fixed-income trader and
portfolio manager.
Jonathan Kelly is manager of Advisor Strategic Income's foreign bond
investments in developed markets, which he has managed since January
1996. Previously, he managed other Fidelity funds. Since joining
Fidelity in 1991, Mr. Kelly has worked as a foreign bond analyst and
manager.
Tim Krochuk is manager of Advisor TechnoQuant Growth, which he has
managed since inception. He also manages another Fidelity fund.
Since joining Fidelity as a research associate in 1992, Mr. Krochuk
has worked as a quantitative analyst and manager.
Harris Leviton is Vice President and manager of Advisor Strategic
Opportunities, which he has managed since March 1996. Previously, he
managed other Fidelity funds. Since joining Fidelity in 1986, he has
worked as an analyst and manager.
Norm Lind is Vice President and manager of Advisor Short-Intermediate
Municipal Income, and Advisor Intermediate Municipal income,
which he has managed since October 1995 and January 1998,
respectively . He also manages several other Fidelity funds. Since
joining Fidelity in 1986, Mr. Lind has worked as an analyst and
manager.
Charles Mangum will provide assistance in managing Advisor Growth
Opportunities from time to time. He also manages another Fidelity
fund. Since joining Fidelity in 1990, Mr. Mangum has worked as an
analyst and manager.
Jonathan Short is Vice-President and Manager of Advisor Municipal
Income, which he has managed since January 1998. He also manages
several other Fidelity funds. Since joining Fidelity in 1990, Mr.
Short has worked as an analyst and manager.
Thomas Silvia is manager of Advisor Mortgage Securities. He has been a
co-manager of the fund since February 1997. Mr. Silvia joined Fidelity
as a senior mortgage trader in 1993. Previously, he was a quantitative
analyst with Donaldson, Lufkin & Jenrette in New York from 1990 to
1993.
Thomas Sprague is Vice President and manager of Advisor Large Cap,
which he has managed since March 1996 and will manage until March
31, 1998 . He also manages another Fidelity fund. Since joining
Fidelity in 1989, he has worked as an analyst and manager.
Beth Terrana is Vice President and manager of Advisor Growth & Income,
which she has managed since inception. She also manages other Fidelity
funds. Since joining Fidelity in 1983, Ms. Terrana has worked as an
analyst, portfolio assistant, and manager.
Jennifer Uhrig is Vice President and manager of Advisor Equity Growth,
which she has managed since January 1997. She also manages another
Fidelity fund. Since joining Fidelity in 1987, Ms. Uhrig has worked as
an analyst and manager.
George Vanderheiden is Vice President and manager of Advisor Growth
Opportunities, which he has managed since November 1987. He also
manages other Fidelity funds. Mr. Vanderheiden joined Fidelity in
1971.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services.
Fidelity Investments Institutional Operations Company, Inc. (FIIOC)
performs transfer agent servicing functions for the Institutional
Class of the Equity Funds, High Yield, Strategic Income, Mortgage
Securities, Government Investment, Intermediate Bond, and Short
Fixed-Income. UMB Bank, n.a. (UMB) is the transfer agent for Municipal
Income, Intermediate Municipal Income, and Short-Intermediate
Municipal Income, although it employes FIIOC to perform these
functions for the Institutional Class of each fund. UMB is located at
1010 Grand Avenue, Kansas City, Missouri.
FMR Corp. is the ultimate parent company of FMR, FIMM, FMR
U.K., and FMR Far East. Members of the Edward C. Johnson 3d family are
the predominant owners of a class of shares of common stock
representing approximately 49% of the voting power of FMR Corp. Under
the Investment Company Act of 1940 (the 1940 Act), control of a
company is presumed where one individual or group of individuals owns
more than 25% of the voting stock of that company; therefore, the
Johnson family may be deemed under the 1940 Act to form a controlling
group with respect to FMR Corp.
Fidelity International Limited (FIL), is the parent company of FIIA,
FIJ, and FIIA(U.K.)L. The Johnson family group also owns, directly or
indirectly, more than 25% of the voting common stock of FIL.
FMR may use its broker-dealer affiliates and other firms that
sell fund shares to carry out a fund's transactions, provided that the
fund receives brokerage services and commission rates comparable to
those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The value of each fund's investments varies in response to many
factors. Stock values fluctuate in response to the activities of
individual companies and general market and economic conditions.
The yield and share price of a bond fund change daily based on changes
in interest rates and market conditions, and in response to other
economic, political or financial events. The types and maturities of
the securities a bond fund purchases and the credit quality of their
issuers will impact a bond fund's reaction to these events.
The total return from a bond includes both income and price gains or
losses. While income is the most important component of bond returns
over time, a bond fund's emphasis on income does not mean the fund
invests only in the highest-yielding bonds available, or that it can
avoid losses of principal.
In general, bond prices rise when interest rates fall and fall when
interest rates rise. Longer-term bonds are usually more sensitive to
interest rate changes. In other words, the longer the maturity of a
bond, the greater the impact a change in interest rates is likely to
have on the bond's price. In addition, short-term interest rates and
long-term interest rates do not necessarily move in the same amount or
in the same direction. A short-term bond tends to react to changes in
short-term interest rates and a long-term bond tends to react to
changes in long-term interest rates.
The price of a bond is affected by the credit quality of its issuer.
Changes in the financial condition of an issuer, changes in general
economic conditions, and changes in specific economic conditions that
affect a particular type of issuer can impact the credit quality of an
issuer. Lower quality bonds generally tend to be more sensitive to
these changes than higher quality bonds.
Many types of debt securities, including mortgage securities, are
subject to prepayment risk. Prepayment risk occurs when the issuer of
a security can prepay principal prior to the security's maturity.
Securities subject to prepayment risk generally offer less potential
for gains during a declining interest rate environment, and similar or
greater potential for loss in a rising interest rate environment. In
addition, the potential impact of prepayment features on the price of
a debt security may be difficult to predict and result in greater
volatility.
Municipal securities are backed by the entity that issued them and/or
other revenue streams. Municipal security values may be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation or the rights of municipal
securities holders.
Funds which invest in foreign securities have increased economic and
political risks as they are exposed to events and factors in the
various world markets. This is especially true for funds that invest
in emerging markets. Also, because certain of the funds' investments
are denominated in foreign currencies, changes in the value of foreign
currencies can significantly affect a fund's share price. FMR may use
a variety of investment techniques to either increase or decrease a
fund's investment exposure to any currency.
FMR may use various investment techniques to hedge a portion of the
funds' risks, but there is no guarantee that these strategies will
work as FMR intends. When you sell your shares, they may be worth more
or less than what you paid for them.
TECHNOQUANT GROWTH FUND seeks growth of capital by investing mainly in
common stocks. However, the fund has the flexibility to invest in
other types of equity securities and debt securities as well. The
fund's security selection process utilizes computer-aided,
quantitative analysis. FMR's computer models use many types of data,
but emphasize technical factors such as historical price and volume
relationships. Fundamental criteria, such as earnings estimates, and
dividend yield may also be considered.
FMR's emphasis on technical analysis can result in the fund holding
different types of stocks at different times. For example, the fund
may hold stocks of companies with large or small market capitalization
or high or low price/earnings ratios. The fund's focus may change
rapidly based on FMR's analysis of the most current information. At
times, the fund may be concentrated in a small number of market
sectors or securities.
MID CAP FUND seeks long-term growth of capital by investing primarily
in equity securities of companies with medium market capitalizations.
FMR normally invests at least 65% of the fund's total assets in these
securities. The fund has the flexibility, however, to invest the
balance in other market capitalizations and security types.
Medium market capitalization companies are those whose market
capitalization falls within the capitalization range of the S&P MidCap
400 at the time of the fund's investment. The S&P MidCap 400 Index is
an unmanaged index of medium-capitalization stocks. Companies whose
capitalization falls outside this range after purchase continue to be
considered medium-capitalized for purposes of the 65% policy. As of
December 31, 1997, the S&P MidCap 400 included companies with
capitalizations of between $ 213 million and $ 13.7
billion. The capitalization range of the S&P MidCap 400 changes with
market conditions and the composition of the Index.
Investing in medium capitalization stocks may involve greater risk
than investing in large capitalization stocks, since they can be
subject to more abrupt or erratic movements. However, they tend to
involve less risk than stocks of small capitalization companies.
EQUITY GROWTH FUND seeks capital appreciation by investing primarily
in common and preferred stock and securities convertible into the
common stock of companies with above-average growth characteristics.
FMR normally invests at least 65% of the fund's total assets in common
and preferred stock. The fund looks for domestic and foreign companies
with above-average growth characteristics compared to the average of
the companies included in the S&P 500. The S&P 500 is a registered
trademark of Standard & Poor's.
Growth may be measured by factors such as earnings or gross sales.
Companies with strong growth potential often have new products,
technologies, distribution channels, or other opportunities. As a
general rule, these companies may include smaller, less well-known
companies, and companies whose stocks have higher than average
price/earnings (P/E) ratios. The market prices of these stocks may be
particularly sensitive to economic, market, or company news. FMR may
also pursue growth in larger or revitalized companies or companies
that hold a strong position in the market. These growth
characteristics may be found in mature or declining industries.
GROWTH OPPORTUNITIES FUND seeks capital growth by investing primarily
in common stocks and securities convertible into common stocks. FMR
normally invests at least 65% of the fund's total assets in securities
of companies that FMR believes have long-term growth potential.
Although the fund invests primarily in common stock and securities
convertible into common stock, it has the ability to purchase other
securities, such as preferred stock and bonds, that may produce
capital growth. The fund may invest in foreign securities without
limitation.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a
"special situation." FMR normally invests at least 65% of the fund's
total assets in these securities. The term "special situation" refers
to FMR's identification of an unusual, and possibly non-repetitive,
development taking place in a company or a group of companies in an
industry.
A special situation may involve one or more of the following
characteristics:
(small solid bullet) A technological advance or discovery, the
offering of a new or unique product or service, or changes in consumer
demand or consumption forecasts.
(small solid bullet) Changes in the competitive outlook or growth
potential of an industry or a company within an industry, including
changes in the scope or nature of foreign competition or the
development of an emerging industry.
(small solid bullet) New or changed management, or material changes in
management policies or corporate structure.
(small solid bullet) Significant economic or political occurrences
abroad, including changes in foreign or domestic import and tax laws
or other regulations.
(small solid bullet) Other events, including natural disasters,
favorable litigation settlements, or a major change in demographic
patterns.
"Special situations" often involve breaks with past experience. They
can be relatively aggressive investments. In seeking capital
appreciation, the fund also may invest in securities of companies not
involving a special situation, but which are companies with valuable
fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential. FMR intends to invest primarily in common stocks and
securities that are convertible into common stocks; however, it also
may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital
appreciation. The fund may invest up to 30% of its assets in foreign
investments.
LARGE CAP FUND seeks long-term growth of capital by investing
primarily in equity securities of companies with large market
capitalizations. FMR normally invests at least 65% of the fund's total
assets in these securities. The fund has the flexibility, however, to
invest the balance in other market capitalizations and security types.
FMR defines large market capitalization companies as those with market
capitalizations of $1 billion or more at the time of the fund's
investment. Companies whose capitalization falls below this level
after purchase continue to be considered large-capitalized for
purposes of the 65% policy.
Companies with large market capitalizations typically have a large
number of publicly held shares and a high trading volume, resulting in
a high degree of liquidity. These tend to be quality companies with
strong management organizations. However, large capitalization
companies may have less growth potential than smaller companies and
may be able to react less quickly to changes in the marketplace.
GROWTH & INCOME FUND seeks high total return through a combination of
current income and capital appreciation. The fund invests mainly in
equity securities. The fund expects to invest the majority of its
assets in domestic and foreign equity securities, with a focus on
those that pay current dividends and show potential earnings growth.
However, the fund may buy debt securities as well as equity securities
that are not currently paying dividends, but offer prospects for
capital appreciation or future income.
EQUITY INCOME FUND seeks a yield which exceeds the composite dividend
yield of securities comprising the S&P 500. In addition, consistent
with the primary objective of obtaining income, the fund will consider
the potential for achieving capital appreciation. FMR normally invests
at least 65% of the fund's total assets in income-producing equity
securities. For purposes of this policy, equity securities are defined
as common and preferred stocks. The balance of the fund's assets will
tend to be invested in debt securities, a high percentage of which are
expected to be convertible into common stocks.
The fund seeks to achieve a yield that beats that of the S&P 500. The
fund does not intend to invest in securities of issuers without proven
earnings and/or credit histories. Because the fund invests for income,
as well as capital appreciation, investors should not expect capital
appreciation comparable with funds which seek only capital
appreciation. The yield on the fund's assets generally will increase
or decrease from year to year in accordance with market conditions and
in relation to the changes in yields of the stocks included in the S&P
500.
BALANCED FUND seeks both income and growth of capital by investing in
a diversified portfolio of equity and fixed-income securities with
income, growth of income, and capital appreciation potential. FMR
manages the fund to maintain a balance between stocks and bonds. When
FMR's outlook is neutral, it will invest approximately 60% of the
fund's assets in stocks and other equity securities and the remainder
in bonds and other fixed-income securities. FMR may vary from this
target if it believes stocks or bonds offer more favorable
opportunities, but will always invest at least 25% of the fund's total
assets in fixed-income senior securities (including debt securities
and preferred stock).
The fund may buy securities that are not currently paying income but
offer prospects for future income. The fund may invest in securities
of foreign issuers. In selecting investments for the fund, FMR will
consider such factors as the issuer's financial strength, its outlook
for increased dividend or interest payments, and the potential for
capital gains.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible
securities and preferred stocks. FMR normally invests at least 65% of
the fund's total assets in these securities.
The fund may also invest in securities issued or guaranteed by the
U.S. Government, any state or any of their respective subdivisions,
agencies or instrumentalities, and securities of foreign issuers,
including securities of foreign governments. The fund may invest up to
35% of its total assets in equity securities, including common stocks,
warrants, and rights.
STRATEGIC INCOME FUND seeks a high level of current income by
investing primarily in debt securities. The fund may also seek capital
appreciation.
The fund invests primarily in fixed-income securities, allocated among
four general investment categories: high yield securities, U.S.
Government and investment-grade securities, emerging market
securities, and foreign developed market securities. The fund's
neutral mix, or the benchmark for its combination of investments in
each category over time, is approximately 40% high yield, 30% U.S.
Government and investment-grade, 15% emerging markets and 15% foreign
developed markets.
FMR regularly reviews the fund's allocation and makes changes
gradually over time to favor investments that it believes provide the
most favorable outlook for achieving the fund's objective. In normal
market environments, FMR expects the fund's asset allocation to
approximate the neutral mix within a range of plus or minus 10% of
assets per category. There are no absolute limits on the percent of
assets invested in each category, however, and FMR reserves the right
to change the neutral mix from time to time.
The HIGH YIELD category includes high-yielding, lower-quality debt
securities consisting mainly of U.S. securities of a quality grade
lower than BBB. The U.S. GOVERNMENT AND INVESTMENT-GRADE category
includes mortgage securities, U.S. Government securities, government
agency securities and other U.S. dollar-denominated securities of
investment-grade quality. The EMERGING MARKET category includes
corporate and governmental debt securities of issuers located in
emerging markets. The FOREIGN DEVELOPED MARKET category includes
corporate and governmental debt securities of issuers located in
developed foreign markets. These investment categories are only
general guidelines, and FMR may use its judgment as to which category
an investment falls within. The fund may also make investments that do
not fall within these categories.
By allocating its investments across different types of fixed-income
securities, the fund attempts to moderate the significant risks of
each investment category through diversification. Diversification,
when successful, can mean higher returns with decreased volatility.
However, each of the fund's four investment categories may experience
periods of volatile returns, and it is possible for all investment
categories to decline at the same time.
MORTGAGE SECURITIES FUND seeks high current income, consistent with
prudent investment risk, by investing primarily in mortgage-related
securities. When consistent with its goal, the fund may also consider
the potential for capital gain. FMR normally invests at least 65% of
the fund's total assets in mortgage-related securities. The fund may
also invest in U.S. Government securities and instruments related to
U.S. Government securities. Instruments related to U.S. Government
securities may include futures or options on U.S. Government
securities or interests in U.S. Government securities that have been
repackaged by dealers or other third parties.
In managing the fund, FMR selects a benchmark index which is
representative of the universe of securities in which the fund
invests. FMR uses this benchmark as a guide in structuring the fund
and selecting its investments. The benchmark index for the fund is the
Lehman Brothers Mortgage-Backed Securities Index, a market
capitalization weighted benchmark of 15- and 30-year fixed-rate
securities backed by mortgage pools of the Government National
Mortgage Association (GNMA), Fannie Mae and Federal Home Loan Mortgage
Corporation (FHLMC), and balloon mortgages with fixed-rate coupons.
FMR manages the fund to have similar overall interest rate risk to the
Index. As of October 31, 1997, the dollar-weighted average maturity of
the fund and the Index was approximately 5.8 and 6.01
years, respectively.
FMR allocates assets among different market sectors (for example,
fixed-rate or adjustable rate mortgages) and different maturities
based on its view of the relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the universe of securities in which the fund invests. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In determining a security's maturity for purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This could be substantially shorter
than its stated final maturity.
GOVERNMENT INVESTMENT FUND seeks high current income by investing in
U.S. Government securities and instruments related to U.S. Government
securities under normal conditions. FMR normally invests the fund's
assets only in U.S. Government securities, repurchase agreements, and
other instruments related to U.S. Government securities. Under normal
conditions, FMR invests at least 65% of the fund's total assets in
U.S. Government securities and repurchase agreements for U.S.
Government securities. Other instruments may include futures or
options on U.S. Government securities or interests in U.S. Government
securities that have been repackaged by dealers or other third
parties. It is important to note that neither the fund nor its yield
is guaranteed by the U.S. Government.
In managing the fund, FMR selects a benchmark index which is
representative of the universe of securities in which the fund
invests. FMR uses this benchmark as a guide in structuring the fund
and selecting its investments. The benchmark index for the fund is the
Lehman Brothers Government Bond Index, a market value weighted
benchmark of U.S. G overnment and government agency
securities (other than mortgage securities) with maturities of one
year or more . FMR manages the fund to have similar overall
interest rate risk to the Index. As of October 31, 1997, the
dollar-weighted average maturity of the fund and the Index was
approximately 8.2 and 8.67 years, respectively.
FMR allocates assets among different market sectors (for example, U.S.
Treasury or U.S. Government agency securities) and different
maturities based on its view of the relative value of each sector or
maturity.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the universe of securities in which the fund invests. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In determining a security's maturity for purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This could be substantially shorter
than its stated final maturity.
INTERMEDIATE BOND FUND seeks high current income by investing in U.S.
dollar-denominated investment-grade debt securities under normal
conditions. When consistent with its primary objective, the fund may
also seek capital appreciation.
In managing the fund, FMR selects a benchmark index which is
representative of the universe of securities in which the fund
invests. FMR uses this benchmark as a guide in structuring the fund
and selecting its investments. The benchmark index for the fund is the
Lehman Brothers Intermediate Government/Corporate Bond Index, a market
value weighted benchmark for government and corporate fixed-rate debt
issues with maturities between one and 10 years. FMR manages the fund
to have similar overall interest rate risk to the Index. As of
November 30, 1997, the dollar-weighted average maturity of the fund
and the Index was approximately 5.9 and 4.30 years,
respectively. In addition, the fund normally maintains a
dollar-weighted average maturity between three and 10 years.
FMR allocates assets among different market sectors (for example,
corporate or government securities) and different maturities based on
its view of the relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the universe of securities in which the fund invests. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In determining a security's maturity for purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This can be substantially shorter
than its stated final maturity.
SHORT FIXED-INCOME FUND seeks high current income, consistent with the
preservation of capital, by investing in U.S. dollar-denominated
investment-grade debt securities under normal conditions. Where
appropriate the fund will take advantage of opportunities to realize
capital appreciation. FMR normally invests at least 65% of the fund's
total assets in fixed-income securities of all types which may include
convertible and zero coupon securities.
In managing the fund, FMR selects a benchmark index which is
representative of the universe of securities in which the fund
invests. FMR uses this benchmark as a guide in structuring the fund
and selecting its investments. The benchmark index for the fund is the
Lehman Brothers 1-3 Year Government/Corporate Bond Index, a market
value weighted benchmark for government and corporate fixed-rate debt
issues with maturities between one and three years. FMR manages the
fund to have similar overall interest rate risk to the Index. As of
October 31, 1997, the dollar-weighted average maturity of the fund and
the Index was approximately 2.2 and 2.09 years,
respectively. In addition, the fund normally maintains a
dollar-weighted average maturity of three years or less.
FMR allocates assets among different market sectors (for example,
corporate or government securities) and different maturities based on
its view of the relative value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the universe of securities in which the fund invests. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In determining a security's maturity for purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This can be substantially shorter
than its stated final maturity.
MUNICIPAL INCOME FUND seeks high current income that is free from
federal income tax by investing primarily in investment-grade
municipal securities. FMR normally invests at least 80% of the fund's
assets in municipal securities whose interest is free from federal
income tax.
In managing the fund, FMR selects a benchmark index which is
representative of the universe of securities in which the fund
invests. FMR uses this benchmark as a guide in structuring the fund
and selecting its investments. The benchmark index for the fund is the
Lehman Brothers Municipal Bond Index, a benchmark of investment-grade
municipal bonds with maturities of one year or more. FMR manages the
fund to have similar overall interest rate risk to the Index. As of
October 31, 1997, the dollar-weighted average maturity of the fund and
the Index was approximately 13.2 and 13.97 years,
respectively.
FMR allocates assets among different market sectors (for example,
general obligation bonds of a state or bonds financing a specific
project) and different maturities based on its view of the relative
value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the universe of securities in which the fund invests. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In addition, FMR may invest all of the fund's assets in municipal
securities issued to finance private activities. The interest from
these securities is a tax preference item for the purposes of the
federal alternative minimum tax.
INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income that is
free from federal income tax, consistent with the preservation of
capital, by investing in investment-grade municipal securities under
normal conditions. FMR normally invests at least 80% of the fund's
assets in municipal securities whose interest is free from federal
income tax.
In managing the fund, FMR selects a benchmark index which is
representative of the universe of securities in which the fund
invests. FMR uses this benchmark as a guide in structuring the fund
and selecting its investments. The benchmark index for the fund is the
Lehman Brothers 1-17 Year Municipal Bond Index, a benchmark of
investment-grade municipal bonds with maturities between one and 17
years. FMR manages the fund to have similar overall interest rate risk
to the Index. As of November 30, 1997, the dollar-weighted average
maturity of the fund and the Index was approximately 7.6 and
8.49 years, respectively. In addition, the fund normally
maintains a dollar-weighted average maturity between three and 10
years.
FMR allocates assets among different market sectors (for example,
general obligation bonds of a state or bonds financing a specific
project) and different maturities based on its view of the relative
value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the universe of securities in which the fund invests. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In addition, FMR may invest all of the fund's assets in municipal
securities issued to finance private activities. The interest from
these securities is a tax preference item for the purposes of the
federal alternative minimum tax.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income
that is free from federal income tax, consistent with preservation of
capital, by investing in investment-grade municipal securities under
normal conditions. FMR normally invests at least 80% of the fund's
assets in municipal securities whose interest is free from federal
income tax.
In managing the fund, FMR selects a benchmark index which is
representative of the universe of securities in which the fund
invests. FMR uses this benchmark as a guide in structuring the fund
and selecting its investments. The benchmark index for the fund is the
Lehman Brothers 1-5 Year Municipal Bond Index, a benchmark of
investment-grade municipal bonds with maturities between one and five
years. FMR manages the fund to have similar overall interest rate risk
to the Index. As of November 30, 1997, the dollar-weighted average
maturity of the fund and the Index was approximately 3.2 and
3.69 years, respectively. In addition, the fund normally
maintains a dollar-weighted average maturity between two and five
years.
FMR allocates assets among different market sectors (for example,
general obligation bonds of a state or bonds financing a specific
project) and different maturities based on its view of the relative
value of each sector or maturity.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the universe of securities in which the fund invests. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In addition, FMR may invest all of the fund's assets in municipal
securities issued to finance private activities. The interest from
these securities is a tax preference item for the purposes of the
federal alternative minimum tax.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets
according to its investment strategy.
Each of the Equity Funds, High Yield, and Strategic Income reserves
the right to invest without limitation in preferred stocks and
investment-grade debt instruments for temporary, defensive purposes.
Each of Mortgage Securities, Government Investment, Intermediate Bond,
and Short Fixed-Income reserves the right to invest without limitation
in investment-grade money market or short-term debt instruments for
temporary, defensive purposes.
Each of Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income do not expect to invest in
federally taxable obligations. Each of Municipal Income, Intermediate
Municipal Income, and Short-Intermediate Municipal Income, 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 taxable obligations for temporary, defensive
purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in
the funds' SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a fund's
investment objective and policies and that doing so will help a fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
your investment professional.
EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's
financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of its total assets, each of the
Equity Funds, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, Municipal Income, and
Intermediate Municipal Income may not purchase more than 10% of the
outstanding voting securities of a single issuer. For TechnoQuant
Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, and Growth & Income, this limitation does
not apply to securities of other investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes. In addition, bond prices are also
affected by the credit quality of the issuer.
Lower-quality debt securities are considered to have speculative
characteristics, and involve greater risk of default or price changes
due to changes in the issuer's creditworthiness, or they may already
be in default. The market prices of these securities may fluctuate
more than higher-quality securities and may decline significantly in
periods of general or regional economic difficulty. Lower-quality
securities may be thinly traded, making them difficult to sell
promptly at an acceptable price. Adverse publicity and changing
investor perceptions may affect the ability to obtain prices for, or
to sell these securities.
The default rate of lower-quality debt securities is likely to be
higher when issuers have difficulty meeting projected goals or
obtaining additional financing. This could occur during economic
recessions or periods of high interest rates. If an issuer defaults,
the fund may try to protect the interests of security holders if it
determines such action to be in the interest of its shareholders.
The table on the following page provides a summary of ratings assigned
to debt holdings (not including money market instruments) in the
funds' portfolios. These figures are dollar-weighted averages of
month-end portfolio holdings during the fiscal period ended 1997, and
are presented as a percentage of total security investments. These
percentages are historical and do not necessarily indicate a fund's
current or future debt holdings.
FISCAL PERIOD ENDED 1997 DEBT HOLDINGS (AS A % OF INVESTMENTS), BY
RATING
MID** EQUITY** GROWTH* GROWTH**** STRATEGIC** LARGE** GROWTH &**
EQUITY** HIGH* STRATEGIC***
S&P RATING CAP GROWTH OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES CAP
INCOME INCOME BALANCED* YIELD INCOME
(AVERAGE OF TOTAL INVESTMENTS)
INVESTMENT GRADE
HIGHEST QUALITY AAA
HIGH QUALITY AA -- -- 14.0 0 % 12.10% -- -- 0.20% 1.35% 22.57% --
41.93%
UPPER-MEDIUM GRADE A
MEDIUM GRADE BBB -- -- -- -- -- -- 0.36% -- 7.19% 0.32% 0.85%
LOWER QUALITY
MODERATELY SPECULATIVE BB -- -- -- -- -- -- 0.35% 0.25% 0.87% 6.39%
8.66%
SPECULATIVE B 0.01% -- -- -- 0.06% -- 0.14% -- 3. 9 2% 51.18%
25.32%
HIGHLY SPECULATIVE CCC -- -- -- -- -- -- -- -- 0.33% 7.13% 2.85%
POOR QUALITY CC -- -- -- -- -- -- -- -- 0.04% 1.14% 0.30%
LOWEST QUALITY, NO INTEREST C -- -- -- -- -- -- -- -- -- -- --
IN DEFAULT, IN ARREARS D -- -- -- -- -- -- -- -- -- -- --
MID EQUITY GROWTH GROWTH STRATEGIC LARGE GROWTH & EQUITY HIGH
STRATEGIC
MOODY'S RATING CAP GROWTH OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES
CAP INCOME INCOME BALANCED YIELD INCOME
(AVERAGE OF TOTAL INVESTMENTS)
INVESTMENT GRADE
HIGHEST QUALITY AAA
HIGH QUALITY AA -- -- 14.0 0 % 12.10 % -- -- 0.10% 1.35%
23.89% -- 41.40%
UPPER-MEDIUM GRADE A
MEDIUM GRADE BAA -- -- -- -- -- -- 0.13% -- 4.64% -- 0.15%
LOWER QUALITY
MODERATELY SPECULATIVE BA -- -- -- -- -- -- 0.57% 0.24% 2.19% 5.98%
7.98%
SPECULATIVE B 0.01% -- -- -- 0.38% -- 0.23% 0.01% 3. 9 0%
50.69% 27.95%
HIGHLY SPECULATIVE CAA -- -- -- -- -- -- -- -- 0.37% 11.11% 3.17%
POOR QUALITY CA -- -- -- -- -- -- -- -- -- 0.03% --
LOWEST QUALITY, NO INTEREST C -- -- -- -- -- -- -- -- -- -- --
IN DEFAULT, IN ARREARS --- -- -- -- -- -- -- -- -- -- -- --
* FISCAL YEAR ENDED OCTOBER 31, 1997.
** FISCAL YEAR ENDED NOVEMBER 30, 1997.
*** FISCAL YEAR ENDED DECEMBER 31, 1997.
**** FOR THE MONTH PERIOD ENDED NOVEMBER 30, 1997.
REFER TO THE APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.
THE FUNDS DO NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH THEIR DEBT QUALITY POLICIES. SECURITIES NOT
RATED BY MOODY'S AND S&P AMOUNTED TO
0.6 6 % OF BALANCED INVESTMENTS, 5.72% OF HIGH YIELD INVESTMENTS,
9 .16% OF STRATEGIC INCOME INVESTMENTS, 0.59% OF STRATEGIC
OPPORTUNITIES INVESTMENTS. THESE PERCENTAGES MAY
INCLUDE SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATIONS, AS WELL AS UNRATED SECURITIES. UNRATED
LOWER-QUALITY SECURITIES AMOUNTED TO 0.51% OF BALANCED
INVESTMENTS, 5. 66 % OF HIGH YIELD INVESTMENTS, 9.09% OF
STRATEGIC INCOME INVESTMENTS , AND 0.59% OF STRATEGIC OPPORTUNITIES
INVESTMENTS.
FOR FOREIGN GOVERNMENT OBLIGATIONS NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE
RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
RESTRICTIONS: For all of the Equity Funds, purchase of a debt security
is consistent with a fund's debt quality policy if it is rated at or
above the stated level by Moody's Investors Service (Moody's) or rated
in the equivalent categories by Standard & Poor's (S&P), or is unrated
but judged to be of equivalent quality by FMR.
Each of Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, and Balanced
currently intends to limit its investments in lower than Baa-quality
debt securities to less than 35% of its assets.
TechnoQuant Growth currently intends to limit its investments in lower
than Baa-quality debt securities to 5% of its assets.
Each of Intermediate Bond, Mortgage Securities, Short Fixed-Income,
Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income normally invests in
investment-grade securities, but reserves the right to invest up to 5%
of its assets in below investment-grade securities. A security is
considered to be investment-grade if it is rated investment-grade by
Moody's, S&P, Duff & Phelps Credit Rating Co., or Fitch IBCA,
Inc., or is unrated but judged by FMR to be of equivalent quality.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of
the U.S. Government. Not all U.S. Government securities are backed by
the full faith and credit of the United States. For example, U.S.
Government securities such as those issued by Fannie Mae are supported
by the instrumentality's right to borrow money from the U.S. Treasury
under certain circumstances. Other U.S. Government securities, such as
those issued by the Federal Farm Credit Banks Funding Corporation, are
supported only by the credit of the entity that issued them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
or private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities.
They may be fully or partially backed by the local government, or by
the credit of a private issuer or the current or anticipated revenues
from specific projects or assets. Because many municipal securities
are issued to finance similar types of projects, especially those
relating to education, health care, housing, transportation, and
utilities, the municipal markets can be affected by conditions in
those sectors. In addition, all municipal securities may be affected
by uncertainties regarding their tax status, legislative changes, or
rights of municipal securities holders. A municipal security may be
owned directly or through a participation interest.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms of
credit and liquidity enhancement, including letters of credit,
guarantees, puts and demand features, and insurance, provided by
foreign or domestic entities such as banks and other financial
institutions. These arrangements expose a fund to the credit risk of
the entity providing the credit or liquidity support. Changes in the
credit quality of the provider could affect the value of the security
and a fund's share price.
OTHER INSTRUMENTS may include securities of closed-end investment
companies.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve additional risks and considerations. These
include risks relating to political , economic , or
regulatory conditions in foreign countries ; fluctuations in
foreign currencies ; withholding or other taxes ; trading,
settlement, custodial, and other operational risks; and the
potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. All of these factors can make foreign investments,
especially those in emerging markets , more volatile and
potentially less liquid than U.S. investments.
ASSET-BACKED SECURITIES include interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities, debt securities, or consumer loans. The value of these
securities depends on many factors, including changes in interest
rates, the availability of information concerning the pool and its
structure, the credit quality of the underlying assets, the market's
perception of the servicer of the pool, and any credit enhancement
provided. In addition, these securities may be subject to prepayment
risk.
MORTGAGE SECURITIES include interests in pools of commercial or
residential mortgages, and may include complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed
securities. Mortgage securities may be issued by agencies or
instrumentalities of the U.S. Government or by private entities.
The price of a mortgage security may be significantly affected by
changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other
factors difficult to predict, making their price highly volatile.
Also, mortgage securities, especially stripped mortgage-backed
securities, are subject to prepayment risk. Securities subject to
prepayment risk generally offer less potential for gains during a
declining interest rate environment, and similar or greater potential
for loss in a rising interest rate environment.
RESTRICTIONS: Government Investment does not currently intend to
invest more than 40% of its assets in mortgage securities.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a
benchmark rate changes. Inverse floaters have interest rates that move
in the opposite direction from a benchmark, often making the
security's market value more volatile.
STRIPPED SECURITIES are the separate income or principal components of
a debt security. The risks associated with stripped securities are
similar to those of other debt securities, although stripped
securities may be more volatile, and the value of certain types of
stripped securities may move in the same direction as interest rates.
U.S. Treasury securities that have been stripped by a Federal Reserve
Bank are obligations issued by the U.S. Treasury.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a
security at one price and simultaneously agrees to sell it back at a
higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund temporarily transfers possession of a portfolio instrument to
another party in return for cash. This could increase the risk of
fluctuation in the fund's yield or in the market value of its assets.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire
land, equipment, or facilities. If the municipality stops making
payments or transfers its obligations to a private entity, the
obligation could lose value or become taxable.
PUT FEATURES entitle the holder to put (sell back) an instrument to
the issuer or another party. In exchange for this benefit, a fund may
accept a lower interest rate. Demand features and standby commitments
are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For
example, industrial revenue bonds are backed by private entities, and
resource recovery bonds often involve private corporations. The
viability of a project or tax incentives could affect the value and
credit quality of these securities.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors
such as changes in real estate values and property taxes, interest
rates, cash flow of underlying real estate assets, overbuilding, and
the management skill and creditworthiness of the issuer. Real
estate-related instruments may also be affected by tax and regulatory
requirements, such as those relating to the environment.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap
agreements, purchasing indexed securities, and selling securities
short.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other
borrower. They have additional risks beyond conventional debt
securities because they may entail less legal protection for a fund,
or there may be a requirement that the fund supply additional cash to
a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: Each fund (except High Yield and Strategic Income) may
not purchase a security if, as a result, more than 10% of its assets
would be invested in illiquid securities.
Each of High Yield and Strategic Income may not purchase a security
if, as a result, more than 15% of its assets would be invested in
illiquid securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading
practices in which payment and delivery for the security take place at
a later date than is customary for that type of security. The market
value of the security could change during this period.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income (exempt from federal income tax in
the case of a municipal money market fund) while maintaining a stable
$1.00 share price. A major change in interest rates or a default on
the money market fund's investments could cause its share price to
change.
RESTRICTIONS: Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, do not currently intend to invest
in repurchase agreements.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: With respect to 75% of its total assets, each of the
Equity Funds, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, Municipal Income, and
Intermediate Municipal Income may not purchase a security if, as a
result, more than 5% would be invested in the securities of any
issuer. This limitation does not apply to U.S. Government securities
or, for TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, and Growth &
Income, to securities of other investment companies.
Strategic Income and Short-Intermediate Municipal Income are
considered non-diversified. Generally, to meet federal tax
requirements at the close of each quarter, each fund does not invest
more than 25% of its total assets in any issuer and, with respect to
50% of total assets, does not invest more than 5% of its total assets
in any issuer. These limitations do not apply to U.S. Government
securities or to securities of other investment companies.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each of Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income may invest more than 25% of its
total assets in tax-free securities that finance similar types of
projects.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If a fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a
delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a
fund's total assets; however, Government Investment, Municipal Income,
Intermediate Municipal Income, and Short-Intermediate Municipal Income
do not currently intend to make loans.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
TECHNOQUANT GROWTH FUND seeks capital growth.
MID CAP FUND seeks long-term growth of capital.
EQUITY GROWTH FUND seeks to achieve capital appreciation by investing
primarily in common and preferred stock and securities convertible
into the common stock of companies with above-average growth
characteristics.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common
stocks.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a
"special situation." Under normal conditions, the fund will invest at
least 65% of its total assets in companies involving a special
situation. FMR intends to invest primarily in common stocks and
securities that are convertible into common stocks; however, it also
may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital
appreciation. The fund may invest up to 30% of its assets in foreign
investments.
LARGE CAP FUND seeks long-term growth of capital.
GROWTH & INCOME FUND seeks high total return through a combination of
current income and capital appreciation.
EQUITY INCOME FUND seeks a yield from dividend and interest income
which exceeds the composite dividend yield on securities comprising
the S&P 500. In addition, consistent with the primary objective of
obtaining dividend and interest income, the fund will consider the
potential for achieving capital appreciation.
BALANCED FUND seeks both income and growth of capital by investing in
a diversified portfolio of equity and fixed-income securities with
income, growth of income, and capital appreciation potential.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
STRATEGIC INCOME FUND seeks a high level of current income by
investing primarily in debt securities. The fund may also seek capital
appreciation.
MORTGAGE SECURITIES FUND seeks a high level of current income,
consistent with prudent investment risk, by investing primarily in
mortgage-related securities. In seeking current income, the fund may
also consider the potential for capital gain.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by
investing primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
INTERMEDIATE BOND FUND seeks to provide a high rate of income through
investment primarily in investment-grade fixed-income obligations.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current
income, consistent with the preservation of capital, by investing
primarily in a broad range of investment-grade fixed-income
securities. Where appropriate the fund will take advantage of
opportunities to realize capital appreciation.
MUNICIPAL INCOME FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of income
exempt from federal income taxes that can be obtained consistent with
the preservation of capital. The fund normally invests at least 80% of
its assets in securities whose interest is free from federal income
tax.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks as high a level of
current income, exempt from federal income tax, as is consistent with
preservation of capital. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
With respect to 75% of its total assets, each of the Equity Funds,
High Yield, Mortgage Securities, Government Investment, Intermediate
Bond, Short Fixed-Income, Municipal Income, and Intermediate Municipal
Income may not purchase a security if, as a result, more than 5% would
be invested in the securities of any one issuer and may not purchase
more than 10% of the outstanding voting securities of a single issuer.
These limitations do not apply to U.S. Government securities or, for
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, and Growth & Income, to securities
of other investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each clas s's assets are
reflected in that class's share price or dividends; they are neither
billed directly to shareholders nor deducted from shareholder
accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services for certain of the funds. Each fund
also pays OTHER EXPENSES, which are explained on page .
FMR may, from time to time, agree to reimburse a fund for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a fund if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be terminated at any time without notice, can decrease a
fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month.
Equity Income pays a monthly management fee at an annual rate of 0.50%
of its average net assets.
For each of TechnoQuant Growth, Mid Cap, Equity Growth, Large Cap,
Growth & Income, Balanced, High Yield, Strategic Income, Mortgage
Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, the fee is calculated by adding a
group fee rate to an individual fund fee rate, multiplying the result
by the fund's monthly average net asset s, and dividing by
twelve.
For Growth Opportunities and Strategic Opportunities, the fee is
calculated by calculating a basic fee and then applying a
performance adjustment. The performance adjustment either increases or
decreases the management fee, depending on how well each fund has
performed relative to the S&P 500. The basic fee is calculated by
adding a group fee rate to an individual fund fee rate, multiplying
the result by the fund's monthly average net assets, and dividing by
twelve.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52% for
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, and Balanced or
0.37% for High Yield, Strategic Income, Mortgage Securities,
Government Investment, Intermediate Bond, Short Fixed-Income,
Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, and it drops as total assets
under management increase. For December 1997, the group fee rate
for the Equity Funds was 0.29%, and the group fee rate for the Bond
Funds, the Intermediate-Term Bond Funds, and the Short-Term Bond Funds
was 0.14%.
The performance adjustment rate is calculated monthly by comparing
Growth Opportunities' and Strategic Opportunities' performance to that
of the S&P 500 over the most recent 36-month period. The difference is
translated into a dollar amount that is added to or subtracted from
the basic fee. The maximum annualized performance adjustment rate
is (plus/minus) 0.20% of a fund's average net assets over the
performance period.
For purposes of calculating the performance adjustment for each of
Growth Opportunities and Strategic Opportunities, the fund's
investment performance will be based on the average performance of all
classes of the fund weighted according to their average assets for
each month in the performance period.
The individual fund fee rates for each of TechnoQuant Growth, Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities,
Large Cap, Mortgage Securities, Government Investment, Intermediate
Bond, and Short-Fixed Income is 0.30%. The individual fund fee rate
for Growth & Income is 0.20%. The individual fund fee rate for
Balanced is 0.15%. The individual fund fee rate for each of High Yield
and Strategic Income is 0.45%. The individual fund fee rate for each
of Municipal Income, Intermediate Municipal Incom e, and
Short-Intermediate Municipal Income is 0.25%.
The following table states the management fee, as a percentage of each
fund's average net assets, for each fund for its most recent fiscal
year end ed 1997.
TOTAL
MANAGEMENT FEE
MID CAP 0.60%
EQUITY GROWTH 0.60%
GROWTH OPPORTUNITIES 0.52%[A][B][C]
STRATEGIC OPPORTUNITIES 0.40%[A][B][C]
LARGE CAP 0.60%
EQUITY INCOME 0.50%
BALANCED 0.45%
HIGH YIELD 0.59%
STRATEGIC INCOME 0.59%
MORTGAGE SECURITIES 0.44%[B][D]
GOVERNMENT INVESTMENT 0.44%
INTERMEDIATE BOND 0.44%
SHORT FIXED-INCOME 0.44%
MUNICIPAL INCOME 0.39%
INTERMEDIATE MUNICIPAL 0.39%
INCOME
SHORT-INTERMEDIATE 0.39%
MUNICIPAL INCOME
[A] THE ANNUALIZED BASIC FEE, AS A PERCENTAGE OF EACH FUND'S
AVERAGE NET ASSETS, FOR THE FISCAL PERIOD ENDED NOVEMBER
30, 1997 WAS 0.60 % FOR GROWTH OPPORTUNITIES AND
0.60 % FOR STRATEGIC OPPORTUNITIES.
[B] ANNUALIZED
[C] FOR THE FISCAL PERIOD ENDED NOVEMBER 30, 1997.
[ D ] FOR THE FISCAL PERIOD ENDED OCTOBER 31, 1997.
The total management fee for Growth Opportunities for the fiscal
year ended October 31, 1997 was 0.49% of the fund's average net
assets. The basic fee for Growth Opportunities for the fiscal year
ended October 31, 1997 was 0.60% of the fund's average net assets. The
total management fee for Mortgage Securities for the fiscal year ended
July 31, 1997 was 0.44% of the fund's average net assets.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA in turn has a sub-advisory agreement
with FIIA(U.K.)L. These sub-advisers are compensated for providing FMR
with investment research and advice on issuers based outside the
United States. FMR pays FMR U.K. and FMR Far East fees equal to 110%
and 105%, respectively, of the costs of providing these services. FMR
pays FIJ and FIIA a fee equal to 30% of its management fee rate
associated with investments for which the sub-adviser provided
investment advice.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to
50% of its management fee rate with respect to a fund's investments
that the sub-adviser manages on a discretionary basis. FIIA pays
FIIA(U.K.)L a fee equal to 110% of the cost of providing these
services.
For the fiscal period ended 1997, FMR, on behalf of each fund
with sub-advisory agreements paid FMR U.K., FMR Far East, FIJ, and
FIIA fees equal to less than 0.01 %, of each fund's average net
assets (annualized for periods of less than one year) . The
numbers for Growth Opportunities and Strategic Opportunities are for
the fiscal period ended November 30, 1997 and the number for Mortgage
Securities is for the fiscal period ended October 31, 1997.
For the fiscal year ended October 31, 1997, FMR on behalf of Growth
Opportunities paid FMR U.K., and FMR Far East fees equal to less than
0.01% of the fund's average net assets.
Beginning January 1, 1999, FIMM will select certain investments for
Balanced and Strategic Income.
Beginning January 1, 1999, FIMM will have primary responsibility
for managing Mortgage Securities, Government Investment, Intermediate
Bond, Short Fixed-Income, Municipal Income, Intermediate Municipal
Income, and Short-Intermediate Municipal Income. FMR will pay FIMM 50%
of its management fee (before expense reimbursements) for FIMM's
services.
OTHER EXPENSES
While the management fee is a significant component of each fund's
annual operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for the Institutional Class of the Equity Funds,
High Yield, Strategic Income, Mortgage Securities, Government
Investment, Intermediate Bond, and Short Fixed-Income (the Taxable
Funds). Fidelity Service Company, Inc. (FSC) calculates the net asset
value per share (NAV) and dividends for the Institutional Class of the
Taxable Funds, and maintains the general accounting records and
administers the securities lending program for the Taxable Funds.
For the fiscal period ended 1997, transfer agency and pricing
and bookkeeping fees paid (as a percentage of average net
assets) amounted to the following. These amounts (annualized for
periods of less than one year) are before expense reductions, if
any.
TRANSFER AGENCY PRICING AND
FEES PAID BOOKKEEPING
FEES PAID
BY FUND
TECHNOQUANT GROWTH 0.30% 0.24%
MID CAP 0.15% 0.06%
EQUITY GROWTH 0.14% 0.02%
GROWTH OPPORTUNITIES [A] 0.15% 0.00%
STRATEGIC OPPORTUNITIES [A] 0.23% 0.05%
LARGE CAP 0.15% 0.10%
GROWTH & INCOME 0.15% 0.09%
EQUITY INCOME 0.14% 0.03%
BALANCED 0.14% 0.03%
HIGH YIELD 0.17% 0.03%
STRATEGIC INCOME 0.18% 0.04%
MORTGAGE SECURITIES [B] 0.24% 0.04%
GOVERNMENT INVESTMENT 0.18% 0.04%
INTERMEDIATE BOND 0.15% 0.04%
SHORT FIXED-INCOME 0.22% 0.04%
[A] FOR THE FISCAL PERIOD ENDED NOVEMBER 30, 1997.
[B] FOR THE FISCAL PERIOD ENDED OCTOBER 31, 1997.
The transfer agency fees paid by Institutional Class of Growth
Opportunities for the fiscal year ended October 31, 1997 were 0.15%.
The transfer agency fees paid by Institutional Class of Mortgage
Securities for the fiscal year ended July 31, 1997 were 0.21%.
The pricing and bookkeeping fees paid by Growth Opportunities for
the fiscal year ended October 31, 1997 were 0.00%. The pricing and
bookkeeping fees paid by Mortgage Securities for the fiscal year ended
July 31, 1997 were 0.04%.
UMB is the transfer and service agent for Municipal Income,
Intermediate Municipal Income, and Short-Intermediate Municipal Income
(the Municipal Funds). UMB has entered into a sub-agreement with
FIIOC. FIIOC performs transfer agency, dividend disbursing and
shareholder servicing functions for the Institutional Class of the
Municipal Funds. UMB has also entered into a sub-agreement with FSC.
FSC calculates the NAV and dividends for the Institutional Class of
the Municipal Funds, and maintains the general accounting records for
each fund. Under the terms of the sub-agreements, FIIOC and FSC
receive all related fees paid to UMB by the Institutional Class.
For the fiscal year ended 1997, transfer agency and pricing and
bookkeeping fees paid (as a percentage of average net assets) amounted
to the following. These amounts are before expense reductions, if any.
TRANSFER AGENCY PRICING AND
FEES PAID BOOKKEEPING
FEES PAID
BY FUND
MUNICIPAL INCOME 0.26% 0.04%
INTERMEDIATE MUNICIPAL 0.18% 0.09%
INCOME
SHORT-INTERMEDIATE 0.30% 0.26%
MUNICIPAL INCOME
Each fund also pays other expenses, such as legal, audit, and
custodian fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
The Institutional Class of each fund has adopted a DISTRIBUTION AND
SERVICE PLAN. Each plan recognizes that FMR may use its management fee
revenues, as well as its past profits or its resources from any other
source, to pay FDC for expenses incurred in connection with the
distribution of Institutional Class shares. FMR, directly or through
FDC, may make payments to third parties, such as banks or
broker-dealers, that engage in the sale of, or provide shareholder
support services for, Institutional Class shares. Currently, the Board
of Trustees of each fund has authorized such payments.
The portfolio turnover rate (annualized for periods of less than
one year) for the fiscal period ended 1997 was 213 %
for TechnoQuant Growth, 208 % for Mid Cap, 108 % for
Equity Growth, 33 % for Growth Opportunities (for the fiscal
period ended November 30, 1997) , 61 % for Strategic
Opportunities (for the fiscal period ended November 30, 1997) ,
93 % for Large Cap, 82 % for Growth & Income, 55 %
for Equity Income, 70 % for Balanced, 105 % for High
Yield, 140 % for Strategic Income, 125 % for Mortgage
Securities (for the fiscal period ended October 31, 1997) ,
136 % for Government Investment, 138 % for
Intermediate Bond, 105 % for Short Fixed-Income, 36 % for
Municipal Income, 18 % for Intermediate Municipal Income, and
41 % for Short-Intermediate Municipal Income .
The portfolio turnover rate for Growth Opportunities for the fiscal
year ended October 31, 1997 was 35%. The portfolio turnover rate for
Mortgage Securities for the fiscal year ended July 31, 1997 was
149%.
Portfolio turnover rates vary from year to year. High turnover rates
increase transaction costs and may increase taxable capital gains. FMR
considers these effects when evaluating the anticipated benefits of
short-term investing.
YOUR ACCOUNT
TYPES OF ACCOUNTS
When you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of
fund shares. Read your investment professional's program materials in
conjunction with this prospectus for additional service features or
fees that may apply. Certain features of the funds, such as minimum
initial or subsequent investment amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain funds or
to certain retirement accounts. For instance, municipal funds are not
available for purchase in retirement accounts. If you are investing
through a retirement account or if your employer offers a fund through
a retirement program, you may be subject to additional fees. For more
information, please refer to your program materials, contact your
employer, or call your retirement benefits number or your investment
professional directly, as appropriate.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have
two or more owners (tenants).
RETIREMENT (ONLY TAXABLE FUNDS ARE AVAILABLE FOR THE FOLLOWING
ACCOUNTS)
FOR TAX-ADVANTAGED RETIREMENT SAVINGS
Retirement plans provide individuals with tax-advantaged
ways to save for retirement, either with tax-deductible contributions
or tax-free growth. Retirement accounts require special applications
and typically have lower minimums.
(solid bullet) TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNTS
(IRAS) allow individuals under age 70
1/2(checkmark)(solid club) with compensation to contribute u p
to $2,000 per tax year. Married couples can contribute up to $4,000
per tax year, provided no more than $2,000 is contributed on behalf of
either spouse. (These limits are aggregate for Traditional and Roth
IRAs.) Contributions may be tax deductible, subject to certain income
limits.
(solid bullet) ROTH IRAS allow individuals to make non-deductible
contributions of up to $2,000 per tax year. Married couples can
contribute up to $4,000 per tax year, provided no more than $2,000 is
contributed on behalf of either spouse. (These limits are aggregate
for Traditional and Roth IRAs.) Eligibility is subject to certain
income limits. Qualified distributions are tax-free.
(solid bullet) ROTH CONVERSION IRAS allow individuals with assets
held in a Traditional IRA or Rollover IRA to convert those assets to a
Roth Conversion IRA. Eligibility is subject to certain income limits.
Qualified distributions are tax-free.
(solid bullet) ROLLOVER IRAS help retain special tax advantages for
certain eligible rollover distributions from employer-sponsored
retirement plans.
(solid bullet) PROFIT SHARING OR MONEY PURCHASE PENSION PLANS
(KEOGHS) allow self-employed individuals or small business owners to
make tax-deductible contributions for themselves and any eligible
employees.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide
small business owners or those with self-employment income (and their
eligible employees) with many of the same advantages as a Keogh, but
with fewer administrative requirements.
(solid bullet) SALARY REDUCTION SEP-IRAS (SARSEPS) allow employees
of businesses with 25 or fewer employees to contribute a percentage of
their wages on a tax-deferred basis. These plans must have been
established by the employer prior to January 1, 1997.
(solid bullet) SIMPLE IRAS provide small business owners and those
with self-employment income (and their eligible employees) with many
of the advantages of a 401(k) plan, but with fewer administrative
requirements.
(solid bullet) 401(K) PLANS allow employees of organizations of all
sizes to contribute a percentage of their wages on a tax-deferred
basis. These accounts need to be established by the trustee of the
plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you
can set up a custodial account under the Uniform Gifts to Minors Act
(UGMA) or the Uniform Transfers to Minors Act (UTMA). Contact your
investment professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
Contact your investment professional.
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of Institutional Class is the class's net
asset value per share (NAV). Institutional Class's shares are sold
without a sales charge.
Your shares will be purchased at the next NAV calculated after your
order is received in proper form. Institutional Class's NAV is
normally calculated each business day at 4:00 p.m. Eastern time.
Shares of Sh ort-Intermediate Municipal Income are offered to
current shareholders only.
Each fund reserves the right to reject any specific purchase order,
including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they
would disrupt management of a fund.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Fidelity must receive payment within three business days after an
order for shares is placed; otherwise your purchase order may be
canceled and you could be held liable for resulting fees and/or
losses.
Share certificates are not available for Institutional Class shares.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an
account application and mail it along with your check. You may also
open your account by wire as described on page . If there is no
account application accompanying this prospectus, call 1-800-843-3001
or your investment professional.
If you are investing through a tax- advantag ed retirement plan,
such as an IRA, for the first time, you will need a special
application. Contact your investment professional for more information
and a retirement account application.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you
can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place an order and wire money into your account,
(small solid bullet) Open your account by exchanging from the same
class of another Fidelity Advisor fund or from another Fidelity fund,
or
(small solid bullet) Contact your investment professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For certain Fidelity Advisor retirement accounts(double
dagger) $500
Through regular investment plans* $1,000
TO ADD TO AN ACCOUNT $250
For certain Fidelity Advisor retirement accounts(double dagger)
$100
Through regular investment plans* $100
MINIMUM BALANCE $1,000
For certain Fidelity Advisor retirement accounts(double dagger)
None
(double dagger)THESE LOWER MINIMUMS APPLY TO FIDELITY TRADITIONAL
IRA, ROTH IRA, ROTH CONVERSION IRA, ROLLOVER IRA, SEP-IRA, AND KEOGH
ACCOUNTS.
*AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $1,000, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED. FOR MORE INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE
REFER TO "INVESTOR SERVICES," PAGE .
There is no minimum account balance or initial or subsequent
investment minimum for certain retirement accounts funded through
salary deduction, or accounts opened with the proceeds of
distributions from such Fidelity retirement accounts. Refer to the
program materials for details.
For further information on opening an account, please consult your
investment professional or refer to the account application.
<TABLE>
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TO OPEN AN TO ADD TO AN
ACCOUNT ACCOUNT
PHONE (SMALL SOLID BULLET) EXCHANGE FROM THE (SMALL SOLID BULLET) EXCHANGE FROM THE
1-800-843-300 SAME CLASS OF ANOTHER SAME CLASS OF ANOTHER
1 OR YOUR FIDELITY ADVISOR FUND OR FIDELITY ADVISOR FUND OR
INVESTMENT FROM ANOTHER FIDELITY FROM ANOTHER FIDELITY
PROFESSIONAL FUND ACCOUNT WITH THE FUND ACCOUNT WITH THE
SAME REGISTRATION, SAME REGISTRATION,
INCLUDING NAME, INCLUDING NAME,
ADDRESS, AND TAXPAYER ADDRESS, AND TAXPAYER
ID NUMBER. ID NUMBER.
MAIL (MAIL_GRAPHIC) (SMALL SOLID BULLET) COMPLETE AND SIGN THE (SMALL SOLID BULLET) MAKE YOUR CHECK
ACCOUNT APPLICATION. PAYABLE TO THE
MAKE YOUR CHECK COMPLETE NAME OF THE
PAYABLE TO THE FUND OF YOUR CHOICE
COMPLETE NAME OF THE AND NOTE THE
FUND OF YOUR CHOICE APPLICABLE CLASS.
AND NOTE THE INDICATE YOUR FUND
APPLICABLE CLASS. MAIL ACCOUNT NUMBER ON
TO THE ADDRESS YOUR CHECK AND MAIL TO
INDICATED ON THE THE ADDRESS PRINTED ON
APPLICATION. YOUR ACCOUNT
STATEMENT.
(SMALL SOLID BULLET) EXCHANGE BY MAIL: CALL
1-800-843-3001 OR
YOUR INVESTMENT
PROFESSIONAL FOR
INSTRUCTIONS.
IN PERSON (HAND_GRAPHIC) (SMALL SOLID BULLET) BRING YOUR ACCOUNT (SMALL SOLID BULLET) BRING YOUR CHECK TO
APPLICATION AND CHECK YOUR INVESTMENT
TO YOUR INVESTMENT PROFESSIONAL.
PROFESSIONAL.
WIRE (WIRE_GRAPHIC) (SMALL SOLID BULLET) CALL 1-800-843-3001 (SMALL SOLID BULLET) NOT AVAILABLE FOR
TO SET UP YOUR ACCOUNT RETIREMENT ACCOUNTS.
AND TO ARRANGE A WIRE (SMALL SOLID BULLET) WIRE TO:
TRANSACTION. NOT BANKER'S TRUST CO.
AVAILABLE FOR ROUTING #
RETIREMENT ACCOUNTS. 021001033
(SMALL SOLID BULLET) WIRE TO: FIDELITY DART
BANKER'S TRUST CO. DEPOSITORY
ROUTING # ACCOUNT # 00159759
021001033 FBO: (ACCOUNT NAME)
FIDELITY DART (ACCOUNT NUMBER)
DEPOSITORY
ACCOUNT #00159759 SPECIFY THE COMPLETE
FBO: (ACCOUNT NAME) NAME OF THE FUND OF
(ACCOUNT NUMBER) YOUR CHOICE, NOTE THE
APPLICABLE CLASS AND
SPECIFY THE COMPLETE INCLUDE YOUR ACCOUNT
NAME OF THE FUND OF NUMBER AND YOUR
YOUR CHOICE, NOTE THE NAME.
APPLICABLE CLASS AND
INCLUDE YOUR NEW
ACCOUNT NUMBER AND
YOUR NAME.
AUTOMATICALLY
(AUTOMATIC_GRAPHIC) (SMALL SOLID BULLET) NOT AVAILABLE. (SMALL SOLID BULLET) USE FIDELITY ADVISOR
SYSTEMATIC INVESTMENT
PROGRAM. SIGN UP FOR
THIS SERVICE WHEN
OPENING YOUR ACCOUNT,
OR CALL YOUR INVESTMENT
PROFESSIONAL TO BEGIN
THE PROGRAM.
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of Institutional Class is the class's NAV.
Your shares will be sold at the next NAV calculated after your order
is received in proper form. Institutional Class's NAV is normally
calculated each business day at 4:00 p.m. Eastern time.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the
methods described on these two pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request
must be made in writing, except for exchanges to shares of the same
class of another Fidelity Advisor fund or shares of other Fidelity
funds, which can be requested by phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least
$1,000 worth of shares in the account to keep it open (account minimum
balances do not apply to retirement and Fidelity Defined Trust
accounts).
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service
in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner,
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity Advisor account with a different registration,
(small solid bullet) You wish to set up the bank wire feature, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, and
(small solid bullet) Any other applicable requirements listed in the
table on page .
Deliver your letter to your investment professional, or mail it to the
following address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
Unless otherwise instructed, Fidelity will send a check to the record
address.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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PHONE ALL ACCOUNT TYPES EXCEPT (SMALL SOLID BULLET) MAXIMUM CHECK
1-800-843-300 RETIREMENT REQUEST: $100,000.
1 OR YOUR ALL ACCOUNT TYPES (SMALL SOLID BULLET) YOU MAY EXCHANGE TO
INVESTMENT THE SAME CLASS OF
PROFESSIONAL OTHER FIDELITY ADVISOR
FUNDS OR TO OTHER
FIDELITY FUNDS IF BOTH
ACCOUNTS ARE
REGISTERED WITH THE
SAME NAME(S),
ADDRESS, AND
TAXPAYER ID NUMBER.
MAIL OR IN PERSON (MAIL_GRAPHIC)(HAND_GRAPHIC) INDIVIDUAL, JOINT TENANT, (SMALL SOLID BULLET) THE LETTER OF
SOLE PROPRIETORSHIP, INSTRUCTION MUST BE
UGMA, UTMA SIGNED BY ALL PERSONS
REQUIRED TO SIGN FOR
RETIREMENT ACCOUNT TRANSACTIONS, EXACTLY
AS THEIR NAMES
APPEAR ON THE
ACCOUNT.
(SMALL SOLID BULLET) THE ACCOUNT OWNER
SHOULD COMPLETE A
RETIREMENT DISTRIBUTION
FORM. CALL
1-800-843-3001 OR
YOUR INVESTMENT
PROFESSIONAL TO REQUEST
ONE.
TRUST (SMALL SOLID BULLET) THE TRUSTEE MUST SIGN
THE LETTER INDICATING
CAPACITY AS TRUSTEE. IF
THE TRUSTEE'S NAME IS
NOT IN THE ACCOUNT
REGISTRATION, PROVIDE A
COPY OF THE TRUST
DOCUMENT CERTIFIED
WITHIN THE LAST 60
DAYS.
BUSINESS OR (SMALL SOLID BULLET) AT LEAST ONE PERSON
ORGANIZATION AUTHORIZED BY
CORPORATE RESOLUTION
TO ACT ON THE ACCOUNT
MUST SIGN THE LETTER.
EXECUTOR, (SMALL SOLID BULLET) CALL
ADMINISTRATOR, 1-800-843-3001 OR
CONSERVATOR/GUARDIAN YOUR INVESTMENT
PROFESSIONAL FOR
INSTRUCTIONS.
WIRE (WIRE_GRAPHIC) ALL ACCOUNT TYPES EXCEPT (SMALL SOLID BULLET) YOU MUST SIGN UP FOR
RETIREMENT THE WIRE FEATURE
BEFORE USING IT. TO
VERIFY THAT IT IS IN
PLACE, CALL
1-800-843-3001.
MINIMUM WIRE:
$500.
(SMALL SOLID BULLET) YOUR WIRE REDEMPTION
REQUEST MUST BE
RECEIVED IN PROPER
FORM BY THE TRANSFER
AGENT BEFORE 4:00
P.M. EASTERN TIME FOR
MONEY TO BE WIRED
ON THE NEXT BUSINESS
DAY.
</TABLE>
INVESTOR SERVICES
Fidelity Advisor funds provide a variety of services to help you
manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements after certain
transactions
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
the fund. Call your investment professional if you need additional
copies of financial reports and prospectuses.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your Institutional Class shares and
buy Institutional Class shares of other Fidelity Advisor funds or
shares of other Fidelity funds, by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see "Exchange Restrictions," page .
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM lets you set up
periodic redemptions from your account. Accounts with a value of
$10,000 or more in Institutional Class shares are eligible for this
program.
One easy way to pursue your financial goals is to invest money
regularly. Fidelity Advisor funds offer convenient services that let
you transfer money into your fund account, or between fund accounts,
automatically. While regular investment plans do not guarantee a
profit and will not protect you against loss in a declining market,
they can be an excellent way to invest for retirement, a home,
educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call your investment
professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY ADVISOR FUND
<TABLE>
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<S> <C> <C> <C>
MINIMUM MINIMUM FREQUENCY SETTING UP OR
INITIAL ADDITIONAL CHANGING
$1,000 $100 MONTHLY, BIMONTHLY, QUARTERLY, (SMALL SOLID BULLET) FOR A NEW ACCOUNT,
OR SEMI-ANNUALLY COMPLETE THE
APPROPRIATE SECTION ON
THE APPLICATION.
(SMALL SOLID BULLET) FOR EXISTING ACCOUNTS,
CALL YOUR INVESTMENT
PROFESSIONAL FOR AN
APPLICATION.
(SMALL SOLID BULLET) TO CHANGE THE AMOUNT
OR FREQUENCY OF YOUR
INVESTMENT, CONTACT
YOUR INVESTMENT
PROFESSIONAL DIRECTLY
OR, CALL
1-800-843-3001.
CALL AT LEAST 10
BUSINESS DAYS PRIOR TO
YOUR NEXT SCHEDULED
INVESTMENT DATE.
</TABLE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital
gains to shareholders each year. Each fund pays capital gains, if any,
in December and may pay additional capital gains after the close of
its fiscal year. Normally, dividends for Growth & Income, Equity
Income, and Balanced are distributed in March, June, September and
December; dividends for TechnoQuant Growth, Mid Cap, Equity Growth,
Growth Opportunities, Strategic Opportunities, and Large Cap are
distributed in December and January; dividends for Strategic Income,
High Yield, Mortgage Securities, Government Investment, Intermediate
Bond, Short Fixed-Income, Municipal Income, Intermediate Municipal
Income, and Short-Intermediate Municipal Income are declared daily and
paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you
want to receive your distributions. The funds offer four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
4. DIRECTED DIVIDENDS(registered trademark) PROGRAM. Your dividend
distributions will be automatically invested in the same class of
shares of another identically registered Fidelity Advisor fund. You
will be sent a check for your capital gain distributions or your
capital gain distributions will be automatically reinvested in
additional shares of the same class of the fund.
If you select distribution option 2, 3, or 4 and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed
for six months, those checks will be reinvested in your account at the
current NAV and your election may be converted to the Reinvestment
Option. To change your distribution option, call your investment
professional directly or call 1-800-843-3001.
When each of the Equity Funds deducts a distribution from its NAV, the
reinvestment price is the applicable class's NAV at the close of
business that day. Dividends from the Bond Funds, the
Intermediate-Term Bond Funds, and the Short-Term Bond Funds will be
reinvested at the applicable class's NAV on the last day of the month.
Capital gain distributions from Bond Funds, the Intermediate-Term Bond
Funds, and the Short-Term Bond Funds will be reinvested at the NAV as
of the date the applicable fund deducts the distributions from its
NAV. The mailing of distribution checks will begin within seven days,
or longer for a December ex-dividend date.
TAXES
As with any investment, you should consider how an investment in the
funds could affect you. Below are some of the funds' tax implications.
If your account is not a tax-advantaged retirement account, be aware
of these tax implications.
TAXES ON DISTRIBUTIONS. Interest income that the Municipal Funds earn
is distributed to shareholders as income dividends. Interest that is
federally tax-free remains tax-free when it is distributed.
Distributions from each fund (except the Municipal Funds), however,
are subject to federal income tax. Each fund may also be subject to
state or local taxes. If you live outside the United States, your
distributions from these funds could also be taxed by the country in
which you reside.
For federal tax purposes, income and short-term capital gains from the
Taxable Funds are distributed as dividends and taxed as ordinary
income; capital gain distributions are taxed as long-term capital
gains.
However, for shareholders of the Municipal Funds, gain on the sale of
tax-free bonds results in taxable distributions. Short-term capital
gains and a portion of the gain on bonds purchased at a discount are
distributed as dividends and taxed as ordinary income; capital gain
distributions, if any, are taxed as long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally
free from state and local income taxes. However, particular states may
limit this benefit, and some types of securities, such as repurchase
agreements and some agency-backed securities, may not qualify for the
benefit. Ginnie Mae securities and other mortgage-backed securities
are notable exceptions in most states. In addition, some states may
impose intangible property taxes. You should consult your own tax
adviser for details and up-to-date information on the tax laws in your
state.
Distributions are taxable when they are paid, whether you take them in
cash or reinvest them. However, distributions declared in December and
paid in January are taxable as if they were paid on December 31.
Every January, Fidelity will send you and the IRS a statement showing
the tax characterization of distributions paid to you in the previous
year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each of the Municipal Funds may invest up to
100% of its assets in these securities. Individuals who are subject to
the tax must report this interest on their tax returns.
A portion of the dividends from each of the Municipal Funds may be
free from state or local taxes. Income from investments in your state
are often tax-free to you. Each year, Fidelity will send you a
breakdown of each of these funds' income from each state to help you
calculate your taxes.
During the fiscal year ended 1997, 100 % of the income
dividends from Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income was free from federal income tax.
During the fiscal year ended 1997, 18.90 % of Municipal
Income's, 8.72 % of Intermediate Municipal Income's, and
19.53 % of Short-Intermediate Municipal Income's dividends were
subject to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions-including exchanges-are
subject to capital gains tax. A capital gain or loss is the difference
between the cost of your shares and the price you receive when you
sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price.
You will also receive a consolidated transaction statement at least
quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of
tax to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount
of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a class has realized but
not yet distributed income or capital gains, you will pay the full
price for the shares and then receive a portion of the price back in
the form of a taxable distribution.
CURRENCY CONSIDERATIONS. For funds that can invest in foreign
securities, if a fund's dividends exceed its taxable income in any
year, which is sometimes the result of currency-related losses, all or
a portion of the fund's dividends may be treated as a return of
capital to shareholders for tax purposes. To minimize the risk of a
return of capital, a fund may adjust its dividends to take currency
fluctuations into account, which may cause the dividends to vary. Any
return of capital will reduce the cost basis of your shares, which
will result in a higher reported capital gain or a lower reported
capital loss when you sell your shares. The statement you receive in
January will specify if any distributions included a return of
capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a
fund and its investments, and these taxes generally will reduce a
fund's distributions. However, if you meet certain holding period
requirements with respect to your fund shares, an offsetting tax
credit may be available to you. If you do not meet such holding period
requirements, you may still be entitled to a deduction for certain
foreign taxes. In either case, your tax statement will show more
taxable income or capital gains than were actually distributed by the
fund, but will also show the amount of the available offsetting credit
or deduction.
There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements,
a fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates Institutional Class's NAV as
of the close of business of the NYSE, normally 4:00 p.m. Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class
is computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting
that class's pro rata share of the value of the applicable fund's
liabilities, subtracting the liabilities allocated to that class, and
dividing the result by the number of shares of that class that are
outstanding.
Each fund's assets are valued primarily on the basis of market
quotations or on the basis of information furnished by a pricing
service. Short-term securities with remaining maturities of sixty days
or less for which quotations and information furnished by a pricing
service are not readily available are valued on the basis of amortized
cost. This method minimizes the effect of changes in a security's
market value. Foreign securities are valued on the basis of quotations
from the primary market in which they are traded, and are translated
from the local currency into U.S. dollars using current exchange
rates. In addition, if quotations and information furnished by a
pricing service are not readily available, or if the values have been
materially affected by events occurring after the closing of a foreign
market, assets may be valued by another method that the Board of
Trustees believes accurately reflects fair value.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to redeem and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail.
EACH FUND RESERVES THE RIGHT to suspend the offering of shares for a
period of time.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased
at the next NAV calculated after your order is received in proper
form. Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.
(small solid bullet) Automated Purchase Orders: For shares of the Bond
Funds, the Intermediate-Term Bond Funds, and Short-Term Bond Funds,
you begin to earn dividends as of the day your funds are received.
(small solid bullet) Other Purchases: For shares of the Bond Funds,
the Intermediate-Term Bond Funds, and Short-Term Bond Funds, you begin
to earn dividends as of the first business day following the day your
funds are received.
AUTOMATED PURCHASE ORDERS. Institutional Class shares can be purchased
or sold through investment professionals utilizing an automated order
placement and settlement system that guarantees payment for orders on
a specified date.
CONFIRMED PURCHASES. Certain financial institutions that meet FDC's
creditworthiness criteria may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow no later than
close of business on the next business day. If payment is not received
by the next business day, the order will be canceled and the financial
institution will be liable for any losses.
TO AVOID THE COLLECTION PERIOD associated with check purchases,
consider buying shares by bank wire, U.S. Postal money order, U.S.
Treasury check, Federal Reserve check, or automatic investment plans.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received in proper form.
Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares of the Bonds Funds, the Intermediate-Term
Bond Funds, and the Short-Term Bond Funds will earn dividends through
the date of redemption; however, shares redeemed on a Friday or prior
to a holiday will continue to earn dividends until the next business
day.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check have been
collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500, subject to an
annual maximum charge of $60.00 per shareholder. Accounts opened after
September 30 will not be subject to the fee for that year. The fee,
which is payable to the transfer agent, is designed to offset in part
the relatively higher costs of servicing smaller accounts. The fee
will not be deducted from retirement accounts (except non-prototype
retirement accounts), accounts using a systematic investment program,
certain (Network Level I and III) accounts which are maintained
through National Securities Clearing Corporation (NSCC), or if total
assets in Fidelity mutual funds exceed $50,000. Eligibility for the
$50,000 waiver is determined by aggregating Fidelity mutual fund
accounts (excluding contractual plans) maintained (i) by FIIOC and
(ii) through NSCC; provided those accounts are registered under the
same primary social security number.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000 you will be
given 30 days' notice to reestablish the minimum balance. If you do
not increase your balance, Fidelity reserves the right to close your
account and send the proceeds to you. Your shares will be redeemed at
the NAV on the day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC will, at its expense, provide promotional incentives such as sales
contests and luxury trips to investment professionals who support the
sale of shares of the funds. In some instances, these incentives will
be offered only to certain types of investment professionals, such as
bank-affiliated or non-bank affiliated broker-dealers, or to
investment professionals whose representatives provide services in
connection with the sale or expected sale of significant amounts of
shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging your
Institutional Class shares for Institutional Class shares of other
Fidelity Advisor funds or for shares of other Fidelity funds. However,
you should note the following:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage difference between that fund's sales charge and
any sales charge you may have previously paid in connection with the
shares you are exchanging. For example, if you had already paid a
sales charge of 2% on your shares and you exchange them into a fund
with a 3% sales charge, you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of a fund per calendar
year. Accounts under common ownership or control, including accounts
with the same taxpayer identification number, will be counted together
for purposes of the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
in certain institutional retirement plans to conform to plan exchange
limits and Department of Labor regulations. See your plan materials
for further information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to a
fund.
Although the funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify these
exchange privileges in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to 1.00% and trading fees of up to 1.50% of
the amount exchanged. Check each fund's prospectus for details.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related SAI,
in connection with the offer contained in this Prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the funds or FDC. This Prospectus
and the related SAI do not constitute an offer by the funds or by FDC
to sell or to buy shares of the funds to any person to whom it is
unlawful to make such offer.
APPENDIX A
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF CORPORATE BONDS
Moody's ratings for obligations with an original remaining maturity in
excess of one year fall within nine categories. They range from Aaa
(highest quality) to C (lowest quality). Moody applies numerical
modifiers of 1, 2, or 3 to each generic rating classification from Aa
through B. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS
Debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA to CCC may be modified by the addition of a plus sign (+) or minus
sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
APPENDIX B
TECHNOQUANT GROWTH - INSTITUTIONAL CLASS
CALENDAR YEAR TOTAL 1997
RETURNS+
TECHNOQUA 12.33%
NT GROWTH
-
INSTITUTIONAL
CLASS
LIPPER 20.36%
CAPITAL
APPRECIATIO
N FUNDS
AVERAGEA
S&P 500 33.36%
CONSUMER 1.70%
PRICE INDEX
MID CAP - INSTITUTIONAL CLASS
CALENDAR YEAR TOTAL 1997
RETURNS+
MID CAP - 28.05%
INSTITUTIONAL
CLASS
LIPPER MID 19.63%
CAP FUNDS
AVERAGEB
S&P 400 32.25%
CONSUMER 1.70%
PRICE INDEX
EQUITY GROWTH - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
EQUITY 15.57% 44.84% 6.93% 64.71% 10.14%
GROWT
H -
INSTITUTI
ONAL
CLASS
LIPPER 14.79% 26.91% -4.49% 36.70% 8.08%
GROWT
H
FUNDS
AVERAG
EC
S&P 16.61% 31.69% -3.10% 30.47% 7.62%
500
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
EQUITY 15.71% -0.04% 40.12% 16.89% 24.61%
GROWT
H -
INSTITUTI
ONAL
CLASS
LIPPER 10.63% -2.17% 30.79% 19.24% 25.30%
GROWT
H
FUNDS
AVERAG
EC
S&P 10.08% 1.32% 37.58% 22.96% 33.36%
500
CONSU 2.75% 2.67% 2.54% 3.32% 1.70%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: -0.5700000000000001
ROW: 2, COL: 1, VALUE: 15.57
ROW: 3, COL: 1, VALUE: 44.84
ROW: 4, COL: 1, VALUE: 6.930000000000001
ROW: 5, COL: 1, VALUE: 64.71000000000001
ROW: 6, COL: 1, VALUE: 10.14
ROW: 7, COL: 1, VALUE: 15.71
ROW: 8, COL: 1, VALUE: -0.04000000000000001
ROW: 9, COL: 1, VALUE: 40.12000000000001
ROW: 10, COL: 1, VALUE: 16.89
ROW: 11, COL: 1, VALUE: 24.61
(LARGE SOLID BOX) EQUITY GROWTH - INSTITUTIONAL
CLASS
GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
GROWT 33.28% 24.14% -1.65% 42.68% 15.03%
H
OPPOR
TUNITIES
-
INSTITUTI
ONAL CL
ASS
LIPPER 14.79% 26.91% -4.49% 36.70% 8.08%
GROWT
H
FUNDS
AVERAG
EC
S&P 16.61% 31.69% -3.10% 30.47% 7.62%
500
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
GROWT 22.17% 2.86% 33.58% 18.30% 29.20%
H
OPPOR
TUNITIES
-
INSTITUTI
ONAL CL
ASS
LIPPER 10.63% -2.17% 30.79% 19.24% 25.30%
GROWT
H
FUNDS
AVERAG
EC
S&P 10.08% 1.32% 37.58% 22.96% 33.36%
500
CONSU 2.75% 2.67% 2.54% 3.32% 1.70%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 33.28
ROW: 3, COL: 1, VALUE: 24.14
ROW: 4, COL: 1, VALUE: -1.65
ROW: 5, COL: 1, VALUE: 42.68
ROW: 6, COL: 1, VALUE: 15.03
ROW: 7, COL: 1, VALUE: 22.17
ROW: 8, COL: 1, VALUE: 2.86
ROW: 9, COL: 1, VALUE: 33.58
ROW: 10, COL: 1, VALUE: 18.3
ROW: 11, COL: 1, VALUE: 29.2
(LARGE SOLID BOX) GROWTH OPPORTUNITIES -
INSTITUTIONAL CLASS
STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
STRATEG 22.71% 32.98% -6.59% 23.69% 13.47%
IC
OPPOR
TUNITIES
-
INSTITUTI
ONAL CL
ASS
LIPPER 14.09% 26.60% -8.24% 39.91% 8.78%
CAPITAL
APPRE
CIATION
FUNDSA
S&P 16.61% 31.69% -3.10% 30.47% 7.62%
500
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
STRATEG 21.07% -6.35% 38.78% 1.99% 26.11%
IC
OPPOR
TUNITIES
-
INSTITUTI
ONAL CL
ASS
LIPPER 15.68% -3.38% 30.34% 16.31% 20.36%
CAPITAL
APPRE
CIATION
FUNDSA
S&P 10.08% 1.32% 37.58% 22.96% 33.36%
500
CONSU 2.75% 2.67% 2.54% 3.32% 1.70%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: -6.33
ROW: 2, COL: 1, VALUE: 22.25
ROW: 3, COL: 1, VALUE: 32.6
ROW: 4, COL: 1, VALUE: -7.17
ROW: 5, COL: 1, VALUE: 23.08
ROW: 6, COL: 1, VALUE: 12.87
ROW: 7, COL: 1, VALUE: 20.44
ROW: 8, COL: 1, VALUE: -7.17
ROW: 9, COL: 1, VALUE: 38.78
ROW: 10, COL: 1, VALUE: 1.99
ROW: 11, COL: 1, VALUE: 26.11
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES -
INSTITUTIONAL CLASS
LARGE CAP - INSTITUTIONAL CLASS
CALENDAR YEAR TOTAL 1997
RETURNS+
LARGE CAP 24.34%
-
INSTITUTIONAL
CLASS
LIPPER 25.30%
GROWTH
FUNDS
AVERAGEC
S&P 500 33.36%
CONSUMER 1.70%
PRICE INDEX
GROWTH & INCOME - INSTITUTIONAL CLASS
CALENDAR YEAR TOTAL 1997
RETURNS+
GROWTH & 28.23%
INCOME -
INSTITUTIONAL
CLASS
LIPPER 27.14%
GROWTH AND
INCOME
FUNDS
AVERAGED
S&P 500 33.36%
CONSUMER 1.70%
PRICE INDEX
EQUITY INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
EQUITY 23.23% 18.43% -14.28% 29.81% 14.94%
INCOME
-
INSTITUTI
ONAL
CLASS
LIPPER 16.74% 22.18% -6.78% 26.86% 9.77%
EQUITY
INCOME
FUNDS
AVERAG
EE
S&P 16.61% 31.69% -3.10% 30.47% 7.62%
500
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
EQUITY 18.80% 7.50% 33.49% 15.26% 26.64%
INCOME
-
INSTITUTI
ONAL
CLASS
LIPPER 13.66% -2.54% 30.17% 18.85% 27.51%
EQUITY
INCOME
FUNDS
AVERAG
EE
S&P 10.08% 1.32% 37.58% 22.96% 33.36%
500
CONSU 2.75% 2.67% 2.54% 3.32% 1.70%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: -2.24
ROW: 2, COL: 1, VALUE: 23.23
ROW: 3, COL: 1, VALUE: 18.43
ROW: 4, COL: 1, VALUE: -14.28
ROW: 5, COL: 1, VALUE: 29.81
ROW: 6, COL: 1, VALUE: 14.94
ROW: 7, COL: 1, VALUE: 18.8
ROW: 8, COL: 1, VALUE: 7.5
ROW: 9, COL: 1, VALUE: 33.49
ROW: 10, COL: 1, VALUE: 15.26
ROW: 11, COL: 1, VALUE: 26.64
(LARGE SOLID BOX) EQUITY INCOME -
INSTITUTIONAL CLASS
BALANCED - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
BALANC 20.89% 24.60% -2.94% 34.48% 9.20%
ED -
INSTITUTI
ONAL
CLASS
LIPPER 12.34% 19.57% -0.57% 26.69% 7.07%
BALANC
ED
FUNDS
AVERAG
EF
S&P 16.61% 31.69% -3.10% 30.47% 7.62%
500
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
BALANC 19.66% -5.09% 15.00% 8.68% 22.92%
ED -
INSTITUTI
ONAL
CLASS
LIPPER 10.91% -2.50% 25.16% 13.76% 19.00%
BALANC
ED
FUNDS
AVERAG
EF
S&P 10.08% 1.32% 37.58% 22.96% 33.36%
500
CONSU 2.75% 2.67% 2.54% 3.32% 1.70%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 20.89
ROW: 3, COL: 1, VALUE: 24.6
ROW: 4, COL: 1, VALUE: -2.94
ROW: 5, COL: 1, VALUE: 34.58
ROW: 6, COL: 1, VALUE: 9.199999999999999
ROW: 7, COL: 1, VALUE: 19.66
ROW: 8, COL: 1, VALUE: -5.09
ROW: 9, COL: 1, VALUE: 15.0
ROW: 10, COL: 1, VALUE: 8.68
ROW: 11, COL: 1, VALUE: 22.92
(LARGE SOLID BOX) BALANCED - INSTITUTIONAL CLASS
HIGH YIELD - INSTITUTIONAL CLASS
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
HIGH 17.24% 3.64% 7.30% 34.94% 23.09%
YIELD -
INSTITUTI
ONAL
CLASS
LIPPER 12.89% -0.58% -10.13% 36.91% 17.51%
HIGH
CURRENT
YIELD
FUNDS
AVERAG
E G
MERRILL 13.47% 4.23% -4.35% 34.58% 18.16%
LYNCH
HIGH
YIELD
MASTER
INDEX
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
HIGH 20.45% -1.49% 18.69% 13.24% 15.30%
YIELD -
INSTITUTI
ONAL
CLASS
LIPPER 18.95% -3.85% 16.43% 13.67% 12.96%
HIGH
CURRENT
YIELD
FUNDS
AVERAG
E G
MERRILL 17.18% -1.17% 19.91% 11.06% 12.82%
LYNCH
HIGH
YIELD
MASTER
INDEX
CONSU 2.75% 2.67% 2.54% 3.32% 1.70%
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 17.24
ROW: 3, COL: 1, VALUE: 3.64
ROW: 4, COL: 1, VALUE: 7.3
ROW: 5, COL: 1, VALUE: 34.94
ROW: 6, COL: 1, VALUE: 23.09
ROW: 7, COL: 1, VALUE: 20.45
ROW: 8, COL: 1, VALUE: -1.49
ROW: 9, COL: 1, VALUE: 18.69
ROW: 10, COL: 1, VALUE: 13.24
ROW: 11, COL: 1, VALUE: 15.3
(LARGE SOLID BOX) HIGH YIELD - INSTITUTIONAL CLASS
STRATEGIC INCOME - INSTITUTIONAL CLASS
CALENDAR 1995 1996 1997
YEAR TOTAL
RETURNS+
STRATEG 22. 38 % 13.04% 9.36%
IC
INCOME
- -
INSTITUTI
ONAL
CLASS
LIPPER 16.92% 11.74% 8.77%
MULTI-S
ECTOR
INCOME
FUNDS
AVERAG
E H
MERRILL 19.91% 11.06% 12.82%
LYNCH
HIGH
YIELD
MASTER
INDEX
CONSU 2.54% 3.32% 1.70%
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: 22.38
ROW: 10, COL: 1, VALUE: 13.04
ROW: 11, COL: 1, VALUE: 9.360000000000001
(LARGE SOLID BOX) STRATEGIC INCOME -
INSTITUTIONAL CLASS
MORTGAGE SECURITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
MORTG 6.72% 13.64% 10.36% 13.61% 5.45%
AGE
SECURIT
IES -
INSTITUTI
ONAL
CLASS
LIPPER 7.47% 12.71% 9.52% 15.00% 6.38%
U.S.
MORTG
AGE
FUNDS
AVERAG
E I
LEHMA 8.72 % 15.35 % 10.72 % 15.72 % 6.97 %
N
BROTHER
S
MORTG
AGE-BA
CKED
SECURITI
ES
INDEX
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
MORTG 6.71% 1.94% 17.02% 5.43% 9.01%
AGE
SECURIT
IES -
INSTITUTI
ONAL
CLASS
LIPPER 7.58% -4.83% 16.29% 3 .87 % 8.58%
U.S.
MORTG
AGE
FUNDS
AVERAG
E I
LEHMA 6.84 % -1.61 % 16.80% 5.35 % 9.49%
N
BROTHER
S
MORTG
AGE-BA
CKED
SECURITI
ES
INDEX
CONSU 2.75% 2.67% 2.54% 3.32% 1.70%
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.7
ROW: 2, COL: 1, VALUE: 6.72
ROW: 3, COL: 1, VALUE: 13.64
ROW: 4, COL: 1, VALUE: 10.36
ROW: 5, COL: 1, VALUE: 13.61
ROW: 6, COL: 1, VALUE: 5.45
ROW: 7, COL: 1, VALUE: 6.71
ROW: 8, COL: 1, VALUE: 1.94
ROW: 9, COL: 1, VALUE: 17.02
ROW: 10, COL: 1, VALUE: 5.930000000000001
ROW: 11, COL: 1, VALUE: 9.01
(LARGE SOLID BOX) MORTGAGE SECURITIES -
INSTITUTIONAL CLASS
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
GOVER 6.57% 11.75% 8.37% 13.45% 6.48%
NMENT
INVEST
MENT -
INSTITUTI
ONAL CL
ASS
LIPPER 6.67% 12.46% 8.22% 14.44% 6.41%
GENER
AL U.S.
GOVER
NMENT
FUNDS
AVERAG
E J
LEHMA 7.03 % 14.22 % 8.72 % 15.32 % 7.23 %
N
BROTHER
S
GOVERN
MENT
BOND
INDEX
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
GOVER 9.36% -3.85% 17.7 2 % 2.33% 8.99 %
NMENT
INVEST
MENT -
INSTITUTI
ONAL CL
ASS
LIPPER 9.42% -4.64% 17.34% 1.72% 8.84 %
GENER
AL U.S.
GOVER
NMENT
FUNDS
AVERAG
E J
LEHMA 10.66 % -3.37 % 18.34 % 2.77 % 9.59 %
N
BROTHER
S
GOVERN
MENT
BOND
INDEX
CONSU 2.75% 2.67% 2.54% 3.32% 1.70 %
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 6.57
ROW: 3, COL: 1, VALUE: 11.75
ROW: 4, COL: 1, VALUE: 8.370000000000001
ROW: 5, COL: 1, VALUE: 13.45
ROW: 6, COL: 1, VALUE: 6.48
ROW: 7, COL: 1, VALUE: 9.360000000000001
ROW: 8, COL: 1, VALUE: -3.85
ROW: 9, COL: 1, VALUE: 17.72
ROW: 10, COL: 1, VALUE: 2.33
ROW: 11, COL: 1, VALUE: 8.99
(LARGE SOLID BOX) GOVERNMENT INVESTMENT -
INSTITUTIONAL CLASS
INTERMEDIATE BOND - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
INTERM 7.84% 12.11% 7.91% 15.16% 7.32%
EDIATE
BOND -
INSTITUTI
ONAL
CLASS
LIPPER 6.16 % 9.94 % 8.11 % 14.01 % 6.24 %
SHORT- I
NTERME
DIATE
INVESTM
ENT
GRADE
DEBT
FUNDS
AVERAG
E K
LEHMA 6.67% 12.77% 9.16% 14.62% 7.17%
N
BROTHER
S
INTERM
EDIATE
GOVER
NMENT
/CORP
ORATE
BOND
INDEX
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
INTERM 12.08% -2.06% 12.50% 3.70% 7.23 %
EDIATE
BOND -
INSTITUTI
ONAL
CLASS
LIPPER 7.51 % -2.08 % 12.88 % 4.17 % 6.62 %
SHORT- I
NTERME
DIATE
INVESTM
ENT
GRADE
DEBT
FUNDS
AVERAG
E K
LEHMA 8.79% -1.93% 15.33% 4.05% 7.87 %
N
BROTHER
S
INTERM
EDIATE
GOVER
NMENT
/CORP
ORATE
BOND
INDEX
CONSU 2.75% 2.67% 2.54% 3.32% 1.70 %
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.32
ROW: 2, COL: 1, VALUE: 7.84
ROW: 3, COL: 1, VALUE: 12.11
ROW: 4, COL: 1, VALUE: 7.91
ROW: 5, COL: 1, VALUE: 15.16
ROW: 6, COL: 1, VALUE: 7.319999999999999
ROW: 7, COL: 1, VALUE: 12.08
ROW: 8, COL: 1, VALUE: -2.06
ROW: 9, COL: 1, VALUE: 12.5
ROW: 10, COL: 1, VALUE: 3.7
ROW: 11, COL: 1, VALUE: 7.23
(LARGE SOLID BOX) INTERMEDIATE BOND -
INSTITUTIONAL CLASS
SHORT FIXED-INCOME - INSTITUTIONAL CLASS
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
SHORT 6.19% 10.31% 5.87% 13.37% 7.61%
FIXED-I
NCOME
- -
INSTITUTI
ONAL
CLASS
LIPPER 6.86% 10.22% 7.87% 12.88% 5.97%
SHORT
INVESTM
ENT
GRADE
BOND
FUNDS
AVERAG
E L
LEHMA 6.34% 10.97% 9.69% 11.83% 6.35%
N
BROTHER
S 1-3
YEAR
GOVER
NMENT
/CORP
ORATE
BOND
INDEX
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
SHORT 9.49% -3.37% 9.90% 4.69% 6.33 %
FIXED-I
NCOME
- -
INSTITUTI
ONAL
CLASS
LIPPER 6.45% -0.44% 10.84% 4.64% 6.19 %
SHORT
INVESTM
ENT
GRADE
BOND
FUNDS
AVERAG
E L
LEHMA 5.55% 0.55% 10.96% 5.14% 6.66 %
N
BROTHER
S 1-3
YEAR
GOVER
NMENT
/CORP
ORATE
BOND
INDEX
CONSU 2.75% 2.67% 2.54% 3.32% 1.70 %
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 6.19
ROW: 3, COL: 1, VALUE: 10.31
ROW: 4, COL: 1, VALUE: 5.87
ROW: 5, COL: 1, VALUE: 13.37
ROW: 6, COL: 1, VALUE: 7.609999999999999
ROW: 7, COL: 1, VALUE: 9.49
ROW: 8, COL: 1, VALUE: -3.37
ROW: 9, COL: 1, VALUE: 9.9
ROW: 10, COL: 1, VALUE: 4.69
ROW: 11, COL: 1, VALUE: 6.33
(LARGE SOLID BOX) SHORT FIXED-INCOME -
INSTITUTIONAL CLASS
MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
MUNICI 11.80% 13.09% 10.29% 12.18% 11.11%
PAL
INCOME
- -
INSTITUTI
ONAL CL
ASS
LIPPER 11.53 % 9.65 % 6.05 % 12.09 % 8.79 %
GENER
AL
MUNICI
PAL
DEBT
FUNDS
AVERAG
E M
LEHMA 10.16% 10.79% 7.29% 12.14% 8.81%
N
BROTHER
S
MUNICI
PAL
BOND
INDEX
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
MUNICI 13.79% -8.05% 16.84% 3.09% 10.22 %
PAL
INCOME
- -
INSTITUTI
ONAL CL
ASS
LIPPER 12.47 % - 6.50 % 16.84 % 3.30 % 9.11 %
GENER
AL
MUNICI
PAL
DEBT
FUNDS
AVERAG
E M
LEHMA 12.29% -5.17% 17.45% 4.43% 9.19%
N
BROTHER
S
MUNICI
PAL
BOND
INDEX
CONSU 2.75% 2.67% 2.54% 3.32% 1.70 %
MER
PRICE
INDEX
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 11.8
ROW: 3, COL: 1, VALUE: 13.09
ROW: 4, COL: 1, VALUE: 10.29
ROW: 5, COL: 1, VALUE: 12.18
ROW: 6, COL: 1, VALUE: 11.11
ROW: 7, COL: 1, VALUE: 13.79
ROW: 8, COL: 1, VALUE: -8.050000000000001
ROW: 9, COL: 1, VALUE: 16.84
ROW: 10, COL: 1, VALUE: 3.09
ROW: 11, COL: 1, VALUE: 10.22
(LARGE SOLID BOX) MUNICIPAL INCOME -
INSTITUTIONAL CLASS
INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
CALENDAR 1988 1989 1990 1991 1992
YEAR TOTAL
RETURNS+
INTERM 7.38% 7.79% 6.37% 9.64% 7.28%
EDIATE
MUNICI
PAL
INCOME
- -
INSTITUTI
ONAL
CLASS
LIPPER 7.57% 8.26% 6.59% 10.52% 7.80%
INTERM
EDIATE
MUNICI
PAL
DEBT
FUNDS
AVERAG
E N
CONSU 4.42% 4.65% 6.11% 3.06% 2.90%
MER
PRICE
INDEX
CALENDAR 1993 1994 1995 1996 1997
YEAR TOTAL
RETURNS+
INTERM 9.94% -5.43% 14.37% 4.15% 8.07 %
EDIATE
MUNICI
PAL
INCOME
- -
INSTITUTI
ONAL
CLASS
LIPPER 10.18% -3.51% 12.89% 3.70% 7.16 %
INTERM
EDIATE
MUNICI
PAL
DEBT
FUNDS
AVERAG
E N
CONSU 2.75% 2.67% 2.54% 3.32% 1.70 %
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.33
ROW: 2, COL: 1, VALUE: 7.38
ROW: 3, COL: 1, VALUE: 7.79
ROW: 4, COL: 1, VALUE: 6.37
ROW: 5, COL: 1, VALUE: 9.639999999999999
ROW: 6, COL: 1, VALUE: 7.28
ROW: 7, COL: 1, VALUE: 9.94
ROW: 8, COL: 1, VALUE: -5.430000000000001
ROW: 9, COL: 1, VALUE: 14.37
ROW: 10, COL: 1, VALUE: 4.15
ROW: 11, COL: 1, VALUE: 8.07
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL
INCOME - INSTITUTIONAL CLASS
SHORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
CALENDAR 1995 1996 1997
YEAR TOTAL
RETURNS+
SHORT-I 8.76% 3.67% 5.18%
NTERME
DIATE
MUNICI
PAL
INCOME
-
INSTITUTI
ONAL
CLASS
LIPPER 7.43% 3.53% 5.20%
SHORT-I
NTERME
DIATE
MUNICI
PAL
DEBT
FUNDS
AVERAG
EO
CONSU 2.54% 3.32% 1.70%
MER
PRICE
INDEX
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 0.0
ROW: 8, COL: 1, VALUE: 0.0
ROW: 9, COL: 1, VALUE: 8.76
ROW: 10, COL: 1, VALUE: 3.67
ROW: 11, COL: 1, VALUE: 5.18
(LARGE SOLID BOX) SHORT-INTERMEDIATE MUNICIPAL
INCOME - INSTITUTIONAL CLASS
+INITIAL OFFERING OF INSTITUTIONAL CLASS OF GROWTH OPPORTUNITIES,
BALANCED, HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, SHORT
FIXED-INCOME, MUNICIPAL INCOME, AND SHORT-INTERMEDIATE MUNICIPAL
INCOME TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS PRIOR
TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.65% FOR GROWTH OPPORTUNITIES, STRATEGIC OPPORTUNITIES, AND BALANCED,
0.25% FOR HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, AND
MUNICIPAL INCOME, AND 0.15% FOR SHORT FIXED-INCOME AND SHORT
INTERMEDIATE MUNICIPAL INCOME. TOTAL RETURNS FOR INSTITUTIONAL CLASS
PRIOR TO JULY 3, 1995 WOULD HAVE BEEN HIGHER IF CLASS T'S 12B-1 FEE
HAD NOT BEEN REFLECTED.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF STRATEGIC OPPORTUNITIES
TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS PRIOR TO JULY
3, 1995 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF MORTGAGE SECURITIES TOOK
PLACE ON MARCH 3, 1997. INSTITUTIONAL CLASS RETURNS PRIOR TO MARCH 3,
1997 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
[A] THE LIPPER CAPITAL APPRECIATION FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 231 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[ B ] THE LIPPER MID CAP FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 249 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[ C ] THE LIPPER GROWTH FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 820 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[ D ] THE LIPPER GROWTH AND INCOME FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 611 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[ E ] THE LIPPER EQUITY INCOME FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 182 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[F] THE LIPPER BALANCED FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 350 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[G] THE LIPPER HIGH CURRENT YIELD FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 181 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[H] THE LIPPER MULTI-SECTOR INCOME FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 81 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[I] THE LIPPER U.S. MORTGAGE FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 59 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[J] THE LIPPER GENERAL U.S. GOVERNMENT BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 179 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[K] THE LIPPER SHORT-INTERMEDIATE INVESTMENT GRADE BOND FUNDS
AVERAGE CURRENTLY REFLECTS THE PERFORMANCE OF OVER 195 MUTUAL FUNDS
WITH SIMILAR OBJECTIVES.
[L] THE LIPPER SHORT INVESTMENT GRADE BOND AVERAGE FUNDS CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 101 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[M] THE LIPPER GENERAL MUNICIPAL DEBT FUNDS FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 235 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[N] THE LIPPER INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 140 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[O] THE LIPPER SHORT-INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE
CURRENTLY REFLECTS THE PERFORMANCE OF OVER 33 MUTUAL FUNDS WITH
SIMILAR OBJECTIVES.
TECHNOQUANT IS A TRADEMARK OF FMR CORP.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND: INITIAL CLASS
PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. *
3 a .............................. Financial Highlights
b .............................. *
c,d .............................. Performance
4 a i............................. Charter
ii........................... Investment Principles and Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Charter
ii........................... Charter; Doing Business With Fidelity
iii.......................... Breakdown of Expenses
c .............................. Charter
d,e .............................. *
f .............................. Expenses
g i.............................. Charter
ii............................. *
5A .............................. *
6 a i............................. Charter
ii........................... How to Buy Additional Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions; Sales
Charge Reductions and Waivers
iii.......................... Charter
b ............................. Charter
c .............................. Transaction Details; Exchange Restrictions
d .............................. Who May Want to Invest
e .............................. Cover Page; Doing Business with Fidelity; How to
Buy Additional Shares; How to Sell Shares;
Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
h .............................. Who May Want To Invest
7 a .............................. Cover Page; Charter
b .............................. How to Buy Additional Shares; Transaction Details
c .............................. Sales Charge Reductions and Waivers
d .............................. How to Buy Additional Shares
e .............................. Breakdown of Expenses; Transaction Details
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the
fund invests and the services available to shareholders.
To learn more about the fund and its investments, you can obtain a
copy of the fund's most recent financial report and portfolio listing
or a copy of the Statement of Additional Information (SAI) dated
February 28, 1998. The SAI has been filed with the Securities and
Exchange Commission (SEC) and is available along with other related
materials on the SEC's Internet Web site (http://www.sec.gov). The SAI
is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, call Fidelity at
1-800-544-8888.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE
COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
SOI-PRO-0298
MUTUAL FUND SHARES ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY DEPOSITORY
INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL
AMOUNT INVESTED.
(fund number 014, trading symbol FSLSX)
FIDELITY
STRATEGIC
OPPORTUNITIES
FUND
Initial Class of Fidelity Advisor Strategic Opportunities Fund.
Strategic Opportunities seeks capital appreciation by investing
primarily in securities of companies believed by Fidelity Management &
Research Company (FMR) to involve a "special situation."
PROSPECTUS
FEBRUARY 28, 1998(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON,
MA 02109
CONTENTS
KEY FACTS THE FUND AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES Initial Class's sales charge
(load) and its yearly operating
expenses.
FINANCIAL HIGHLIGHTS A summary of the
fund's financial data.
PERFORMANCE How the fund has done
over time.
THE FUND IN DETAIL CHARTER How the fund is organized.
INVESTMENT PRINCIPLES AND RISKS The
fund's overall approach to investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and what
they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
HOW TO BUY ADDITIONAL SHARES
Making additional investments.
HOW TO SELL SHARES Taking money out
and closing your account.
INVESTOR SERVICES Services to help you
manage your account.
SHAREHOLDER AND ACCOUNT DIVIDENDS, CAPITAL GAINS,
POLICIES AND TAXES
TRANSACTION DETAILS Share price
calculations and the timing of purchases
and redemptions.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND
WAIVERS
APPENDIX
KEY FACTS
THE FUND AT A GLANCE
GOAL: Capital appreciation. As with any mutual fund, there is no
assurance that the fund will achieve its goal.
STRATEGY: Invests primarily in securities of companies believed by FMR
to involve a "special situation."
MANAGEMENT: FMR is the management arm of Fidelity Investments, which
was established in 1946 and is now America's largest mutual fund
manager. Foreign affiliates of FMR may help choose investments for the
fund.
SIZE: As of December 31, 1997, the fund had over $ 658 million
in assets.
WHO MAY WANT TO INVEST
Initial Class shares are offered through this prospectus to current
Initial Class shareholders.
The fund is designed for investors who are willing to ride out stock
market fluctuations in pursuit of potentially high long-term returns
and who want to be invested in the stock market for its long-term
growth potential. The fund invests for growth and does not pursue
income.
The value of the fund's investments varies from day to day, generally
reflecting changes in market conditions and other company, political,
and economic news. In the short term, stock prices can fluctuate
dramatically in response to these factors. The securities of small,
less well-known companies may be more volatile than those of larger
companies. Over time, however, stocks have shown greater growth
potential than other types of securities.
The fund is not in itself a balanced investment plan. You should
consider your investment objective and tolerance for risk when making
an investment decision. When you sell your fund shares, they may be
worth more or less than what you paid for them.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking to
maximize return must assume
greater risk. Strategic
Opportunities is in the GROWTH
category.
(solid bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(solid bullet) INCOME Seeks income by
investing in bonds.
(solid bullet) GROWTH AND INCOME Seeks
long-term growth and income
by investing in stocks and
bonds.
(right arrow) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
The fund is composed of multiple classes of shares. All classes of the
fund have a common investment objective and investment portfolio. The
fund offers Initial Class shares, Class A shares, Class T shares,
Class B shares, and Institutional Class shares. Class A and Class T
shares have a front-end sales charge and pay a 12b-1 fee. Class A and
Class T shares may be subject to a contingent deferred sales charge
(CDSC). Class B shares do not have a front-end sales charge, but do
have a CDSC, and pay a 12b-1 fee. Institutional Class shares have no
sales charg e a nd do not pay a 12b-1 fee, but are available only
to certain types of investors.
You may obtain more information about shares of Institutional Class,
Class A, Class T, and Class B shares, which are not offered through
this prospectus, by calling 1-800-343-3001.
The performance of one class of shares of the fund may be different
from the performance of another class of shares of the fund because of
different sales charges and class expenses.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell Initial Class shares of the fund. In addition, you may be
charged an annual account maintenance fee if your account balance
falls below $2,500. Lower front-end sales charges may be available
with purchases of $50,000 or more. See "Transaction Details," page
, for an explanation of how and when these charges apply.
Maximum sales charge on purchases 3.50%
(as a % of offering price)
Sales charge on reinvested distributions None
Deferred sales charge on redemptions None
Annual account maintenance fee $12.00
(for accounts under $2,500)
ANNUAL OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee to FMR that varies based on its performance. It
also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and
financial reports.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of expenses
for portfolio management,
shareholder statements, tax
reporting, and other services.
These expenses are paid from
Initial Class's assets, and their
effect is already factored into
any quoted share price or
return. Also, as an investor,
you may pay certain expenses
directly (for example, Initial
Class's 3.50% sales charge).
(checkmark)
Initial Class's expenses are factored into its share price or
dividends and are not charged directly to shareholder accounts (see
"Breakdown of Expenses" on page ).
The following figures are based on historical expenses of Initial
Class of the fund and are calculated as a percentage of average net
assets of Initial Class of the fund. A portion of the brokerage
commissions that the fund pays is used to reduce the fund's expenses.
In addition, the fund has entered into arrangements with its custodian
and transfer agent whereby credits realized as a result of uninvested
cash balances are used to reduce custodian and transfer agent
expenses. Including these reductions, the total Initial Class
operating expenses presented in the table would have been
0.76 %.
Management fee 0.40 %
12b-1 fee None
Other expenses 0.37 %
Total operating expenses 0.77 %
EXAMPLES: Let's say, hypothetically, that Initial Class's annual
return is 5% and that your shareholder transaction expenses and
Initial Class's annual operating expenses are exactly as just
described. For every $1,000 you invested, here's how much you would
pay in total expenses if you close your account after the number of
years indicated:
1 Year 3 Years 5 Years 10 Years
$ 43 $ 59 $ 76 $ 127
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED EXPENSES OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse Initial Class of the fund to
the extent that the total operating expenses (as a percentage of its
average net assets ) exceed 1.50%. Expenses eligible for
reimbursement do not include interest, taxes, brokerage commissions,
and extraordinary expenses.
FINANCIAL HIGHLIGHTS
The financial highlights table that follows has been audited by
Coopers & Lybrand L.L.P ., independent accountants. The fund's
financial highlights, financial statements, and report of the auditor
are included in the fund's Annual Report, and are incorporated by
reference into (are legally a part of) the fund's SAI. Contact
Fidelity for a free copy of the Annual Report or the SAI.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.Years ended
1997O 1996N 1995N 1994E 1994D 1993D 1992D,J 1991D 1990D 1989D 1988D
2.Net asset value,
$ 22.90 $ 25.10 $ 18.86 $ 20.23 $ 22.72 $ 19.72 $ 21.55 $ 17.37 $ 19.77 $ 15.65 $ 19.13
beginning of period
3.Income from Investment Operations
4. Net investment income
.04K .28K .50 .13K .54K .45 .73 .77 .80 .64 .48
5. Net realized and
6.12 .19 6.79 (.74) (.81) 4.46 .58 4.26 (2.49) 4.08 (1.80)
unrealized gain (loss)
6. Total from investment
6.16 .47 7.29 (.61) (.27) 4.91 1.31 5.03 (1.69) 4.72 (1.32)
operations
7.Less Distributions
8. From net investment
- -- (.32) (.50) (.50) (.51) (.70) (.72) (.85) (.71) (.60) (.25)
income
9. From net realized gain
(.87) (2.35) (.55) (.26) (1.71) (1.21) (2.42) -- -- -- (1.91)
10. Total distributions
(.87) (2.67) (1.05) (.76) (2.22) (1.91) (3.14) (.85) (.71) (.60) (2.16)
11.Net asset value, end of
$ 28.19 $ 22.90 $ 25.10 $ 18.86 $ 20.23 $ 22.72 $ 19.72 $ 21.55 $ 17.37 $ 19.77 $ 15.65
period
12.Total returnB,C
27.79% 2.00% 38.75% (3.02)% (1.51)% 26.98% 7.89% 30.01% (8.96)% 31.19% (4.63)%
13. RATIOS AND SUPPLEMENTAL DATA
14.Net assets, end of period
$ 21,792 $ 20,406 $ 23,428 $ 17,583 $ 18,850 $ 20,707 $ 17,933 $ 19,193 $ 15,988 $ 19,780 $ 19,221
(000 omitted)
15.Ratio of expenses to
.77%A .82% 1.04% 1.14%A 1.15% .89%F .87% 1.00% 1.03% .64%G 1.49%H,I
average net assets
16.Ratio of expenses to
.76%A,L .81%L 1.03%L 1.11%A,L 1.14%L .89% .87% 1.00% 1.03% .64% 1.49%
average net assets after
expense reductions
17.Ratio of net investment
.18%A 1.16% 2.47% 2.65%A 2.60% 2.74% 3.78% 4.12% 4.21% 4.08% 3.31%
income to average net assets
18.Portfolio turnover
61%A 151% 142% 228%A 159% 183% 211% 223% 114% 89% 160%
19.Average commission rateM
$ .0382 $ .0409
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D YEAR ENDED SEPTEMBER 30
E FOR THE THREE MONTHS ENDED DECEMBER 31, 1994
F INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FMR FOR ADJUSTMENTS
TO PRIOR PERIOD'S FEES.
G INCLUDES REIMBURSEMENT OF $.08 PER SHARE FROM FIDELITY SERVICE
COMPANY, INC. FOR ADJUSTMENTS TO PRIOR PERIOD'S FEES.
H LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. WITHOUT
THIS REIMBURSEMENT, THE CLASS'S RATIO OF EXPENSES TO AVERAGE NET
ASSETS WOULD HAVE BEEN HIGHER.
I DURING THE PERIOD JULY 1, 1986 THROUGH OCTOBER 31, 1987 FMR
VOLUNTARILY WAIVED .05% OF THE ANNUAL INDIVIDUAL FUND FEE OF .35%.
WITHOUT THIS REIMBURSEMENT, THE CLASS'S EXPENSE RATIO WOULD HAVE BEEN
HIGHER.
J AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
K NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
L FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
M FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
N YEAR ENDED DECEMBER 31
O FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1997
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The
total returns that follow are based on historical fund results and do
not reflect the effect of taxes.
The fund's fiscal year runs from December 1 through November 30. The
tables below show the performance of Initial Class of the fund over
past fiscal p eriods . The chart on page presents calendar year
performance for Initial Class of the fund compared to different
measures, including a competitive funds average.
AVERAGE ANNUAL TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended Past 1 Past 5 Past 10
November 30, 1997 year years years
Strategic Opportunities - Initial Class 27.65 % 15.85 % 16.20 %
Strategic Opportunities - Initial Class (load adj.)[A] 23.18 % 15.03 % 15.79 %
</TABLE>
CUMULATIVE TOTAL RETURNS
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal periods ended Past 1 Past 5 Past 10
November 30, 1997 year years years
Strategic Opportunities - Initial Class 27.65 % 108.67 % 348.76 %
Strategic Opportunities - Initial Class (load adj.)[A] 23.18 % 101.37 % 333.05 %
</TABLE>
[A] LOAD-ADJUSTED RETURNS INCLUDE THE EFFECT OF INITIAL CLASS 'S
3.50% MAXIMUM APPLICABLE FRONT-END SALES CHARGE.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
Average annual and cumulative total returns usually will include the
effect of paying the maximum applicable sales charge.
THE COMPETITIVE FUNDS AVERAGE is the Lipper Capital Appreciation Funds
Average. As of November 30, 1997, the average reflected the
performance of 213 mutual funds with similar investment
objectives. This average, published by Lipper Analytical Services,
Inc., excludes the effect of sales loads.
STANDARD & POOR'S 500 INDEX (S&P 500 (registered trademark) ) is
a widely recognized, unmanaged index of common stocks.
Unlike Initial Class's returns, the total returns of the comparative
index do not include the effect of any brokerage commissions,
transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
Other illustrations of fund performance may show moving averages
over specified periods.
YEAR-BY-YEAR TOTAL RETURNS
Calendar years 1988 1989 1990 1991 1992 1993 1994 1995 1996
1997
STRATEGIC OPPORTUNITIES - 22.71% 32.98% -6.59% 23.69% 13.47%
21.07% -6.35% 38.75% 2.00% 26.79%
INITIAL CLASS
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58%
22.96% 33.36%
Lipper Cap. App. Funds Avg. 14.09% 26.60% -8.24% 39.91% 8.78%
15.68% -3.38% 30.34% 16.31% 20.36%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67%
2.54% 3.32% 1.70%
Percentage (%)
Row: 1, Col: 1, Value: 22.71
Row: 2, Col: 1, Value: 32.98
Row: 3, Col: 1, Value: -6.59
Row: 4, Col: 1, Value: 23.69
Row: 5, Col: 1, Value: 13.47
Row: 6, Col: 1, Value: 21.07
Row: 7, Col: 1, Value: -6.35
Row: 8, Col: 1, Value: 38.75
Row: 9, Col: 1, Value: 2.0
Row: 10, Col: 1, Value: 26.79
(LARGE SOLID BOX) Strategic
Opportunities
- Initial Class
The fund's recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please call
1-800-544-8888.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF
FUTURE PERFORMANCE.
THE FUND IN DETAIL
CHARTER
STRATEGIC OPPORTUNITIES IS A MUTUAL FUND: an investment that pools
shareholders' money and invests it toward a specified goal. The fund
is a diversified fund of Fidelity Advisor Series I, an open-end
management investment company organized as a Massachusetts business
trust on June 24, 1983.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
fund's activities, review contractual arrangements with companies that
provide services to the fund, and review the fund's performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials in
advance, including a voting card and information about the proposals
to be voted on. The number of votes you are entitled to is based upon
the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust,
respectively.
FMR AND ITS AFFILIATES
The fund is managed by FMR, which chooses the fund's investments and
handles its business affairs. Fidelity Management & Research (U.K.)
Inc. (FMR U.K.) in London, England, and Fidelity Management & Research
(Far East) Inc. (FMR Far East) in Tokyo, Japan, assist FMR with
foreign investments.
Harris Leviton is Vice President and manager of Advisor Strategic
Opportunities, which he has managed since March 1996. Previously, he
managed other Fidelity funds. Since joining Fidelity in 1986, he has
worked as an analyst and manager.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services.
Fidelity Service Company, Inc. (FSC) performs transfer agent servicing
functions for Initial Class of the fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant
owners of a class of shares of common stock representing approximately
49% of the voting power of FMR Corp. Under the Investment Company Act
of 1940 (the 1940 Act), control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company; therefore, the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to FMR
Corp .
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out the fund's transactions, provided that the
fund receives brokerage services and commission rates comparable to
those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a
"special situation." FMR normally invests at least 65% of the fund's
total assets in these securities. The term "special situation" refers
to FMR's identification of an unusual, and possibly non-repetitive,
development taking place in a company or a group of companies in an
industry.
A special situation may involve one or more of the following
characteristics:
(small solid bullet) A technological advance or discovery, the
offering of a new or unique product or service, or changes in consumer
demand or consumption forecasts.
(small solid bullet) Changes in the competitive outlook or growth
potential of an industry or a company within an industry, including
changes in the scope or nature of foreign competition or the
development of an emerging industry.
(small solid bullet) New or changed management, or material changes in
management policies or corporate structure.
(small solid bullet) Significant economic or political occurrences
abroad, including changes in foreign or domestic import and tax laws
or other regulations.
(small solid bullet) Other events, including natural disasters,
favorable litigation settlements, or a major change in demographic
patterns.
"Special situations" often involve breaks with past experience. They
can be relatively aggressive investments. In seeking capital
appreciation, the fund also may invest in securities of companies not
involving a special situation, but which are companies with valuable
fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential. FMR intends to invest primarily in common stocks and
securities that are convertible into common stocks; however, it also
may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital
appreciation. The fund may invest up to 30% of its assets in foreign
investments.
The value of the fund's domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies, and general market and economic
conditions. FMR may use various investment techniques to hedge a
portion of the fund's risks, but there is no guarantee that these
strategies will work as FMR intends. When you sell your shares, they
may be worth more or less than what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy. The fund also reserves the right to invest without
limitation in preferred stocks and investment-grade debt instruments
for temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, strategies FMR may employ in
pursuit of the fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of the fund's limitations and more
detailed information about the fund's investments are contained in the
fund's SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with the fund's
investment objective and policies and that doing so will help the fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in the fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
1-800-544-8888.
EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's
financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of total assets, the fund may
not purchase more than 10% of the outstanding voting securities of a
single issuer. This limitation does not apply to securities of other
investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
Lower-quality debt securities (sometimes called "junk bonds") are
considered to have speculative characteristics, and involve greater
risk of default or price changes due to changes in the issuer's
creditworthiness, or they may already be in default. The market prices
of these securities may fluctuate more than higher-quality securities
and may decline significantly in periods of general or regional
economic difficulty.
The following table provides a summary of ratings assigned to debt
holdings (not including money market instruments) in the fund's
portfolio. These figures are dollar-weighted averages of month-end
portfolio holdings during the fiscal period ended November 30,
1997, and are presented as a percentage of total security investments.
These percentages are historical and do not necessarily indicate the
fund's current or future debt holdings.
FISCAL PERIOD ENDED NOVEMBER 1997 DEBT HOLDINGS, BY RATING
MOODY'S INVESTORS
SERVICE STANDARD & POOR'S
(AS A % OF INVESTMENTS) (AS A % OF INVESTMENTS)
Average of Average of
Rating total investments Rating total investments
INVESTMENT GRADE
Highest quality Aaa __ AAA __
High quality Aa __ AA __
Upper-medium grade A __ A __
Medium grade Baa __ BBB __
LOWER QUALITY
Moderately speculative Ba __ BB __
Speculative B 0.38% B 0.06 %
Highly speculative Caa __ CCC __
Poor quality Ca __ CC __
Lowest quality, no interest C __ C __
In default, in arrears -- D __
REFER TO THE FUND'S SAI FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUND DOES NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH ITS DEBT QUALITY
POLICY. SECURITIES NOT RATED BY MOODY'S OR S&P AMOUNTED TO
0.59 % OF THE FUND'S INVESTMENTS. THIS PERCENTAGE MAY
INCLUDE SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATIONS, AS WELL AS UNRATED SECURITIES.
UNRATED LOWER-QUALITY SECURITIES AMOUNTED TO 0.59 % OF THE
FUND'S INVESTMENTS.
FOR FOREIGN GOVERNMENT SECURITIES NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR
ASSIGNS THE RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
RESTRICTIONS: Purchase of a debt security is consistent with the
fund's debt quality policy if it is rated at or above the stated level
by Moody's Investors Service (Moody's) or rated in the equivalent
categories by Standard & Poor's (S&P), or is unrated but judged to be
of equivalent quality by FMR.
The fund currently intends to limit its investments in lower than
Baa-quality debt securities to less than 35% of its assets.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve additional risks and considerations. These
include risks relating to political , economic , or
regulatory conditions in foreign countries; fluctuations in
foreign currencies ; withholding or other taxes ; trading,
settlement, custodial, and other operational risks ; and the
potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. All of these factors can make foreign investments,
especially those in emerging markets, more volatile and
potentially less liquid than U.S. investments.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a
security at one price and simultaneously agrees to sell it back at a
higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap
agreements, and purchasing indexed securities.
FMR can use these practices to adjust the risk and return
characteristics of the fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with the fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of
the fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other
borrower. They have additional risks beyond conventional debt
securities because they may entail less legal protection for the fund,
or there may be a requirement that the fund supply additional cash to
a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result,
more than 10% of its assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include real estate-related instruments.
CASH MANAGEMENT. The fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income while maintaining a stable $1.00
share price. A major change in interest rates or a default on the
money market fund's investments could cause its share price to change.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one
industry. Economic, business, or political changes can affect all
securities of a similar type.
RESTRICTIONS: With respect to 75% of its total assets, the fund may
not purchase a security if, as a result, more than 5% would be
invested in the securities of any issuer. This limitation does not
apply to U.S. Government securities or to securities of other
investment companies.
The fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
BORROWING. The fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If the fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If the fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a
delay in recovering the fund's securities. The fund may also lend
money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of the
fund's total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a
"special situation." Under normal conditions, the fund will invest at
least 65% of its total assets in companies involving a special
situation. FMR intends to invest primarily in common stocks and
securities that are convertible into common stocks; however, it also
may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital
appreciation. The fund may invest up to 30% of its assets in foreign
investments.
With respect to 75% of its total assets, the fund may not purchase a
security if, as a result, more than 5% would be invested in the
securities of any one issuer and may not purchase more than 10% of the
outstanding voting securities of a single issuer. These limitations do
not apply to U.S. Government securities or to securities of other
investment companies.
The fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
The fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of the fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily
operations. Expenses paid out of Initial Class's assets are reflected
in its share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. The fund also pays OTHER EXPENSES,
which are explained on page .
FMR may, from time to time, agree to reimburse the fund for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by the fund if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be terminated at any time without notice, can decrease the
fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee
is determined by taking a basic fee and then applying a performance
adjustment. The performance adjustment either increases or decreases
the management fee, depending on how well the fund has performed
relative to its comparative index.
The basic fee rate is calculated by adding a group fee rate to
an individual fund fee rate, multiplying the result by the fund's
monthly average net assets and dividing by twelve .
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52%, and it
drops as total assets under management increase.
For December 1997, the group fee rate was 0.29%. The individual
fund fee rate is 0. 3 0%.
The annualized basic fee for the fiscal year ended November
1997 was 0.60 % of the fund's average net assets.
The performance adjustment rate is calculated monthly by comparing the
fund's performance to that of the S&P 500 over the performance period.
The performance period is the most recent 36-month period.
The difference is translated into a dollar amount that is added to or
subtracted from the basic fee.
The maximum annualized performance adjustment rate is
(plus/minus)0.20% of the fund's average net assets over the
performance period.
For the purposes of calculating the performance adjustment for the
fund, the fund's investment performance will be based on the average
performance of all classes of the fund weighted according to their
average assets for each month in the performance period.
The total management fee for the fiscal period ended Nove mber 1997
was 0.40% of the fund's average net assets.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on
issuers based outside the United States. Under the sub-advisory
agreements, FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of the costs of providing these services.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K. and FMR Far East a fee equal to 50% of its
management fee rate with respect to the fund's investments that the
sub-adviser manages on a discretionary basis.
For the fiscal peri od ended November 1997, FMR, on behalf of
the fund, paid FMR U.K. and FMR Far East fees equal to less than
0.01% (annualized) of the fund's average net assets.
OTHER EXPENSES
While the management fee is a significant component of the fund's
annual operating costs, the fund has other expenses as well.
FSC performs transfer agency, dividend disbursing, and shareholder
servicing functions for Initial Class of the fund. FSC also calculates
the net asset value (NAV) and dividends for Initial Class, maintains
the fund's general accounting records, and administers the fund's
securities lending program. For the fiscal period ended
November 1997, Initial Class paid fees equal to 0.19 %
(annualized) of Initial Class's average net assets for transfer
agency and related services, and the fund paid fees equal to
0.05 % (annualized) of the fund's average net assets for
pricing and bookkeeping services. These amounts are before expense
reductions, if any.
The fund also pays other expenses, such as legal, audit, and custodian
fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by the fund to
reduce the fund's custodian or transfer agent fees.
YOUR ACCOUNT
Doing Business with Fidelity
Fidelity Investments was established in 1946 to manage one of
America's first mutual funds. Today, Fidelity is the largest mutual
fund company in the country, and is known as an innovative provider of
high-quality financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, FBSI. Fidelity is also a
leader in providing tax- advantaged retirement plans for
individuals investing on their own or through their employer.
Fidelity is committed to providing investors with practical
information to make investment decisions. Based in Boston, Fidelity
provides customers with complete service 24 hours a day, 365 days a
year, through a network of telephone service centers around the
country.
To reach Fidelity for general information, call these numbers:
(BULLET) For mutual funds, 1-800-544-8888
(BULLET) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has over 80 walk-in Investor Centers across the country.
You may purchase or sell shares of the fund through an investment
professional including a broker, who may charge you a transaction fee
for this service. If you invest through FBSI, another financial
institution, or an investment professional, read their program
materials for any special provisions, additional service features or
fees that may apply to your investment in the fund. Certain features
of the fund, such as the minimum initial or subsequent investment
amounts, may be modified.
The account guidelines that follow may not apply to certain retirement
accounts. If you are investing through a retirement account or if your
employer offers the fund through a retirement program, you may be
subject to additional fees. For more information, please refer to your
program materials, contact your employer, or call your retirement
benefits number or Fidelity directly, as appropriate.
(CHECKMARK)Fidelity Facts
Fidelity offers the broadest selection of mutual funds in the world.
(BULLET) Number of Fidelity mutual funds: over 226
(BULLET) Assets in Fidelity mutual funds: over $529 billion
(BULLET) Number of shareholder accounts: over 34 million
(BULLET) Number of investment analysts and portfolio managers: over
265
How to Buy Additional Shares
The price to buy one share of Initial Class is the class's offering
price or the class's NAV, depending on whether you pay a front-end
sales charge. If you pay a front-end sales charge, your price will be
Initial Class's offering price. When you buy Initial Class shares at
the offering price, Fidelity deducts the appropriate sales charge and
invests the rest in Initial Class shares of the fund. If you qualify
for a front-end sales charge waiver, your price will be Initial
Class's NAV. See "Transaction Details," page 25, and "Sales Charge
Reductions and Waivers," page 29, for explanations of how and when the
sales charge and waivers apply.
Your shares will be purchased at the next offering price or NAV, as
applicable, calculated after your order is received in proper form.
Initial Class's offering price and NAV are normally calculated
each business day at 4:00 p.m. Eastern time.
The fund reserves the right to reject any specific purchase order,
including certain purchases by exchange. See "Exchange Restrictions"
on page 28. Purchase orders may be refused if, in FMR's opinion, they
would disrupt the management of the fund.
Share certificates are not available for Initial Class shares.
If you buy additional shares by check or Fidelity Money
Line(REGISTERED TRADEMARK), and then sell those shares by any method
other than by exchange to another Fidelity fund, the payment may be
delayed for up to seven business days to ensure that your previous
investment has cleared.
If you are investing through a tax-advantaged retirement plan,
such as an IRA, for the first time, you will need a special
application. Retirement investing also involves its own investment
procedures. Call 1-800-544-8888 for more information and a retirement
application.
Minimum Investments
To Add to an Account $250
For certain Fidelity retirement accounts(DOUBLE DAGGER) $250
Through regular investment plans* $100
Minimum Balance $2,000
For certain Fidelity retirement accounts(DOUBLE DAGGER) $500
(DOUBLE DAGGER) These lower minimums apply to Fidelity Traditional
IRA, Roth Conversion IRA, Rollover IRA, SEP-IRA, and Keogh
accounts.
* For more information about regular investment plans, please refer to
"Investor Services," page 22.
There is no minimum account balance or initial or subsequent
investment minimum for certain retirement accounts funded through
salary deduction, or accounts opened with the proceeds of
distributions from such Fidelity retirement accounts. Refer to the
program materials for details.
To Add to an Account
Phone
1-800-544-7777
(PHONE GRAPHIC)
(BULLET)Exchange from another Fidelity fund
account with the same registration, including
name, address, and taxpayer ID number.
(BULLET)Use Fidelity Money Line to transfer from
your bank account. Call before your first use to
verify that this service is in place on your
account. Maximum Money Line: up to $100,000.
Mail
(MAIL GRAPHIC)
(BULLET)Make your check payable to "Fidelity
Strategic Opportunities Fund - Initial Class."
Indicate your fund account number on your check
and mail to the address printed on your account
statement.
(BULLET)Exchange by mail: call 1-800-544-6666
for instructions.
In Person
(IN PERSON GRAPHIC)
(BULLET)Bring your application and check to a
Fidelity Investor Center. Call 1-800-544-9797
for the center nearest you.
Wire
(WIRE GRAPHIC)
(BULLET)Not available for retirement accounts.
(BULLET)Wire to:
Bankers Trust Company,
Bank Routing # 021001033,
Account # 00163053.
Specify "Fidelity Strategic Opportunities Fund -
Initial Class" and include your account number
and your name.
Automatically
(AUTOMATICALLY GRAPHIC)
(BULLET)Use Fidelity Automatic Account Builder.
Call 1-800-544-6666 to change the amount of your
investment, skip an investment, or stop
Automatic Account Builder.
(TDD GRAPHIC) TDD - Service for the Deaf and Hearing-Impaired:
1-800-544-0118
How to Sell Shares
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares.
The price to sell one share of Initial Class is the class's NAV.
Your shares will be sold at the next NAV calculated after your
order is received in proper form. Initial Class's NAV is normally
calculated each business day at 4:00 p.m. Eastern time.
To sell shares in a non-retirement account, you may use any of the
methods described on these two pages.
To sell shares in a Fidelity retirement account, your request must be
made in writing, except for exchanges to other Fidelity funds, which
can be requested by phone or in writing. Call 1-800-544-6666 for a
retirement distribution form.
If you are selling some but not all of your shares, leave at least
$2,000 worth of shares in the account to keep it open ($500 for
retirement accounts).
To sell shares by bank wire or Fidelity Money Line, you will need to
sign up for these services in advance.
Certain requests must include a signature guarantee. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(BULLET)You wish to redeem more than $100,000 worth of shares,
(BULLET)Your account registration has changed within the last 30 days,
(BULLET)The check is being mailed to a different address than the one
on your account (record address),
(BULLET)The check is being made payable to someone other than the
account owner,
(BULLET)The redemption proceeds are being transferred to a Fidelity
account with a different registration,
(BULLET)You wish to set up the bank wire feature, or
(BULLET)You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
Selling Shares in Writing
Write a "letter of instruction" with:
(BULLET)Your name,
(BULLET)The fund's name,
(BULLET)The applicable class name ("Initial Class"),
(BULLET)Your fund account number,
(BULLET)The dollar amount or number of shares to be redeemed, and
(BULLET)Any other applicable requirements listed in the following
table.
Deliver your letter to a Fidelity Investor Center or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Unless otherwise instructed, Fidelity will send a check to the record
address.
Account Type Special Requirements
Phone
1-800-544-7777
(PHONE GRAPHIC)
All account types
except retirement
(BULLET)Maximum check request:
$100,000.
(BULLET) For Money Line
transfers to your bank account.
Minimum:
$10; Maximum: up to $100,000.
All account types
(BULLET)You may exchange to other
Fidelity funds if both accounts
are registered with the same
name(s), address, and taxpayer ID
number.
Mail or
in Person
(MAIL GRAPHIC)
(IN PERSON GRAPHIC)
Individual, Joint
Tenant, Sole
Proprietorship,
UGMA, UTMA
(BULLET)The letter of instruction
must be signed by all persons
required to sign for
transactions, exactly as their
names appear on the account.
Retirement account
(BULLET)The account owner should
complete a retirement
distribution form. Call
1-800-544-6666 to request one.
Trust
(BULLET)The trustee must sign the
letter indicating capacity as
trustee. If the trustee's name is
not in the account registration,
provide a copy of the trust
document certified within the
last 60 days.
Business or
Organization
(BULLET)At least one person
authorized by corporate
resolution to act on the account
must sign the letter.
Executor,
Administrator,
Conservator/
Guardian
(BULLET)Call 1-800-544-6666 for
instructions.
Wire
(WIRE GRAPHIC)
All account types
except retirement
(BULLET)You must sign up for the
wire feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum wire:
$5,000.
(BULLET)Your wire redemption
request must be received in
proper form by Fidelity
before
4:00 p.m. Eastern time for money
to be wired on the next business
day.
(TDD GRAPHIC) TDD - Service for the Deaf and
Hearing-Impaired:1-800-544-0118
Investor Services
Fidelity provides a variety of services to help you manage your
account.
Information Services
Fidelity's telephone representatives are available 24 hours a day, 365
days a year. Whenever you call, you can speak with someone equipped to
provide the information or service you need.
Statements and reports that Fidelity sends to you include the
following:
(BULLET)Confirmation statements after certain transactions
(BULLET)Account statements (quarterly)
(BULLET)Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more
than one account in the fund. Call Fidelity at 1-800-544-6666 if you
need additional copies of financial reports and prospectuses.
(CHECKMARK)24-Hour Service
Account Assistance
1-800-544-6666
Account Transactions
1-800-544-7777
Product Information
1-800-544-8888
Retirement Account Assistance
1-800-544-4774
TouchTone XpressSM
1-800-544-5555
(AUTOMATED SERVICE GRAPHIC) Automated service
Transaction Services
Exchange privilege. You may sell your Initial Class shares and buy
shares of other Fidelity funds by telephone or in writing. The shares
you exchange will carry credit for any front-end sales charge you
previously paid in connection with their purchase.
Note that exchanges out of the fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see "Exchange Restrictions," page 28.
Systematic Withdrawal Plans let you set up periodic redemptions from
your account.
Fidelity Money Line enables you to transfer money by phone between
your bank account and your fund account. Most transfers are complete
within three business days of your call.
Regular Investment Plans
One easy way to pursue your financial goals is to invest money
regularly. Fidelity offers convenient services that let you transfer
money into your fund account, or between fund accounts, automatically.
While regular investment plans do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses,
and other long-term financial goals. Certain restrictions apply for
retirement accounts. Call 1-800-544-6666 for more information.
Regular Investment Plans
Fidelity Automatic Account BuilderSM
To move money from your bank account to a Fidelity fund
Minimum
$100
Frequency
Monthly or quarterly
Setting up or changing
(BULLET)Call 1-800-544-6666 for an
application.
(BULLET)To change the amount or
frequency of your investment, call
1-800-544-6666 at least three business
days prior to your next scheduled
investment date.
Direct Deposit
To send all or a portion of your paycheck or government check to a
Fidelity fundA
Minimum
$100
Frequency
Every pay period
Setting up or changing
(BULLET)Call 1-800-544-6666 for an
authorization form.
(BULLET)Changes require a new authorization
form.
Fidelity Automatic Exchange Service
To move money from a Fidelity money market fund to another Fidelity
fund
Minimum
$100
Frequency
Monthly, bimonthly,
quarterly, or
annually
Setting up or changing
(BULLET)To establish, call 1-800-544-6666
after both accounts are opened.
(BULLET)To change the amount or frequency
of your investment, call 1-800-544-6666.
A Because its share price fluctuates, the fund may not be an
appropriate choice for direct deposit of your entire check.
The fund's portfolio turnover rate for the fiscal period ended
November 1997 was 61% (annualized) . This rate varies from year
to year.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net income and capital
gains to shareholders each year. Normally, dividends and capital gains
are distributed in December and January.
DISTRIBUTION OPTIONS
Initial Class offers four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional Initial Class shares of
the fund. If you did not indicate a choice on your application, you
were automatically assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional Initial Class shares of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in shares of
another identically registered Fidelity fund.
For retirement accounts, all distributions are automatically
reinvested. When you are over 59 years old, you can receive
distributions in cash.
Shares purchased through reinvestment of dividend and capital gain
distributions are not subject to a sales charge. If you direct Initial
Class distributions to a class with a front-end sales charge,
you will not pay a sales charge on those purchases.
When Initial Class deducts a distribution from its NAV, the
reinvestment price is the class's NAV at the close of business that
day. Distribution checks will be mailed within seven days.
TAXES
As with any investment, you should consider how your investment in the
fund will be taxed. If your account is not a tax-advantaged
retirement account, you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income
tax, and may also be subject to state or local taxes. If you live
outside the United States, your distributions could also be taxed by
the country in which you reside. Your distributions are taxable when
they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are
taxable as if they were paid on December 31.
For federal tax purposes, the fund's income and short-term capital
gains are distributed as dividends and taxed as ordinary income;
capital gain distributions are taxed as long-term capital gains.
Every January, Fidelity will send you and the IRS a statement showing
the tax characterization of distributions paid to you in the previous
year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges - are
subject to capital gains tax. A capital gain or loss is the difference
between the cost of your shares and the price you receive when you
sell them.
Whenever you sell shares of the fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price.
You will also receive a consolidated transaction statement every
January. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of
tax to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount
of your capital gains.
"BUYING A DIVIDEND." If you buy shares when the class has realized but
not yet distributed income or capital gains, you will pay the full
price for the shares and then receive a portion of the price back in
the form of a taxable distribution.
CURRENCY CONSIDERATIONS. If the fund's dividends exceed its taxable
income in any year, which is sometimes the result of currency-related
losses, all or a portion of the fund's dividends may be treated as a
return of capital to shareholders for tax purposes. To minimize the
risk of a return of capital, the fund may adjust its dividends to take
currency fluctuations into account, which may cause the dividends to
vary. Any return of capital will reduce the cost basis of your shares,
which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. The statement you
receive in January will specify if any distributions included a return
of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on the
fund and its investments, and these taxes generally will reduce the
fund's distributions.
There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements,
the fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates Initial Class's NAV and
offering price as of the close of business of the NYSE, normally 4:00
p.m. Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class is
computed by adding that class's pro rata share of the value of the
fund's investments, cash, and other assets, subtracting that class's
pro rata share of the value of the fund's liabilities, subtracting the
liabilities allocated to that class, and dividing the result by the
number of shares of that class that are outstanding.
The fund's assets are valued primarily on the basis of market
quotations. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
on the basis of amortized cost. This method minimizes the effect of
changes in a security's market value. Foreign securities are valued on
the basis of quotations from the primary market in which they are
traded, and are translated from the local currency into U.S. dollars
using current exchange rates. In addition, if quotations are not
readily available, or if the values have been materially affected by
events occurring after the closing of a foreign market, assets may be
valued by another method that the Board of Trustees believes
accurately reflects fair value.
THE OFFERING PRICE of Initial Class is its NAV divided by the
difference between one and the applicable front-end sales charge
percentage. The maximum front-end sales charge is 3.50% of the
offering price.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require the fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to redeem and
exchange by telephone, call Fidelity for instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail or by visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT to suspend the offering of shares for a
period of time.
WHEN YOU PLACE AN ORDER TO BUY ADDITIONAL SHARES, your shares will be
purchased at the next offering price or NAV, as applicable, calculated
after your investment is received in proper form . Note the
following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) The fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees the fund or
Fidelity has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money
order, U.S. Treasury check, Federal Reserve check, or direct deposit
instead.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements
with FDC may enter confirmed purchase orders on behalf of customers by
phone, with payment to follow no later than the time when the class is
priced on the following business day. If payment is not received by
that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received in proper
form . Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect the fund, it may take up to seven days to pay you.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day
after your phone call.
(small solid bullet) The fund may hold payment on redemptions until it
is reasonably satisfied that investments made by check or Fidelity
Money Line have been collected, which can take up to seven business
days.
(small solid bullet) Remember that if you redeem all of your Initial
Class shares, your account will be closed and you will not be able to
purchase new Initial Class shares of the fund.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500 (including any
amount paid as a sales charge), subject to an annual maximum charge of
$24.00 per shareholder. It is expected that accounts will be valued on
the second Friday in November of each year. Accounts opened after
September 30 will not be subject to the fee for that year. The fee,
which is payable to the transfer agent, is designed to offset in part
the relatively higher costs of servicing smaller accounts. This fee
will not be deducted from Fidelity brokerage accounts, retirement
accounts (except non-prototype retirement accounts), accounts using
regular investment plans, or if total assets with Fidelity exceed
$30,000. Eligibility for the $30,000 waiver is determined by
aggregating Fidelity accounts maintained by FSC or FBSI which are
registered under the same social security number or which list the
same social security number for the custodian of a Uniform
Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $2,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send
the proceeds to you. Your shares will be redeemed at the NAV on the
day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the fund
without reimbursement from the fund. Qualified recipients are
securities dealers who have sold fund shares or others, including
banks and other financial institutions, under special arrangements in
connection with FDC's sales activities. In some instances, these
incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or
expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging Initial Class
shares for shares of other Fidelity funds. However, you should note
the following:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage point difference between that fund's sales
charge and any sales charge you have previously paid in connection
with the shares you are exchanging. For example, if you had already
paid a sales charge of 2% on your shares and you exchange them into a
fund with a 3% sales charge, you would pay an additional 1% sales
charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, the fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of the fund per
calendar year. Accounts under common ownership or control, including
accounts with the same tax identification number, will be counted
together for purposes of the four exchange limit.
(small solid bullet) The fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) The exchange limit may be modified for accounts
in certain institutional retirement plans to conform to plan exchange
limits and Department of Labor regulations. See your plan materials
for further information.
(small solid bullet) Your exchanges may be restricted or refused if
the fund receives or anticipates simultaneous orders affecting
significant portions of the fund's assets. In particular, a pattern of
exchanges that coincides with a "market timing" strategy may be
disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any
time. The fund reserves the right to terminate or modify the exchange
privilege in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to 1.00% and trading fees of up to
1.50% of the amount exchanged . Check each fund's prospectus for
details.
SALES CHARGE REDUCTIONS AND WAIVERS
REDUCTIONS. Initial Class's sales charge may be reduced if you invest
directly with Fidelity or through prototype or prototype-like
retirement plans sponsored by FMR or FMR Corp. The amount you invest,
plus the value of your account, must fall within the ranges shown
below. Purchases made with assistance or intervention from a
financial intermediary are not eligible for a sales charge
reduction. Call Fidelity to see if your purchase qualifies.
SALES CHARGES
Ranges Sales Charge
As a As an Investment
% of approximate Professional
Offering % of Net Concession
Price Amount as %
Invested of Offering
Price*
Up to $49,999 3.50% 3.63% 3.00%
$50,000 to $99,999 3.00% 3.09% 2.50%
$100,000 to $249,999 2.50% 2.56% 2.00%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None None None
*FDC COLLECTS THE PROCEEDS FROM INITIAL CLASS'S SALES CHARGE AND MAY
PAY A PORTION OF THEM TO SECURITIES DEALERS WHO HAVE SOLD THE FUND'S
SHARES, OR TO OTHERS, INCLUDING BANKS AND OTHER FINANCIAL INSTITUTIONS
(QUALIFIED RECIPIENTS), UNDER SPECIAL ARRANGEMENTS IN CONNECTION WITH
FDC'S SALES ACTIVITIES.
The sales charge will also be reduced by the percentage of any sales
charge you previously paid on investments in other Fidelity funds
or by the percentage of any sales charge you would have paid if
the reductions in the table on the left had not existed. These
sales charge credits only apply to purchases made in one of the ways
listed below, and only if you continuously owned Fidelity fund
shares , maintained a Fidelity brokerage core account, or
participated in The CORPORATEplan for Retirement Program.
1. By exchange from another Fidelity fund.
2. With proceeds from a transaction in a Fidelity
brokerage core account, including any free credit balance, core money
market fund, or margin availability, to the extent such proceeds were
derived from redemption proceeds from another Fidelity fund.
3. As a participant in The CORPORATEplan for Retirement Program
when shares are purchased through plan-qualified loan repayments, and
for exchanges into and out of the Managed Income Portfolio.
A FRONT-END SALES CHARGE WILL NOT APPLY TO THE FOLLOWING INITIAL CLASS
SHARES:
1. If you buy shares as part of an employee benefit plan having more
than 200 eligible employees or a minimum of $3 million in plan assets
invested in Fidelity funds.
2. To shares in a Fidelity account purchased with the proceeds of a
distribution from an employee benefit plan, provided that at the time
of the distribution, the employer or its affiliate maintained a plan
that both qualified for waiver (1) above and had at least some of its
assets invested in Fidelity-managed products. (Distributions
transferred to an IRA account must be transferred within 60 days from
the date of the distribution. All other distributions must be
transferred directly into a Fidelity account).
3. If you are a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or
more.
4. If you purchase shares for a charitable remainder trust or life
income pool established for the benefit of a charitable organization
(as defined for purposes of Section 501(c)(3) of the Internal Revenue
Code).
5. If you are an investor participating in the Fidelity Trust
Portfolios program.
6. To shares purchased by a mutual fund for which FMR or an affiliate
serves as investment manager.
7. To shares purchased through Portfolio Advisory Services or Fidelity
Charitable Advisory Services.
8. If you are a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director, or regular employee of
FMR Corp. or Fidelity International Limited or their direct or
indirect subsidiaries (a Fidelity trustee or employee), the spouse of
a Fidelity trustee or employee acting as a custodian for a minor
child, or a person acting as trustee of a trust for the sole benefit
of the minor child of a Fidelity trustee or employee.
9. If you are a bank trust officer, registered representative, or
other employee of a qualified recipient, as defined on page .
10. To contributions and exchanges to a prototype or prototype-like
retirement plan sponsored by FMR Corp. or FMR and which is marketed
and distributed directly to plan sponsors or participants without any
assistance or intervention from any intermediary distribution channel.
11. If you invest through a non-prototype pension or profit-sharing
plan that maintains all of its mutual fund assets in Fidelity funds,
provided the plan executes a Fidelity non-prototype sales charge
waiver agreement confirming its qualification.
12. If you are a registered investment adviser (RIA) purchasing for
your discretionary accounts, provided you execute a Fidelity RIA load
waiver agreement which specifies certain aggregate minimum and
operating provisions. Except for correspondents of National Financial
Services Corporation, this waiver is available only for shares
purchased directly from Fidelity, and is unavailable if the RIA is
part of an organization principally engaged in the brokerage business.
13. If you are a trust institution or bank trust department purchasing
for your non-discretionary, non-retirement fiduciary accounts,
provided you execute a Fidelity Trust load waiver agreement which
specifies certain aggregate minimum and operating provisions. This
waiver is available only for shares purchased either directly from
Fidelity or through a bank-affiliated broker, and is unavailable if
the trust department or institution is part of an organization not
principally engaged in banking or trust activities.
These waivers must be qualified through FDC in advance. More detailed
information about waivers (1), (2), (5), (9), (10), and (12) is
contained in the SAI. A representative of your plan or organization
should call Fidelity for more information.
You must notify FDC in advance if you qualify for a front-end sales
charge waiver. Employee benefit plan investors must meet additional
requirements specified in the fund's SAI.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related SAI,
in connection with the offer contained in this Prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the fund or FDC. This Prospectus and
the related SAI do not constitute an offer by the fund or by FDC to
sell or to buy shares of the fund to any person to whom it is unlawful
to make such offer.
APPENDIX
Fidelity Money Line and Directed Dividends are registered
trademarks of FMR Corp.
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY ADVISOR FUNDS:
CLASS A, CLASS T, CLASS B, CLASS C, INSTITUTIONAL CLASS, AND INITIAL
CLASS STATEMENT OF ADDITIONAL INFORMATION
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C>
10.................................... Cover Page
11.................................... Cover Page
12.................................... Description of the Trusts
13 a-c.............................. Investment Policies and Limitations
d................................. Portfolio Transactions
14 a-c.............................. Trustees and Officers
15 a-c ............................. Trustees and Officers
16 a i.............................. FMR
ii............................ Trustees and Officers
iii........................... Management Contracts
b................................. Management Contracts
c................................. *
d................................. Contracts with FMR Affiliates
e................................. *
f................................. Distribution and Service Plans
g................................. *
h................................. Description of the Trusts
i................................. Contracts with FMR Affiliates
17 a-d............................. Portfolio Transactions
e................................. *
18 a................................. Description of the Trusts
b................................. *
19 a................................. Additional Purchase, Redemption, and Exchange
Information
b................................. Valuation; Additional Purchase, Redemption, and
Exchange Information
c................................. *
20.................................... Distributions and Taxes
21 a, b............................. Contracts with FMR Affiliates; Distribution and
Service Plans
c................................. *
22 a ............................. *
b ................................ Performance
23.................................... Financial Statements
</TABLE>
* Not Applicable
FIDELITY ADVISOR FUNDS
CLASS A, CLASS T, CLASS B, CLASS C, INSTITUTIONAL CLASS, AND INITIAL
CLASS
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 28, 1998
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectuses
(dated February 28, 1998) for Class A, Class T, Class B, Class C,
Institutional Class, and Initial Class shares. Initial Class shares
are available only to current Initial Class shareholders. Please
retain this document for future reference. The funds' Annual Reports
are separate documents supplied with this SAI. To obtain a free
additional copy of a Prospectus or an Annual Report for the Initial
Class of Fidelity Advisor Strategic Opportunities Fund, Fidelity
Advisor Mortgage Securities Fund, and Fidelity Advisor Municipal Bond
Fund, please call Fidelity at 1-800-544-8888 . To obtain a free
additional copy of a Prospectus or an Annual Report for Class A, Class
T, Class B, Class C, and Institutional Class, please call your
investment professional.
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Considerations Regarding Africa
Special Considerations Regarding Canada
Special Considerations Regarding Europe
Special Considerations Regarding Japan, the Pacific Basin, and Southeast Asia
Special Considerations Regarding Latin America
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Contracts with FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
</TABLE>
ACOM-ptb-0298
For more information on any Fidelity fund, including charges and
expenses, call or write for a free prospectus. Read it carefully
before you invest or send money.
GROWTH FUNDS
Fidelity Advisor TechnoQuantSM Growth Fund
Fidelity Advisor International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund (formerly Fidelity Advisor High
Income Municipal Fund)
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited
(FIIA(U.K.)L)
Fidelity Investments Japan Limited (FIJ)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENTS
Fidelity Investments Institutional Operations Company, Inc. (FIIOC)
(Class A, Class T, Class B, Class C, and Institutional Class - Taxable
Funds)
UMB Bank, n.a. (UMB) (Class A, Class T, Class B, Class C,
Institutional Class, and Initial Class - Municipal Funds)
Fidelity Service Company, Inc. (FSC) (Initial Class - Taxable Funds)
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets or other circumstances will
not be considered when determining whether the investment complies
with a fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval of a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940
Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF TECHNOQUANTSM GROWTH FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF INTERNATIONAL CAPITAL APPRECIATION
FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF OVERSEAS FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government, or any of its agencies or instrumentalities,
or securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF MID CAP FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF EQUITY GROWTH FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite any issue of securities (to the extent that the fund
may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than obligations
issued or guaranteed by the Government of the United States, its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets (taken at current value) would be invested in the
securities of issuers having their principal business activities in
the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF GROWTH OPPORTUNITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF STRATEGIC OPPORTUNITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF LARGE CAP FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF GROWTH & INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF EQUITY INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to
repurchase agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser,
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF BALANCED FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser, or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
INVESTMENT LIMITATIONS OF EMERGING MARKETS INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser,
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more that 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF HIGH YIELD FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the value of the fund's total
assets would be invested in the securities of that issuer, or (b) it
would hold more than 10% of the outstanding voting securities of that
issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF STRATEGIC INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more that 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF MORTGAGE SECURITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase any security if, as a result thereof, more than 25% of
the value of its total assets would be invested in the securities of
companies having their principal business activities in the same
industry (this limitation does not apply to securities issued or
guaranteed by the United States government, its agencies or
instrumentalities);
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (i) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (ii) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF GOVERNMENT INVESTMENT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940.
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of issuers having their
principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other investments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies in the real estate
business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser,
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF INTERMEDIATE BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment), in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of debt securities or
to repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF SHORT FIXED-INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (i) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (ii) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others (except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of investment limitations (1) and (5), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF MUNICIPAL BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser, or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
For purposes of limitations (1) and (5), FMR identifies the issuer of
a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF INTERMEDIATE MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of its total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities);
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of investment limitations (1) and (5), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures contracts and options, see the
section entitled "Limitations on Futures and Options Transactions" on
page .
INVESTMENT LIMITATIONS OF SHORT-INTERMEDIATE MUNICIPAL INCOME
FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business;
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limitation does not apply to purchases of debt securities or to
repurchase agreements).
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For purposes of investment limitations (4) and (i), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
THE FOLLOWING PAGES CONTAIN MORE DETAILED INFORMATION ABOUT TYPES OF
INSTRUMENTS IN WHICH A FUND MAY INVEST, STRATEGIES FMR MAY EMPLOY IN
PURSUIT OF A FUND'S INVESTMENT OBJECTIVE, AND A SUMMARY OF RELATED
RISKS. FMR MAY NOT BUY ALL OF THESE INSTRUMENTS OR USE ALL OF THESE
TECHNIQUES UNLESS IT BELIEVES THAT DOING SO WILL HELP A FUND ACHIEVE
ITS GOAL.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act. These
transactions may in volve repurchase agreements with custodian
banks; short-term obligations of, and repurchase agreements with, the
50 largest U.S. banks (measured by deposits); municipal securities;
U.S. Government securities with affiliated financial institutions that
are primary dealers in these securities; short-term currency
transactions; and short-term borrowings. In accordance with exemptive
orders issued by the Securities and Exchange Commission (SEC), the
Board of Trustees has established and periodically reviews procedures
applicable to transactions involving affiliated financial
institutions.
ASSET-BACKED SECURITIES represent interests in pools of mortgages,
loans, receivables or other assets. Payment of i nterest and
re payment of principal may be largely dependent upon
the cash flows generated by the assets backing the securities and, in
certain cases, supported by letters of credit , surety
bonds, or other credit enhancements. A sset-backed
securit y values may also be affected by the
creditworthiness of the servicing agent for the pool, the originator
of the loans or receivables, or the entities providing the
credit enhancement. In addition, these securities may be subject to
prepayment risk.
CLOSED-END INVESTMENT COMPANIES are investment companies that issue
a fixed number of shares which trade on a stock exchange or
over-the-counter. Closed-end investment companies are professionally
managed and may invest in any type of security. Shares of closed-end
investment companies may trade at a premium or a discount to their net
asset value. A fund may purchase shares of closed-end investment
companies to facilitate investment in certain foreign countries.
CONVERTIBLE SECURITIES are bonds, debentures, notes, preferred
stocks or other securities that may be converted or exchanged (by the
holder or by the issuer) into shares of the underlying common stock
(or cash or securities of equivalent value) at a stated exchange
ratio. A convertible security may also be called for redemption or
conversion by the issuer after a particular date and under certain
circumstances (including a specified price) established upon issue. If
a convertible security held by a fund is called for redemption or
conversion, the fund could be required to tender it for redemption,
convert it into the underlying common stock, or sell it to a third
party.
Convertible securities generally have less potential for gain or
loss than common stocks. Convertible securities generally provide
yields higher than the underlying common stocks, but generally lower
than comparable non-convertible securities. Because of this higher
yield, convertible securities generally sell at prices above their
"conversion value," which is the current market value of the stock to
be received upon conversion. The difference between this conversion
value and the price of convertible securities will vary over time
depending on changes in the value of the underlying common stocks and
interest rates. When the underlying common stocks decline in value,
convertible securities will tend not to decline to the same extent
because of the interest or dividend payments and the repayment of
principal at maturity for certain types of convertible securities.
However, securities that are convertible other than at the option of
the holder generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. When the
underlying common stocks rise in value, the value of convertible
securities may also be expected to increase. At the same time,
however, the difference between the market value of convertible
securities and their conversion value will narrow, which means that
the value of convertible securities will generally not increase to the
same extent as the value of the underlying common stocks. Because
convertible securities may also be interest-rate sensitive, their
value may increase as interest rates fall and decrease as interest
rates rise. Convertible securities are also subject to credit risk,
and are often lower-quality securities.
COUNTRIES NOT CONSIDERED TO HAVE EMERGING MARKETS. As of December
31, 1997, the following countries are not considered to have emerging
markets: Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand,
Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and
the United States.
DELAYED-DELIVERY TRANSACTIONS. Securities may be bought and
sold on a delayed-delivery or when-issued basis. These
transactions involve a commitment to purchase or sell specific
securities at a predetermined price or yield, with payment and
delivery taking place after the customary settlement period for that
type of security. Typically, no interest accrues to the purchaser
until the security is delivered. The funds may receive fees or
price concessions for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, a
purchaser assumes the rights and risks of ownership, including
the risk s of price and yield fluctuations and the risk that
the security will not be issued as anticipated. Because payment
for the securities is not required until the delivery
date, these risks are in addition to the risks associated with
a fund's investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding,
the delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, a fund will set aside
appropriate liquid assets in a segregated custodial account to cover
the purchase obligations. When a fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains
or losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the
securities, a fund could miss a favorable price or yield opportunity
or suffer a loss.
A fund may renegotiate a delayed-delivery transaction and may
sell the underlying securities before delivery, which
may result in capital gains or losses for the fund.
DIRECT INVESTMENT IN MORTGAGES. (Mortgage Securities Fund only)
Although the fund has no current intention to invest directly in
mortgages, it may invest up to 10% of its total assets directly
in mortgages securing residential real estate. These mortgages are
normally available from lending institutions which group together a
number of mortgages (usually 10 to 50) for resale and which act as
servicing agent for the purchaser with respect to, among other things,
the receipt of principal and interest payments. The vendor of such
mortgages receives a fee from the fund for acting as servicing agent.
The vendor does not provide any insurance or guarantees covering the
repayment of principal or payment of interest on the mortgages.
Unlike pass-through securities, these constitute direct investment in
mortgages inasmuch as the fund, rather than a financial intermediary,
becomes the mortgagee. At present, FMR considers such
investments to be illiquid. The fund will invest in mortgages only if
FMR has determined through an examination of the mortgage loans and
their originators (which may include an examination of such factors as
percentage of family income dedicated to loan service and the
relationship between loan value and market value) that purchase of the
mortgages should not present a significant risk of loss to the fund.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve significant risks in addition to the risks
inherent in U.S. investments .
Foreign investments involve risk s relating to local political,
economic, regulatory, or social instability, military action or
unrest, or adverse diplomatic developments, and may be affected by
actions of foreign governments adverse to the interests of U.S.
investors. Such actions may include expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency
into U.S. dollars, or other government intervention. There is no
assurance that FMR will be able to anticipate these potential events
or counter their effects. In addition, the value of securities
denominated in foreign currencies and of dividends and interest paid
with respect to such securities will fluctuate based on the relative
strength of the U.S. dollar.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter
(OTC) markets located outside of the United States. Foreign
stock markets, while growing in volume and sophistication, are
generally not as developed as those in the United States, and
securities of some foreign issuers may be less liquid and more
volatile than securities of comparable U.S. issuers. Foreign security
trading , settlement and custodial practices ( including
those involving securities settlement where fund assets may be
released prior to receipt of payment ) are often less developed than
those in U.S. markets, and may result in increased risk or
substantial delays in the event of a failed trade or the
insolvency of , or breach of duty by, a foreign
broker-dealer , securities depository or foreign subcustodian.
In addition, the costs associated with foreign
invest ments , including withholding taxes, brokerage commissions
and custodial costs, are generally higher than with U.S.
invest ments .
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and
standards of practice comparable to those applicable to U.S. issuers.
Adequate public information on foreign issuers may not be available,
and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges,
brokers, and listed companies than in the United States. OTC markets
tend to be less regulated than stock exchange markets and, in certain
countries, may be totally unregulated. Regulatory enforcement may be
influenced by economic or political concerns, and investors may have
difficulty enforcing their legal rights in foreign countries.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such
transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depositary Receipts (ADRs) as well as other "hybrid" forms of
ADRs, including European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs), are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by
depository banks and generally trade on an established market in the
United States or elsewhere. The underlying shares are held in trust by
a custodian bank or similar financial institution in the issuer's home
country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various
services, including forwarding dividends and interest and corporate
actions. ADRs are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. However,
ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the
underlying issuer's country.
The risks of foreign investing may be magnified for investments in
emerging markets. Security prices in emerging markets can be
significantly more volatile than those in more developed markets,
reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets
may have relatively unstable governments, may present the risks of
nationalization of businesses, restrictions on foreign ownership and
prohibitions on the repatriation of assets, and may have less
protection of property rights than more developed countries. The
economies of countries with emerging markets may be based on only a
few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt
burdens or inflation rates. Local securities markets may trade a small
number of securities and may be unable to respond effectively to
increases in trading volume, potentially making prompt liquidation of
holdings difficult or impossible at times.
FANNIE MAES AND FREDDIE MACS are pass-through securities issued by
Fannie Mae and Freddie Mac , respectively. Fannie Mae and
Freddie Mac , which guarantee payment of interest and
repayment of principal on Fannie Maes and Freddie Macs,
respectively, are federally chartered corporations supervised by
the U.S. Government that act as governmental instrumentalities
under authority granted by Congress. Fannie Mae is authorized to
borrow from the U.S. Treasury to meet its obligations. Fannie Maes and
Freddie Macs are not backed by the full faith and credit of the
U.S. Government .
FEDERALLY TAXABLE SECURITIES . Under normal conditions, a
municipal fund do es not intend to invest in securities whose
interest is federally taxable. However, from time to time on a
temporary basis, a municipal fund may invest a portion of its assets
in fixed-income securities whose interest is subject to federal
income tax.
Should a municipal fund invest in federally taxable securities ,
it would purchase securities that, in FMR's judgment, are of high
quality. These would include s ecurities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities ,
obligations of domestic banks , and repurchase agreements. A
municipal bond fund ' s standards for high-quality, taxable
securities are essentially the same as those described by
Moody's Investor s Service (Moody's) in rating corporate
obligations within its two highest ratings of Prime-1 and Prime-2, and
those described by Standard & Poor's (S&P) in rating corporate
obligations within its two highest ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption
for interest on municipal securities are introduced before
Congress from time to time. Proposals also may be introduced before
state legislatures that would affect the state tax treatment of
a municipal fund ' s distributions. If such proposals were
enacted, the availability of municipal securities and the value
of a municipal fund ' s holdings would be affected and the
Trustees would reevaluate the fund ' s investment objectives and
policies.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Although foreign exchange dealers generally do not charge
a fee for such conversions, they do realize a profit based on the
difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency at one rate, while offering a lesser rate of exchange should
the counterparty desire to resell that currency to the dealer. Forward
contracts are customized transactions that require a specific amount
of a currency to be delivered at a specific exchange rate on a
specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency
traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the
contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange. A fund may use currency
forward contracts for any purpose consistent with its investment
objective.
The following discussion summarizes the principal currency management
strategies involving forward contracts that could be used by a fund. A
fund may also use swap agreements, indexed securities, and options and
futures contracts relating to foreign currencies for the same
purposes.
A "settlement hedge" or "transaction hedge" is designed to protect a
fund against an adverse change in foreign currency values between the
date a security is purchased or sold and the date on which payment is
made or received. Entering into a forward contract for the purchase or
sale of the amount of foreign currency involved in an underlying
security transaction for a fixed amount of U.S. dollars "locks in" the
U.S. dollar price of the security. Forward contracts to purchase or
sell a foreign currency may also be used by a fund in anticipation of
future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected
by FMR.
A fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if a fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return
for U.S. dollars to hedge against possible declines in the pound's
value. Such a hedge, sometimes referred to as a "position hedge,"
would tend to offset both positive and negative currency fluctuations,
but would not offset changes in security values caused by other
factors. A fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would
not hedge currency exposure as effectively as a direct hedge into U.S.
dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged
securities are denominated.
A fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting
exposure from U.S. dollars to a foreign currency, or from one foreign
currency to another foreign currency. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to
the currency that is sold, and increase exposure to the currency that
is purchased, much as if a fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the
hedged currency, but will cause a fund to assume the risk of
fluctuations in the value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to
cover currency forward contracts. As required by SEC guidelines, a
fund will segregate assets to cover currency forward contracts, if
any, whose purpose is essentially speculative. A fund will not
segregate assets to cover forward contracts entered into for hedging
purposes, including settlement hedges, position hedges, and proxy
hedges.
Successful use of currency management strategies will depend on FMR's
skill in analyzing currency values. Currency management strategies may
substantially change a fund's investment exposure to changes in
currency exchange rates and could result in losses to a fund if
currencies do not perform as FMR anticipates. For example, if a
currency's value rose at a time when FMR had hedged a fund by selling
that currency in exchange for dollars, a fund would not participate in
the currency's appreciation. If FMR hedges currency exposure through
proxy hedges, a fund could realize currency losses from both the hedge
and the security position if the two currencies do not move in tandem.
Similarly, if FMR increases a fund's exposure to a foreign currency
and that currency's value declines, a fund will realize a loss. There
is no assurance that FMR's use of currency management strategies will
be advantageous to a fund or that it will hedge at appropriate times.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may
include agreements to purchase and sell foreign securities in exchange
for fixed U.S. dollar amounts, or in exchange for specified amounts of
foreign currency. Unlike typical U.S. repurchase agreements, foreign
repurchase agreements may not be fully collateralized at all times.
The value of a security purchased by a fund may be more
or less than the price at which the counterparty has agreed to
repurchase the security. In the event of a default by the
counterparty, the fund may suffer a loss if the value of the security
purchased is less than the agreed-upon repurchase price, or if the
fund is unable to successfully assert a claim to the collateral under
foreign laws. As a result, foreign repurchase agreements may involve
higher credit risks than repurchase agreements in U.S. markets, as
well as risks associated with currency fluctuations. In addition, as
with other emerging market investments, repurchase agreements with
counterparties located in emerging markets or relating to emerging
markets may involve issuers or counterparties with lower credit
ratings than typical U.S. repurchase agreements.
FUNDS' RIGHTS AS SHAREHOLDERS. The funds do not intend to direct or
administer the day-to-day operations of any company. A fund, however,
may exercise its rights as a shareholder and may communicate its views
on important matters of policy to management, the Board of Directors,
and shareholders of a company when FMR determines that such matters
could have a significant effect on the value of the fund's investment
in the company. The activities in which a fund may engage,
either individually or in conjunction with others, may include, among
others, supporting or opposing proposed changes in a company's
corporate structure or business activities; seeking changes in a
company's directors or management; seeking changes in a company's
direction or policies; seeking the sale or reorganization of the
company or a portion of its assets; or supporting or opposing
third - party takeover efforts. This area of corporate activity
is increasingly prone to litigation and it is possible that a fund
could be involved in lawsuits related to such activities. FMR will
monitor such activities with a view to mitigating, to the extent
possible, the risk of litigation against a fund and the risk of actual
liability if a fund is involved in litigation. No guarantee can be
made, however, that litigation against a fund will not be undertaken
or liabilities incurred.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options: Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures
Margin Payments, Limitations on Futures and Options Transactions,
Liquidity of Options and Futures Contracts, Options and Futures
Relating to Foreign Currencies, OTC Options, Purchasing Put and Call
Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will
comply with guidelines established by the SEC with respect to coverage
of options and futures strategies by mutual funds and, if the
guidelines so require, will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held
in a segregated account cannot be sold while the futures or option
strategy is outstanding, unless they are replaced with other suitable
assets. As a result, there is a possibility that segregation of a
large percentage of a fund's assets could impede portfolio management
or the fund's ability to meet redemption requests or other current
obligations.
COMBINED POSITIONS involve purchasing and writ ing
options in combination with each other, or in combination with futures
or forward contracts, to adjust the risk and return characteristics of
the overall position. For example, purchasing a put option and
writ ing a call option on the same underlying instrument
would construct a combined position whose risk and return
characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, to reduce the
risk of the written call option in the event of a substantial price
increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to
open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. A fund may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests, which involves a risk that
the options or futures position will not track the performance of
the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. In purchasing a futures contract, the
buyer agrees to purchase a specified underlying instrument at a
specified future date. In selling a futures contract, the
seller agrees to sell a specified underlying instrument at
a specified future date. The price at which the purchase and sale will
take place is fixed when the buyer and seller enter into the
contract. Some currently available futures contracts are based on
specific securities, such as U.S. Treasury bonds or notes, and some
are based on indices of securities prices, such as the Standard &
Poor's 500 Index (S&P 500(registered trademark)) or the Bond Buyer
Municipal Bond Index . Futures can be held until their delivery
dates, or can be closed out before then if a liquid secondary market
is available.
The funds may invest in futures based on such indexes as the CAC 40
(France), DAX 30 (Germany), EuroTop 100 (Europe), IBEX (Spain), FTSE
100 (United Kingdom), All Ordinary (Australia), Hang Seng (Hong Kong),
and Nikkei 225, Nikkei 300 and TOPIX (Japan).
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
Although futures exchanges generally operate similarity in the U.S.
and abroad, foreign futures exchanges may follow different trading,
settlement and margin procedures than U.S. exchanges do. Futures
contracts traded outside the United States may involve greater risk of
loss than U.S.-traded contracts, including potentially greater risks
of losses due to insolvency of a futures broker, exchange member or
other party that may owe initial or variation margin to a fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets . The Funds intend to comply with
Rule 4.5 under the Commodity Exchange Act, which limits the extent to
which the fund s can commit assets to initial margin deposits
and option premiums.
In addition, each fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of
the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options
if, as a result, the fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options
purchased by the fund would exceed 5% of the fund's total assets.
These limitations do not apply to options attached to or acquired or
traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.
Each bond fund further limits its options and futures investments
to options and futures contracts relating to U.S. Government
securities.
The above limitations on the funds ' investments in
futures contracts and options, and the funds ' policies
regarding futures contracts and options discussed elsewhere in this
SAI, may be changed as regulatory agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible to enter into new positions or close out
existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could
prevent prompt liquidation of unfavorable positions, and potentially
could require a fund to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, a fund's
access to other assets held to cover its options or futures positions
could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and
are standardized as to contract size and delivery date. Most currency
futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency,
which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency
call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed
above. A fund may purchase and sell currency futures and may purchase
and write currency options to increase or decrease its exposure to
different foreign currencies. Currency options may also
be purchase d or written in conjunction with each other or
with currency futures or forward contracts. Currency futures and
options values can be expected to correlate with exchange rates, but
may not reflect other factors that affect the value of a fund's
investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not
protect a fund against a price decline resulting from deterioration in
the issuer's creditworthiness. Because the value of a fund's
foreign-denominated investments changes in response to many factors
other than exchange rates, it may not be possible to match the amount
of currency options and futures to the value of the fund's investments
exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC)
options (options not traded on exchanges) generally are
established through negotiation with the other party to the option
contract. While this type of arrangement allows the purchaser or
writer greater flexibility to tailor an option to its needs, OTC
options generally involve greater credit risk than exchange-traded
options, which are guaranteed by the clearing organization of the
exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
purchaser obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for
this right, the purchaser pays the current market price for the
option (known as the option premium). Options have various types of
underlying instruments, including specific securities, indices of
securities prices, and futures contracts. The purchaser may
terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is allowed to expire, the
purchaser will lose the entire premium. If the option is
exercised, the purchaser completes the sale of the underlying
instrument at the strike price. A purchaser may also terminate
a put option position by closing it out in the secondary market at its
current price, if a liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. The writer of a put or call
option takes the opposite side of the transaction from the
option's purchaser. In return for receipt of the premium, the
writer assumes the obligation to pay the strike price for the
option's underlying instrument if the other party to the option
chooses to exercise it. The writer may seek to terminate
a position in a put option before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option, however, the writer must
continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set
aside assets to cover its position. When writing an option on a
futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the writer to sell or deliver
the option's underlying instrument, in return for the strike price,
upon exercise of the option. The characteristics of writing call
options are similar to those of writing put options, except that
writing calls generally is a profitable strategy if prices remain the
same or fall. Through receipt of the option premium, a call writer
mitigates the effects of a price decline. At the same time, because a
call writer must be prepared to deliver the underlying instrument in
return for the strike price, even if its current value is greater, a
call writer gives up some ability to participate in security price
increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
instruments. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency of trades
and quotations, (2) the number of dealers and prospective purchasers
in the marketplace, (3) dealer undertakings to make a market, (4) the
nature of the security (including any demand or tender features) and
(5) the nature of the marketplace for trades (including the ability to
assign or offset the fund's rights and obligations relating to the
investment).
Investments currently considered by FMR to be illiquid include
repurchase agreements not entitling the holder to re payment of
principal and payment of interest within seven days ,
over-the-counter options, and non-government-stripped fixed-rate
mortgage-backed securities . Also, FMR may determine some
restricted securities, municipal lease obligations,
government-stripped fixed-rate mortgage-backed securities, loans and
other direct debt instruments, emerging market securities, and swap
agreements to be illiquid. However, with respect to over-the-counter
options a fund writes, all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the
option and the nature and terms of any agreement the fund may have to
close out the option before expiration.
In the absence of market quotations, illiquid investments are priced
at fair value as determined in good faith by a committee appointed by
the Board of T rustees.
INDEXED SECURITIES are instruments whose prices are indexed to
the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic.
Indexed securities may have principal payments as well as coupon
payments that depend on the performance of one or more interest rates.
Their coupon rates or principal payments may change by several
percentage points for every 1% interest rate change.
Mortgage-indexed securities, for example, could be structured to
replicate the performance of mortgage securities and the
characteristics of direct ownership.
Gold-indexed securities typically provide for a maturity value that
depends on the price of gold, resulting in a security whose price
tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt
securities whose maturity values or interest rates are determined by
reference to the values of one or more specified foreign currencies,
and may offer higher yields than U.S. dollar-denominated securities.
Currency-indexed securities may be positively or negatively indexed;
that is, their maturity value may increase when the specified currency
value increases, resulting in a security that performs similarly to a
foreign-denominated instrument, or their maturity value may decline
when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the
values of a number of different foreign currencies relative to each
other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency , or other instrument to
which they are indexed, and may also be influenced by interest rate
changes in the United States and abroad. Indexed securities may be
more volatile than the underlying instruments. I ndexed securities
are also subject to the credit risks associated with the issuer
of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Recent issuers of indexed
securities have included banks, corporations, and certain U.S.
Government agencies.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and borrow
money from, other funds advised by FMR or its affiliates. Municipal
Income, Municipal Bond, Intermediate Municipal Income, and
Short-Intermediate Municipal Income currently intend to participate in
this program only as borrowers. A fund will borrow through the program
only when the costs are equal to or lower than the cost of bank
loans , and will lend through the program only when the returns are
higher than those available from an investment in repurchase
agreements . Interfund loans and borrowings normally extend
overnight, but can have a maximum duration of seven days. Loans may be
called on one day's notice. A fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from movements in prevailing short-term
interest rate levels - rising when prevailing short-term interest
rates fall, and vice versa. The prices of inverse floaters
can be considerably more volatile than the price of bonds
with comparable maturities.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other
borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or
other receivables), or to other parties. Direct debt instruments are
subject to a fund's policies regarding the quality of debt
securities.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
interest and repayment of principal . Direct debt instruments
may not be rated by any nationally recognized statistical
rating service. If scheduled interest or principal payments are not
made , the value of the instrument may be adversely
affected. Loans that are fully secured provide more protections
than an unsecured loan in the event of failure to make
scheduled interest or principal payments . However, there is no
assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral could be
liquidated. Indebtedness of borrowers whose creditworthiness is poor
involves substantially greater risks and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off
their indebtedness, or may pay only a small fraction of the amount
owed. Direct indebtedness of developing countries also involves a risk
that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal
when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks. For example, if a loan is foreclosed, the purchaser
could become part owner of any collateral, and would bear the costs
and liabilities associated with owning and disposing of the
collateral. In addition, it is conceivable that under emerging legal
theories of lender liability, a purchaser could be held liable
as a co-lender. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less
legal protection to the purchaser in the event of fraud or
misrepresentation. In the absence of definitive regulatory guidance,
FMR uses its research to attempt to avoid situations
where fraud or misrepresentation could adversely affect a fund.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of
the loan, as specified in the loan agreement. Unless, under the terms
of the loan or other indebtedness, the purchaser has direct
recourse against the borrower, the purchaser may have to rely
on the agent to apply appropriate credit remedies against a borrower.
If assets held by the agent for the benefit of a purchaser were
determined to be subject to the claims of the agent's general
creditors, the purchaser might incur certain costs and delays
in realizing payment on the loan or loan participation and could
suffer a loss of principal or interest.
Direct indebtedness may include letters of credit, revolving credit
facilities, or other standby financing commitments that obligate
purchasers to make additional cash payments on
demand. These commitments may have the effect of requiring a
purchaser to increase its investment in a borrower at a time when
it would not otherwise have done so, even if the borrower's condition
makes it unlikely that the amount will ever be repaid. A fund will set
aside appropriate liquid assets in a segregated custodial account to
cover its potential obligations under standby financing commitments.
Each fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see each fund's
investment limitations). For purposes of these limitations, a fund
generally will treat the borrower as the "issuer" of indebtedness held
by the fund. In the case of loan participations where a bank or other
lending institution serves as financial intermediary between a fund
and the borrower, if the participation does not shift to the fund the
direct debtor-creditor relationship with the borrower, SEC
interpretations require a fund, in appropriate circumstances,
to treat both the lending bank or other lending institution and the
borrower as "issuers" for these purposes. Treating a financial
intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same
industry, even if the underlying borrowers represent many different
companies and industries.
LOWER-QUALITY DEBT SECURITIES. L ower-quality debt securities
have poor protection with respect to the payment of interest and
repayment of principal, or may be in default. These securities are
often considered to be speculative and involve greater risk of loss or
price changes due to changes in the issuer's capacity to pay. The
market prices of lower-quality debt securities may fluctuate more than
those of higher-quality debt securities and may decline significantly
in periods of general economic difficulty, which may follow periods of
rising interest rates.
While the market for high-yield corporate debt securities has been in
existence for many years and has weathered previous economic
downturns, the 1980s brought a dramatic increase in the use of such
securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication
of the future performance of the high-yield bond market, especially
during periods of economic recession.
The market for lower-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. If market
quotations are not available, lower-quality debt securities will be
valued in accordance with procedures established by the Board of
Trustees, including the use of outside pricing services. Judgment
plays a greater role in valuing high-yield debt securities than is the
case for securities for which more external sources for quotations and
last-sale information are available. Adverse publicity and changing
investor perceptions may affect the liquidity of
lower-quality debt securities and the ability of outside
pricing services to value lower-quality debt securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type . FMR will attempt to identify
those issuers of high-yielding securities whose financial condition is
adequate to meet future obligations, has improved, or is expected to
improve in the future. FMR's analysis focuses on relative values based
on such factors as interest or dividend coverage, asset coverage,
earnings prospects, and the experience and managerial strength of the
issuer.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
MORTGAGE-BACKED SECURITIES are issued by government and
non-government entities such as banks, mortgage lenders, or other
institutions. A mortgage-backed security is an obligation of the
issuer backed by a mortgage or pool of mortgages or a direct interest
in an underlying pool of mortgages. Some mortgage-backed securities,
such as collateralized mortgage obligations ( or
" CMOs "), make payments of both principal and interest at
a range of specified intervals; others make semiannual
interest payments at a predetermined rate and repay principal at
maturity (like a typical bond). Mortgage-backed securities are based
on different types of mortgages , including those on commercial
real estate or residential properties. Stripped mortgage-backed
securities are created when the interest and principal components of a
mortgage-backed security are separated and sold as individual
securities. In the case of a stripped mortgage-backed security, the
holder of the "principal-only" security (PO) receives the principal
payments made by the underlying mortgage, while the holder of the
"interest-only" security (IO) receives interest payments from the same
underlying mortgage.
The value of mortgage-backed securities may change due to shifts in
the market's perception of issuers and changes in interest
rates . In addition, regulatory or tax changes may adversely affect
the mortgage-backed securities market as a whole.
Non-government mortgage-backed securities may offer higher yields than
those issued by government entities, but also may be subject to
greater price changes than government issues. Mortgage-backed
securities are subject to prepayment risk. Prepayment occurs when
unscheduled or early payments are made on the underlying mortgages,
usually in response to a reduction in interest rates. Mortgage-backed
security values may also be adversely affected when prepayments on
underlying mortgages do not occur. The prices of stripped
mortgage-backed securities tend to be more volatile in response to
changes in interest rates than those of non-stripped mortgage-backed
securities.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities. Generally,
a fund will not hold these obligations directly as a lessor of
the property, but will purchase a participation interest in a
municipal obligation from a bank or other third party. A participation
interest gives the purchaser a specified, undivided interest in
the obligation in proportion to its purchased interest in the total
amount of the issue .
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal securities
may be affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Municipal bankruptcies are relatively rare, and
certain provisions of the U.S. Bankruptcy Code governing such
bankruptcies are unclear and remain untested. Further, the application
of state law to municipal issuers could produce varying results among
the states or among municipal securities issuers within a state. These
legal uncertainties could affect the municipal securities market
generally, certain specific segments of the market, or the relative
credit quality of particular securities. Any of these effects could
have a significant impact on the prices of some or all of the
municipal securities held by a fund.
MUNICIPAL SECTORS:
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student
loans. Bonds issued to supply educational institutions with funds are
subject to the risk of unanticipated revenue decline, primarily the
result of decreasing student enrollment or decreasing state and
federal funding. Among the factors that may lead to declining or
insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general
economic conditions. Student loan revenue bonds are generally offered
by state (or substate) authorities or commissions and are backed by
pools of student loans. Underlying student loans may be guaranteed by
state guarantee agencies and may be subject to reimbursement by the
United States Department of Education through its guaranteed student
loan program. Others may be private, uninsured loans made to parents
or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student
loan revenue bonds are impacted by numerous factors, including the
rate of student loan defaults, seasoning of the loan portfolio, and
student repayment deferral during periods of forbearance. Other risks
associated with student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and
other program subsidies currently in effect.
ELECTRIC UTILITIES. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open
transmission access to any electricity supplier, although it is not
presently known to what extent competition will evolve. Other risks
include: (a) the availability and cost of fuel, (b) the availability
and cost of capital, (c) the effects of conservation on energy demand,
(d) the effects of rapidly changing environmental, safety, and
licensing requirements, and other federal, state, and local
regulations, (e) timely and sufficient rate increases, and (f)
opposition to nuclear power.
HEALTH CARE. The health care industry is subject to regulatory action
by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for
the health care industry is payments from the Medicare and Medicaid
programs. As a result, the industry is sensitive to legislative
changes and reductions in governmental spending for such programs.
Numerous other factors may affect the industry, such as general and
local economic conditions; demand for services; expenses (including
malpractice insurance premiums); and competition among health care
providers. In the future, the following elements may adversely affect
health care facility operations: adoption of legislation proposing a
national health insurance program; other state or local health care
reform measures; medical and technological advances which dramatically
alter the need for health services or the way in which such services
are delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; and efforts by employers, insurers,
and governmental agencies to reduce the costs of health insurance and
health care services.
HOUSING. Housing revenue bonds are generally issued by a state,
county, city, local housing authority, or other public agency. They
generally are secured by the revenues derived from mortgages purchased
with the proceeds of the bond issue. It is extremely difficult to
predict the supply of available mortgages to be purchased with the
proceeds of an issue or the future cash flow from the underlying
mortgages. Consequently, there are risks that proceeds will exceed
supply, resulting in early retirement of bonds, or that homeowner
repayments will create an irregular cash flow. Many factors may affect
the financing of multi-family housing projects, including acceptable
completion of construction, proper management, occupancy and rent
levels, economic conditions, and changes to current laws and
regulations.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways or other transit
facilities. Airport bonds are dependent on the general stability of
the airline industry and on the stability of a specific carrier who
uses the airport as a hub. Air traffic generally follows broader
economic trends and is also affected by the price and availability of
fuel. Toll road bonds are also affected by the cost and availability
of fuel as well as toll levels, the presence of competing roads, and
the general economic health of the area. Fuel costs and availability
also affect other transportation-related securities, as does the
presence of alternate forms of transportation, such as public
transportation.
WATER AND SEWER. Water and sewer revenue bonds are often considered to
have relatively secure credit as a result of their issuer's
importance, monopoly status, and generally unimpeded ability to raise
rates. Despite this, lack of water supply due to insufficient rain,
run-off, or snow pack is a concern that has led to past defaults.
Further, public resistance to rate increases, costly environmental
litigation, and Federal environmental mandates are challenges faced by
issuers of water and sewer bonds.
REAL ESTATE INVESTMENT TRUSTS. Equity real estate investment trusts
own real estate properties, while mortgage real estate investment
trusts make construction, development, and long-term mortgage loans.
Their value may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property
taxes, interest rates, and tax and regulatory requirements, such as
those relating to the environment. Both types of trusts are dependent
upon management skill, are not diversified, and are subject to heavy
cash flow dependency, defaults by borrowers, self-liquidation, and the
possibility of failing to qualify for tax-free status of income under
the Internal Revenue Code and failing to maintain exemption from the
1940 Act.
REFUNDING CONTRACTS. Securities may be purchase d on a
when-issued basis in connection with the refinancing of an issuer's
outstanding indebtedness. Refunding contracts require the issuer to
sell and a purchaser to buy refunded municipal obligations at a
stated price and yield on a settlement date that may be several months
or several years in the future. A purchaser generally will not
be obligated to pay the full purchase price if the issuer fails
to perform under a refunding contract. Instead, refunding contracts
generally provide for payment of liquidated damages to the issuer
(currently 15-20% of the purchase price). A purchaser may
secure its obligations under a refunding contract by depositing
collateral or a letter of credit equal to the liquidated damages
provisions of the refunding contract. When required by SEC guidelines,
a fund will place liquid assets in a segregated custodial account
equal in amount to its obligations under refunding contracts.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is
unrelated to the coupon rate or maturity of the purchased security.
As protection against the risk that the original seller will
not fulfill its obligation, the securities are held in a
separate account at a bank, marked-to-market daily, and maintained
at a value at least equal to the sale price plus the accrued
incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the
possibility that the value of the underlying security will be less
than the resale price, as well as delays and costs to a fund in
connection with bankruptcy proceedings), the funds will engage
in repurchase agreement transactions with parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part
of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time it may
be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, a fund might obtain a less favorable price than prevailed
when it decided to seek registration of the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at a n agreed-upon price and time. While a reverse
repurchase agreement is outstanding, a fund will maintain appropriate
liquid assets in a segregated custodial account to cover its
obligation under the agreement. The fund s will enter
into reverse repurchase agreements with parties whose creditworthiness
has been reviewed and found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of fund
assets and may be viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity
Brokerage Services, Inc. (FBSI). FBSI is a member of the New York
Stock Exchange (NYSE) and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there
may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially,
loans will be made only to parties deemed by FMR to be of good
standing. Furthermore, they will only be made if, in FMR's judgment,
the consideration to be earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a
fund may engage in loan transactions only under the following
conditions: (1) the fund must receive 100% collateral in the form of
cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the
borrower; (2) the borrower must increase the collateral whenever the
market value of the securities loaned (determined on a daily basis)
rises above the value of the collateral; (3) after giving notice, the
fund must be able to terminate the loan at any time; (4) the fund must
receive reasonable interest on the loan or a flat fee from the
borrower, as well as amounts equivalent to any dividends, interest, or
other distributions on the securities loaned and to any increase in
market value; (5) the fund may pay only reasonable custodian fees in
connection with the loan; and (6) the Board of Trustees must be able
to vote proxies on the securities loaned, either by terminating the
loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in other
eligible securities. Investing this cash subjects that investment,
as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SHORT SALES "AGAINST THE BOX." A fund may sell securities short
when it owns or has the right to obtain securities equivalent in kind
or amount to the securities sold short. Such short sales are known as
short sales "against the box." If a fund enters into a short sale
against the box, it will be required to set aside securities
equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will
be required to hold such securities while the short sale is
outstanding. The fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short
sales against the box.
SHORT SALES. A fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a
convertible security a fund holds, it may sell the stock short. If the
stock price subsequently declines, the proceeds of the short sale
could be expected to offset all or a portion of the effect of the
stock's decline on the value of the convertible security. Each
fund currently intends to hedge no more than 15% of its total assets
with short sales on equity securities underlying its convertible
security holdings under normal circumstances.
When a fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to the securities sold short
(or securities convertible or exchangeable into such securities) and
will be required to hold them aside while the short sale is
outstanding. A fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short
sales.
SOVEREIGN DEBT OBLIGATIONS are issued or guaranteed by foreign
governments or their agencies, including debt of Latin American
nations or other developing countries. Sovereign debt may be in the
form of conventional securities or other types of debt instruments
such as loans or loan participations. Sovereign debt of developing
countries may involve a high degree of risk, and may be in default or
present the risk of default. Governmental entities responsible for
repayment of the debt may be unable or unwilling to repay principal
and pay interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of
principal and payment of interest may depend on political as
well as economic factors. Although some sovereign debt, such as
Brady Bonds, is collateralized by U.S. Government securities,
repayment of principal and payment of interest is not guaranteed by
the U.S. Government.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. A fund may acquire standby commitments to enhance the
liquidity of portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a
third party at any time. A fund may purchase standby commitments
separate from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, a fund would pay a
higher price for the securities acquired, thus reducing their yield to
maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments
are not generally marketable ; and the possibility that
the maturities of the underlying securities may be different from
those of the commitments.
STRIPPED GOVERNMENT SECURITIES. Stripped government securities are
created by separating the income and principal components of a U.S.
Government security and selling them separately. STRIPS (Separate
Trading of Registered Interest and Principal of Securities) are
created when the coupon payments and the principal payment are
stripped from an outstanding U.S. Treasury security by a Federal
Reserve Bank.
Privately stripped government securities are created when a dealer
deposits a U.S. Treasury security or other U.S. Government security
with a custodian for safekeeping. The custodian issues separate
receipts for the coupon payments and the principal payment, which the
dealer then sells.
SWAP AGREEMENTS can be individually negotiated and structured to
include exposure to a variety of different types of investments
or market factors. Depending on their structure, swap agreements may
increase or decrease a fund's exposure to long- or short-term interest
rates (in the United States or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such
as security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the rights to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if a fund agreed to
exchange payments in dollars for payments in foreign currency, the
swap agreement would tend to decrease the fund's exposure to
U.S. interest rates and increase its exposure to foreign currency and
interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a fund's investments
and its share price and yield.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from a fund. If a
swap agreement calls for payments by the fund, the fund must be
prepared to make such payments when due. In addition, if the
counterparty's creditworthiness declined, the value of a swap
agreement would be likely to decline, potentially resulting in losses.
A fund may be able to eliminate its exposure under a
swap agreement either by assignment or other disposition, or by
entering into an offsetting swap agreement with the same party or a
similarly creditworthy party.
A fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap
agreements. If a fund enters into a swap agreement on a net basis, it
will segregate assets with a daily value at least equal to the excess,
if any, of the fund's accrued obligations under the swap agreement
over the accrued amount the fund is entitled to receive under the
agreement. If a fund enters into a swap agreement on other than a net
basis, it will segregate assets with a value equal to the full amount
of the fund's accrued obligations under the agreement.
TENDER OPTION BONDS are created by coupling an intermediate - or
long-term, fixed-rate, municipal bond (generally held pursuant
to a custodial arrangement) with a tender agreement that gives the
holder the option to tender the bond at its face value. As
consideration for providing the tender option, the sponsor (usually a
bank, broker-dealer, or other financial institution) receives periodic
fees equal to the difference between the bond's fixed coupon rate and
the rate (determined by a remarketing or similar agent) that would
cause the bond, coupled with the tender option, to trade at par on the
date of such determination. After payment of the tender option fee, a
fund effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds , FMR will consider the creditworthiness of the issuer of
the underlying bond, the custodian, and the third party provider of
the tender option. In certain instances, a sponsor may terminate a
tender option if, for example, the issuer of the underlying bond
defaults on interest payments.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic
adjustments in the interest rate paid on the security. Variable rate
securities provide for a specified periodic adjustment in the interest
rate, while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some
variable or floating rate securities are structured with put features
that permit holders to demand payment of the unpaid principal balance
plus accrued interest from the issuers or certain financial
intermediaries.
In many instances bonds and participation interests have tender
options or demand features that permit the holder to tender (or
put) the bonds to an institution at periodic intervals and to receive
the principal amount thereof. V ariable rate instruments
structured in this fashion are considered to be essentially
equivalent to other variable rate securities . The IRS has not
ruled whether the interest on these instruments is tax-exempt.
F ixed-rate bonds that are subject to third party puts and
participation interests in such bonds held by a bank in trust or
otherwise may have similar features .
WARRANTS. Warrants are instruments which entitle the holder to
buy an equity securit y at a specific price for a
specific period of time. Changes in the value of a warrant
do not necessarily correspond to changes in the value of its
underlying security. The price of a warrant may be more volatile
than the price of its underlying securit y, and a
warrant may offer greater potential for capital appreciation as
well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying securit y and do not represent any
rights in the assets of the issuing company. A warrant ceases
to have value if it is not exercised prior to expiration date. These
factors can make warrants more speculative than other types of
investments.
ZERO COUPON BOND S do not make interest payments; instead, they
are sold at a discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be more volatile than other types
of fixed-income securities when interest rates change. In
calculating a fund 's dividend, a portion of the difference
between a zero coupon bond's purchase price and its face value is
considered income .
SPECIAL CONSIDERATIONS REGARDING AFRICA
Africa is a highly diverse and politically unstable continent of over
50 countries and 720 million people. Much of this region has been
beset by civil wars, coups and even genocidal warfare in recent years.
Nevertheless, it is home to an abundance of natural resources,
including natural gas, aluminum, crude oil, copper, iron, bauxite,
cotton, diamonds and timber. Wealthier countries generally have strong
connections to European partners, and evidence of these relationships
is seen in the growing market capitalization and foreign investment.
Economic performance is closely tied to world commodity markets,
particularly oil, and also to agricultural conditions, such as
drought.
Five African countries are among the 20 fastest growing in the
world (Uganda, Ivory Coast, Botswana, Angola and Zimbabwe) with
1996 GDP growth rates ranging from 5. 0 % to 6. 2 %.
Several African countries in the north have substantial oil reserves
and accordingly their economies react strongly to world oil prices.
They share a regional and sometimes religious identification with the
oi l- producing nations of the Middle East and can be strongly
affected by political and economic developments in those countries. As
in the south, weather conditions also have a strong impact on many of
their natural resources, and, as was the case in 1995, severe drought
can adversely effect economic growth.
Ten African countries have active equity markets (Botswana, Egypt,
Ghana, Kenya, Morocco, Nigeria, South Africa, Tunisia, Zambia, and
Zimbabwe). The oldest market, in Egypt, was established in 1883, while
the youngest, in Zambia, was established in 1994. Four additional
markets have been established since 1989, and the mean age for all
equity markets is 40 years old. A total of 1,697 firms are listed on
the respective exchanges. Total market capitalization for these
countries in 1996 was 280 billion, an average increase of 63% over
1995 levels.
SPECIAL CONSIDERATIONS REGARDING CANADA
Canada is one of the richest nations in the world in terms of natural
resources. Within this sector particularly strong commodities are
forest products, mining and metals products, and agricultural products
such as grains. Additionally, energy related products such as oil, gas
and hydroelectricity are important components of their economy.
Accordingly, the Canadian stock market is strongly represented by such
basic materials stocks, and movements in the supply and demand of
industrial materials, agriculture, and energy, both domestically and
internationally, can have a strong effect on market performance.
Canada is a confederation of 10 provinces with a parliamentary system
of government. The area, the world's second largest nation by
landmass, is inhabited by 30.2 million people, most of whom are
dece ndants of France, the United Kingdom and indigenous
peoples. The country has a work force of over 15 million, spread out
over a variety of industries from trade, manufacturing and mining to
finance, construction and government. While the country has many
institutions which closely parallel the U . S . , such as a
transparent stock market and similar accounting practices, it differs
from the U . S . in that it has an extensive social welfare
system, much more akin to European welfare states.
The confederated structures combined with recent financial pressure on
the federal government have pushed some provinces, Quebec in
particular, to call for a reevaluation of the legal and financial
relationships between the federal government in Ottawa and the
provinces. This issue came to a head in 1995 with a referendum on
Quebec sovereignty, which was ultimately won by Ottawa
(50.56%-49.44%). The very narrow defeat of the referendum and the
return of Bloc Quebecois to parliament with a lower but still
substantial number of seats indicate that the issue is far from
resolved. Accordingly, a large amount of the government's energy is
spent considering new constitutional arrangements. In the meantime,
markets react to the periodic escalations of separatist calls with
caution.
The current government of the Liberal party was reelected in June 1997
with a clear majority of 155 of the 301 parliamentary seats. This is a
drop in majority status during their previous government, during which
they held 60% of the seats. Opposition is currently divided amongst 4
parties, none of which occupies more than 60 seats. T he
Conservatives ha ve had to fight back onto the political stage
after being marginalized in the 1993 elections. Reclaiming enough
seats in 1997 to be restored to official status, the Conservatives
currently hold 20 seats.
Economically, GDP growth in Canada was 1.5% in 1996, down from 2.3% in
1995. Driving growth was optimism in the government's stability and
fiscal health following the Quebec referendum and the achievement of a
current account surplus (which was subsequently lost, then regained in
early 1997). Particularly strong market performers were financial
services, real estate, utilities and merchandising. Consumer demand
was strong in 1996, financed by borrowing.
The Bank of Canada is fairly independent from the government and has
the latitude to manipulate interest rates to keep inflation within its
self imposed target of less than 3%. The Canadian dollar has benefited
from internal fiscal successes, specifically the balancing of the
current account. Despite the strong link to the US dollar, the Bank of
Canada won't automatically raise rates in response to
U . S . hikes.
The U . S . is Canada's biggest trading partner,
representing over 75% of total trade. Strong export industries are
energy, mining and forest products. Canada is the largest energy
supplier to the U . S . Main imports are industrial
machinery and chemicals. The U . S . is also Canada's
largest foreign investor, responsible for 71% of all FDI in Canada
(worth approximately $87 billion). Main targets for investment are
metals and mining industries, energy, and finance.
Recently the Finance Ministry has kept demands for spending on social
programs at bay in the name of eradicating the budget deficit. Once
they feel this is firmly behind them, social spending could possibly
resume.
Privatization programs, meeting gathering opposition from trade
unions, interest groups and the general public, are slowly shrinking,
with many large-scale services remaining public.
There are four primary securities exchanges in Canada: Toronto,
Montreal, Vancouver, and Alberta. The Toronto and Montreal exchanges
list the older, larger, more established firms. Combined, these two
exchanges accounted for 95.2% of the total trading value in 1996. The
Vancouver and Alberta exchanges list smaller, younger start up firms
which tend to represent the natural resource sector. In 1996 these two
exchanges accounted for 4.8% of the total value of equity trading.
SPECIAL CONSIDERATIONS REGARDING EUROPE
Europe can be divided into two categories of market
development: the developed economies of Western Europe1<F4>1, and the
transition economies of Eastern Europe2<F3>. As a whole, Europe
witnessed a slowdown in growth in 1996, down to 1.7% from its 1995
level of 2.5%. Inflation decreased to 4.6%, down from 5.1% in 1995.
The weak growth performance in Germany had an effect on the region as
a whole, largely due to the role Germany plays as a primary trading
partner to most European countries.
In the W est, GDP growth averaged 2.5%, unemployment 9.2% and
inflation 6.8%3<F2>. Twelve of the countries enjoy both positive trade
balances and positive current accounts balances, while seven do not.
Likewise, in the E ast growth averaged 3.1%, while inflation
averaged 26%4<F1>. All countries save Bulgaria saw trade and current
accounts deficits.
Stock market performance in the W estern countries was strong.
Over 9100 firms, both foreign and domestic, are listed on the
exchanges throughout the region. Total market capitalization in the
west was over $9 trillion in 1996. Market capitalization totals grew
over their 1995 levels on an average of 31%, with notable performances
by Turkey and Greece, both growing by almost 50%. Trading value
turnover increased in all countries save Austria and Ireland, and the
average increase across the region was 29%.
The European Union (EU) consists of 15 countries of W estern
Europe: Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and
the UK. The six founding countries first formed an economic
community in the 1950's to bring down trade barriers such as taxes and
quotas, to eliminate technical restrictions such as special standards
and regulations for foreigners, and coordinate various industrial
policies, such as agriculture. The group has admitted new members in
the 1970's and most recently in 1995 when Austria, Finland and Sweden
joined. By that time the community had changed its legal status to the
EU and reaffirmed their goal of creating a single, unified
market that would, at 372.6 million people, be the largest in the
developed world. The notion is to create a union through which goods,
people, and capital could move freely. A second component of the EU is
the creation of a single currency to replace each of the member
countries' domestic currencies. In preparation for the creation of
this currency, to be called the Euro, the Exchange Rate Mechanism
(ERM) was established to keep the various national currencies with a
pre-specified value relative to each other. In 1999 there is planned
the establishment of the Economic and Monetary Union (EMU), as set
forth by the Maastricht Treaty. At this point the Euro will be
introduced and those countries which both qualify and desire to join
will join. Beyond 1999 there will be opportunities for new countries
to join the EMU.
The year 1997 is significant for members of the EU as it is the
initial reference year for evaluating debt levels and deficits within
the criteria set forth by the Maastricht treaty. Specifically, the
Maastricht criteria includes, amongst other indicators, an inflation
rate below 3.3%, a public debt below 60% of GDP, and a deficit of 3%
or less of GDP. Failure to meet the Maastricht levels could delay the
realization of EMU by 1999. Many political battles are currently being
waged over the issue of how much debt and deficit reducing policies
should be undertaken. Pressure to increase fiscal spending is strong,
particularly given the slow growth and high unemployment. Indeed,
unemployment rates, which range from 3.2% in Luxembourg to 22% in
Spain and which average 9.9%, are currently seen as the biggest
threats to EMU.
In 1996, the EU averaged a 6.85% inflation rate, a 75.98% government
debt, and a 3.62% budget deficit. Only three countries meet the
necessary debt levels, four countries meet the required deficit
levels, and only 1 meets both (Luxembourg). Broadly speaking, the
success of left of center parties in recent elections in various
countries is a signal that citizens and at least some politicians are
now more hesitant to move rapidly toward EMU.
Many foreign and domestic firms are establishing themselves or
increasing their activity in Europe in anticipation of the unified
single market. Clear, confident signals of what a diverse,
multi-industrial, unified market under a single currency could look
like have been the impetus for increases in market activity, corporate
development and mergers and acquisitions. A successful EMU could prove
be an engine for sustained growth.
Nevertheless, much discussion of liberalizing the Maastricht criteria
is coming about as 1999 approaches and the prospects of achieving a
successful implementation of the EMU is seen by many as slim. Should
this happen, the political ramifications and the strength of the EMU
would become unpredictable, as many politicians have staked their
credibility on meeting the EMU deadline.
In the meantime, the expansion of the EU to include other countries in
W estern and Eastern Europe serves as a strong political impetus
for many governments to employ tight fiscal and monetary policies.
Particularly for the E astern European countries, aspirations to
join the EU are likely to push governments to act decisively. At the
same time, there could become an increasingly obvious gap between rich
and poor both within the aspiring countries and also between those
countries who are close to meeting membership criteria and those who
are not. Realigning traditional alliances could result in altering
trading relationships and potentially provoking divisive
socio-economic splits.
The economies of the E ast are embarking on the transition from
communism at different paces with appropriately different
characteristics. War - torn Croatia's economy crossed firmly into
positive growth levels for the first time since it split from
Yugoslavia while the rapidly developing Polish and Czech economies
continued their strong advance, responded to rising levels of
investment, domestic consumption, exchange rate stability, and export
growth. To be sure, one country's recipe for success is unique from
all other countries. Inflation and unemployment levels differ widely,
and the search for a `transition strategy' remains confined to the
dictates of local conditions.
In some countries, such as Albania and Romania, political events and
policy failures severely hindered economic recovery. In others, such
as Serbia, extreme political events prevent the gathering of accurate
macroeconomic data. Politically, what separates these countries from
the rest is not that they have relied on the leadership of former
communists, but that these politicians have continued to reject the
libertarian economic principles that their counterparts in other
E astern countries have been implementing. Part of this
rejection includes the failure to establish an effective and
legitimate legal infrastructure. This position isolates these
countries from both the west and their multinational organizations.
For the more developed E astern economies, partnership with
W estern institutions such as the EU and NATO serve as
incentives to balance the demands of the citizens with fiscal
austerity. As relationships develop and confidence rises, investment
in these economies increases. In the E ast established stock
markets now exist in Bulgaria, Croatia, Czech Republic, Hungary,
Poland, Slovenia and Slovakia. Over 330 firms are listed on the
various exchanges, and in 1996 total market capitalization was $38.3
billion. This represents an average increase of 193% over 1995.
Trading value turnover in 1996 went up 287% on average.
Strong sectors for these economies are mostly industrial such as
automotives and machinery. Also strong are manufacturing sectors,
chemicals and pharmaceuticals. Service industries are not extensively
developed, but financial services are increasing. Natural resources,
particularly oil and minerals, are weak.
As this region continues to develop, it is possible that the massive
drops in output that followed the collapse of the Soviet Union are
well behind and that for many economies a significant corner has been
turned toward positive growth. Economies, which work to tie their
future to an integrated, global economy, are likely to continue to
receive the aid and investment from the west that has helped bring
them along so far. Still, the key component of a successful transition
for all of these countries is political commitment to support the
civil institutions that will ultimately replace the monolithic welfare
state. With 113 million people, diverse industry and an well-educated
work force, Eastern Europe is a promising market.
REAL GDP ANNUAL RATE OF GROWTH
(ANNUAL % CHANGE)
1996
Denmark 1.8%
France 0.9%
Germany 1.3%
Italy 0.8%
Netherlands 2.2%
Spain 2.1%
Switzerland 0.0%
United Kingdom 2.2%
Source: The Economist. The LGT Guide to World Equity Markets 1997.
<F1>4 This average inflation rate includes the exceptionally high rate
in Bulgaria (125.0%). Without this outlier, inflation across the
region averaged 17.0%.
<F2>3 This average inflation rate includes the exceptionally high rate
in Turkey (86.0%). Without this outlier, inflation across the region
averaged 2.4%.
<F3>2 Albania, Bulgaria, Croatia, Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
<F4>1 Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland, Turkey, United Kingdom.
For national stock market index performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS REGARDING JAPAN, THE PACIFIC BASIN, AND
SOUTHEAST ASIA
Asia has undergone an impressive economic transformation in the past
decade. Many developing economies, utilizing massive foreign
investments, established themselves as inexpensive producers of
manufactured and re-manufactured consumer goods for export. As
household incomes rose, birth was given to rising middle classes,
stimulating domestic consumption. More recently, large projects in
infrastructure and energy resource development have been undertaken,
again utilizing cheap labor, foreign investment, and a business
friendly regulatory environment. During the course of development,
governments, which are democratic, at least in a formal sense, fought
to maintain the stability and control necessary to attract investment
and provide labor. Subsequently, Asian countries today are coming
under increasing, if inconsistent, pressure from W estern
governments regarding human rights practices.
GDP growth in Asia increased in 1996 to 4.9% over its 1995 level of
3.2%. It is the fastest growing region of the world, with China
leading the way at 9.1%. Of the 20 fastest growing economies in the
world, half of them are in Asia. Inflation in 1996 was reduced to
2.6%, down from 3.0% the previous year. Nevertheless it is a
significant concern given the areas high levels of domestic
consumption and capital inflows.
Manufacturing exports declined significantly in 1996, due to drops in
demand, increased competition, and also strong U.S . dollar
performance. This is particularly true of electronics, a critical
industry for several Asian economies. Declines in exports reveal how
much of the recent growth in these countries is dependent on their
trading partners. Many Asian exports are priced in dollars, while the
majority of its imports are paid for in local currencies. A stable
exchange rate between the dollar and other Asian currencies is
important to Asian trade balances.
Despite the impressive economic growth experienced by Asia's emerging
economies, currency and economic concerns have recently roiled these
markets. Over the summer of 1997, a plunge in Thailand's currency set
off a wave of currency depreciations throughout South and Southeast
Asia. The Thai crisis was brought on by the country's failure to take
steps to curb its current-account deficit, reduce short-term foreign
borrowing and strengthen its troubled banking industry, which was
burdened by speculative property loans. Most of the area's stock
markets tumbled in reaction to these events. Investors were heavy
sellers as they became increasingly concerned that other countries in
the region, faced with similar problems, would have to allow their
currencies to weaken further or take steps that would chock off
economic growth and erode company profits. For U.S. investors, the
impact of the market declines were further exacerbated by the effect
of the decline in the value of their local currencies versus the U.S.
dollar.
The same kinds of concerns that affected Thailand and other Southeast
Asian countries subsequently spread to North Asia. To widely varying
degrees, Taiwan, South Korea, and Hong Kong all faced related currency
and/or equity market declines. Of these, the South Korean situation
was the most severe. Revelations of this country's poor lending
practices and high levels of corporate indebtedness led to steep,
extended declines in the value of the won, high interest rates, and
tumbling equity markets. Due to continued weakness in the Japanese
economy combined with the reliance of Asian economies on intra-Asian
trade and capital flows, many experts believed that the entire
region's economic growth would slow in the near term.
JAPAN. A country of 126 million with a labor force of 64 million
people, Japan is renowned as the preeminent economic miracle of the
post war era. Fueled by public investment, protectionist trade
policies, and innovative management styles, the Japanese economy has
transformed itself since the war into the world's second largest
economy. An island nation with limited natural resources, Japan has
developed a strong heavy industrial sector and is highly dependent on
international trade. Strong domestic industries are automotive,
electronics, and metals. Needed imports revolve around raw materials
such as oil, forest products, and iron ore. Subsequently, Japan is
sensitive to fluctuations in commodity prices. With only 19% of its
land suitable for cultivation, the agricultural industry is small and
largely protected. While the U.S. is Japan's largest single trading
partner, close to half of Japan's trade is conducted with developing
nations, almost all of which are in S outheast Asia. Investment
patterns generally mirror these trade relationships. Japan has over
$100 billion of direct investment in the United States.
The Tokyo Stock Exchange (TSE) is the largest of eight exchanges in
Japan. The exchanges divide the market for domestic stocks into two
sections, with larger companies assigned to the first section and
newly listed or smaller companies assigned to the second. In 1996,
1,833 firms were listed on the TSE, 96% of which were domestic. Some
believe that the TSE has a tendency to be strongly influenced by the
performance of a small circle of large cap firms that dominate the
market. The two key indexes are the Tokyo Stock Price Index (TOPIX)
and the Nikkei. In 1996, TSE performance was lackluster, with the
TOPIX down about 7%.
CHINA AND HONG KONG. China is one of the world's last remaining
communist systems, and the only one that appears poised to endure due
to its measured embrace of capitalist institutions. It is the world's
most populous nation, with 1.3 billion people creating a work force of
630 million. Today's Chinese economy, roughly separated between the
largely agricultural interior provinces and the more industrialized
coastal and southern provinces, has its roots in the reforms of the
recently deceased communist leader Deng Xiaoping. Originally an
orthodox communist system, China undertook economic reforms in 1978 by
providing broad autonomy to certain industries and establishing
special economic zones (SEZ's) to attract foreign investment (FDI).
Attracted to low labor costs and favorable government policies,
investment flowed from many sources, with Hong Kong, Taiwan, and the
United States leading the way. Most of the investment, totaling $37
billion by the end of 1995, has been located in the southern
provinces, establishing manufacturing facilities to process goods for
re-export.
The result has been a steadily high level of real GDP growth,
averaging 11.35% per year so far this decade. With this growth has
come a doubling of total consumption, a tripling of real incomes for
many workers, and a reduction in the number of people living in
absolute poverty from 270 to 100 million. Today there is a market of
more that 80 million who are now able to afford middle class
W estern goods.
China has two stock exchanges that are set up to accommodate foreign
investment, in Shenzhen and in Shanghai. In both cases, foreign
trading is limited to a special class of shares (Class B) which was
created for that purpose. Only foreign investors may own Class B
shares, but the government must approve sales of Class B shares among
foreign investors. As of December 1996, there were 42 companies with
Class B shares on the two exchanges, for a total Class B market
capitalization of U.S. $4.7 billion.
AUSTRALIA. Australia is a 3 million sq. mile continent (about the size
of the 48 continental United States) with a predominantly European
ethnic population of 18.2 million people. A member of the British
Commonwealth, its government is a democratic, federal-state system.
The country has a W estern style capitalist economy with a work
force of 9.2 million that is concentrated in services, mining, and
agriculture. Australia's natural resources are bauxite, coal, iron
ore, copper, tin, silver, uranium, nickel, tungsten, mineral sands,
lead, zinc, diamonds, natural gas, and oil. Primary trading partners
are the United States , Japan, South Korea, New Zealand,
United Kingdo m , and Germany. Imports revolve around
machinery and high technology equipment, while exports are heavy in
the agricultural and mineral products, making them sensitive to world
commodity prices.
Historically, Australia's strong points were its agricultural and
mining sectors. While this is still true to a large extent, the
government managed to boost its manufacturing sector by undertaking
protective measures in the 1970's and early 1980's. These have
subsequently been liberalized in an effort to kindle growth in the
industrial sector. Today's economy is more diverse, as manufactures'
share of total exports is increasing. Part of the government's effort
to make manufacturing more competitive was a floating of the
Australian dollar in 1984, precipitating an initial depreciation, and
a campaign to reduce taxes. Such reforms have attracted foreign
investment, particularly in the transport and manufacturing sectors.
Restrictions do exist on investment in certain areas as media, mining
and some real estate. In 1995, cumulative U.S. investment in
Australia totaled more than $65 billion and accounted for 21% of total
foreign investment.
GDP growth reached 3.6% in 1996; a steady increase over the days of
the early 1990's which saw a recession. The recession was followed in
1992 by a jump in growth (from 0.4 % -2.8%), but this initial
boost seems to have leveled off. The election of a new
Liberal/National coalition government after 13 years of Labor rule has
brought with it new efforts to cut public spending and eliminate the
projected $6 billion budget deficit. This step, coupled with a steady
unemployment rate (8%), could slow down the recent ascent in growth.
Australia is fully integrated into the world economy, participating in
GATT and also more regional trade associations such as the Asia and
the Pacific Economic Cooperation (APEC) forum. Future growth could
result from their movement towards regional economic liberalization,
but a countervailing force is the reality that some export markets in
Europe could be lost to continued European economic integration.
INDONESIA. Indonesia is a country that encompasses over 17,000 islands
on which live 195 million people. It is a mixed economy that balances
free enterprise with significant government intervention. Deregulation
policies, diversification of strong domestic sectors, and investment
in infrastructure projects have all contributed to high levels of
growth since the late 1980's. Indonesia's economy grew at 7.1% in
1996, the exact average of its performance for the current
decade. Growth in the 1990's has been fairly steady, hovering between
6.5 % -7.5% for the most part, peaking at 8.1% in 1995. Moderate
growth in investment, including public investment, and also in import
growth, helped to slow down GDP growth. Growth has been
accompanied by moderately high levels of inflation, ranging from the
recent high of 9.7% in 1993 to a low of 7.1%, as witnessed last year.
Indonesia is currently undergoing a diversification of the core of its
economy. No longer strictly revolving around oil and textiles, it
is now gaining strength in high technology manufactures, such as
electronics. Indonesia consistently runs a positive trade balance.
Strong export performers are oil, gas, and textiles and apparel. Oil,
once responsible for 80% of export revenues, now accounts for only
25%, an indication of how far other (mostly manufacturing and apparel)
sectors have developed. Main imports are raw materials and capital
goods.
In 1994 the country underwent deregulation measures which further
boosted investment. By 1996, FDI levels dropped from the record high
in 1995, and the trend was away from large projects including
infrastructure to smalle r, more manageable projects. Many
consider this a reflection of a desire to avoid the notoriously
nepotism ridden bureaucracy.
The Indonesian government is strongly authoritarian. Treatment of
political opponents, workers and ethnic minorities has put Indonesia
in the world spotlight with criticism of its human rights practices.
One source of outspoken popular discontent is the glaring discrepancy
in income distribution, particularly across ethnic lines. World
attention to the problems in Indonesia has given support to the
various causes, but it does not seem to have had much impact on the
government. Efforts to impose sanctions on the country by both federal
and state level politicians in the U.S . have so far proven
unsuccessful, but are likely to continue to persist.
Politically, the ruling party, Golkar, faces frequent challenges from
unofficially sanctioned opposition parties, but these efforts are
effectively marginalized. The key political question in Indonesia is
who will replace the aging ruler, President Suharto who, at 76, has
been the county's only leader for over 30 years. His long tenure and
the country's nascent democratic institutions leave the question of
proper succession open. During his career he has amassed support from
a directly appointed insider bureaucracy of political and business
elites which features immediate members of his family. As well, he has
relied strongly upon the army to provide the force necessary to
contain social unrest. Which amongst these two institutions will
emerge to replace Suharto is far from clear, and the surrounding
intrigue could lead to some instability. As economic policies have
been crafted to benefit Suharto's supporters in the business
community, any deviation from Suharto's position would likely impact
the economy. Additionally, a key ingredient to Indonesia's success has
been its ability to contain social unrest. Maintaining this
control, especially in the face of recently escalated tensions and
political uncertainty, is an important anchor for economic
performance. Proof of this is the Jakarta Stock Exchange's volatile
reaction to riots in July 1995.
MALAYSIA. 1996 saw Malaysia's GDP growth slow to 8.3%, down from over
9% in 1994 and 1995. Inflation has been kept relatively low at 3.8%.
Performance in 1996 avoided the economy's potential overheating as
export growth, investment, and consumption all slowed. This helped to
bring the current account deficit down by $1.7 billion to settle at
approximately 6.0% of GDP.
A large part of Malaysia's recent growth is due to its manufacturing
industries, particularly electronics and especially semiconductors.
This has led to an increased reliance on imports; thus the economy is
sensitive to shifts in foreign production and demand. This is
particularly true regarding its main trading partners: the United
States, Japan, and Singapore. Such shifts were partly responsible
for the slowdown in 1996. In addition, monetary policies to stem the
threat of overheating were evident, but the country still needs
massive public and private investment to finance several large
infrastructure projects. Government industrial policy seeks investment
to create more value added high technology manufacturing and service
sectors in order to decrease the emphasis on low skilled
manufacturing. Already U.S . investors have invested over $9
billion, and most of this is in electronics and energy projects.
Unemployment remains extremely low (2.6%) and labor for completing the
various projects is becoming costly, especially as industry has to go
abroad to search for higher skilled workers. Wages have soared so high
that Malaysia no longer qualifies for the special trading benefits
that the U.S. and the EU bestow upon developing nations. This
could hurt exports. A further catch is that rapidly increasing wages
could cause inflationary pressures, yet a shortage of labor could
threaten development.
The political situation in Malaysia is stable and could possibly
remain so up to and including the next election in the year 2000.
SINGAPORE. Since achieving independence from the British in 1965,
Singapore has repeatedly elected the People's Action Party (PAP) as
their government. It is a party that is so consistent it has only
offered up two prime ministers in this 32-year period. Elections in
January 1997 returned the PAP to power, signaling satisfaction with
their policy of close coordination with the private sector to
stimulate investment. Typical policies include selective tax
incentives, subsidies for R&D, and joint ventures with private firms.
While the combination of consistent leadership and interventionist
policies is sometimes seen as impeding civil liberties and
laissez-faire economics, it has produced an attractive investment
environment.
The Singapore economy is almost devoid of agriculture and natural
resources, not surprising given the island nation's geographic size.
Its strongest sector is manufacturing, particularly of electronics,
machinery and petroleum and chemical products. They produce 45% of the
world's computer disk drives. Major trading partners are Japan,
Malaysia and the United States.
The economic situation in Singapore registered a passable year in
1996. The regional trend toward slowed electronics exports made clear
the country's strong reliance on this sector. GDP growth dropped from
8.8% to 6.5%, while inflation remained low (1.4%) and the current
account balance maintained its large surplus. Property values have
gone up recently, partially in response to uncertainty surrounding
Hong Kong. Interest rates are consistently low, and wages high,
leaving some at a loss to explain the repeatedly low inflation rate.
SOUTH ASIA. Although India's economy has grown at an average rate
of 7% over the past three years, growth has slowed to about 6% during
1997. Economic growth, which had been fueled by strong industrial and
export sectors, slowed along with growth in these sectors. It is
uncertain whether India will be able to sustain the high growth rates
it experienced through 1996. Subsidies amount to almost 15% of GDP,
while agriculture accounts for about 25%. In 1997, annual inflation
has been approximately 3.8% down from about 6.6% the previous year.
During 1997, the current account deficit has been roughly 1.2% of GDP,
down from 1.5% in 1996. The exchange rate has been gradually devalued
in the 1980's and 1990's, and could be devalued further. Beginning in
1992, industry, financial markets, and the country's trade have been
gradually liberalized. Fifty-five percent of India's population is
illiterate, roughly half live in poverty, and unemployment remains
high.
Since the dissolution of the Narasimha Rao government in early
1996, India has experienced several weak, coalition governments that
have been unable to consolidate their position for an extended period.
Partially as a result, economic reforms have proceeded slowly through
gradually. Future changes in government could weaken or set back the
reform process.
India does not enjoy trouble-free relations with its neighbors.
India and Pakistan have fought two wars since their independence in
1947 and have yet to resolve a continuing dispute over the status of
the norther Indian state of Kashmir. Various Kashmiri separatist
groups, Indian, and Pakistani military have been involved in armed
conflict within the state. Neither India nor Pakistan have signed the
Comprehensive Nuclear Test Ban Treaty, which prohibits nuclear weapons
testing. A border dispute with China and questions over the
involvement of elements within India in the internal affairs of Sri
Lanka also affect India's relations with these countries.
The other, smaller South Asian countries of Pakistan, Bangladesh,
and Sri Lanka share with India the challenges of reducing poverty and
illiteracy and improving infrastructure and economic growth. While
each of these countries has taken steps to liberalize their economies,
their economies are far from mature, as are their legal and regulatory
systems. In addition, because they have small and relatively less
diversified economies and public markets, they are susceptible to
external economic shocks, which may result in currency declines. Sri
Lanka has been plagued by internal challenges to its security, while
Pakistan has faced significant political infighting and instability.
Bangladesh's largely agricultural economy is heavily dependent on the
severity of the monsoons.
SOUTH KOREA. South Korea is one of the more spectacular economic
stories of the post war period. Coming out of a civil war in the
mid-1950's the country found itself with a destroyed economy and
boundaries that excluded most of the peninsula's mineral and
industrial resources. It proceeded over the next 40 years to create a
society that includes a highly skilled and educated labor force and an
economy that exploited the large amounts of foreign aid given to it by
the United States and other countries. Exports of labor intensive
products such as textile s initially drove the economy, to be
replaced later by heavy industries such as automobiles.
Hostile relations with North Korea dictate large expenditures on the
military, and political uncertainty and potential famine in the north
has put the south on high alert. Any kind of significant military
effort could have multiple effects, both positive and negative, on the
economy. South Korea's lack of natural resources put a premium on
imported energy products, making the economy very sensitive to oil
prices.
Since 1991, GDP growth has fluctuated widely between 5% and 9%,
settling down at 6.8% last year. Currently the labor market is in need
of restructuring, and its rigidity has hurt performance. Relations
between labor and the large conglomerates, or Chaebols, could prove to
be a significant influence on future growth. Inflation in the same
period has been consistently dropping, save a brief rise in 1994, and
finished the year at 4.5%. The country consistently runs trade
deficits, and the current account deficit widened sharply in 1996,
more than doubling to $19.3 billion. South Korea's strong domestic
sectors are electronics, textiles and industrial machinery. Exports
revolve around electronics, textil es, automobiles, steel and
footwear, while imports focus on oil, food, chemicals and metals.
The stock market (Korea Stock Exchange (KSE) ) is currently
undergoing liberalization to include more foreign participation, which
was only first allowed in 1992, but the bond market remains off limits
until 1999. Liberalization is in response to the KSE 1996 performance,
which was down 18%. While the number of listed companies increased by
39 in 1996, total market capitalization fell 24% from its 1995 level.
THAILAND. The political situation in Thailand is tenuous. Democracy
has a short history in the country, and power is alternatively
obtained by the military, a non-elected bureaucratic elite, and
democratically elected officials. The frequent transfers of power have
generally gone without divisive, bloody conflicts, but there are
bitter differences between the military and the political parties.
Free elections in 1992 and again in 1995 have produced non-military
democratic leaders from different parties, a healthy sign of party
competition. While democratic institutions are stabilizing, the
current government is under increasing pressure due to recent poor
economic performance.
The Thai economy has witnessed a fundamental transition in recent
years. Traditionally it was a strong producer of textiles, minerals
and agricultural products, but more recently it has tried to build
high-tech export industries. This proved particularly fortuitous in
the mid 1990's when flooding wiped out much of their traditional
exports, but the newer industries remained strong, keeping the growth
rate above 8%. (This level had been achieved through the 1990's,
giving the economy a name as one of the fastest growing in the
region.) The government has also taken steps toward reducing the
influence of central planning, opening its market to foreigners and
abandoning five-year plans. This restructuring is still underway, and
the change can cause difficulty at times.
GDP growth slowed a bit last year to 7.2%, down from 8.6% in 1995. The
current account deficit was 7.9% of GDP, and inflation was 5.8%, both
considered high but steady and controllable results in line with
recent years' performance. One cause for the slowdown was a decline in
export growth as its manufacturing industry faces stiff competition
from low priced competitors and its agriculture suffers drops in
production. In 1996, Thailand's currency, the baht, was linked to a
U.S . dollar dominated basket, and monetary policy had remained
tight to keep that link strong and avoid inflationary pressures.
The situation changed in early 1997, however, with the revelation of
many bad bank loans and a bubbling of property prices due to
over-investment. Many companies, faced with slowing exports, stopped
servicing their debts. Many other firms have stayed alive only with
infusions of public cash, and the government has been slow to let many
property laden financial firms fail. The stock market has reacted
strongly, dropping to new lows for the decade. Reluctant to float the
baht, indeed promising that it would not , the government
relented in early July hoping to revive export and stock market
growth. The subsequent devaluation (approximately 20% against the
dollar in the first month) led to the need for a $16 billion loan
coordinated by the IMF to shore up foreign reserves. Most of the loan
came from neighboring countries led by Japan, indicating their desire
to both protect their own investments in Thailand, and also mitigate
the effect of the devaluation on their home currencies .
The total impact of the entire situation is negative, particularly on
inflation, unemployment and foreign debt. Significant turnover and a
major gamble on the currency has put the government in a precarious
position, especially given the fact that it is a six party coalition.
Dissatisfaction amongst the military, always a political factor, is
high.
EMERGING MARKETS: ASIA
MARKET CAPITALIZATION IN U.S. DOLLARS
DECEMBER 1996
Billions:
India $ 132.97
Indonesia 91.00
Korea 138.91
Malaysia 322.00
Pakistan 11.75
Philippines 80.69
Singapore 182.00
Taiwan 274.00
Thailand 95.92
Source: The Economist. The LGT Guide to World Equity Markets 1997.
REAL GDP ANNUAL RATE OF GROWTH
(ANNUAL % CHANGE) 1996
China 9.1%
Hong Kong 4.3%
India 5.7%
Indonesia 7.1%
Japan 3.9%
Korea 6.8%
Malaysia 8.3%
Philippines 5.5%
Singapore 6.5%
Taiwan 5.8%
Thailand 7.2%
Source: The Economist. The LGT Guide to World Equity Markets 1997.
For national stock market index performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS REGARDING LATIN AMERICA
Latin America represents one of the world's more advanced emerging
markets. With a total population of 427 million and its abundant
natural resources, the area is a prime trading partner for the U.S.
and Canada. In Latin America exports represent, on average, 16.6%
of GDP. Strong export sectors are petroleum, manufactured goods,
agricultural commodities such as coffee and beef, and metals and
mining products. GDP growth in Latin America as a region was 3.4% in
1996, up from 0.1% in 1995. Recognizing the important role of
international trade as a component of GDP, the countries of Latin
America have formed strong regional trade organizations, notably
MERCOSUR. Talk of extending the North American Free Trade Agreement
(NAFTA) down through Latin America indicates some desire to tie
the economies even closer to those of the north.
Politically, Latin American countries generally have strong
presidential systems closely modeled on the U.S. Their transition
to democracy, largely complete in most countries, nevertheless
allows for a considerable military influence, reflecting the strong
authoritarian leanings of a large portion of the population. The
countries all enjoy good relations with the United States, with whom
they cooperate on a range of non-economic matters, such as
preservation of the environment and drug control. Monetarist minded
governments were responsible for the successful staving off of
contagion from the recent currency crisis in Mexico, increasing their
stature in the eyes of most capital market participants.
ARGENTINA. Prior to 1989, Argentine politics were characterized by
populist leaders, sometimes democratically elected and sometimes not,
who ruled with the overt support of the military. Coups and outright
military rule were not uncommon. Economic policies were highly
protectionist, with significant barriers and restrictions on foreign
trade and investment. Markets were highly regulated and the state
was heavily involved in many industries. Inflation was routinely high
and growth stagnant.
President Carlos Menem was first elected to office in 1989 and
undertook a program of deregulation, liberalization and macroeconomic
reform. The results have been positive. Growth in 1996 was 4.4%, up
from -4.4% in 1995. Argentina's growth, averaging over 7% from 1991 to
1994, has been driven primarily by domestic consumption. In the wake
of the Mexican currency crisis, however, banking liquidity has been
restrained. While deposits have increased in reaction to peso
stabilization, lending has not, putting downward pressure on consumer
spending. The positive effect is that inflation, well over 150% at the
beginning of the decade, was 0.4% in 1996. Still troublesome for
Argentina is unemployment, quite high at 17%. Menem's economic
liberalization policies have succeeded in attracting foreign
investment. From the U.S. alone, approximately $10 billion was
invested by 1996. Investors have been most attracted to the
telecommunications, finance, and energy sectors.
Argentina enjoys a positive trade balance. The export economy is
heavily weighted toward agriculture, which represents 60% of the total
value of all Argentine exports. Primary products are livestock,
oilseeds, and grain. Argentina's single biggest trading partner is
Brazil, and the U.S. is the second. Primary imports are machinery,
vehicles and chemicals.
The resignation of Economy Minister Domingo Cavallo in July 1996 was
initially greeted with skepticism from the markets. Cavallo was widely
recognized as the man responsible for ensuring the convertibility of
the peso by pegging it to the dollar, a move which saved Argentina
from the hyperinflation and continuous drops in output which could
have followed from the Mexican crisis in 1994. Confidence was quickly
restored, however, with the appointment of Roque Fernandez, who
promptly reaffirmed commitment to Cavallo's plan and introduced
further measures for fiscal stability.
The central bank's main priority is maintaining convertibility against
the dollar. It is very active in the foreign exchange market and even
assists local firms with liquidity problems.
Legislative elections to be held in October, 1997 could prove to be
critical for Menem, who still has an extensive economic reform agenda
which includes further privatizations, labor market reforms and a
revamped tax policy. Failure to retain a friendly majority in the
Lower House of congress could deprive Menem of the support he needs to
pass such reforms.
The next presidential election is due in 1999. In accordance with the
constitution, Menem, a member of the Peronist party, can not seek a
third consecutive term. The next election is likely to present a third
candidate to the voters beyond the traditional contestants from the
Peronist and Radical parties. Frepaso, a center-left alliance, first
emerged in the 1995 elections and by 1999 could build itself up enough
to promote a viable alternative to the older parties. It is uncertain
how policies would be a ffected by the systemic change from a
predominantly two party system to a three way game.
BRAZIL. Brazil is the largest country in South America and is home to
vast amounts of natural resources. Its 155 million people are
descendants from indigenous tribes and European immigrants. They live
in diverse socio-economic conditions, from the urban cities of Sao
Paolo to the undeveloped trading posts of the distant regions.
Industrial development has been concentrated in specific areas. The
disenfranchised population is quite large and is a source of many of
Brazil's social problems.
The Brazilian economy is currently undergoing extensive reforms,
stemming from a 1994 effort to stabilize the currency called the Real
Plan. With the aim of curbing inflation, a new currency, the Real, was
introduced and supported via a floating exchange band. The plan has
stabilized the exchange rate and controlled inflation, which was
reeling out of control in 1994 at 2,700%. Inflation in 1995 dropped to
81%, and fell even further in 1996, settling at 18.7%. At the same
time, however, the Real Plan has sent the trade and current account
balances into a deficit. The current account soared from $1 billion to
$18 billion, and increased further in 1996 to $27 billion.
Other objectives of the administration of the current President,
Fernando Henrique Cardoso, are trade liberalization and privatization,
but these efforts are sporadic and often stalled by special interests
in the legislature. Some privatization efforts are performing well,
particularly in the utilities sector. Utilities and telecommunications
have been key draws for foreign investment, and foreign direct
investment (FDI) is coming in at record levels. In 1996 the country
received over $9.5 billion, with $2.4 billion coming from the
U . S . Still, there are restrictions against investments
in certain industries, such as metals and mining.
Similarly with trade liberalization, the government increased import
restrictions in an effort to shrink the trade deficit and slow the
growth of import consumption. This consumption was a main contributor
to GDP growth in 1996, though growth was down 1% to 3.2%.
Traditionally a primarily agricultural economy, a strong industrial
sector has developed which produces metals, chemical, and manufactured
consumer goods. Agriculture still plays a significant role, however,
representing 11% of the GDP, 40% of exports and employing over 35% of
the work force. Primary agricultural products are grains, coffee, and
cattle. Regarding energy and utilities, the country is a leading
producer of hydroelectric power, but they are dependent on imports for
oil.
Presidential elections will be held in 1998. President Cardoso hopes
to stand for re-election but currently is unable to, given a
constitutional provision on term limits. Efforts to gather
congressional support for constitutional reform, allowing Cardoso to
stand, could result in a great deal of special interest concessions,
translating into more public spending and horse-trading over fiscal
reforms.
CHILE. Chile is a transition economy which has recently made great
strides toward putting its authoritarian, statist, past behind itself.
In all of Latin America, it is the country with the highest rates of
growth. Averaging 7.3% so far this decade, GDP grew at 6.7% in 1996,
down from 8.5% the previous year. Inflation has been steadily
declining and is down over 15% in the last five years. Inflation in
1996 was 7.4%, a 0.8% drop over 1995. Unemployment in 1996 was 6.6%,
particularly low for the Latin American region. Despite the fact that
market capitalization fell $8 billion in 1996 to $64 billion, Chile is
still considered to have one of the best performing stock markets in
the region.
Chile has a strong, interventionist central bank which focuses more on
the investment community than it does on the government. Active steps
are taken to control demand and inflation. One example is the practice
of restricting short-term flows of foreign capital through the
country.
Interest rate hikes in 1996 are said to have restrained growth, but
other factors include unfavorable weather conditions that hurt
agricultural and hydroelectric power production. Mining and metals
were strong performers in 1996. Of particular note was the strong
showing of the country's copper industry.
Eduardo Frei is President and is due for reelection in 1999. President
Frei has been trying to decentralize the government but encounters
stiff opposition from the powerful trade unions. Also high on Frei's
agenda is tax reform.
There is a considerable military component to political life in Chile.
In the legislature there is strong representation by parties with
authoritarian views. As part of the negotiated settlement with coup
leader General Augusto Pinochet in 1990, the army chain of command
ends with General Pinochet, not an elected official. Furthermore,
certain seats are reserved in the Senate for appointed officials from
the military. Pinochet must resign in 1998, and shortly thereafter the
reserved Senate seats will fall open to election. There are
constitutional reforms currently in progress further diminishing the
role and influence of the military, and thus the political transition
is still underway. A successful outcome requires that the military
acquiesce as it is stripped of its political powers.
MEXICO. The Mexican economy recovered fairly well in 1996 from the
currency crisis of December 1994 thanks in large part to growth in
exports, peso stabilization, and massive financial assistance from the
United States. Growth rebounded from its negative position of -6.2% in
1995 to reach 5.1% in 1996. The peso devaluation of 1994, prompted by
mounting foreign debt, was effective in reducing the current account
deficit from $30 billion to just over $1 billion, and it also pushed
Mexico into a positive trade balance. The current account deficit
increased in 1996 to $3.7 billion, but the trade surplus was
maintained. Inflation jumped from 7% to over 50% in the year after the
crisis, but was controlled in 1996, registering a drop to 28%.
Inflation is the chief concern of the central bank, which takes active
measures such as the setting of wage ceilings and manipulation of
interest rates to control it. Domestic consumption is sluggish and has
yet to return to pre-1994 levels, also contributing to the containment
inflation.
The Mexican economy is very strong in manufacturing and natural
resources, specifically oil. Manufacturing alone counts for 22% of the
Mexican GDP and 21% of all urban employment. The economy is also very
closely tied to the U . S . , which is responsible for 60%
of all foreign investment and with whom it conducts over 75% of all
trade. Trade pacts such as NAFTA further integrate the
economies, giving the U . S . strong incentives to provide
assistance in times of crisis. NAFTA also enabled the recent recovery,
given the ease with which it allows increases in exports and
investment. The Mexican stock market listed 193 companies with total
capitalization of $106 billion in 1996, a 17% rise over 1995.
Internally, the various people of the Mexican states have recently
experienced a great deal of dissatisfaction with their relationship to
the federal government. Most notably, in Chiapas there have been armed
uprisings by indigenous groups demanding further autonomy. While the
rebellions have not strongly shaken financial markets, they serve as a
reminder of the diversity of Mexico, of the vast socio-economic gaps
between various peoples, and of the potential for such groups to
demand the attention of both their government and the world.
Politically, the landscape changed fundamentally in July 1997. The
defeat of candidates from the Institutional Revolutionary Party (PRI)
in legislative elections signaled the end of decades of one party
rule. Citizens now have the confidence that their votes count and that
the PRI is no longer invincible. Winning every presidential election
since its founding in 1929, the PRI was the country's monolithic
political machine, maintaining power through rigged elections and
ruling in an environment rife with intrigue and corruption. Internal
pressures including armed rebellion from domestic interest groups,
extensive crises and scandals caused by intra-party rivalries and
corruption, and deteriorating relationships with foreign countries
over financial mismanagement and mutual social problems all
contributed to the establishment of fully free and unfettered
elections. The response from the Mexican people was clear. Though they
took the most votes (39%) for the 500-member Lower House of congress,
the PRI has lost their majority, and the President is now forced to
accommodate the interests of the opposition parties. Market reaction
to the new Mexican political world was positive. The IPC index,
consisting of 35 of the most representative stocks on the Mexican
Stock Exchange, rose 3.25% the day after the election. Further
financial implications of the new landscape are as yet uncertain.
Relevant considerations are the effect of the new configurations on
government consensus and policy making, the demands of newly empowered
groups on economic and other resources, the balance of power between
the executive and the legislature, and the ability of the government
to maintain law and order.
EMERGING MARKETS: LATIN AMERICA
MARKET CAPITALIZATION IN U.S. DOLLARS
DECEMBER 1996
Billions:
Argentina $ 44.7
Brazil 429.3
Chile 65.6
Mexico 107.0
Peru 13.8
Venezuela 10.0
Source: The Economist, The LGT Guide to World Equity Markets, 1997
For national stock market index performance, please see the section on
Performance beginning on page .
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to
the sub-advisers (see the section entitled "Management Contracts"),
the sub-advisers are authorized to place orders for the purchase and
sale of portfolio securities, and will do so in accordance with the
policies described below. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for
which it or its affiliates act as investment adviser. In selecting
broker-dealers, subject to applicable limitations of the federal
securities laws, FMR considers various relevant factors, including,
but not limited to: the size and type of the transaction; the nature
and character of the markets for the security to be purchased or sold;
the execution efficiency, settlement capability, and financial
condition of the broker-dealer firm; the broker-dealer's execution
services rendered on a continuing basis; the reasonableness of any
commissions; and for equity funds arrangements for payment of fund
expenses. Generally, commissions for investments traded on foreign
exchanges will be higher than for investments traded on U.S. exchanges
and may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts
over which FMR or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; and
the availability of securities or the purchasers or sellers of
securities. In addition, such broker-dealers may furnish analyses and
reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; effect
securities transactions, and perform functions incidental thereto
(such as clearance and settlement). The selection of such
broker-dealers generally is 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
(for equity funds), and is based upon the quality of research and
execution services provided.
The receipt of research from broker-dealers that execute transactions
on behalf of the funds may be useful to FMR in rendering investment
management services to the funds or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to the funds. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause a fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided
by such executing broker-dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to the funds and its
other clients. In reaching this determination, FMR will not attempt to
place a specific dollar value on the brokerage and research services
provided, or to determine what portion of the compensation should be
related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the funds or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC) and Fidelity Brokerage
Services (Japan), LLC (FBSJ ), indirect subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. Prior to December 9, 1997, FMR used research
services provided by and placed agency transactions with Fidelity
Brokerage Services (FBS), an indirect subsidiary of FMR Corp.
FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer
allocates a portion of the commissions paid by each fund toward
payment of the fund's expenses, such as transfer agent fees or
custodian fees. The transaction quality must, however, be comparable
to those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the Board
of Trustees has authorized NFSC to execute portfolio transactions on
national securities exchanges in accordance with approved procedures
and applicable SEC rules.
Each fund's 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
each fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For the fiscal periods ended 1996 and 1997, respectively, each fund's
portfolio turnover rates are shown in the chart below. Because a high
turnover rate increases transaction costs and may increase taxable
gains, FMR carefully weighs the anticipated benefits of short-term
investing against these consequences. An increased turnover rate may
be due to a greater volume of shareholder purchase orders, short-term
interest rate volatility, and other special market conditions.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND FISCAL PERIOD ENDED 1996 1997
TechnoQuant Growth November 30 N/A 213% **
International Capital Appreciation October 31 N/A <</r>200%*
Overseas October 31 82%
70%
Mid Cap November 30 101%** 208%
Equity Growth November 30 76% 108%
Growth Opportunities October 31 33% 33%**,+
Strategic Opportunities December 31 151% 61%**,++
Large Cap November 30 59%** 93%
Growth & Income November 30 N/A 82% **
Equity Income November 30 78% 55%
Balanced October 31 223% 70%
Emerging Markets Income December 31 410% 660%
High Yield October 31 121% 105%
Strategic Income December 31 119% 140%
Mortgage Securities July 31 221% 125%**,+++
Government Investment October 31 153% 136%
Intermediate Bond November 30 200% 138%
Short Fixed-Income October 31 124% 105%
Municipal Income October 31 49% 36%
Municipal Bond December 31 35% 33%
Intermediate Municipal Income November 30 35% 18%
Short-Intermediate Municipal Income November 30 62% 41%
</TABLE>
* Estimated 1998 turnover rate
** Annualized
+ For the fiscal period November 1, 1997 through November 30,
1997.
++ For the fiscal period January 1, 1997 through November 30,
1997.
+++ For the fiscal period August 1, 1997 through October 31,
1997.
For the fiscal period ended October 31, 1997 the portfolio turnover
rate for Growth Opportunities was 35%. For the fiscal period ended
July 31, 1997 the portfolio turnover rate for Mortgage Securities was
149%.
The following tables show the brokerage commissions paid by
TechnoQuant Growth, Overseas, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth & Income,
Equity Income, Balanced, Emerging Markets Income, High Yield, and
Strategic Income. The first table shows the total amount of brokerage
commissions paid by each fund and the total amount of brokerage
commissions paid to NFSC and FBS for the past three fiscal
years. The second table shows the percentage of aggregate brokerage
commissions paid to and the percentage of the aggregate dollar amount
of transactions for which a fund paid brokerage commissions effected
through NFSC and FBS for the fiscal year ended 1997. The third table
shows the amount of brokerage commissions paid to firms providing
research and the approximate dollar amount of the transactions on
which brokerage commissions were paid for the fiscal year ended 1997.
Each of these funds pays both commissions and spreads in connection
with the placement of portfolio transactions; NFSC and FBS are paid on
a commission basis. The difference between the percentage of brokerage
commissions paid to and the percentage of the dollar amount of
transactions effected through NFSC is a result of the low commission
rates charged by NFSC. The other funds paid no brokerage commissions
for the fiscal years ended 1995 through 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FISCAL PERIOD TOTAL TO NFSC TO FBS
ENDED AMOUNT PAID
TECHNOQUANT GROWTH November 30
1997+ $ 91,653 $ 14,045 $ 0
OVERSEAS October 31
1997 2,761,658 5,510 198,192
1996 2,828,416 15,499 169,534
1995 1,420,464 5,926 142,450
MID CAP November 30
1997 1,076,816 184,530 0
1996++ 280,816 72,019 0
EQUITY GROWTH November 30
1997 6,180,477 1,553,180 17,274
1996 3,252,297 820,661 9,780
1995 2,185,589 862,434 2,034
GROWTH OPPORTUNITIES November 30
11/1/97-11/30/97 746,177 126,243 45,100
1997* 9,799,619 1,199,152 192,356
1996* 6,894,871 1,513,633 74,768
1995* 6,189,975 1,793,388 9,682
STRATEGIC OPPORTUNITIES November 30
1/1/97-11/30/97 698,872 170,790 0
1996** 1,107,012 257,886 0
1995** 1,138,485 217,580 0
LARGE CAP November 30
1997 93,523 10,202 0
1996++ 31,692 8,248 0
GROWTH & INCOME November 30
1997+ 214,663 26,529 69
EQUITY INCOME November 30
1997 2,827,048 473,418 0
1996 2,634,183 685,839 0
1995 1,410,440 549,549 7,528
BALANCED October 31
1997 1,691,341 251,104 7,686
1996 7,090,976 1,476,330 61,240
1995 8,952,888 2,249,157 122,777
EMERGING MARKETS INCOME December 31
1997 0 0 0
1996 0 0 0
1995 11,820 0 0
HIGH YIELD October 31
1997 269,517 12,656 0
1996 139,187 1,507 0
1995 123,145 3,958 0
STRATEGIC INCOME December 31
1997 0 0 0
1996 0 0 0
1995 152 0 0
</TABLE>
* Fiscal year ended October 31
** Fiscal year ended December 31
+ TechnoQuant Growth and Growth & Income commenced operations on
December 31, 1996
++ Large Cap and Mid Cap commenced operations on February 20,
1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FISCAL PERIOD % OF % OF % OF % OF
ENDED 1997 COMMISSIONS TRANSACTIONS COMMISSIONS TRANSACTIONS
PAID TO NFSC EFFECTED THROUGH PAID TO FBS EFFECTED THROUGH
NFSC FBS
TECHNOQUANT GROWTH November 30 15.33 % 22.63 % 0.00 % 0.00 %
OVERSEAS October 31 0.20 % 0.68 % 7.18 % 7.30 %
MID CAP November 30 17.14 % 23.08 % 0.00 % 0.00 %
EQUITY GROWTH November 30 25.13 % 34.11 % 0.28 % 0.14 %
GROWTH OPPORTUNITIES November 30* 16.92 % 24.87 % 6.04 % 2.95 %
October 31** 12.24 % 17.85 % 1.96 % 1.04 %
STRATEGIC OPPORTUNITIES November 30++ 24.44 % 34.66 % 0.00 % 0.00 %
LARGE CAP November 30 10.91 % 15.07 % 0.00 % 0.00 %
GROWTH & INCOME November 30 12.36 % 14.98 % 0.03 % 0.01 %
EQUITY INCOME November 30 16.75 % 24.59 % 0.00 % 0.00 %
BALANCED October 31 14.84 % 26.38 % 0.45 % 0.22 %
HIGH YIELD October 31 4.70 % 8.15 % 0.00 % 0.00 %
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL PERIOD AMOUNT PAID TO FIRMS TOTAL AMOUNT OF
ENDED 1997 PROVIDING RESEARCH+ TRANSACTIONS ON WHICH
COMMISSIONS WERE PAID
TECHNOQUANT GROWTH November 30 $ 75,204 $ 86,895,245
OVERSEAS October 31 2,639,259 1,336,618,897
MID CAP November 30 1,012,972 918,040,718
EQUITY GROWTH November 30 5,875,525 7,253,759,526
GROWTH OPPORTUNITIES November 30* 0 764,267,094
October 31** 9,321,410 9,694,532,390
STRATEGIC OPPORTUNITIES November 30++ 677,806 517,487,188
LARGE CAP November 30 81,815 99,679,339
GROWTH & INCOME November 30 122,531 302,006,568
EQUITY INCOME November 30 2,513,229 2,873,777,310
BALANCE D October 31 1,594,302 1,993,648,305
HIGH YIELD October 31 265,965 117,796,039
</TABLE>
+ The provision of research services was not necessarily a factor in
the placement of all this business with such firms.
++ Period of January 1, 1997 through November 30, 1997
* Period of November 1, 1997 through November 30, 1997
** Period of November 1, 1996 through October 31, 1997
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR, investment decisions for
each fund are made independently from those of other funds managed by
FMR or accounts managed by FMR affiliates. It sometimes happens that
the same security is held in the portfolio of more than one of these
funds or accounts. Simultaneous transactions are inevitable when
several funds and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
FSC normally determines each class's net asset value per share (NAV)
as of the close of the New York Stock Exchange (NYSE) (normally 4:00
p.m. Eastern time). The valuation of portfolio securities is
determined as of this time for the purpose of computing each class's
NAV.
GROWTH AND GROWTH & INCOME FUNDS. Portfolio securities are valued by
various methods depending on the primary market or exchange on which
they trade. Most equity securities for which the primary market is the
United States are valued at last sale price or, if no sale has
occurred, at the closing bid price. Most equity securities for which
the primary market is outside the United States are valued using the
official closing price or the last sale price in the principal market
in which they are traded. If the last sale price (on the local
exchange) is unavailable, the last evaluated quote or last bid price
normally is used. Securities of other open-end investment companies
are valued at their respective NAVs.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available .
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC gathers all exchange rates daily at the
close of the NYSE using the last quoted price on the local currency
and then translates the value of foreign securities from their local
currencies into U.S. dollars. Any changes in the value of forward
contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of NAV. If an extraordinary event that is
expected to materially affect the value of a portfolio security occurs
after the close of an exchange on which that security is traded, then
that security will be valued as determined in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value. In addition, securities and other assets for which
there is no readily available market value may be valued in good faith
by a committee appointed by the Board of Trustees. The procedures set
forth above need not be used to determine the value of the securities
owned by a fund if, in the opinion of a committee appointed by the
Board of Trustees, some other method would more accurately reflect the
fair market value of such securities.
TAXABLE BOND FUNDS. Portfolio securities are valued by various methods
depending on the primary market or exchange on which they trade.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets.
Or, fixed-income securities and convertible securities may be valued
on the basis of information furnished by a pricing service that uses a
valuation matrix which incorporates both dealer-supplied valuations
and electronic data processing techniques. Use of pricing services has
been approved by the Board of Trustees. A number of pricing services
are available, and the funds may use various pricing services or
discontinue the use of any pricing service.
Most equity securities for which the primary market is the United
States are valued at last sale price or, if no sale has occurred, at
the closing bid price. Most equity securities for which the primary
market is outside the United States are valued using the official
closing price or the last sale price in the principal market in which
they are traded. If the last sale price (on the local exchange) is
unavailable, the last evaluated quote or last bid price normally is
used.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other opened investment
companies are valued at their respective NAVs.
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC gathers all exchange rates daily at the
close of the NYSE using the last quoted price on the local currency
and then translates the value of foreign securities from their local
currencies into U.S. dollars. Any changes in the value of forward
contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of NAV. If an extraordinary event that is
expected to materially affect the value of a portfolio security occurs
after the close of an exchange on which that security is traded, then
that security will be valued as determined in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value. In addition, securities and other assets for which
there is no readily available market value may be valued in good faith
by a committee appointed by the Board of Trustees. The procedures set
forth above need not be used to determine the value of the securities
owned by a fund if, in the opinion of a committee appointed by the
Board of Trustees, some other method would more accurately reflect the
fair market value of such securities.
MUNICIPAL BOND FUNDS. Portfolio securities are valued by various
methods. If quotations are not available, fixed-income securities are
usually valued on the basis of information furnished by a pricing
service that uses a valuation matrix which incorporates both
dealer-supplied valuations and electronic data processing techniques.
Use of pricing services has been approved by the Board of Trustees. A
number of pricing services are available, and the funds may use
various pricing services or discontinue the use of any pricing
service.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-ended investment
companies valued at their respective NAVs.
Securities and other assets for which there is no readily available
market value are valued in good faith by a committee appointed by the
Board of Trustees. The procedures set forth above need not be used to
determine the value of the securities owned by a fund if, in the
opinion of a committee appointed by the Board of Trustees, some other
method would more accurately reflect the fair market value of such
securities.
PERFORMANCE
Each class of shares may quote performance in various ways. All
performance information supplied by the funds in advertising is
historical and is not intended to indicate future returns. Share
price, yield, and total return fluctuate in response to market
conditions and other factors, and the value of shares when redeemed
may be more or less than their original cost.
YIELD CALCULATIONS. Yields for a class are computed by dividing the
class's pro rata share of the applicable interest and dividend income,
if any, for a given 30-day or one-month period, net of expenses, by
the average number of shares of that class entitled to receive
distributions during the period, dividing this figure by the class's
net asset value (NAV) or offering price, as appropriate, at the end of
the period, and annualizing the result (assuming compounding of
income) in order to arrive at an annual percentage rate. Income is
calculated for purposes of yield quotations in accordance with
standardized methods applicable to all stock and bond funds. Dividends
from equity investments are treated as if they were accrued on a daily
basis, solely for the purposes of yield calculations. In general,
interest income is reduced with respect to bonds trading at a premium
over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds
trading at a discount by adding a portion of the discount to daily
income. For a fund's investments denominated in foreign currencies,
income and expenses are calculated first in their respective
currencies, and are then converted to U.S. dollars, either when they
are actually converted or at the end of the 30-day or one month
period, whichever is earlier. Capital gains and losses generally are
excluded from the calculation as are gains and losses from currency
exchange rate fluctuations. Income is adjusted to reflect gains and
losses from principal repayments received by a fund with respect to
mortgage-related securities and other asset-backed securities. Other
capital gains and losses generally are excluded from the calculation.
Income calculated for the purposes of calculating a class's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, a class's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
In calculating a class's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing a class's yield.
Yield information may be useful in reviewing a class's performance and
in providing a basis for comparison with other investment
alternatives. However, each class's yield fluctuates, unlike
investments that pay a fixed interest rate over a stated period of
time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest
rates, a class's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates, the class's
yield will tend to be somewhat lower. Also, when interest rates are
falling, the inflow of net new money to a fund from the continuous
sale of its shares will likely be invested in instruments producing
lower yields than the balance of the fund's holdings, thereby reducing
the class's current yield. In periods of rising interest rates, the
opposite can be expected to occur.
A class's tax-equivalent yield is the rate an investor would have to
earn from a fully taxable investment before taxes to equal the class's
tax-free yield. Tax-equivalent yields are calculated by dividing a
class's yield by the result of one minus a stated federal income tax
rate. If only a portion of a class's yield is tax-exempt, only that
portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1998. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of
hypothetical tax-exempt obligations yielding from 2.00% to 8.00%. Of
course, no assurance can be given that a class will achieve any
specific tax-exempt yield. While the municipal funds invest
principally in obligations whose interest is exempt from federal
income tax, other income received by the funds may be taxable.
1998 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
If individual tax-exempt yield is:
2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
Taxable Income* Federal
Marginal
Single Return Joint Return Rate** Then taxable equivalent yield is:
$ 0 - $ 2 5,350 $ 0-$ 42,350 15.0% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24% 9.41%
$ 2 5,351-$ 61,400 $ 42,351-$ 102,300 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11%
$ 61,401-$ 128,100 $ 155,951 - $ 278,450 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14% 11.59%
$ 128,101-$ 278,450 $ 15 5,951 - $ 278,450 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50%
over + $ 278,450 over + $ 278,450 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% 13.25%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
A federally tax-exempt fund may invest a portion of its assets in
obligations that are subject to federal income tax. When a fund
invests in these obligations, its tax-equivalent yields will be lower.
In the table above, tax-equivalent yields are calculated assuming
investments are 100% federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of a class's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in a class's
NAV over a stated period. A class's total return may be calculated
by using the performance data of a previously existing class prior to
the date that the new class commenced operations, adjusted to reflect
differences in sales charges but not 12b-1 fees. Average annual
total returns are calculated by determining the growth or decline in
value of a hypothetical historical investment in a class over a stated
period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or
decline in value had been constant over the period. For example, a
cumulative total return of 100% over ten years would produce an
average annual total return of 7.18%, which is the steady annual rate
of return that would equal 100% growth on a compounded basis in ten
years. Average annual total returns covering periods of less than one
year are calculated by determining a class's total return for the
period, extending that return for a full year (assuming that return
remains constant over the year), and quoting the result as an annual
return. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that a
class's performance is not constant over time, but changes from year
to year, and that average annual total returns represent averaged
figures as opposed to the actual year-to-year performance of the
class.
In addition to average annual total returns, a class may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions
to total return. Total returns may be quoted on a before-tax or
after-tax basis and may be quoted with or without taking a class's
maximum sales charge into account. Excluding a class's sales charge
from a total return calculation produces a higher total return figure.
Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using a class's NAVs, adjusted
NAVs, and benchmark indices may be used to exhibit performance. An
adjusted NAV includes any distributions paid and reflects all elements
of its return. Unless otherwise indicated, a class's adjusted NAVs are
not adjusted for sales charges, if any.
MOVING AVERAGES. A growth or growth and income fund may illustrate
performance using moving averages. A long-term moving average is the
average of each week's adjusted closing NAV for a specified period. A
short-term moving average is the average of each day's adjusted
closing NAV for a specified period. Moving Average Activity Indicators
combine adjusted closing NAVs from the last business day of each week
with moving averages for a specified period to produce indicators
showing when a NAV has crossed, stayed above, or stayed below its
moving average.
The 13-week and 39-week long-term moving averages are shown below:*
FUND AS OF 13-WEEK 39-WEEK
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TechnoQuant Growth - Class A 1 1 / 28 /97 11.95 10.78
TechnoQuant Growth - Class T 11/28/97 11.92 10.76
TechnoQuant Growth - Class B 11/28/97 11.87 10.73
TechnoQuant Growth - Class C 11/28/97 11.93 10.78
TechnoQuant Growth - Institutional 11/28/97 11.96 10.79
Overseas - Class A 10/ 31 /97 17.70 16.96
Overseas - Class T 10/ 31 /97 17.83 17.08
Overseas - Class B 10/ 31 /97 17.50 16.79
Overseas - Class C 10/ 31 /97 17.85 17.13
Overseas - Institutional 10/ 31 /97 17.71 16.95
Mid Cap - Class A 11/ 28 /97 14.24 12.98
Mid Cap - Class T 11/ 28 /97 14.28 13.02
Mid Cap - Class B 11/ 28 /97 14.15 12.91
Mid Cap - Class C 11/ 28 /97 14.29 13.04
Mid Cap - Institutional 11/ 28 /97 14.31 13.03
Equity Growth - Class A 11/ 28 /97 51.71 48.02
Equity Growth - Class T 11/ 28 /97 52.00 48.29
Equity Growth - Class B 11/ 28 /97 51.47 47.87
Equity Growth - Class C 11/ 28 /97 52.01 48.37
Equity Growth - Institutional 11/ 28 /97 52.86 49.02
Growth Opportunities - Class A 11/ 28 /97 43.43 40.67
Growth Opportunities - Class T 11/ 28 /97 43.63 40.86
Growth Opportunities - Class B 11/ 28 /97 43.48 40.78
Growth Opportunities - Class C 11/ 28 /97 43.64 40.93
Growth Opportunities - Institutional 11/ 28 /97 43.71 40.89
Strategic Opportunities - Class A 1 1 / 28 /97 28.11 24.90
Strategic Opportunities - Class T 1 1 / 28 /97 28.39 25.12
Strategic Opportunities - Class B 1 1 / 28 /97 27.83 24.66
Strategic Opportunities - Institutional 1 1 / 28 /97 28.21 24.96
Strategic Opportunities - Initial 1 1 / 28 /97 28.78 25.44
Large Cap - Class A 11/ 28 /97 13.96 13.04
Large Cap - Class T 11/ 28 /97 13.99 13.06
Large Cap - Class B 11/ 28 /97 13.86 12.96
Large Cap - Class C 11/ 28 /97 13.99 13.08
Large Cap - Institutional 11/ 28 /97 14.05 13.10
Growth & Income - Class A 1 1 / 28 /97 12.27 11.45
Growth & Income - Class T 1 1 / 28 /97 12.25 11.43
Growth & Income - Class B 1 1 / 28 /97 12.22 11.42
Growth & Income - Class C 1 1 / 28 /97 12.26 11.46
Growth & Income - Institutional Class 1 1 / 28 /97 12.26 11.43
Equity Income - Class A 11/ 28 /97 26.67 24.98
Equity Income - Class T 11/ 28 /97 26.83 25.13
Equity Income - Class B 11/ 28 /97 26.73 25.07
Equity Income - Class C 11/ 28 /97 26.83 25.16
Equity Income - Institutional 11/ 28 /97 27.03 25.28
Balanced - Class A 10/ 31 /97 18.91 17.96
Balanced - Class T 10/ 31 /97 18.93 17.97
Balanced - Class B 10/ 31 /97 18.87 17.95
Balanced - Class C 10/ 31 /97 18.94 18.02
Balanced - Institutional 10/ 31 /97 18.98 18.00
FUND AS OF 13-WEEK 39-WEEK
Emerging Markets Income - Class A 12/ 26 /97 10.92 10.78
Emerging Markets Income - Class T 12/ 26 /97 10.91 10.78
Emerging Markets Income - Class B 12/ 26 /97 10.97 10.85
Emerging Markets Income - Class C 12/ 26 /97 10.94 10.83
Emerging Markets Income - Institutional 12/ 26 /97 10.86 10.72
High Yield - Class A 10/ 31 /97 12.84 12.20
High Yield - Class T 10/ 31 /97 12.85 12.20
High Yield - Class B 10/ 31 /97 12.82 12.20
High Yield - Class C 10/ 31 /97 12.87 12.25
High Yield - Institutional 10/ 31 /97 12.63 11.99
Strategic Income - Class A 12/ 26 /97 10.99 10.71
Strategic Income - Class T 12/ 26 /97 10.99 10.70
Strategic Income - Class B 12/ 26 /97 11.02 10.75
Strategic Income - Class C 12/ 26 /97 11.01 10.75
Strategic Income - Institutional 12/ 26 /97 11.05 10.75
</TABLE>
* Moving averages are shown for those classes that had commenced
operations prior to January 1, 1998.
The following tables and charts show performance for each class of
shares of each fund. Class A shares have a maximum front-end sales
charge of 5.75% for TechnoQuant Growth, International Capital
Appreciation Fund, Overseas, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth & Income,
Equity Income, and Balanced (the Equity Funds); 4.75% for Emerging
Markets Income, High Yield, Strategic Income, Mortgage Securities,
Government Investment, and Municipal Income (the Bond Funds); 3.75%
for Intermediate Bond and Intermediate Municipal Income (the
Intermediate-Term Bond Funds); or 1.50% for Short Fixed-Income and
Short-Intermediate Municipal Income (the Short-Term Bond Funds). Class
A shares are also subject to a 12b-1 fee of 0.25% (Equity Funds), or
0.15% (Bond Funds, Intermediate-Term Bond Funds, and Short-Term Bond
Funds). Class T shares have a maximum front-end sales charge of 3.50%
for the Equity Funds and the Bond Funds, 2.75% for the
Intermediate-Term Bond Funds, or 1.50% for the Short-Term Bond Funds.
Class T shares are also subject to a 12b-1 fee of 0.50% (the Equity
Funds), 0.25% (the Bond Funds and the Intermediate-Term Bond Funds),
or 0.15% (the Short-Term Bond Funds). Class B shares may be subject to
a contingent deferred sales charge (CDSC) upon redemption: maximum
CDSC of 5.00% for the Equity and the Bond Funds or a maximum CDSC of
3.00% for the Intermediate-Term Bond Funds. Class B shares are also
subject to a 12b-1 fee of 1.00% (the Equity Funds) or 0.90% (the Bonds
Funds and the Intermediate-Term Bond Funds). Class C shares that are
redeemed within a year of purchase are subject to a CDSC of 1.00% for
all funds (except Strategic Opportunities, Mortgage Securities, and
Short-Intermediate Municipal Income). Class C shares are also subject
to a 12b-1 fee of 1.00% for all funds (except Strategic Opportunities,
Mortgage Securities, and Short-Intermediate Municipal Income).
Institutional Class shares do not have a sales charge or a 12b-1 fee.
Initial Class shares of Strategic Opportunities have a front-end sales
charge of 3.50% and no 12b-1 fee. Initial Class shares of Mortgage
Securities and Municipal Bond do not have a sales charge or a 12b-1
fee.
HISTORICAL BOND FUND RESULTS. The following tables show yields,
tax-equivalent yields (for municipal funds), and total returns for
each class of each bond fund for the fiscal year ended October 31,
November 30, December 31, as indicated below. The tax-equivalent yield
is based on a 36% federal income tax rate for each municipal fund.
Note that each municipal fund may invest in securities whose income is
subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Cumulative Total
Returns1 Returns1
Fiscal Yield2 Tax One Five Ten One Five Ten Years/
Period Equiva Year Years Years/ Year Years Life of
Ended lent Life of Fund+
Yield2 Fund+
Emerging Markets 12/31 N/A N/A 10.98% N/A 15.08% 10.98% N/A 70.86%
Income - Class A
Emerging Markets 7.50% N/A 12.40% N/A 15.46% 12.40% N/A 73.02%
Income - Class T
Emerging Markets 6.85% N/A 10.95% N/A 15.31% 10.95% N/A 72.17%
Income - Class B
Emerging Markets N/A N/A 14.58% N/A 15.81% 14.58% N/A 75.03%
Income - Class C
Emerging Markets 8.04% N/A 16.84% N/A 16.62% 16.84% N/A 79.77%
Income - Institutional
High Yield - Class A 10/31 N/A N/A 9.71% 11.96% 14.63% 9.71% 75.89% 291.72%
High Yield - Class T 7.47% N/A 11.18% 12.30% 14.80% 11.18% 78.60% 297.75%
High Yield - Class B 7.26% N/A 9.34% 12.22% 14.89% 9.34% 77.96% 300.76%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Cumulative Total
Returns1 Returns1
Fiscal Yield2 Tax One Five Ten One Five Ten
Period Equiva Year Years Years/ Year Years Years/
Ended lent Life of Life of
Yield2 Fund+ Fund+
High Yield - Class C N/A N/A 13.37% 12.45% 14.89% 13.37% 79.83% 300.77%
High Yield -Institutional 8.30% N/A 15.42% 13.01% 15.17% 15.42% 84.31% 310.46%
Strategic Income - Class A 12/31 N/A N/A 4.05% N/A 12.08% 4.05% N/A 43.48%
Strategic Income - Class T 6.62% N/A 5.50% N/A 12.59% 5.50% N/A 45.58%
Strategic Income - Class B 6.18% N/A 3.67% N/A 12.38% 3.67% N/A 44.70%
Strategic Income - Class C N/A N/A 7.55% N/A 13.09% 7.55% N/A 47.61%
Strategic Income - 7.01% N/A 9.36% N/A 14.03% 9.36% N/A 51.55%
Institutional
Mortgage Securities - Class A 10/31 N/A N/A 3.57% 6.98% 8.48% 3.57% 40.13% 125.67%
Mortgage Securities - Class T N/A N/A 4.87% 7.25% 8.61% 4.87% 41.89% 128.50%
Mortgage Securities - Class B N/A N/A 3.20% 7.62% 8.95% 3.20% 44.39% 135.75%
Mortgage Securities - N/A N/A 8.75% 8.03% 9.01% 8.75% 47.15% 136.96%
Institutional
Mortgage Securities - Initial 6.40% N/A 8.86% 8.05% 9.02% 8.86% 47.29% 137.20%
Government 10/31 N/A N/A 2.95% 5.65% 7.44% 2.95% 31.66% 104.86%
Investment - Class A
Government 5.37% N/A 4.20% 5.91% 7.56% 4.20% 33.23% 107.31%
Investment - Class T
Government 4.92% N/A 2.20% 5.83% 7.68% 2.20% 32.75% 109.65%
Investment - Class B
Government N/A N/A 6.21% 6.16% 7.69% 6.21% 34.82% 109.81%
Investment - Class C
Government Investment - 5.83% N/A 8.18% 6.76% 8.00% 8.18% 38.72% 115.85%
Institutional
Intermediate Bond - Class A 11/30 5.19% N/A 1.84% 5.50% 7.68% 1.84% 30.67% 109.60%
Intermediate Bond - Class T 5.20% N/A 2.65% 5.70% 7.79% 2.65% 31.95% 111.65%
Intermediate Bond - Class B 4.65% N/A 1.85% 5.73% 7.80% 1.85% 32.13% 111.93%
Intermediate Bond - Class C N/A N/A 3.82% 5.74% 7.80% 3.82% 32.19% 112.02%
Intermediate Bond - 5.64% N/A 5.86% 6.67% 8.30% 5.86% 38.13% 121.90%
Institutional
Short Fixed-Income - Class A 10/31 5.51% N/A 4.05% 4.83% 6.75% 4.05% 26.57% 92.20%
Short Fixed-Income - Class T 5.43% N/A 4.38% 4.91% 6.80% 4.38% 27.11% 93.01%
Short Fixed-Income - Class C N/A N/A 4.97% 5.23% 6.96% 4.97% 29.04% 95.95%
Short Fixed-Income - 5.77% N/A 6.24% 5.29% 6.99% 6.24% 29.42% 96.53%
Institutional
Municipal Income - Class A 10/31 4.14% 6.47% 3.84% 5.87% 8.76% 3.84% 32.99% 131.61%
Municipal Income - Class T 4.18% 6.53% 5.08% 6.16% 8.91% 5.08% 34.84% 134.83%
Municipal Income - Class B 3.73% 5.83% 3.15% 6.04% 9.01% 3.15% 34.06% 136.95%
Municipal Income - Class C N/A N/A 7.17% 6.36% 9.01% 7.17% 36.10% 136.95%
Municipal Income - 4.49% 7.02% 9.44% 6.99% 9.34% 9.44% 40.18% 144.13%
Institutional
Municipal Bond - Initial 12/31 4.16% 6.50% 9.20% 6.83% 8.35% 9.20% 39.12% 123.09%
Intermediate Municipal 11/30 3.68% 5.75% 2.43% 4.72% 6.29% 2.43% 25.96% 84.08%
Income - Class A
Intermediate Municipal 3.63% 5.67% 3.29% 4.89% 6.38% 3.29% 26.99% 85.58%
Income - Class T
Intermediate Municipal 3.08% 4.81% 2.54% 4.97% 6.41% 2.54% 27.42% 86.22%
Income - Class B
Intermediate Municipal N/A N/A 4.54% 4.97% 6.42% 4.54% 27.44% 86.26%
Income - Class C
Intermediate Municipal 3.98% 6.22% 6.48% 5.75% 6.82% 6.48% 32.28% 93.39%
Income - Institutional
Short-Intermediate 11/30 3.47% 5.42% 2.72% N/A 4.38% 2.72% N/A 17.25%
Municipal Income - Class A
Short-Intermediate 3.46% 5.41% 2.81% N/A 4.40% 2.81% N/A 17.33%
Municipal Income - Class T
Short-Intermediate Municipal 3.67% 5.73% 4.52% N/A 4.89% 4.52% N/A 19.40%
Income - Institutional
</TABLE>
+ Life of fund figures are from commencement of operations (March 10,
1994 for Emerging Markets Income; October 31, 1994 for Strategic
Income; March 16, 1994 for Short-Intermediate Municipal Income)
through each fund's fiscal periods ended 1997.
1 Average annual and cumulative total returns for Class A include the
effect of paying Class A's maximum front-end sales charge of 4.75% for
Bond Funds, 3.75% for Intermediate-Term Bond Funds, and 1.50% for
Short-Term Bond Funds.
Average annual and cumulative total returns for Class T include the
effect of paying Class T's maximum front-end sales charge of 3.50% for
Bond Funds; 2.75% for Intermediate-Term Bond Funds; and 1.50% for
Short-Term Bond Funds.
Average annual and cumulative total returns for Class B include the
effect of paying Class B's CDSC upon redemption based on the following
schedule: for Bond Funds for periods less than one year, 5%; one year
to less than two years, 4%; two years to less than four years, 3%;
four years to less than five years, 2%; five years to less than six
years, 1%; six years or greater, 0%; for Intermediate-Term Bond Funds
for periods less than one year, 3%; one year to less than two years,
2%; two years to less than three years, 1%; three years or greater,
0%.
Average annual and cumulative total returns for Class C include the
effect of paying Class C's CDSC of 1% for shares redeemed within one
year of purchase.
Initial offering of Class A for each fund (except Mortgage
Securities) took place on September 3, 1996. Class A returns prior to
September 3, 1996 (except for Intermediate Bond and Intermediate
Municipal Income) are those of Class T which reflect a 12b-1 fee of
0. 25 % for Bond funds and 0.15% for Short-Term Bond
Funds . If Class A's 12b-1 fee had been reflected total returns
prior to September 3, 1996 for the Bond Funds would have been
higher. For Intermediate Bond and Intermediate Municipal
Income returns from September 3, 1996 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.25%. Class A returns
prior to September 10, 1992 are those of Institutional Class, which
has no 12b-1 fee. If Class A's 12b-1 fee had been reflected, total
returns prior to September 3, 1996 through September 10, 1992 would
have been higher and total returns prior to September 10, 1992 would
have been lower.
Initial offering of Class A, Class T, and Class B of Mortgage
Securities took place on March 3, 1997. Class A, Class T , and
Class B returns prior to March 3, 1997 are those of Initial Class
which has no 12b-1 fee. If Class A's, Class T's , and Class B's
respective 12b-1 fees had been reflected, total returns prior to March
3, 1997 would have been lower.
Initial offering of Class T of Intermediate Bond and Intermediate
Municipal Income took place on September 10, 1992. Class T returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class T's 12b-1 fee had been reflected, total returns
prior to September 10, 1992 would have been lower.
Initial offering of Class B of Intermediate Bond and Intermediate
Municipal Income took place on June 30, 1994. Class B returns prior to
June 30, 1994 through September 10, 1992 are those of Class T which
reflect a 12b-1 fee of 0.25%. Class B returns prior to September 10,
1992 are those of Institutional Class which has no 12b-1 fee. If Class
B's 12b-1 fee had been reflected, total returns prior to June 30, 1994
would have been lower.
Initial offering of Class B of High Yield, Government Investment,
Municipal Income , and Emerging Markets Income took place on
June 30, 1994. Class B returns prior to June 30, 1994 are those of
Class T which reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had
been reflected, total returns prior to June 30, 1994 would have been
lower.
Class C of each fund (excep t Mortgage Securities, Municipal
Bond, and Short-Intermediate Municipal Income) commenced operations on
November 3, 1997.
Class C returns for Strategic Income prior to November 3, 1997 are
those of Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to
January 1, 1996). If Class C's 12b-1 fee had been reflected, total
returns prior to November 3, 1997 through January 1, 1996 would
have been lower.
Class C returns for High Yield, Government Investment, and Municipal
Income prior to November 3, 1997 through June 30, 1994 are
those of Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to
January 1, 1996). Class C returns prior to June 30, 1994 are those of
Class T which reflect a 12b-1 fee of 0.25%. If Class C's 12b-1 fee had
been reflected, total returns prior to November 3 , 1997 through
January 1, 1996 and prior to June 30, 1994 would have been lower.
Class C returns for Emerging Markets Income prior to November 3, 1997
through June 30, 1994 are those of Class B which reflect a 12b-1 fee
of 0.90% (1.00% prior to January 1, 1996). Class C returns prior to
June 30, 1994 are those of Class T which reflect a 12b-1 fee of 0.25%.
If Class C's 12b-1 fee had been reflected, total returns prior to
November 3 , 1997 through December 3 1, 199 5 and prior
to June 30, 1994 would have been lower.
Class C returns for Short Fixed-Income prior to November 3 ,
1997 are those of Class T which reflect a 12b-1 fee of 0.15%. If Class
C's 12b-1 fee had been reflected, total returns would have been lower.
Class C returns for Intermediate Bond and Intermediate Municipal
Income prior to November 3, 1997 through June 30, 1994 are those of
Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to January 1,
1996). Class C returns prior to June 30, 1994 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.25%. Returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class C's 12b-1 fee had been reflected, total returns
prior to November 3 , 1997 through January 1, 1996 and
prior to June 30, 1994 would have been lower.
Initial offering of Institutional Class of High Yield, Strategic
Income, Government Investment, Short Fixed-Income, Municipal Income,
Emerging Markets Income, and Short-Intermediate Municipal Income took
place on July 3, 1995. Institutional Class returns prior to July 3,
1995 are those of Class T which reflect a 12b-1 fee of 0.25% for High
Yield, Strategic Income, Government Investment, Emerging Markets
Income, and Municipal Income; and 0.15% for Short Fixed-Income and
Short-Intermediate Municipal Income. I f Class T's 12b-1 fee had
not been reflected , total returns prior to July 3, 1995 for
Institutional Class would have been higher.
Initial offering of Institutional Class of Mortgage Securities took
place on March 3, 1997. Institutional Class returns prior to March 3,
1997 are those of Initial Class which has no 12b-1 fee.
2 Yields and tax-equivalent yields shown for Class A shares include
the effect of the applicable Class A front-end sales charge and 12b-1
fee. Yields and tax-equivalent yields shown for Class T shares include
the effect of the applicable Class T front-end sales charge and 12b-1
fee. Yields and tax-equivalent yields shown for Class B and Class C
include the effect of the applicable Class B or Class C 12b-1 fee, but
not the CDSC.
Note: If FMR had not reimbursed certain class expenses during certain
of these periods, the yields and total returns for those periods for
Strategic Income, Mortgage Securities, Government Investment,
Intermediate Bond, Intermediate Municipal Income, and
Short-Intermediate Municipal Income would have been lower. The
tables below shows what yields and tax-equivalent yields (if
applicable) would have been if the class had not been in
reimbursement.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
<C>
Class A Class T Class B Class C Institutional Class
Yield* Tax-Equi Yield* Tax-Equi Yield* Tax-Equi Yield* Tax-Equi Yield* Tax-Equi
valent valent valent valent valent
Yield Yield Yield Yield Yield
Strategic Income N/A N/A N/A N/A N/A N/A N/A N/A 7.01% N/A
Government N/A N/A 5.31% N/A 4.91% N/A N/A N/A 5.83% N/A
Investment
Intermediate Bond 3.67% N/A N/A N/A 4.56% N/A N/A N/A N/A N/A
Short Fixed-Income 5.51% N/A N/A N/A ** ** N/A N/A 5.77% N/A
Municipal Income 2.89% N/A N/A N/A N/A N/A N/A N/A 3.29% 5.14%
Municipal Bond *** *** *** *** *** *** (dagger) (dagger) *** ***
Intermediate 3.61% 5.64% 3.59% 5.61% 3.08% 4.81% N/A N/A 3.96% 6.19%
Municipal
Short-Intermediate 3.22% 5.03% 3.18% 4.97% ** ** N/A N/A 3.37% 5.27%
Municipal Income
</TABLE>
* See footnote 2 on page .
** Class B is not available for this fund.
*** All Advisor classes were closed to both new and existing
shareholders on November 1, 1997.
(dagger) Class C is not available for this fund.
HISTORICAL EQUITY FUND RESULTS. The following table shows the total
returns for each class of each equity fund for the annual period ended
October 31, November 30, or December 31 , as indicated below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Cumulative Total
Returns1 Returns1
Fiscal One Five Ten One Five Years Ten
Year Year Years Years/Life Year Years/Life
Ended of Fund+ of Fund+
TechnoQuant - Class A 11/30 N/A N/A N/A N/A N/A 7.26%
TechnoQuant - Class T N/A N/A N/A N/A N/A 9.62%
TechnoQuant - Class B N/A N/A N/A N/A N/A 8.10%
TechnoQuant - Class C N/A N/A N/A N/A N/A 12.12%
TechnoQuant - Institutional Class N/A N/A N/A N/A N/A 14.00%
Overseas - Class A 10/31 10.23% 13.81% 7.89% 10.23% 90.92% 77.18%
Overseas - Class T 12.97% 14.38% 8.26% 12.97% 95.80% 81.71%
Overseas - Class B 11.41% 14.64% 8.56% 11.41% 98.02% 85.62%
Overseas - Class C 15.41% 14.87% 8.56% 15.41% 100.02% 85.62 %
Overseas - Institutional Class 17.73% 15.38% 8.88% 17.73% 104.44% 89.73%
Mid Cap - Class A 11/30 15.21% N/A 18.29% 15.21% N/A 34.80%
Mid Cap - Class T 18.07% N/A 19.93% 18.07% N/A 38.14%
Mid Cap - Class B 16.67% N/A 19.50% 16.67% N/A 37.26%
Mid Cap - Class C 20.68% N/A 21.45% 20.68% N/A 41.27%
Mid Cap - Institutional Class 23.04% N/A 22.74% 23.04% N/A 43.96%
Equity Growth - Class A 11/30 12.84% 17.12% 23.37% 12.84% 120.38% 716.82%
Equity Growth - Class T 15.62% 17.70% 23.67% 15.62% 125.84% 737.07%
Equity Growth - Class B 14.09% 18.19% 24.04% 14.09% 130.62% 762.19%
Equity Growth - Class C 18.08% 18.39% 24.04% 18.08% 132.62% 762.17%
Equity Growth - 20.46% 19.35% 24.56% 20.46% 142.20% 799.06%
Institutional Class
Growth Opportunities - Class A 11/30 15.28% 19.00% 21.64% 15.28% 138.60% 609.28%
Growth Opportunities - Class T 17.86% 19.54% 21.92% 17.86% 144.05% 625.50%
Growth Opportunities - Class B 16.63% 20.10% 22.30% 16.63% 149.87% 648.75%
Growth Opportunities - Class C 20.68% 20.30% 22.31% 20.68% 151.98% 649.06%
Growth Opportunities - 22.75% 20.71% 22.52% 22.75% 156.32% 661.97%
Institutional Class
Strategic Opportunities -Class A 11/30 19.58% 13.79% 14.90% 19.58% 90.77% 301.11%
Strategic Opportunities - Class T 22.56% 14.36% 15.19% 22.56% 95.61% 311.27%
Strategic Opportunities - Class B 21.33% 14.57% 15.41% 21.33% 97.42% 319.29%
Strategic Opportunities - 27.07% 15.74% 16.14% 27.07% 107.66% 346.58%
Institutional Class
Strategic Opportunities - Initial 23.18% 15.03% 15.79% 23.18% 101.37% 333.05%
Large Cap - Class A 11/30 11.99% N/A 17.14% 11.99% N/A 32.49%
Large Cap - Class T 14.73% N/A 18.69% 14.73% N/A 35.61%
Large Cap - Class B 13.18% N/A 18.44% 13.18% N/A 35.10%
Large Cap - Class C 17.18% N/A 20.40% 17.18% N/A 39.10%
Large Cap - Institutional Class 19.39% N/A 21.61% 19.39% N/A 41.60%
Growth & Income - Class A 11/30 N/A N/A N/A N/A N/A 17.85%
Growth & Income - Class T N/A N/A N/A N/A N/A 20.46%
Growth & Income - Class B N/A N/A N/A N/A N/A 19.22%
Growth & Income - Class C N/A N/A N/A N/A N/A 23.21%
Growth & Income - N/A N/A N/A N/A N/A 25.26%
Institutional Class
Equity Income - Class A 11/30 15.03% 17.84% 15.67% 15.03% 127.27% 328.68%
Equity Income - Class T 17.84% 18.43% 15.96% 17.84% 133.00% 339.49%
Equity Income - Class B 16.52% 18.72% 16.19% 16.52% 135.80% 348.55%
Equity Income - Class C 20.56% 18.93% 16.20% 20.56% 137.88% 348.71%
Equity Income - Institutional 22.87% 20.13% 16.80% 22.87% 150.15% 372.57%
Balanced - Class A 10/31 14.03% 9.36% 13.02% 14.03% 56.44% 240.09%
Balanced - Class T 17.11% 9.96% 13.33% 17.11% 60.76% 249.48%
Balanced - Class B 15.54% 10.33% 13.66% 15.54% 63.46% 259.70%
Balanced - Class C 19.54% 10.60% 13.66% 19.54% 65.46% 259.70%
Balanced - Institutional 21.97% 11.07% 13.90% 21.97% 69.00% 267.41%
</TABLE>
+ Life of fund figures are from commencement of operations (April 23,
1990 for Overseas; February 20, 1996 for Mid Cap and Large Cap; and
December 31, 1996 for TechnoQuant Growth and Growth & Income) through
the fiscal periods ended 1997.
1 Average annual and cumulative total returns for Class A shares
include the effect of paying Class A's maximum applicable front-end
sales charge of 5.75% for Equity Funds.
Average annual and cumulative total returns for Class T shares
include the effect of paying Class T's maximum applicable front-end
sales charge of 3.50% for Equity Funds.
Average annual and cumulative total returns for Class B shares
include the effect of paying Class B's CDSC upon redemption based on
the following schedule: for Equity Funds for periods less than one
year, 5%; one year to less than two years, 4%; two years to less than
four years, 3%; four years to less than five years, 2%; five years to
less than six years, 1%; six years or greater, 0%.
Average annual and cumulative total returns for Class C shares
include the effect of paying Class C's CDSC of 1% for shares redeemed
within one year of purchase.
Initial offering of Class A for each fund (except TechnoQuant
Growth and Growth & Income) took place on September 3, 1996. Class
A returns prior to September 3, 1996 (except for Equity Growth and
Equity Income) are those of Class T which reflect a 12b-1 fee of 0.50%
(0.65% prior to January 1, 1996). If Class A's 12b-1 fee had been
reflected, total returns prior to September 3, 1996 would have been
higher. For Equity Growth and Equity Income, Class A returns from
September 3, 1996 through September 10, 1992 are those of Class T
which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
Class A returns prior to September 10, 1992 are those of Institutional
Class which has no 12b-1 fee. If Class A's 12b-1 fee had been
reflected, total returns prior to September 3, 1996 through September
10, 1992 would have been higher and total returns prior to September
10, 1992 would have been lower.
Initial offering of Class T of Equity Growth and Equity Income took
place on September 10, 1992. Class T returns prior to September 10,
1992 are those of Institutional Class which has no 12b-1 fee. If Class
T's 12b-1 fee had been reflected, total returns prior to September 10,
1992 would have been lower.
Initial offering of Class B of Equity Growth took place on December
31, 1996. Class B returns prior to December 31, 1996 through September
10, 1992 are those of Class T which reflect a 12b-1 of fee of 0.50%
(0.65% prior to January 1, 1996). Class B returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class B's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
Initial offering of Class B of Balanced took place on December 31,
1996. Class B returns prior to December 31, 1996 are those of Class T
which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
If Class B's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
Initial offering of Class B of Growth Opportunities took place on
March 3, 1997. Class B returns prior to March 3, 1997 are those of
Class T which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1,
1996). If Class B's 12b-1 fee had been reflected, total returns prior
to March 3, 1997 would have been lower.
Initial offering of Class B of Equity Income took place on June 30,
1994. Class B returns prior to June 30, 1994 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.65%. Class B
returns prior to September 10, 1992 are those of Institutional Class
which has no 12b-1 fee. If Class B's 12b-1 fee had been reflected,
total returns prior to June 30, 1994 would have been lower.
Initial offering of Class B of Strategic Opportunities took place on
June 30, 1994. Class B returns prior to June 30, 1994 and through
August 20, 1986 are those of Class T which reflect a 12b-1 fee of
0.65%. Class B returns prior to August 20, 1986 are those of
Initial Class which has no 12b-fee. If Class B's 12b-1 fee had
been reflected, total returns prior to June 30, 1994 would have been
lower.
Initial offering of Class B of Overseas took place on July 3, 1995.
Class B returns prior to July 3, 1995, are those of Class T which
reflect a 12b-1 fee of 0.65%. If Class B's 12b-1 fee had been
reflected, total returns prior to July 3, 1995 would have been lower.
Prior to December 1, 1992, Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
Class C of each fund (except Strategic Opportunities) commenced
operations on November 3, 1997.
Class C returns for TechnoQuant Growth, Mid Cap, Large Cap, and
Growth & Income prior to November 3, 1997 are those of
C lass B which reflect a 12b-1 fee of 1.00%.
Class C returns for Equity Growth prior to November 3, 1997 through
December 31, 1996 are those of Class B which reflect a 12b-1 fee of
1.00%. Class C returns prior to December 31, 1996 through September
10, 1992 are those of Class T which reflect a 12b-1 fee of 0.50%
(0.65% prior to January 1, 1996). Class C returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class C's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
Class C returns for Growth Opportunities prior to November 3, 1997
through March 3, 1997 are those of Class B which reflect a 12b-1 fee
of 1.00%. Class C returns prior to March 3, 1997 are those of Class T
which reflect a 12b-1 fee of 0.50 (0.65% prior to January 1, 1996). If
Class C's 12b-1 fee had been reflected, total returns prior to March
3, 1997 would have been lower.
Class C returns for Balanced prior to November 3, 1997 through
December 31, 1996 are those of Class B which reflect a 12b-1 fee of
1.00%. Class C returns prior to December 31, 1996 are those of Class T
which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
If Class C's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
Class C returns for Equity Income prior to November 3, 1997 through
June 30, 1994 are those of Class B which reflect a 12b-1 fee of 1.00%.
Class C returns prior to June 30, 1994 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.65%. Class C returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class C's 12b-1 fee had been reflected, total returns
prior to June 30, 1994 would have been lower.
Class C returns for Overseas prior to November 3, 1997 through
July 3, 1995 are those of Class B which reflect a 12b-1 fee of 1.00%.
Class C returns prior to July 3, 1995 are those of Class T which
reflect a 12b-1 fee of 0.65%. If Class C's 12b-1 fee had been
reflected, total returns prior to July 3, 1995 would have been lower.
Prior to December 1, 1992, Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
Initial offering of Institutional Class of Growth Opportunities,
Balanced, and Overseas took place on July 3, 1995. Institutional
Class returns prior to July 3, 1995 are those of Class T which reflect
a 12b-1 fee of 0.65%. If Institutional Class' 12b-fee had not been
reflected, total returns prior to July 3, 1995 would have been
higher.
Initial offering of Institutional Class of Strategic Opportunities
took place on July 3, 1995. Institutional Class returns prior to July
3, 1995 are those of Initial Class which has no 12b-fee.
Note: If FMR had not reimbursed certain class expenses during certain
of these periods, the total returns for those periods for TechnoQuant
Growth, Overseas, Mid Cap, Strategic Opportunities, Large Cap, Growth
& Income, Equity Income, and Balanced would have been lower.
The following tables show the income and capital elements of each
class's cumulative total return. The tables compare each class's
return to the record of the S&P 500, the Dow Jones Industrial Average
(DJIA), and the cost of living as measured by the Consumer Price Index
(CPI), over the same period. The CPI information is as of the
month-end closest to the initial investment date for each class. The
S&P 500 and DJIA comparisons are provided to show how each class's
total return compared to the record of a broad unmanaged index of
common stocks and a narrower set of stocks of major industrial
companies, respectively, over the same period. Because each of the
Bond Funds invest in fixed-income securities, common stocks represent
a different type of investment from the funds. Common stocks generally
offer greater growth potential than the Bond Funds, but generally
experience greater price volatility, which means greater potential for
loss. In addition, common stocks generally provide lower income than a
fixed-income investment such as the Bond Funds. Each of the Equity
Funds has the ability to invest in securities not included in either
index, and its investment portfolio may or may not be similar in
composition to the indices. The S&P 500 and DJIA returns are based on
the prices of unmanaged groups of stocks and, unlike each class's
returns, do not include the effect of brokerage commissions or other
costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each class of each fund (except International
Capital Appreciation) during the past 10 fiscal years ended 1997 or
life of each fund, as applicable, assuming all distributions were
reinvested. The figures below reflect the fluctuating interest rates,
bond prices, and stock prices of the specified periods and should not
be considered representative of the dividend income or capital gain or
loss that could be realized from an investment in a class today. Tax
consequences of different investments with the exception of foreign
tax withholdings have not been factored into the figures.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class A of TechnoQuant Growth would have grown to $ 10,726 ,
including the effect of Class A's maximum 5.75% sales charge.
TECHNOQUANT GROWTH - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997* $ 10,726 $ 0 $ 0 $ 10,726 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
TechnoQuant Growth on December 31, 1996, assuming the 5.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,425 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class T of TechnoQuant Growth would have grown to $ 10,962 ,
including the effect of Class T's maximum 3.50% sales charge.
TECHNOQUANT GROWTH - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997* $ 10,962 $ 0 $ 0 $ 10,962 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
TechnoQuant Growth on December 31, 1996, assuming the 3.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class B of TechnoQuant Growth would have grown to $ 10,810,
including the effect of Class B's maximum applicable CDSC.
TECHNOQUANT GROWTH - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997* $ 10,810 $ 0 $ 0 $ 10,810 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
TechnoQuant Growth on December 31, 1996, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class C of TechnoQuant Growth would have grown to $ 11,212,
including the effect of Class C's maximum applicable CDSC .
TECHNOQUANT GROWTH - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 * $ 11,212 $ 0 $ 0 $ 11,212 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
TechnoQuant Growth on December 31, 1996, the net amount invested in
Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 10,000 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 0 for capital gain distributions. Initial offering of
Class C of TechnoQuant Growth took place on November 3, 1997. Class C
returns prior to November 3, 1997 are those of Class B which reflect a
12b-1 fee of 1.00%
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Institutional Class of TechnoQuant Growth would have grown to
$ 11,400 .
TECHNOQUANT GROWTH - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997* $ 11,400 $ 0 $ 0 $ 11,400 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of TechnoQuant Growth on December 31, 1996, the
net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 10,000 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 0 for dividends and $ 0 for capital gain distributions.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1997, a hypothetical $10,000 investment in
Class A of Overseas would have grown to $ 17,718 , including the
effect of Class A's 5.75% maximum sales charge.
OVERSEAS - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
October 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 15,919 $ 959 $ 840 $ 17,718 $ 34,008 $ 34,273 $ 12,537
1996 14,411 616 123 15,150 25,742 27,259 12,281
1995 13,120 472 103 13,695 20,774 21,042 11,924
1994 13,252 478 0 13,730 16,406 16,865 11,598
1993 12,187 419 0 12,606 15,795 15,458 11,303
1992 8,548 199 0 8,747 13,741 13,162 11,001
1991 9,218 76 0 9,294 12,495 12,158 10,659
1990* 9,001 0 0 9,001 9,359 9,347 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Overseas on April 23, 1990, assuming the 5.75% maximum sales charge
had been in effect, the net amount invested in Class A shares was
$ 9,425 . The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 11,392 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 641 for dividends and $ 697 for
capital gain distributions. Initial offering of Class A of Overseas
took place on September 3, 1996. Class A returns prior to September 3,
1996 are those of Class T, which reflect a 12b-1 fee of 0.50% (0.65%
prior to January 1, 1996). If Class A's 12b-1 fee had been reflected,
total returns prior to September 3, 1996 would have been higher. Prior
to December 1, 1992, Overseas operated under a different investment
objective. Accordingly, the fund's historical performance may not
represent its current investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1997, a hypothetical $10,000 investment in
Class T of Overseas would have grown to $ 18,171 , including the
effect of Class T's 3.50% maximum sales charge.
OVERSEAS - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
October 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 16,424 $ 885 $ 862 $ 18,171 $ 34,008 $ 34,273 $ 12,537
1996 14,765 631 126 15,522 25,742 27,259 12,281
1995 13,433 484 105 14,022 20,744 21,042 11,924
1994 13,568 489 0 14,057 16,406 16,865 11,598
1993 12,477 430 0 12,907 15,795 15,458 11,303
1992 8,753 202 0 8,955 13,741 13,162 11,001
1991 9,438 77 0 9,515 12,495 12,158 10,659
1990* 9,216 0 0 9,216 9,359 9,347 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Overseas on April 23, 1990, assuming the 3.50% maximum sales charge
had been in effect, the net amount invested in Class T shares was
$ 9,650 . The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 11,334 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 569 for dividends and $ 714 for
capital gain distributions. Prior to December 1, 1992, Overseas
operated under a different investment objective. Accordingly, the
fund's historical performance may not represent its current investment
policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1997, a hypothetical $10,000 investment in
Class B of Overseas would have grown to $ 18,562 .
OVERSEAS - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
October 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 16,690 $ 981 $ 891 $ 18,562 $ 34,008 $ 34,273 $ 12,537
1996 15,060 756 129 15,945 25,742 27,259 12,281
1995 13,920 502 109 14,531 20,744 21,042 11,924
1994 14,060 507 0 14,567 16,406 16,865 11,598
1993 12,930 445 0 13,375 15,795 15,458 11,303
1992 9,070 210 0 9,280 13,741 13,162 11,001
1991 9,780 80 0 9,860 12,495 12,158 10,659
1990* 9,550 0 0 9,550 9,359 9,347 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Overseas on April 23, 1990, the net amount invested in Class B shares
was $10,000. The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 11,451 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 650 for dividends and $ 740 for
capital gain distributions. Initial offering of Class B of Overseas
took place on July 3, 1995. Class B returns prior to July 3, 1995 are
those of Class T which reflect a 12b-1 fee of 0.65%. If Class B's
12b-1 fee had been reflected, total returns prior to July 3, 1995
would have been lower. Prior to December 1, 1992, Overseas operated
under a different investment objective. Accordingly, the fund's
historical performance may not represent its current investment
policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1997 a hypothetical $10,000 investment in
Class C of Overseas would have grown to $ 18,562 .
OVERSEAS - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
October 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 16,690 $ 981 $ 891 $ 18,562 $ 34,008 $ 34,273 $ 12,537
1996 15,060 756 129 15,945 25,742 27,259 12,281
1995 13,920 502 109 14,531 20,744 21,042 11,924
1994 14,060 507 0 14,567 16,406 16,865 11,598
1993 12,930 445 0 13,375 15,795 15,458 11,303
1992 9,070 210 0 9,280 13,741 13,162 11,001
1991 9,780 80 0 9,860 12,495 12,158 10,659
1990* 9,550 0 0 9,550 9,359 9,347 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Overseas on April 23, 1990, the net amount invested in Class C shares
was $10,000. The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 11,451 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 650 for dividends and $ 740 for
capital gain distributions. Initial offering of Class C of Overseas
took place on November 3, 1997. Class C returns prior to November
3, 1997 through July 3, 1995 are those of Class B which reflect a
12b-1 fee of 1.00%. Class C returns prior to July 3, 1995 are those of
Class T which reflect a 12b-1 fee of 0.65%. If Class C's 12b-1 fee had
been reflected, total returns prior to July 3, 1995 would have been
lower. Prior to December 1, 1992, Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1997, a hypothetical $10,000 investment in
Institutional Class of Overseas would have grown to $ 18,973 .
OVERSEAS - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
October 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 16,920 $ 1,151 $ 902 $ 18,973 $ 34,008 $ 34,273 $ 12,537
1996 15,200 785 130 16,115 25,742 27,259 12,281
1995 13,970 504 109 14,583 20,744 21,042 11,924
1994 14,060 507 0 14,567 16,406 16,865 11,598
1993 12,930 445 0 13,375 15,795 15,458 11,303
1992 9,070 210 0 9,280 13,741 13,162 11,001
1991 9,780 80 0 9,860 12,495 12,158 10,659
1990* 9,550 0 0 9,550 9,359 9,347 10,357
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Overseas on April 23, 1990, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 11,589 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 780 for dividends and $ 740 for capital gain
distributions. Initial offering of Institutional Class of Overseas
took place on July 3, 1995. Institutional Class returns prior to July
3, 1995 are those of Class T which reflect a 12b-1 fee of 0.65%. Total
returns for Institutional Class prior to July 3, 1995 would have been
higher if Class T's 12b-1 fee had not been reflected. Prior to
December 1, 1992, Overseas operated under a different investment
objective. Accordingly, the fund's historical performance may not
represent its current investment policies.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class A of Mid Cap would have grown to $ 13,480 , including
the effect of Class A's maximum 5.75% sales charge.
MID CAP - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,233 $ 12 $ 235 $ 13,480 $ 15,453 $ 14,837 $ 10,426
1996* 11,027 0 0 11,027 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Mid Cap on February 20, 1996, assuming the 5.75% maximum sales charge
had been in effect, the net amount invested in Class A shares was
$ 9,425 . The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 10,198 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 9 for dividends and $ 189 for
capital gain distributions. Initial offering of Class A for Mid Cap
took place on September 3, 1996. Class A returns prior to September 3,
1996 are those of Class T which reflect a 12b-1 fee of 0.50%. If Class
A's 12b-1 fee had been reflected, total returns prior to September 3,
1996 would have been higher.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class T of Mid Cap would have grown to $ 13,814 , including
the effect of Class T's maximum 3.50% sales charge.
MID CAP - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,597 $ 0 $ 217 $ 13,814 $ 15,453 $ 14,837 $ 10,426
1996* 11,291 0 0 11,291 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Mid Cap on February 20, 1996, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $10,174 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 174 for capital gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class B of Mid Cap would have grown to $ 13,726 , including
the effect of Class B's maximum applicable CDSC.
MID CAP - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,540 $ 0 $ 186 $ 13,726 $ 15,453 $ 14,837 $ 10,426
1996* 11,610 0 0 11,610 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Mid Cap on February 20, 1996, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,150 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 150 for capital gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class C of Mid Cap would have grown to $ 14,127 .
MID CAP - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,941 $ 0 $ 186 $ 14,127 $ 15,453 $ 14,837 $ 10,426
1996* 11,610 0 0 11,610 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Mid Cap on February 20, 1996, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,150 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 150 for capital gain distributions. Initial offering of
Class C of Mid Cap took place on November 3, 1997. Class C returns
prior to November 3, 1997 are those of C lass B which reflect a
12b-1 fee of 1.00%.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Institutional Class of Mid Cap would have grown to $ 14,396 .
MID CAP - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 14,120 $ 25 $ 251 $ 14,396 $ 15,453 $ 14,837 $ 10,426
1996* 11,700 0 0 11,700 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Mid Cap on February 20, 1996, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 10,220 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 20 for dividends and $ 200 for capital gain
distributions.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class A of Equity Growth would have grown to
$ 81,682 , including the effect of Class A's maximum 5.75% sales
charge.
EQUITY GROWTH - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost of
November 30 Initial Reinvested Reinvested Value 500 Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ 49,111 $ 2,758 $ 29,813 $ 81,682 $ 55,623 $ 57,303 $ 13,995
1996 42,565 1,808 23,849 68,222 43,282 46,910 13,744
1995 37,843 1,515 17,986 57,344 33,851 35,730 13,310
1994 27,097 969 12,572 40,638 24,712 25,688 12,990
1993 28,028 1,002 10,974 40,004 24,457 24,627 12,634
1992 25,016 789 9,128 34,933 22,213 21,471 12,305
1991 23,068 689 5,123 28,880 18,745 18,258 11,941
1990 14,774 441 3,281 18,496 15,575 15,610 11,594
1989 16,456 393 1,153 18,002 16,137 15,875 10,910
1988 11,420 11 800 12,231 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Equity Growth on December 1, 1987 assuming the 5.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,425 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 25,042 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 912 for
dividends and $ 10,328 for capital gain distributions. Initial
offering of Class A of Equity Growth took place on September 3, 1996.
Class A returns prior to September 3, 1996 through September 10, 1992
are those of Class T which reflect a 12b-1 fee of 0.50% (0.65% prior
to January 1, 1996). Class A returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class A's
12b-1 fee had been reflected, total returns prior to September 3, 1996
through September 10, 1992 would have been higher and total returns
prior to September 10, 1992 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class T of Equity Growth would have grown to
$ 83,707 , including the effect of the Class T's maximum 3.50%
sales charge.
EQUITY GROWTH - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 50,555 $ 2,474 $ 30,678 $ 83,707 $ 55,623 $ 57,303 $ 13,995
1996 43,590 1,853 24,424 69,867 43,282 46,910 13,744
1995 38,746 1,552 18,415 58,713 33,851 35,730 13,310
1994 27,744 991 12,873 41,608 24,712 25,688 12,990
1993 28,697 1,027 11,236 40,960 24,457 24,627 12,634
1992 25,613 808 9,346 35,767 22,213 21,471 12,305
1991 23,619 705 5,245 29,569 18,745 18,258 11,941
1990 15,127 452 3,359 18,938 15,575 15,610 11,594
1989 16,849 402 1,180 18,431 16,137 15,875 10,910
1988 11,693 11 819 12,523 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Equity Growth on December 1, 1987, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 25,104 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 749 for
dividends and $ 10,574 for capital gain distributions. Initial
offering of Class T of Equity Growth took place on September 10, 1992.
Class T returns prior to September 10, 1992 are those of Institutional
Class which has no 12b-1 fee. If Class T's 12b-1 fee had been
reflected, total returns prior to September 10, 1992 would have been
lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class B of Equity Growth would have grown to
$ 86,219 .
EQUITY GROWTH - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 52,073 $ 2,547 $ 31,599 $ 86,219 $ 55,623 $ 57,303 $ 13,995
1996 45,171 1,920 25,310 72,401 43,282 46,910 13,744
1995 40,151 1,609 19,083 60,843 33,851 35,730 13,310
1994 28,750 1,029 13,339 43,118 24,712 25,688 12,990
1993 29,738 1,063 11,644 42,445 24,457 24,627 12,634
1992 26,542 837 9,685 37,064 22,213 21,471 12,305
1991 24,476 731 5,435 30,642 18,745 18,258 11,941
1990 15,675 468 3,481 19,624 15,575 15,610 11,594
1989 17,460 417 1,223 19,100 16,137 15,875 10,910
1988 12,117 11 849 12,977 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Equity Growth on December 1, 1987, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 25,653 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 776 for
dividends and $ 10,958 for capital gain distributions. Initial
offering of Class B of Equity Growth took place on December 31, 1996.
Class B returns prior to December 31, 1996 through September 10, 1992
are those of Class T which reflect a 12b-1 of fee of 0.50% (0.65%
prior to January 1, 1996). Class B returns prior to September 10, 1992
are those of Institutional Class which has no 12b-1 fee. If Class B's
12b-1 fee had been reflected, total returns prior to December 31, 1996
would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class C of Equity Growth would have grown to
$ 86,217 .
EQUITY GROWTH - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 52,071 $ 2,547 $ 31,599 $ 86,217 $ 55,623 $ 57,303 $ 13,995
1996 45,171 1,920 25,310 72,401 43,282 46,910 13,744
1995 40,151 1,609 19,083 60,843 33,851 35,730 13,310
1994 28,750 1,029 13,339 43,118 24,712 25,688 12,990
1993 29,738 1,063 11,644 42,445 24,457 24,627 12,634
1992 26,542 837 9,685 37,064 22,213 21,471 12,305
1991 24,476 731 5,435 30,642 18,745 18,258 11,941
1990 15,675 468 3,481 19,624 15,575 15,610 11,594
1989 17,460 417 1,223 19,100 16,137 15,875 10,910
1988 12,117 11 849 12,977 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Equity Growth on December 1, 1987, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 25,653 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 776 for
dividends and $ 10,958 for capital gain distributions. Initial
offering of Class C of Equity Growth took place on November 3, 1997.
Class C returns prior to November 3, 1997 through December 31, 1996
are those of Class B which reflect a 12b-1 fee of 1.00%. Class C
returns prior to December 31, 1996 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.50% (0.65% prior to
January 1, 1996). Class C returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class C's
12b-1 fee had been reflected, total returns prior to December 31, 1996
would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Institutional Class of Equity Growth would have
grown to $ 89,906 .
EQUITY GROWTH - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 53,286 $ 4,291 $ 32,329 $ 89,906 $ 55,623 $ 57,303 $ 13,995
1996 45,887 3,052 25,699 74,638 43,282 46,910 13,744
1995 40,716 2,311 19,337 62,364 33,851 35,730 13,310
1994 29,133 1,232 13,508 43,873 24,712 25,688 12,990
1993 29,980 1,103 11,738 42,821 24,457 24,627 12,634
1992 26,583 837 9,700 37,120 22,213 21,471 12,305
1991 24,476 731 5,435 30,642 18,745 18,258 11,941
1990 15,675 468 3,481 19,624 15,575 15,610 11,594
1989 17,460 417 1,223 19,100 16,137 15,875 10,910
1988 12,117 11 849 12,977 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Equity Growth on December 1, 1987, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 26,808 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 1,482 for dividends and $ 10,958 for capital gain
distributions.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class A of Growth Opportunities would have grown
to $ 70,928 , including the effect of Class A's maximum 5.75%
sales charge.
GROWTH OPPORTUNITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 44,043 $ 4,500 $ 22,385 $ 70,928 $ 55,623 $ 57,303 $ 13,995
1996 38,190 2,730 17,068 57,988 43,282 46,910 13,744
1995 31,657 1,648 13,547 46,852 33,851 35,730 13,310
1994 25,784 940 9,312 36,036 24,712 25,688 12,990
1993 25,283 826 7,970 34,079 24,457 24,627 12,634
1992 22,172 550 5,296 28,018 22,213 21,471 12,305
1991 19,370 367 2,695 22,432 18,745 18,258 11,941
1990 14,378 83 2,000 16,461 15,575 15,610 11,594
1989 16,649 37 947 17,633 16,137 15,875 10,910
1988 13,817 0 0 13,817 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Growth Opportunities on December 1, 1987, assuming the 5.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,425 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 23,620 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 1,941 for
dividends and $ 8,565 for capital gain distributions. Initial
offering of Class A of Growth Opportunities took place on September 3,
1996. Class A returns prior to September 3, 1996 are those of Class T
which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
If Class A's 12b-1 fee had been reflected, total returns prior to
September 3, 1996 would have been higher.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class T of Growth Opportunities would have grown
to $ 72,550 , including the effect of Class T's maximum 3.50%
sales charge.
GROWTH OPPORTUNITIES - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 45,279 $ 4,273 $ 22,998 $ 72,550 $ 55,623 $ 57,303 $ 13,995
1996 39,122 2,797 17,484 59,403 43,282 46,910 13,744
1995 32,413 1,686 13,871 47,970 33,851 35,730 13,310
1994 26,399 964 9,534 36,897 24,712 25,688 12,990
1993 25,887 846 8,160 34,893 24,457 24,627 12,634
1992 22,701 563 5,423 28,687 22,213 21,471 12,305
1991 19,833 375 2,759 22,967 18,745 18,258 11,941
1990 14,721 85 2,048 16,854 15,575 15,610 11,594
1989 17,046 38 970 18,054 16,137 15,875 10,910
1988 14,147 0 0 14,147 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Growth Opportunities on December 1, 1987, assuming the 3.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 23,665 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 1,803 for
dividends and $ 8,769 for capital gain distributions.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class B of Growth Opportunities would have grown
to $ 74,875 .
GROWTH OPPORTUNITIES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 46,730 $ 4,410 $ 23,735 $ 74,875 $ 55,623 $ 57,303 $ 13,995
1996 40,541 2,899 18,118 61,558 43,282 46,910 13,744
1995 33,588 1,748 14,374 49,710 33,851 35,730 13,310
1994 27,357 998 9,880 38,235 24,712 25,688 12,990
1993 26,826 876 8,456 36,158 24,457 24,627 12,634
1992 23,524 584 5,619 29,727 22,213 21,471 12,305
1991 20,552 389 2,859 23,800 18,745 18,258 11,941
1990 15,255 88 2,122 17,465 15,575 15,610 11,594
1989 17,665 39 1,005 18,709 16,137 15,875 10,910
1988 14,660 0 0 14,660 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Growth Opportunities on December 1, 1987, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 24,161 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 1,868 for
dividends and $ 9,087 for capital gain distributions. Initial
offering of Class B of Growth Opportunities took place on March 3,
1997. Class B returns prior to March 3, 1997 are those of Class T
which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
If Class B's 12b-1 fee had been reflected, total returns prior to
March 3, 1997 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class C of Growth Opportunities would have grown
to $ 74,906 .
GROWTH OPPORTUNITIES - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 46,749 $ 4,412 $ 23,745 $ 74,906 $ 55,623 $ 57,303 $ 13,995
1996 40,541 2,898 18,118 61,558 43,282 46,910 13,744
1995 33,588 1,748 14,374 49,710 33,851 35,730 13,310
1994 27,357 998 9,880 38,235 24,712 25,688 12,990
1993 26,826 876 8,456 36,158 24,457 24,627 12,634
1992 23,524 583 5,619 29,727 22,213 21,471 12,305
1991 20,552 389 2,859 23,800 18,745 18,258 11,941
1990 15,255 88 2,122 17,465 15,575 15,610 11,594
1989 17,665 40 1,005 18,709 16,137 15,875 10,910
1988 14,660 0 0 14,660 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Growth Opportunities on December 1, 1987, the net amount invested in
Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 24,161 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 1,868 for
dividends and $ 9,087 for capital gain distributions. Initial
offering of Class C of Growth Opportunities took place on November 3,
1997. Class C returns prior to November 3, 1997 through March 3, 1997
are those of Class B which reflect a 12b-1 fee of 1.00%. Class C
returns prior to March 3, 1997 are those of Class T which reflect a
12b-1 fee of 0.50 (0.65% prior to January 1, 1996). If Class C's 12b-1
fee had been reflected, total returns prior to March 3, 1997 would
have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Institutional Class of Growth Opportunities
would have grown to $ 76,197 .
GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
November
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 47,038 $ 5,240 $ 23,919 $ 76,197 $ 55,623 $ 57,303 $ 13,995
1996 40,626 3,293 18,158 62,077 43,282 46,910 13,744
1995 33,705 1,754 14,424 49,883 33,851 35,730 13,310
1994 27,357 998 9,880 38,235 24,712 25,688 12,990
1993 26,826 876 8,456 36,158 24,457 24,627 12,634
1992 23,524 584 5,619 29,727 22,213 21,471 12,305
1991 20,552 389 2,859 23,800 18,745 18,258 11,941
1990 15,255 88 2,122 17,465 15,575 15,610 11,594
1989 17,665 39 1,005 18,709 16,137 15,875 10,910
1988 14,660 0 0 14,660 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Growth Opportunities on December 1, 1987, the
net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 24,771 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 2,261 for dividends and $ 9,087 for capital gain
distributions. Initial offering of Institutional Class of Growth
Opportunities took place on July 3, 1995. Institutional Class returns
prior to July 3, 1995 are those of Class T which reflect a 12b-1 fee
of 0.65%. Total returns for Institutional Class prior to July 3, 1995
would have been higher if Class T's 12b-1 fee had not been reflected.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class A of Strategic Opportunities would have
grown to $ 40,111 , including the effect of Class A's maximum
5.75% sales charge.
STRATEGIC OPPORTUNITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 17,460 $ 6,503 $ 16,148 $ 40,111 $ 55,623 $ 57,303 $ 13,995
1996 15,778 5,353 10,485 31,616 43,282 46,910 13,744
1995 15,924 4,920 9,374 30,218 33,851 35,730 13,310
1994 12,148 3,336 6,841 22,325 24,712 25,688 12,990
1993 14,122 3,391 6,016 23,529 24,457 24,627 12,634
1992 13,030 2,522 4,264 19,816 22,213 21,471 12,305
1991 12,973 1,914 1,915 16,802 18,745 18,258 11,941
1990 11,399 1,080 1,683 14,162 15,575 15,610 11,594
1989 12,535 762 1,850 15,147 16,137 15,875 10,910
1988 10,091 187 1,490 11,768 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Strategic Opportunities on December 1, 1987, assuming the 5.75%
maximum sales charge had been in effect, the net amount invested in
Class A shares was $ 9,425 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 25,788 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 3,066 for
dividends and $ 7,159 for capital gain distributions. Initial
offering of Class A of Strategic Opportunities took place on September
3, 1996. Class A returns prior to September 3, 1996 are those of Class
T which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
If Class A's 12b-1 fee had been reflected, total returns prior to
September 3, 1996 would have been higher.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class T of Strategic Opportunities would have
grown to $ 41,127 , including the effect of Class T's maximum
3.50% sales charge.
STRATEGIC OPPORTUNITIES - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 18,052 $ 6,429 $ 16,646 $ 41,127 $ 55,623 $ 57,303 $ 13,995
1996 16,161 5,482 10,740 32,383 43,282 46,910 13,744
1995 16,304 5,037 9,598 30,939 33,851 35,730 13,310
1994 12,438 3,415 7,005 22,858 24,712 25,688 12,990
1993 14,459 3,472 6,159 24,090 24,457 24,627 12,634
1992 13,341 2,582 4,366 20,289 22,213 21,471 12,305
1991 13,283 1,959 1,961 17,203 18,745 18,258 11,941
1990 11,671 1,106 1,723 14,500 15,575 15,610 11,594
1989 12,834 781 1,894 15,509 16,137 15,875 10,910
1988 10,332 192 1,525 12,049 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Strategic Opportunities on December 1, 1987, assuming the 3.50%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $ 9,650 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 25,920 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 3,022 for
dividends and $ 7,330 for capital gain distributions.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class B of Strategic Opportunities would have
grown to $ 41,929 .
STRATEGIC OPPORTUNITIES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 18,337 $ 6,556 $ 17,036 $ 41,929 $ 55,623 $ 57,303 $ 13,995
1996 16,451 5,777 10,961 33,189 43,282 46,910 13,744
1995 16,687 5,357 9,827 31,871 33,851 35,730 13,310
1994 12,875 3,537 7,251 23,663 24,712 25,688 12,990
1993 14,983 3,598 6,383 24,964 24,457 24,627 12,634
1992 13,825 2,676 4,524 21,025 22,213 21,471 12,305
1991 13,764 2,031 2,032 17,827 18,745 18,258 11,941
1990 12,094 1,147 1,785 15,026 15,575 15,610 11,594
1989 13,300 809 1,963 16,072 16,137 15,875 10,910
1988 10,707 199 1,580 12,486 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Strategic Opportunities on December 1, 1987, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 26,505 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 3,125 for
dividends and $ 7,596 for capital gain distributions. Initial
offering of Class B of Strategic Opportunities took place on June 30,
1994. Class B returns prior to June 30, 1994 are those of Class T
which reflect a 12b-1 fee of 0.65%. If Class B's 12b-1 fee had been
reflected, total returns prior to June 30, 1994 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Institutional Class of Strategic Opportunities
would have grown to $ 44,658 .
STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 18,676 $ 8,362 $ 17,620 $ 44,658 $ 55,623 $ 57,303 $ 13,995
1996 16,824 6,998 11,322 35,144 43,282 46,910 13,744
1995 17,006 6,321 10,100 33,427 33,851 35,730 13,310
1994 12,999 4,180 7,382 24,561 24,712 25,688 12,990
1993 15,040 4,211 6,441 25,692 24,457 24,627 12,634
1992 13,876 3,079 4,551 21,506 22,213 21,471 12,305
1991 13,809 2,319 2,024 18,152 18,745 18,258 11,941
1990 12,142 1,310 1,780 15,232 15,575 15,610 11,594
1989 13,880 858 1,961 16,199 16,137 15,875 10,910
1988 10,723 205 1,572 12,500 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Strategic Opportunities on December 1, 1987,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 28,050 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 3,841 for dividends and $ 7,575 for capital gain
distributions. Initial offering of Institutional Class of Strategic
Opportunities took place on July 3, 1995. Institutional Class returns
prior to July 3, 1995 are those of Initial Class which has no 12b-1
fee.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Initial Class of Strategic Opportunities would
have grown to $ 43,305 , including the effect of Initial Class's
maximum 3.50% sales charge.
STRATEGIC OPPORTUNITIES - INITIAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 18,208 $ 8,027 $ 17,070 $ 43,305 $ 55,623 $ 57,303 $ 13,995
1996 16,284 6,700 10,941 33,925 43,282 46,910 13,744
1995 16,413 6,100 9,747 32,260 33,851 35,730 13,310
1994 12,544 4,034 7,123 23,701 24,712 25,688 12,990
1993 14,514 4,064 6,215 24,793 24,457 24,627 12,634
1992 13,390 2,972 4,391 20,753 22,213 21,471 12,305
1991 13,325 2,239 1,953 17,517 18,745 18,258 11,941
1990 11,717 1,263 1,718 14,698 15,575 15,610 11,594
1989 12,912 827 1,893 15,632 16,137 15,875 10,910
1988 10,348 198 1,517 12,063 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Strategic Opportunities on December 1, 1987, assuming the
3.50% maximum sales charge had been in effect, the net amount invested
in Initial Class shares was $ 9,650 .The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$ 27,251 . If distributions had not been reinvested, the amount
of distributions earned from the class over time would have been
smaller, and cash payments for the period would have amounted to
$ 3,656 for dividends and $ 7,286 for capital gain
distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class A of Large Cap would have grown to $ 13,249 , including
the effect of Class A's maximum 5.75% sales charge.
LARGE CAP - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,157 $ 0 $ 92 $ 13,249 $ 15,453 $ 14,837 $ 10,426
1996* 11,150 0 0 11,150 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Large Cap on February 20, 1996, assuming the 5.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,425 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,076 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 75 for capital gain distributions. Initial offering of
Class A of Large Cap took place on September 3, 1996. Class A returns
prior to September 3, 1996 are those of Class T which reflect a 12b-1
fee of 0.50% (0.65% prior to January 1, 1996). If Class A's 12b-1 fee
had been reflected, total returns prior to September 3, 1996 would
have been higher.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class T of Large Cap would have grown to $ 13,561 , including
the effect of Class T's maximum 3.50% sales charge.
LARGE CAP - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Reinvested Total S&P DJIA Cost
November 30 Initial Reinvested Capital Gain Value 500 of
$10,000 Dividend Distributions Living**
Investment Distributions
1997 $ 13,491 $ 0 $ 70 $ 13,561 $ 15,453 $ 14,837 $ 10,426
1996* 11,406 0 0 11,406 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Large Cap on February 20, 1996, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,058 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 58 for capital gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class B of Large Cap would have grown to $ 13,510, including the
effect of Class B's maximum applicable CDSC.
LARGE CAP - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,450 $ 0 $ 60 $ 13,510 $ 15,453 $ 14,837 $ 10,426
1996* 11,770 0 0 11,770 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Large Cap on February 20, 1996, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,050 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 0 for dividends
and $ 50 for capital gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class C of Large Cap would have grown to $ 13,910 .
LARGE CAP - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,850 $ 0 $ 60 $ 13,910 $ 15,453 $ 14,837 $ 10,426
1996* 11,770 0 0 11,770 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Large Cap on February 20, 1996, assuming the maximum applicable CDSC
had been in effect, the net amount invested in Class C shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 10,050 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 0 for dividends and $ 50 for
capital gain distributions. Initial offering of Class C of Large Cap
took place on November 3, 1997. Class C returns prior to November 3,
1997 are those of Class B which reflect a 12b-1 fee of 1.00%.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Institutional Class of Large Cap would have grown to
$ 14,160 .
LARGE CAP - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 14,050 $ 0 $ 110 $ 14,160 $ 15,453 $ 14,837 $ 10,426
1996* 11,860 0 0 11,860 12,025 12,146 10,239
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Large Cap on February 20, 1996, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 10,090 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 0 for dividends and $ 90 for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class A of Growth & Income would have grown to $ 11,785 ,
including the effect of Class A's maximum 5.75% sales charge.
GROWTH & INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997* $ 11,753 $ 32 $ 0 $ 11,785 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Growth & Income on December 31, 1996, assuming the 5.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,425 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,028 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 28 for
dividends and $ 0 for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class T of Growth & Income would have grown to $ 12,046 ,
including the effect of Class T's maximum 3.50% sales charge.
GROWTH & INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997* $ 12,024 $ 22 $ 0 $ 12,046 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Growth & Income on December 31, 1996, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,019 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 19 for
dividends and $ 0 for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class B of Growth & Income would have grown to $ 11,922,
including the effect of Class B's maximum applicable CDSC.
GROWTH & INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997* $ 11,910 $ 12 $ 0 $ 11,922 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Growth & Income on December 31, 1996, the net amount invested in Class
B shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,010 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 10 for
dividends and $ 0 for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Class C of Growth & Income would have grown to $ 12,321,
including the effect of Class C's maximum applicable CDSC.
GROWTH & INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain
Living**
Investment Distributions Distributions
1997* $ 12,309 $ 12 $ 0 $ 12,321 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Growth & Income on December 31, 1996, the net amount invested in Class
C shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 10,010 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 12 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class C of Growth & Income took place on November 3, 1997.
Class C returns prior to November 3, 1997 are those of Class B which
reflect a 12b-1 fee of 1.00%.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1997, a hypothetical $10,000 investment
in Institutional Class of Growth & Income would have grown to
$ 12,526 .
GROWTH & INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997* $ 12,470 $ 56 $ 0 $ 12,526 $ 13,111 $ 12,334 $ 10,183
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Growth & Income on December 31, 1996,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 10,050 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 50 for dividends and $ 0 for capital gain distributions.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class A of Equity Income would have grown to
$ 42,868 , including the effect of Class A's maximum 5.75% sales
charge.
EQUITY INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 23,015 $ 12,474 $ 7,379 $ 42,868 $ 55,623 $ 57,303 $ 13,995
1996 19,643 10,129 5,351 35,123 43,282 46,910 13,744
1995 17,203 8,368 3,995 29,566 33,851 35,730 13,310
1994 13,762 6,288 2,787 22,837 24,712 25,688 12,990
1993 12,814 5,574 2,595 20,983 24,457 24,627 12,634
1992 11,089 4,443 2,246 17,778 22,213 21,471 12,305
1991 9,554 3,237 1,935 14,726 18,745 18,258 11,941
1990 8,209 2,104 1,663 11,976 15,575 15,610 11,594
1989 10,580 1,710 1,783 14,073 16,137 15,875 10,910
1988 9,572 784 1,613 11,969 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Equity Income on December 1, 1987, assuming the 5.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,425 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 19,843 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 4,113 for
dividends and $ 2,828 for capital gain distributions. Initial
offering of Class A of Equity Income took place on September 3, 1996.
Class A returns from September 3, 1996 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.50% (0.65% for prior
to January 1, 1996). Class A returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class A's
12b-1 fee had been reflected, total returns prior to September 3, 1996
through September 10, 1992 would have been higher and total returns
prior to September 10, 1992 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class T of Equity Income would have grown to
$ 43,949 , including the effect of Class T's maximum 3.50% sales
charge.
EQUITY INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 23,706 $ 12,649 $ 7,594 $ 43,949 $ 55,623 $ 57,303 $ 13,995
1996 20,156 10,342 5,491 35,989 43,282 46,910 13,744
1995 17,614 8,567 4,090 30,271 33,851 35,730 13,310
1994 14,091 6,437 2,854 23,382 24,712 25,688 12,990
1993 13,120 5,707 2,657 21,484 24,457 24,627 12,634
1992 11,354 4,548 2,300 18,202 22,213 21,471 12,305
1991 9,782 3,315 1,981 15,078 18,745 18,258 11,941
1990 8,405 2,154 1,702 12,261 15,575 15,610 11,594
1989 10,833 1,750 1,826 14,409 16,137 15,875 10,910
1988 9,800 802 1,652 12,254 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Equity Income on December 1, 1987, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 19,915 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 4,123 for
dividends and $ 2,896 for capital gain distributions. Initial
offering of Class T of Equity Income took place on September 10, 1992.
Class T returns prior to September 10, 1992 are those of Institutional
Class which has no 12b-1 fee. If Class T's 12b-1 fee had been
reflected, total returns prior to September 10, 1992 would have been
lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class B of Equity Income would have grown to
$ 44,855 .
EQUITY INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 24,456 $ 12,566 $ 7,833 $ 44,855 $ 55,623 $ 57,303 $ 13,995
1996 20,796 10,449 5,666 36,911 43,282 46,910 13,744
1995 18,207 8,787 4,229 31,223 33,851 35,730 13,310
1994 14,584 6,677 2,954 24,215 24,712 25,688 12,990
1993 13,596 5,913 2,754 22,263 24,457 24,627 12,634
1992 11,766 4,713 2,383 18,862 22,213 21,471 12,305
1991 10,137 3,435 2,053 15,625 18,745 18,258 11,941
1990 8,710 2,232 1,764 12,706 15,575 15,610 11,594
1989 11,226 1,814 1,892 14,932 16,137 15,875 10,910
1988 10,156 831 1,712 12,699 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Equity Income on December 1, 1987, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 19,872 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 4,053 for
dividends and $ 3,001 for capital gain distributions. Initial
offering of Class B of Equity Income took place on June 30, 1994.
Class B returns prior to June 30, 1994 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.65%. Class B returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class B's 12b-1 fee had been reflected, total returns
prior to June 30, 1994 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class C of Equity Income would have grown to
$ 44,871 .
EQUITY INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 24,464 $ 12,572 $ 7,835 $ 44,871 $ 55,623 $ 57,303 $ 13,995
1996 20,796 10,449 5,666 36,911 43,282 46,910 13,744
1995 18,207 8,787 4,229 31,223 33,851 35,730 13,310
1994 14,584 6,677 2,954 24,215 24,712 25,688 12,990
1993 13,596 5,913 2,754 22,263 24,457 24,627 12,634
1992 11,766 4,713 2,383 18,862 22,213 21,471 12,305
1991 10,137 3,435 2,053 15,625 18,745 18,258 11,941
1990 8,710 2,232 1,764 12,706 15,575 15,610 11,594
1989 11,226 1,814 1,892 14,932 16,137 15,875 10,910
1988 10,156 831 1,712 12,699 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Equity Income on December 1, 1987, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 19,872 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 4,053 for
dividends and $ 3,001 for capital gain distributions. Initial
offering of Class C of Equity Income took place on November 3, 1997.
Class C returns prior to November 3, 1997 through June 30, 1994 are
those of Class B which reflect a 12b-1 fee of 1.00%. Class C returns
prior to June 30, 1994 through September 10, 1992 are those of Class T
which reflect a 12b-1 fee of 0.65%. Class C returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class C's 12b-1 fee had been reflected, total returns prior to June
30, 1994 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Institutional Class of Equity Income would have
grown to $ 47,257 .
EQUITY INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 24,767 $ 14,519 $ 7,971 $ 47,257 $ 55,623 $ 57,303 $ 13,995
1996 21,043 11,671 5,747 38,461 43,282 46,910 13,744
1995 18,381 9,521 4,272 32,174 33,851 35,730 13,310
1994 14,703 6,987 2,978 24,668 24,712 25,688 12,990
1993 13,660 6,036 2,767 22,463 24,457 24,627 12,634
1992 11,784 4,721 2,387 18,892 22,213 21,471 12,305
1991 10,137 3,435 2,053 15,625 18,745 18,258 11,941
1990 8,710 2,232 1,764 12,706 15,575 15,610 11,594
1989 11,226 1,814 1,892 14,932 16,137 15,875 10,910
1988 10,156 831 1,712 12,699 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Equity Income on December 1, 1987, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 21,228 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 4,776 for dividends and $ 3,001 for capital gain
distributions.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class A of Balanced would have grown to
$ 34,009 , including the effect of Class A's maximum 5.75% sales
charge.
BALANCED - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 18,720 $ 10,873 $ 4,416 $ 34,009 $ 48,782 $ 50,221 $ 14,016
1996 16,015 8,507 3,588 28,110 36,924 39,944 13,729
1995 15,276 7,084 3,373 25,733 29,755 30,834 13,330
1994 14,647 5,977 3,235 23,859 23,533 24,713 12,966
1993 15,885 5,901 2,732 24,518 22,657 22,651 12,637
1992 14,387 4,525 1,577 20,489 19,710 19,286 12,298
1991 14,108 3,791 683 18,582 17,923 17,816 11,917
1990 10,393 2,215 503 13,111 13,424 13,696 11,578
1989 12,750 1,370 0 14,120 14,511 14,271 10,893
1988 11,052 603 0 11,655 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Balanced on November 1, 1987, assuming the 5.75% maximum sales charge
had been in effect, the net amount invested in Class A shares was
$ 9,425 . The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 21,055 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 5,681 for dividends and $ 2,346
for capital gain distributions. Initial offering of Class A of
Balanced took place on September 3, 1996. Class A returns prior to
September 3, 1996 are those of Class T which reflect a 12b-1 fee of
0.50% (0.65% prior to January 1, 1996). If Class A's 12b-1 fee had
been reflected, total returns prior to September 3, 1996 would have
been higher.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class T of Balanced would have grown to
$ 34,948 , including the effect of Class T's maximum 3.50% sales
charge.
BALANCED - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 19,208 $ 11,209 $ 4,531 $ 34,948 $ 48,782 $ 50,221 $ 14,016
1996 16,427 8,689 3,681 28,797 36,924 39,944 13,729
1995 15,640 7,253 3,454 26,347 29,755 30,834 13,330
1994 14,996 6,121 3,312 24,429 23,533 24,713 12,966
1993 16,264 6,042 2,797 25,103 22,657 22,651 12,637
1992 14,731 4,633 1,615 20,979 19,710 19,286 12,298
1991 14,444 3,882 699 19,025 17,923 17,816 11,917
1990 10,642 2,267 515 13,424 13,424 13,696 11,578
1989 13,054 1,403 0 14,457 14,511 14,271 10,893
1988 11,316 617 0 11,933 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Balanced on November 1, 1987, assuming the 3.50% maximum sales charge
had been in effect, the net amount invested in Class T shares was
$ 9,650 . The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 21,374 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 5,487 for dividends and $ 2,402
for capital gain distributions.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class B of Balanced would have grown to
$ 35,970 .
BALANCED - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 19,844 $ 11,445 $ 4,681 $ 35,970 $ 48,782 $ 50,221 $ 14,016
1996 17,023 9,005 3,814 29,842 36,924 39,944 13,729
1995 16,208 7,515 3,579 27,302 29,755 30,834 13,330
1994 15,540 6,343 3,432 25,315 23,533 24,713 12,966
1993 16,854 6,260 2,899 26,013 22,657 22,651 12,637
1992 15,265 4,800 1,674 21,739 19,710 19,286 12,298
1991 14,968 4,023 724 19,715 17,923 17,816 11,917
1990 11,028 2,349 534 13,911 13,424 13,696 11,578
1989 13,528 1,453 0 14,981 14,511 14,271 10,893
1988 11,727 639 0 12,366 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Balanced on November 1, 1987, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 21,653 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 5,986 for
dividends and $ 2,489 for capital gain distributions. Initial
offering of Class B of Balanced took place on December 31, 1996. Class
B returns prior to December 31, 1996 are those of Class T which
reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996). If
Class B's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class C of Balanced would have grown to
$ 35,970 .
BALANCED - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 19,844 $ 11,445 $ 4,681 $ 35,970 $ 48,782 $ 50,221 $ 14,016
1996 17,023 9,005 3,814 29,842 36,924 39,944 13,729
1995 16,208 7,515 3,579 27,302 29,755 30,834 13,330
1994 15,540 6,343 3,432 25,315 23,533 24,713 12,966
1993 16,854 6,260 2,899 26,013 22,657 22,651 12,637
1992 15,265 4,800 1,674 21,739 19,710 19,286 12,298
1991 14,968 4,023 724 19,715 17,923 17,816 11,917
1990 11,028 2,349 534 13,911 13,424 13,696 11,578
1989 13,528 1,453 0 14,981 14,511 14,271 10,893
1988 11,727 639 0 12,366 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Balanced on November 1, 1987, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 21,653 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 5,986 for
dividends and $ 2,489 for capital gain distributions. Initial
offering of Class C of Balanced took place on November 3, 1997. Class
C returns prior to November 3, 1997 through December 31, 1996
are those of Class B which reflect a 12b-1 fee of 1.00%. Class C
returns prior to December 31, 1996 are those of Class T which reflect
a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996). If Class C's
12b-1 fee had been reflected, total returns prior to December 31, 1996
would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Institutional Class of Balanced would have grown
to $ 36,741 .
BALANCED - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 19,968 $ 12,062 $ 4,711 $ 36,741 $ 48,782 $ 50,221 $ 14,016
1996 17,066 9,234 3,824 30,124 36,924 39,944 13,729
1995 16,314 7,617 3,603 27,534 29,755 30,834 13,330
1994 15,540 6,343 3,432 25,315 23,533 24,713 12,966
1993 16,854 6,260 2,899 26,013 22,657 22,651 12,637
1992 15,265 4,800 1,674 21,739 19,710 19,286 12,298
1991 14,968 4,023 724 19,715 17,923 17,816 11,917
1990 11,028 2,349 534 13,911 13,424 13,696 11,578
1989 13,528 1,453 0 14,981 14,511 14,271 10,893
1988 11,727 639 0 12,366 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Balanced on November 1, 1987, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 22,152 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 6,261 for dividends and $ 2,489 for capital gain
distributions. Initial offering of Institutional Class of Balanced
took place on July 3, 1995. Institutional Class returns prior to July
3, 1995 are those of Class T which reflect a 12b-1 fee of 0.65%. Total
returns for Institutional Class prior to July 3, 1995 would have been
higher if Class T's 12b-1 fee had not been reflected.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Class A of Emerging Markets Income would have grown to $ 17,086 ,
including the effect of Class A's maximum 4.75% sales charge.
EMERGING MARKETS INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
December 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,592 $ 3,802 $ 2,692 $ 17,086 $ 22,864 $ 22,483 $ 10,995
1996 11,163 2,715 786 14,664 17,144 18,007 10,811
1995 8,839 1,374 229 10,442 13,943 13,991 10,464
1994* 9,068 457 235 9,760 10,134 10,233 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Emerging Markets Income on March 10, 1994, assuming the 4.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,525 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 16,227 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 2,864 for
dividends and $ 2,029 for capital gain distributions. Initial
offering of Class A for Emerging Markets Income took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T which reflect a 12b-1 fee of 0.25%. If Class A's
12b-1 fee had been reflected, total returns prior to September 3, 1996
would have been higher.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Class T of Emerging Markets Income would have grown to $ 17,302 ,
including the effect of Class T's maximum 3.50% sales charge.
EMERGING MARKETS INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
December 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,721 $ 3,853 $ 2,728 $ 17,302 $ 22,864 $ 22,483 $ 10,995
1996 11,300 2,757 797 14,854 17,144 18,007 10,811
1995 8,955 1,392 232 10,579 13,943 13,991 10,464
1994* 9,187 463 238 9,888 10,134 10,233 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Emerging Markets Income on March 10, 1994, assuming the 3.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 16,313 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 2,903 for
dividends and $ 2,055 for capital gain distributions.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Class B of Emerging Markets Income would have grown to $ 17,217 .
EMERGING MARKETS INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
December 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,860 $ 3,591 $ 2,766 $ 17,217 $ 22,864 $ 22,483 $ 10,995
1996 11,750 2,574 816 15,140 17,144 18,007 10,811
1995 9,300 1,304 240 10,844 13,943 13,991 10,464
1994* 9,520 428 246 10,194 10,134 10,233 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Emerging Markets Income on March 10, 1994, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 16,092 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 2,733 for
dividends and $ 2,130 for capital gain distributions. Initial
offering of Class B of Emerging Markets Income took place on June 30,
1994. Class B returns prior to June 30, 1994 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had been
reflected, total returns prior to June 30, 1994 would have been lower.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Class C of Emerging Markets Income would have grown to $ 17,503 .
EMERGING MARKETS INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
December 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,147 $ 3,585 $ 2,771 $ 17,503 $ 22,864 $ 22,483 $ 10,995
1996 11,750 2,574 816 15,140 17,144 18,007 10,811
1995 9,300 1,304 240 10,844 13,943 13,991 10,464
1994* 9,520 428 246 10,194 10,134 10,233 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Emerging Markets Income on March 10, 1994, the net amount invested in
Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 16,098 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 2,732 for
dividends and $2,134 for capital gain distributions. Initial
offering of Class C of Emerging Markets Income took place on November
3, 1997. Class C returns prior to November 3, 1997 through June 30,
1994 are those of Class B which reflect a 12b-1 fee of 0.90% (1.00%
prior to January 1, 1996). Class C returns prior to June 30, 1994 are
those of Class T which reflect a 12b-1 fee of 0.25%. If Class C's
12b-1 fee had been reflected, total returns prior to November
3, 1997 through prior to January 1, 1996 and prior to June 30,
1994 would have been lower.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Institutional Class of Emerging Markets Income would have grown to
$ 17,977 .
EMERGING MARKETS INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
December 31 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,060 $ 4,076 $ 2,841 $ 17,977 $ 22,864 $ 22,483 $ 10,995
1996 11,650 2,909 826 15,385 17,144 18,007 10,811
1995 9,280 1,452 241 10,973 13,943 13,991 10,464
1994* 9,520 480 247 10,247 10,134 10,233 10,204
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Emerging Markets Income on March 10, 1994, the
net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 16,648 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 3,072 for dividends and $ 2,130 for capital gain
distributions. Initial offering of Institutional Class of Emerging
Markets Income took place on July 3, 1995. Institutional Class returns
prior to July 3, 1995 are those of Class T which reflect a 12b-1 fee
of 0.25%. Total returns for Institutional Class prior to July 3, 1995
would have been higher if Class T's 12b-1 fee had not been reflected.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class A of High Yield would have grown to
$ 39,172 , including the effect of Class A's maximum 4.75% sales
charge.
HIGH YIELD - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,549 $ 24,309 $ 1,314 $ 39,172 $ 48,782 $ 50,221 $ 14,016
1996 12,889 20,037 1,083 34,009 36,924 39,944 13,729
1995 12,480 16,649 1,049 30,178 29,755 30,834 13,330
1994 11,757 13,484 988 26,229 23,533 24,713 12,966
1993 12,585 12,477 492 25,554 22,657 22,651 12,637
1992 11,600 9,612 0 21,212 19,710 19,286 12,298
1991 10,604 6,789 0 17,393 17,923 17,816 11,917
1990 8,540 3,912 0 12,452 13,424 13,696 11,578
1989 9,399 2,624 0 12,023 14,511 14,271 10,893
1988 10,332 1,302 0 11,634 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
High Yield on November 1, 1987, assuming the 4.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,525 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 31,488 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 11,177 for
dividends and $ 576 for capital gain distributions. Initial
offering of Class A of High Yield took place on September 3, 1996.
Class A returns prior to September 3, 1996 are those of Class T which
reflect a 12b-1 fee of 0.25%. If Class A's 12b-1 fee had been
reflected, total returns prior to September 3, 1996 would have been
lower.
During the 10-year period ended from October 31, 1997, a hypothetical
$10,000 investment in Class T of High Yield would have grown to
$ 39,775 , including the effect of Class T's maximum 3.50% sales
charge.
HIGH YIELD - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,737 $ 24,705 $ 1,333 $ 39,775 $ 48,782 $ 50,221 $ 14,016
1996 13,068 20,358 1,098 34,524 36,924 39,944 13,729
1995 12,644 16,867 1,063 30,574 29,755 30,834 13,330
1994 11,911 13,661 1,001 26,573 23,533 24,713 12,966
1993 12,750 12,641 498 25,889 22,657 22,651 12,637
1992 11,752 9,739 0 21,491 19,710 19,286 12,298
1991 10,743 6,878 0 17,621 17,923 17,816 11,917
1990 8,652 3,964 0 12,616 13,424 13,696 11,578
1989 9,523 2,657 0 12,180 14,511 14,271 10,893
1988 10,467 1,320 0 11,787 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
High Yield on November 1, 1987, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 31,827 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 11,344 for
dividends and $ 584 for capital gain distributions.
During the 10-year period ended from October 31, 1997, a hypothetical
$10,000 investment in Class B of High Yield would have grown to
$ 40,076 .
HIGH YIELD - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 14,180 $ 24,523 $ 1,373 $ 40,076 $ 48,782 $ 50,221 $ 14,016
1996 13,509 20,405 1,135 35,049 36,924 39,944 13,729
1995 13,080 17,087 1,099 31,266 29,755 30,834 13,330
1994 12,332 14,029 1,036 27,397 23,533 24,713 12,966
1993 13,212 13,100 516 26,828 22,657 22,651 12,637
1992 12,178 10,092 0 22,270 19,710 19,286 12,298
1991 11,133 7,127 0 18,260 17,923 17,816 11,917
1990 8,966 4,107 0 13,073 13,424 13,696 11,578
1989 9,868 2,754 0 12,622 14,511 14,271 10,893
1988 10,847 1,367 0 12,214 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
High Yield on November 1, 1987, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 31,695 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 11,432 for
dividends and $ 605 for capital gain distributions. Initial
offering of Class B of High Yield took place on June 30, 1994. Class B
returns prior to June 30, 1994 are those of Class T which reflect a
12b-1 fee of 0.25%. If Class B's 12b-1 fee had been reflected, total
returns prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class C of High Yield would have grown to
$ 40,077 .
HIGH YIELD - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C>
Period Ended Value of Value of Value of Total S&P DJIA
Cost
October 31 Initial Reinvested Reinvested Value 500
of
$10,000 Dividend Capital Gain
Living**
Investment Distributions Distributions
1997 $ 14,180 $ 24,524 $ 1,373 $ 40,077 $ 48,782 $
50,221 $ 14,016
1996 13,509 20,405 1,135 35,049 36,924 39,944
13,729
1995 13,080 17,087 1,099 31,266 29,755 30,834
13,330
1994 12,332 14,029 1,036 27,397 23,533 24,713
12,966
1993 13,212 13,100 516 26,828 22,657 22,651
12,637
1992 12,178 10,092 0 22,270 19,710 19,286
12,298
1991 11,133 7,127 0 18,260 17,923 17,816
11,917
1990 8,966 4,107 0 13,073 13,424 13,696
11,578
1989 9,868 2,754 0 12,622 14,511 14,271
10,893
1988 10,847 1,367 0 12,214 11,481 11,172
10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
High Yield on November 1, 1987, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 31,695 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 11,432 for
dividends and $ 605 for capital gain distributions. Initial
offering of Class C of High Yield took place on November 3, 1997.
Class C returns prior to November 3, 1997 through June 30, 1994
are those of Class B which reflect a 12b-1 fee of 0.90% (1.00% prior
to January 1, 1996). Class C returns prior to June 30, 1994 are those
of Class T which reflect a 12b-1 fee of 0.25%. If Class C's 12b-1 fee
had been reflected, total returns prior to November 3, 1997
through January 1, 1996 and prior to June 30, 1994 would have been
lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Institutional Class of High Yield would have
grown to $ 41,046 .
HIGH YIELD - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 13,982 $ 25,703 $ 1,361 $ 41,046 $ 48,782 $ 50,221 $ 14,016
1996 13,333 21,111 1,120 35,564 36,924 39,944 13,729
1995 12,937 17,501 1,087 31,525 29,755 30,834 13,330
1994 12,343 14,157 1,037 27,537 23,533 24,713 12,966
1993 13,212 13,100 516 26,828 22,657 22,651 12,637
1992 12,178 10,092 0 22,270 19,710 19,286 12,298
1991 11,133 7,127 0 18,260 17,923 17,816 11,917
1990 8,966 4,107 0 13,073 13,424 13,696 11,578
1989 9,868 2,754 0 12,622 14,511 14,271 10,893
1988 10,847 1,367 0 12,214 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of High Yield on November 1, 1987, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 33,050 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 11,901 for dividends and $ 605 for capital gain
distributions. Initial offering of Institutional Class of High Yield
took place on July 3, 1995. Institutional Class returns prior to July
3, 1995 are those of Class T which reflect a 12b-1 fee of 0.25%. Total
returns for Institutional Class prior to July 3, 1995 would have been
higher if Class T's 12b-1 fee had not been reflected.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Class A of Strategic Income would have grown to $ 14,348 ,
including the effect of Class A's maximum 4.75% sales charge.
STRATEGIC INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
December 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,563 $ 2,761 $ 1,024 $ 14,348 $ 22,061 $ 21,656 $ 10,789
1996 10,716 1,839 579 13,134 16,542 17,344 10,609
1995 10,478 928 237 11,643 13,453 13,476 10,268
1994* 9,449 93 0 9,542 9,779 9,857 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Strategic Income on October 31, 1994, assuming the 4.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,525 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 13,766 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 2,372 for
dividends and $ 857 for capital gain distributions. Initial
offering of Class A of Strategic Income took place on September 3,
1996. Class A returns prior to September 3, 1996 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class A's 12b-1 fee had been
reflected, total returns prior to September 3, 1996 would have been
higher.
During the 10-year period ended from October 31, 1994 (commencement of
operations of the fund) to December 31, 1997, a hypothetical $10,000
investment in Class T of Strategic Income would have grown to
$ 14,558 , including the effect of Class T's maximum 3.50% sales
charge.
STRATEGIC INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period EndedValue of Value of Value of Total S&P DJIA Cost
December 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,702 $ 2,817 $ 1,039 $ 14,558 $ 22,061 $ 21,656 $ 10,789
1996 10,856 1,874 586 13,316 16,542 17,344 10,609
1995 10,615 941 240 11,796 13,453 13,476 10,268
1994* 9,573 94 0 9,667 9,779 9,857 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Strategic Income on October 31, 1994, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 13,838 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 2,419 for
dividends and $ 869 for capital gain distributions.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Class B of Strategic Income would have grown to $ 14,470, including
the effect of Class B's maximum applicable CDSC .
STRATEGIC INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
December 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,800 $ 2,610 $ 1,060 $ 14,470 $ 22,061 $ 21,656 $ 10,789
1996 11,260 1,739 601 13,600 16,542 17,344 10,609
1995 11,010 871 247 12,128 13,453 13,476 10,268
1994* 9,910 8 0 9,994 9,779 9,857 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Strategic Income on October 31, 1994, the net amount invested in Class
B shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 13,653 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 2,266 for
dividends and $ 900 for capital gain distributions.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Class C of Strategic Income would have grown to $ 14,761 .
STRATEGIC INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
December 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,099 $ 2,602 $ 1,060 $ 14,761 $ 22,061 $ 21,656 $ 10,789
1996 11,260 1,739 601 13,600 16,542 17,344 10,609
1995* 11,010 871 247 12,128 13,453 13,476 10,268
1994 9,910 84 0 9,994 9,779 9,857 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Strategic Income on October 31, 1994, the net amount invested in Class
C shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 13,645 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 2,260 for
dividends and $ 901 for capital gain distributions. Initial
offering of Class C of Strategic Income took place on November 3,
1997. Class C returns prior to November 3, 1997 are those of Class B
which reflect a 12b-1 fee of 0.90% (1.00% prior to January 1, 1996).
If Class C's 12b-1 fees had been reflected, total returns prior to
November 3, 1997 through January 3, 1996 would have been lower.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 1997, a hypothetical $10,000 investment in
Institutional Class of Strategic Income would have grown to
$ 15,155 .
STRATEGIC INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
December 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,140 $ 2,938 $ 1,077 $ 15,155 $ 22,061 $ 21,656 $ 10,789
1996 11,300 1,950 608 13,858 16,542 17,344 10,609
1995 11,030 981 249 12,260 13,453 13,476 10,268
1994* 9,920 97 0 10,017 9,779 9,857 10,013
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Strategic Income on October 31, 1994, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 13,901 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 2,518 for dividends and $ 900 for capital gain
distributions. Initial offering of Institutional Class of Strategic
Income took place on July 3, 1995. Institutional Class returns prior
to July 3, 1995 are those of Class T which reflect a 12b-1 fee of
0.25%. Total returns for Institutional Class prior to July 3, 1995
would have been higher if Class T's 12b-1 fee had not been reflected.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class A of Mortgage Securities would have grown
to $22,567, including the effect of Class A's maximum 4.75% sales
charge.
MORTGAGE SECURITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,635 $ 11,186 $ 746 $ 22,567 $ 48,782 $ 50,221 $ 14,016
1996 10,480 9,699 575 20,754 36,924 39,944 13,729
1995 10,616 8,512 316 19,444 29,755 30,834 13,330
1994 9,959 6,742 181 16,882 23,533 24,713 12,966
1993 10,394 6,068 75 16,537 22,657 22,651 12,637
1992 10,307 5,032 0 15,339 19,710 19,286 12,298
1991 10,394 4,041 0 14,435 17,923 17,816 11,917
1990 9,776 2,761 0 12,537 13,424 13,696 11,578
1989 9,824 1,792 0 11,616 14,511 14,271 10,893
1988 9,747 851 0 10,598 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Mortgage Securities on November 1, 1987, assuming the 4.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,525 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 21,431 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,244 for
dividends and $ 396 for capital gain distributions. Initial
offering of Class A of Mortgage Securities took place on March 3,
1997. Class A returns prior to March 3, 1997 are those of Initial
Class which has no 12b-1 fee. If Class A's 12b-1 fee had been
reflected, total returns prior to March 3, 1997 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class T of Mortgage Securities would have grown
to $ 22,850 , including the effect of Class T's maximum 3.50%
sales charge.
MORTGAGE SECURITIES - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,774 $ 11,320 $ 756 $ 22,850 $ 48,782 $ 50,221 $ 14,016
1996 10,618 9,826 582 21,026 36,924 39,944 13,729
1995 10,755 8,624 320 19,699 29,755 30,834 13,330
1994 10,090 6,830 183 17,103 23,533 24,713 12,966
1993 10,530 6,148 76 16,754 22,657 22,651 12,637
1992 10,442 5,098 0 15,540 19,710 19,286 12,298
1991 10,530 4,095 0 14,625 17,923 17,816 11,917
1990 9,904 2,797 0 12,701 13,424 13,696 11,578
1989 9,953 1,815 0 11,768 14,511 14,271 10,893
1988 9,875 862 0 10,737 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Mortgage Securities on November 1, 1987, assuming the 3.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 21,568 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,333 for
dividends and $401 for capital gain distributions. Initial
offering of Class T of Mortgage Securities took place on March 3,
1997. Class T returns prior to March 3, 1997 are those of Initial
Class which has no 12b-1 fee. If Class T's 12b-1 fee had been
reflected, total returns prior to March 3, 1997 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class B of Mortgage Securities would have grown
to $ 23,575 .
MORTGAGE SECURITIES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,165 $ 11,627 $ 783 $ 23,575 $ 48,782 $ 50,221 $ 14,016
1996 11,003 10,182 604 21,789 36,924 39,944 13,729
1995 11,145 8,937 331 20,413 29,755 30,834 13,330
1994 10,456 7,077 190 17,723 23,533 24,713 12,966
1993 10,912 6,370 79 17,361 22,657 22,651 12,637
1992 10,821 5,283 0 16,104 19,710 19,286 12,298
1991 10,912 4,243 0 15,155 17,923 17,816 11,917
1990 10,263 2,899 0 13,162 13,424 13,696 11,578
1989 10,314 1,881 0 12,195 14,511 14,271 10,893
1988 10,233 893 0 11,126 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,0000 in Class B
of Mortgage Securities on November 1, 1987, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $21,884 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,550 for
dividends and $ 415 for capital gain distributions. Initial
offering of Class B of Mortgage Securities took place on March 3,
1997. Class B returns prior to March 3, 1997 are those of Initial
Class which has no 12b-1 fee. If Class B's 12b-1 fees had been
reflected, total returns prior to March 3, 1997 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Institutional Class of Mortgage Securities would
have grown to $ 23,696 .
MORTGAGE SECURITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,155 $ 11,758 $ 783 $ 23,696 $ 48,782 $ 50,221 $14,016
1996 11,003 10,182 604 21,789 36,924 39,944 13,729
1995 11,145 8,937 331 20,413 29,755 30,834 13,330
1994 10,456 7,078 190 17,723 23,533 24,713 12,966
1993 10,912 6,370 79 17,361 22,657 22,651 12,637
1992 10,821 5,283 0 16,104 19,710 19,286 12,298
1991 10,912 4,244 0 15,155 17,923 17,816 11,917
1990 10,263 2,898 0 13,162 13,424 13,696 11,578
1989 10,314 1,881 0 12,195 14,511 14,271 10,893
1988 10,233 893 0 11,126 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Mortgage Securities on November 1, 1987, the
net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $22,026 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 7,617 for dividends and $ 415 for capital gain
distributions. Initial offering of Institutional Class of Mortgage
Securities took place on March 3, 1997. Returns prior to March 3, 1997
are those of Initial Class which has no 12b-1 fee.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Initial Class of Mortgage Securities would have
grown to $ 23,720 .
MORTGAGE SECURITIES - INITIAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,165 $ 11,771 $ 784 $ 23,720 $ 48,782 $ 50,221 $ 14,016
1996 11,003 10,182 604 21,789 36,924 39,944 13,729
1995 11,145 8,937 331 20,413 29,755 30,834 13,330
1994 10,456 7,077 190 17,723 23,533 24,713 12,966
1993 10,912 6,370 79 17,361 22,657 22,651 12,637
1992 10,821 5,283 0 16,104 19,710 19,286 12,298
1991 10,912 4,243 0 15,155 17,923 17,816 11,917
1990 10,263 2,899 0 13,162 13,424 13,696 11,578
1989 10,314 1,881 0 12,195 14,511 14,271 10,893
1988 10,233 893 0 11,126 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Mortgage Securities on November 1, 1987, the net amount
invested in Initial Class shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$ 22,028 . If distributions had not been reinvested, the amount
of distributions earned from the class over time would have been
smaller, and cash payments for the period would have amounted to
$ 7,618 for dividends and $ 415 for capital gain
distributions.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class A of Government Investment would have
grown to $ 20,486 , including the effect of Class A's maximum
4.75% sales charge.
GOVERNMENT INVESTMENT - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,012 $ 9,921 $ 553 $ 20,486 $ 48,782 $ 50,221 $ 14,016
1996 9,825 8,586 543 18,954 36,924 39,944 13,729
1995 10,012 7,591 553 18,156 29,755 30,834 13,330
1994 9,277 6,010 513 15,800 23,533 24,713 12,966
1993 10,498 5,856 324 16,678 22,657 22,651 12,637
1992 10,074 4,747 0 14,821 19,710 19,286 12,298
1991 9,929 3,733 0 13,662 17,923 17,816 11,917
1990 9,473 2,655 0 12,128 13,424 13,696 11,578
1989 9,639 1,751 0 11,390 14,511 14,271 10,893
1988 9,587 827 0 10,414 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Government Investment on November 1, 1987, assuming the 4.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $9,525 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,210 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,633 for
dividends and $ 362 for capital gain distributions. Initial
offering of Class A for Government Investment took place on September
3, 1996. Class A returns prior to September 3, 1996 are those
of Class T which reflect a 12b-1 fee of 0.25%. If Class A's 12b-1 fee
had been reflected, total returns prior to September 3, 1996 would
have been higher.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class T of Government Investment would have
grown to $ 20,731 , including the effect of Class T's maximum
3.50% sales charge.
GOVERNMENT INVESTMENT - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,143 $ 10,027 $ 561 $20,731 $ 48,782 $ 50,221 $ 14,016
1996 9,954 8,696 550 19,200 36,924 39,944 13,729
1995 10,143 7,690 561 18,394 29,755 30,834 13,330
1994 9,398 6,090 519 16,007 23,533 24,713 12,966
1993 10,636 5,932 329 16,897 22,657 22,651 12,637
1992 10,206 4,810 0 15,016 19,710 19,286 12,298
1991 10,059 3,782 0 13,841 17,923 17,816 11,917
1990 9,598 2,689 0 12,287 13,424 13,696 11,578
1989 9,765 1,775 0 11,540 14,511 14,271 10,893
1988 9,713 838 0 10,551 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Government Investment on November 1, 1987, assuming the 3.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,650 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,320 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,708 for
dividends and $ 367 for capital gain distributions.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class B of Government Investment would have
grown to $ 20,965 .
GOVERNMENT INVESTMENT - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,500 $ 9,885 $ 580 $ 20,965 $ 48,782 $ 50,221 $ 14,016
1996 10,315 8,673 570 19,558 36,924 39,944 13,729
1995 10,511 7,770 581 18,862 29,755 30,834 13,330
1994 9,728 6,252 538 16,518 23,533 24,713 12,966
1993 11,022 6,148 340 17,510 22,657 22,651 12,637
1992 10,576 4,984 0 15,560 19,710 19,286 12,298
1991 10,424 3,919 0 14,343 17,923 17,816 11,917
1990 9,946 2,787 0 12,733 13,424 13,696 11,578
1989 10,120 1,838 0 11,958 14,511 14,271 10,893
1988 10,065 869 0 10,934 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Government Investment on November 1, 1987, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 20,212 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,711 for
dividends and $ 380 for capital gain distributions. Initial
offering of Class B of Government Investment took place on June 30,
1994. Class B returns prior to June 30, 1994 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had been
reflected, total returns prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class C of Government Investment would have
grown to $ 20,965 .
GOVERNMENT INVESTMENT - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,500 $ 9,885 $ 580 $ 20,965 $ 48,782 $ 50,221 $ 14,016
1996 10,315 8,673 570 19,558 36,924 39,944 13,729
1995 10,511 7,770 581 18,862 29,755 30,834 13,330
1994 9,728 6,252 538 16,518 23,533 24,713 12,966
1993 11,022 6,148 340 17,510 22,657 22,651 12,637
1992 10,576 4,984 0 15,560 19,710 19,286 12,298
1991 10,424 3,919 0 14,343 17,923 17,816 11,917
1990 9,946 2,787 0 12,733 13,424 13,696 11,578
1989 10,120 1,838 0 11,958 14,511 14,271 10,893
1988 10,065 869 0 10,934 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Government Investment on November 1, 1987 the net amount invested in
Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 20,212 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 6,711 for
dividends and $ 380 for capital gain distributions. Initial
offering of Class C of Government Investment took place on November 3,
1997. Class C returns prior to November 3, 1997 through June
30, 1994 are those of Class B which reflect a 12b-1 fee of 0.90%
(1.00% prior to January 1, 1996). Class C returns prior to June 30,
1994 are those of Class T which reflect a 12b-1 fee of 0.25%. If Class
C's 12b-1 fee had been reflected, total returns prior to
November 3, 1997 through January 1, 199 6 and
prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Institutional Class of Government Investment
would have grown to $ 21,585 .
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,489 $ 10,516 $ 580 $ 21,585 $ 48,782 $ 50,221 $ 14,016
1996 10,304 9,080 569 19,953 36,924 39,944 13,729
1995 10,511 7,988 581 19,080 29,755 30,834 13,330
1994 9,739 6,311 538 16,588 23,533 24,713 12,966
1993 11,022 6,148 340 17,510 22,657 22,651 12,637
1992 10,576 4,984 0 15,560 19,710 19,286 12,298
1991 10,424 3,919 0 14,343 17,923 17,816 11,917
1990 9,946 2,787 0 12,733 13,424 13,696 11,578
1989 10,120 1,838 0 11,958 14,511 14,271 10,893
1988 10,065 869 0 10,934 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Government Investment on November 1, 1987, the
net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 20,836 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 7,020 for dividends and $ 380 for capital gain
distributions. Initial offering of Institutional Class of Government
Investment took place on July 3, 1995. Institutional Class returns
prior to July 3, 1995 are those of Class T which reflect a 12b-1 fee
of 0.25%. Total Returns for Institutional Class prior to July 3, 1995
would have been higher if Class T's 12b-1 fee had not been reflected.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class A of Intermediate Bond would have grown to
$ 20,960 , including the effect of Class A's maximum 3.75% sales
charge.
INTERMEDIATE BOND - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,916 $ 11,044 $ 0 $ 20,960 $ 55,623 $ 57,303 $ 13,995
1996 9,944 9,865 0 19,809 43,282 46,910 13,744
1995 10,104 8,776 0 18,880 33,851 35,730 13,310
1994 9,634 7,310 0 16,944 24,712 25,688 12,990
1993 10,461 6,907 0 17,368 24,457 24,627 12,634
1992 9,991 5,447 0 15,438 22,213 21,471 12,305
1991 9,907 4,250 0 14,157 18,745 18,258 11,941
1990 9,522 2,968 0 12,490 15,575 15,610 11,594
1989 9,775 1,958 0 11,733 16,137 15,875 10,910
1988 9,559 914 0 10,473 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Intermediate Bond on December 1, 1987 assuming the 3.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $ 9,625 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,961 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,369 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class A of Intermediate Bond took place on September 3,
1996. Class A returns from September 3, 1996 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.25%. Class A
returns prior to September 10, 1992 are those of Institutional Class
which has no 12b-1 fee. If Class A's 12b-1 fee had been reflected,
total returns prior to September 3, 1996 through September 10, 1992
would have been higher and total returns prior to September 10, 1992
would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class T of Intermediate Bond would have grown to
$ 21,165 , including the effect of Class T's maximum 2.75% sales
charge.
INTERMEDIATE BOND - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,019 $ 11,146 $ 0 $ 21,165 $ 55,623 $ 57,303 $ 13,995
1996 10,067 9,983 0 20,050 43,282 46,910 13,744
1995 10,209 8,868 0 19,077 33,851 35,730 13,310
1994 9,734 7,386 0 17,120 24,712 25,688 12,990
1993 10,569 6,979 0 17,548 24,457 24,627 12,634
1992 10,095 5,504 0 15,599 22,213 21,471 12,305
1991 10,010 4,295 0 14,305 18,745 18,258 11,941
1990 9,621 2,999 0 12,620 15,575 15,610 11,594
1989 9,877 1,978 0 11,855 16,137 15,875 10,910
1988 9,659 923 0 10,582 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Intermediate Bond on December 1, 1987 assuming the 2.75% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $ 9,725 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 21,064 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,440 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class T of Intermediate Bond took place on September 10,
1992. Class T returns prior to September 10, 1992 are those of
Institutional Class which has no 12b-1 fee. If Class T's 12b-1 fee had
been reflected, total returns prior to September 10, 1992 would have
been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class B of Intermediate Bond would have grown to
$ 21,193 .
INTERMEDIATE BOND - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,283 $ 10,910 $ 0 $ 21,193 $ 55,623 $ 57,303 $ 13,995
1996 10,332 9,884 0 20,216 43,282 46,910 13,744
1995 10,488 8,892 0 19,380 33,851 35,730 13,310
1994 10,000 7,519 0 17,519 24,712 25,688 12,990
1993 10,868 7,176 0 18,044 24,457 24,627 12,634
1992 10,380 5,660 0 16,040 22,213 21,471 12,305
1991 10,293 4,416 0 14,709 18,745 18,258 11,941
1990 9,893 3,084 0 12,977 15,575 15,610 11,594
1989 10,156 2,034 0 12,190 16,137 15,875 10,910
1988 9,932 949 0 10,881 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Intermediate Bond on December 1, 1987, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 20,846 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,395 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class B of Intermediate Bond took place on June 30, 1994.
Class B returns prior to June 30, 1994 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.25%. Class B returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class B's 12b-1 fee had been reflected, total returns
prior to June 30, 1994 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class C of Intermediate Bond would have grown to
$ 21,202 .
INTERMEDIATE BOND - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,292 $ 10,910 $ 0 $ 21,202 $ 55,623 $ 57,303 $ 13,995
1996 10,332 9,884 0 20,216 43,282 46,910 13,744
1995 10,488 8,892 0 19,380 33,851 35,730 13,310
1994 10,000 7,519 0 17,519 24,712 25,688 12,990
1993 10,868 7,176 0 18,044 24,457 24,627 12,634
1992 10,380 5,660 0 16,040 22,213 21,471 12,305
1991 10,293 4,416 0 14,709 18,745 18,258 11,941
1990 9,893 3,084 0 12,977 15,575 15,610 11,594
1989 10,156 2,034 0 12,190 16,137 15,875 10,910
1988 9,932 949 0 10,881 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Intermediate Bond on December 1, 1987, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 20,846 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,395 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class C of Intermediate Bond took place on November 3,
1997. Class C returns prior to November 3, 1997 through June 30, 1994
are those of Class B which reflect a 12b-1 fee of 0.90% (1.00% prior
to January 1, 1996). Class C returns prior to June 30, 1994 through
September 10, 1992 are those of Class T which reflect a 12b-1 fee of
0.25%. Class C returns prior to September 10, 1992 are those of
Institutional Class which has no 12b-1 fee. If Class C's 12b-1 fee had
been reflected, total returns prior to November 3, 1997 through
January 1, 1996, and prior to June 30, 1994 would have been
lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class C of Intermediate Bond would have grown to
$ 22,190 .
INTERMEDIATE BOND - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,312 $ 11,878 $ 0 $ 22,190 $ 55,623 $ 57,303 $ 13,995
1996 10,361 10,600 0 20,961 43,282 46,910 13,744
1995 10,507 9,380 0 19,887 33,851 35,730 13,310
1994 10,020 7,779 0 17,799 24,712 25,688 12,990
1993 10,888 7,292 0 18,180 24,457 24,627 12,634
1992 10,380 5,684 0 16,064 22,213 21,471 12,305
1991 10,293 4,416 0 14,709 18,745 18,258 11,941
1990 9,893 3,084 0 12,977 15,575 15,610 11,594
1989 10,156 2,034 0 12,190 16,137 15,875 10,910
1988 9,932 949 0 10,881 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Intermediate Bond on December 1, 1987, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 21,790 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 7,847 for dividends and $ 0 for capital gain
distributions.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class A of Short Fixed-Income would have grown
to $ 19,220 , including the effect of Class A's maximum 1.50%
sales charge.
SHORT FIXED-INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,116 $ 10,104 $ 0 $ 19,220 $ 48,782 $ 50,221 $ 14,016
1996 9,174 9,020 0 18,194 36,924 39,944 13,729
1995 9,272 7,999 0 17,271 29,755 30,834 13,330
1994 9,282 7,004 0 16,286 23,533 24,713 12,966
1993 9,879 6,443 0 16,322 22,657 22,651 12,637
1992 9,742 5,215 0 14,957 19,710 19,286 12,298
1991 9,664 4,003 0 13,667 17,923 17,816 11,917
1990 9,419 2,763 0 12,182 13,424 13,696 11,578
1989 9,742 1,794 0 11,536 14,511 14,271 10,893
1988 9,733 861 0 10,594 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Short Fixed-Income on November 1, 1987, assuming the 1.50% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $ 9,850 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,527 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,137 for
dividends and $ 0 for capital gain distributions. Initial
offering of Class A of Short Fixed-Income took place on September 3,
1996. Class A returns prior to September 3, 1996 are those of Class T
which reflect a 12b-1 fee of 0.15%.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class T of Short Fixed-Income would have grown
to $ 19,301 , including the effect of Class T's maximum 1.50%
sales charge.
SHORT FIXED-INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,155 $ 10,146 $ 0 $ 19,301 $ 48,782 $ 50,221 $ 14,016
1996 9,184 9,029 0 18,213 36,924 39,944 13,729
1995 9,272 7,999 0 17,271 29,755 30,834 13,330
1994 9,282 7,004 0 16,286 23,533 24,713 12,966
1993 9,879 6,443 0 16,322 22,657 22,651 12,637
1992 9,742 5,215 0 14,957 19,710 19,286 12,298
1991 9,664 4,003 0 13,667 17,923 17,816 11,917
1990 9,419 2,763 0 12,182 13,424 13,696 11,578
1989 9,742 1,794 0 11,536 14,511 14,271 10,893
1988 9,733 861 0 10,594 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Short Fixed-Income on November 1, 1987, assuming the 1.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $ 9,850 . The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,531 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,138 for
dividends and $ 0 for capital gain distributions.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class C of Short-Fixed Income would have grown
to $ 19,595 .
SHORT FIXED-INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,294 $ 10,301 $ 0 $ 19,595 $ 48,782 $ 50,221 $ 14,016
1996 9,324 9,167 0 18,491 36,924 39,944 13,729
1995 9,414 8,120 0 17,534 29,755 30,834 13,330
1994 9,423 7,111 0 16,534 23,533 24,713 12,966
1993 10,030 6,541 0 16,571 22,657 22,651 12,637
1992 9,891 5,294 0 15,185 19,710 19,286 12,298
1991 9,811 4,064 0 13,875 17,923 17,816 11,917
1990 9,563 2,804 0 12,367 13,424 13,696 11,578
1989 9,891 1,821 0 11,712 14,511 14,271 10,893
1988 9,881 875 0 10,756 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class
C of Short-Fixed Income on November 1, 1987, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$ 20,691 . If distributions had not been reinvested, the amount
of distributions earned from the class over time would have been
smaller, and cash payments for the period would have amounted to
$ 7,247 for dividends and $ 0 for capital gain
distributions. Initial offering of Class C Short Fixed-Income took
place on November 3, 1997. Class C returns prior to November 3,
1997 are those of Class T which reflect a 12b-1 fee of 0.15%. If
Class C's 12b-1 fee had been reflected, total returns would have been
lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Institutional Class of Short Fixed-Income would
have grown to $19,653.
SHORT FIXED-INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,294 $ 10,359 $ 0 $ 19,653 $ 48,782 $ 50,221 $ 14,016
1996 9,314 9,185 0 18,499 36,924 39,944 13,729
1995 9,414 8,129 0 17,543 29,755 30,834 13,330
1994 9,423 7,111 0 16,534 23,533 24,713 12,966
1993 10,030 6,541 0 16,571 22,657 22,651 12,637
1992 9,891 5,294 0 15,185 19,710 19,286 12,298
1991 9,811 4,064 0 13,875 17,923 17,816 11,917
1990 9,563 2,804 0 12,367 13,424 13,696 11,578
1989 9,891 1,821 0 11,712 14,511 14,271 10,893
1988 9,881 875 0 10,756 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Short Fixed-Income on November 1, 1987, the net
amount invested Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 20,749 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 7,275 for dividends and $ 0 for capital gain
distributions. Initial offering of Institutional Class of Short
Fixed-Income took place on July 3, 1995. Institutional Class returns
prior to July 3, 1995 are those of Class T which reflect a 12b-1 fee
of 0.15%. Total returns for Institutional Class prior to July 3, 1995
would have been higher if Class T's 12b-1 fee had not been reflected.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class A of Municipal Income would have grown to
$ 23,161 , including the effect of Class A's maximum 4.75% sales
charge.
MUNICIPAL INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,749 $ 10,893 $ 519 $ 23,161 $ 48,782 $ 50,221 $ 14,016
1996 11,353 9,394 498 21,245 36,924 39,944 13,729
1995 11,488 8,342 504 20,334 29,755 30,834 13,330
1994 10,850 6,748 476 18,074 23,533 24,713 12,966
1993 12,300 6,503 431 19,234 22,657 22,651 12,637
1992 11,266 4,969 353 16,588 19,710 19,286 12,298
1991 11,034 3,823 332 15,189 17,923 17,816 11,917
1990 10,511 2,641 169 13,321 13,424 13,696 11,578
1989 10,463 1,673 54 12,190 14,511 14,271 10,893
1988 10,115 764 0 10,879 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Municipal Income on November 1, 1987, assuming the 4.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $9,525. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 20,719 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 7,073 for dividends and $ 369 for
capital gain distributions. Initial offering of Class A of Municipal
Income took place on September 3, 1996. Class A returns prior to
September 3, 1996 are those of Class T which reflect a 12b-1 fee of
0.25%. If Class A's 12b-1 fee had been reflected, total returns prior
to September 3, 1996 would have been higher.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class T of Municipal Income would have grown to
$ 23,483 , including the effect of Class T's maximum 3.50% sales
charge.
MUNICIPAL INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,913 $ 11,044 $ 526 $ 23,483 $ 48,782 $ 50,221 $ 14,016
1996 11,521 9,539 505 21,565 36,924 39,944 13,729
1995 11,639 8,451 511 20,601 29,755 30,834 13,330
1994 10,992 6,837 482 18,311 23,533 24,713 12,966
1993 12,462 6,587 437 19,486 22,657 22,651 12,637
1992 11,413 5,036 357 16,806 19,710 19,286 12,298
1991 11,178 3,875 336 15,389 17,923 17,816 11,917
1990 10,649 2,676 171 13,496 13,424 13,696 11,578
1989 10,600 1,695 55 12,350 14,511 14,271 10,893
1988 10,248 774 0 11,022 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Municipal Income on November 1, 1987, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $9,650. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 20,858 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 7,165 for dividends and $ 374 for
capital gain distributions.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class B of Municipal Income would have grown to
$ 23,695 .
MUNICIPAL INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 12,315 $ 10,836 $ 544 $ 23,695 $ 48,782 $ 50,221 $ 14,016
1996 11,919 9,467 523 21,909 36,924 39,944 13,729
1995 12,041 8,502 528 21,071 29,755 30,834 13,330
1994 11,381 7,006 499 18,886 23,533 24,713 12,966
1993 12,914 6,826 453 20,193 22,657 22,651 12,637
1992 11,827 5,218 370 17,415 19,710 19,286 12,298
1991 11,584 4,014 349 15,947 17,923 17,816 11,917
1990 11,036 2,773 177 13,986 13,424 13,696 11,578
1989 10,985 1,756 57 12,798 14,511 14,271 10,893
1988 10,619 803 0 11,422 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Municipal Income on November 1, 1987, the net amount invested in Class
B shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,687 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,133 for
dividends and $ 388 for capital gain distributions. Initial
offering of Class B of Municipal Income took place on June 30, 1994.
Class B returns prior to June 30, 1994 are those of Class T which
reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had been
reflected, total returns prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Class C of Municipal Income would have grown to
$ 23,695 .
MUNICIPAL INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 12,315 $ 10,836 $ 544 $ 23,695 $ 48,782 $ 50,221 $ 14,016
1996 11,919 9,467 523 21,909 36,924 39,944 13,729
1995 12,041 8,502 528 21,071 29,755 30,834 13,330
1994 11,381 7,006 499 18,886 23,533 24,713 12,966
1993 12,914 6,826 453 20,193 22,657 22,651 12,637
1992 11,827 5,218 370 17,415 19,710 19,286 12,298
1991 11,584 4,014 349 15,947 17,923 17,816 11,917
1990 11,036 2,773 177 13,986 13,424 13,696 11,578
1989 10,985 1,756 57 12,798 14,511 14,271 10,893
1988 10,619 803 0 11,422 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Municipal Income on November 1, 1987, the net amount invested in Class
C shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 20,687 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 7,133 for
dividends and $ 388 for capital gain distributions. Initial
offering of Class C of Municipal Income took place on November 3,
1997. Class C returns prior to November 3, 1997 through June
30, 1994 are those of Class B which reflect a 12b-1 fee of 0.90%
(1.00% prior to January 1, 1996). Class C returns prior to June 30,
1994 are those of Class T which reflect a 12b-1 fee of 0.25%. If Class
C's 12b-1 fee had been reflected, total returns prior to November
3, 1997 through January 1, 199 6 and prior to June
30, 1994 would have been lower.
During the 10-year period ended October 31, 1997, a hypothetical
$10,000 investment in Institutional Class of Municipal Income would
have grown to $ 24,413 .
MUNICIPAL INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
October 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 12,305 $ 11,564 $ 544 $ 24,413 $ 48,782 $ 50,221 $ 14,016
1996 11,898 9,887 522 22,307 36,924 39,944 13,729
1995 12,061 8,775 529 21,365 29,755 30,834 13,330
1994 11,391 7,084 500 18,975 23,533 24,713 12,966
1993 12,914 6,826 453 20,193 22,657 22,651 12,637
1992 11,827 5,218 370 17,415 19,710 19,286 12,298
1991 11,584 4,014 349 15,947 17,923 17,816 11,917
1990 11,036 2,773 177 13,986 13,424 13,696 11,578
1989 10,985 1,756 57 12,798 14,511 14,271 10,893
1988 10,619 803 0 11,422 11,481 11,172 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Municipal Income on November 1, 1987, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $ 21,405 . If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 7,502 for dividends and $ 388 for capital gain
distributions. Initial offering of Institutional Class of Municipal
Income took place on July 3, 1995. Institutional Class returns prior
to July 3, 1995 are those of Class T which reflect a 12b-1 fee of
0.25%. Total returns for Institutional Class prior to July 3, 1995
would have been higher if Class T's 12b-1 fee had not been reflected.
During the 10-year period ended December 31, 1997, a hypothetical
$10,000 investment in Initial Class of Municipal Bond would have grown
to $ 22,309 .
MUNICIPAL BOND - INITIAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
Dec. 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,211 $ 9,471 $ 1,627 $ 22,309 $ 52,577 $ 54,688 $ 13,977
1996 10,776 8,092 1,562 20,430 39,424 43,801 13,744
1995 10,882 7,166 1,574 19,622 32,063 34,032 13,302
1994 9,697 5,515 1,395 16,607 23,305 24,891 12,972
1993 11,434 5,431 1,283 18,148 23,002 23,712 12,634
1992 11,184 4,398 454 16,036 20,896 20,268 12,296
1991 11,145 3,456 121 14,722 19,412 18,890 11,950
1990 10,697 2,458 0 13,155 14,877 15,192 , 11,594
1989 10,697 1,607 0 12,304 15,356 15,274 10,927
1988 10,461 769 0 11,230 11,661 11,592 10,442
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Municipal Bond on November 1, 1987, the net amount invested
in Initial Class shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$ 20,683 . If distributions had not been reinvested, the amount
of distributions earned from the class over time would have been
smaller, and cash payments for the period would have amounted to
$ 6,390 for dividends and $ 1,061 for capital gain
distributions.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class A of Intermediate Municipal Income would
have grown to $ 18,408 , including the effect of Class A's
maximum 3.75% sales charge.
INTERMEDIATE MUNICIPAL INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,829 $ 7,380 $ 1,199 $ 18,408 $ 55,623 $ 57,303 $ 13,995
1996 9,653 6,469 1,176 17,298 43,282 46,910 13,744
1995 9,625 5,691 1,172 16,488 33,851 35,730 13,310
1994 8,716 4,500 1,061 14,277 24,712 25,688 12,990
1993 9,699 4,301 1,152 15,152 24,457 24,627 12,634
1992 10,274 3,792 0 14,066 22,213 21,471 12,305
1991 10,014 2,895 0 12,909 18,745 18,258 11,941
1990 9,866 2,070 0 11,936 15,575 15,610 11,594
1989 9,838 1,313 0 11,151 16,137 15,875 10,910
1988 9,755 618 0 10,373 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Intermediate Municipal Income on December 1, 1987, assuming the 3.75%
maximum sales charge had been in effect, the net amount invested in
Class A shares was $9,625. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 18,421 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 5,280 for
dividends and $ 835 for capital gain distributions. Initial
offering of Class A of Intermediate Municipal Income took place on
September 3, 1996. Class A returns from September 3, 1996 through
September 10, 1992 are those of Class T which reflect a 12b-1 fee of
0.25%. Class A returns prior to September 10, 1992 are those of
Institutional Class which has no 12b-1 fee. If Class A's 12b-1 fee had
been reflected, total returns prior to September 3, 1996 through
September 10, 1992 would have been higher and total returns prior to
September 10, 1992 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class T of Intermediate Municipal Income would
have grown to $ 18,558 , including the effect of Class T's
maximum 2.75% sales charge.
INTERMEDIATE MUNICIPAL INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,922 $ 7,426 $ 1,210 $ 18,558 $ 55,623 $ 57,303 $ 13,995
1996 9,753 6,532 1,188 17,473 43,282 46,910 13,744
1995 9,725 5,750 1,184 16,659 33,851 35,730 13,310
1994 8,807 4,545 1,073 14,425 24,712 25,688 12,990
1993 9,800 4,346 1,164 15,310 24,457 24,627 12,634
1992 10,381 3,831 0 14,212 22,213 21,471 12,305
1991 10,118 2,925 0 13,043 18,745 18,258 11,941
1990 9,969 2,091 0 12,060 15,575 15,610 11,594
1989 9,940 1,327 0 11,267 16,137 15,875 10,910
1988 9,856 625 0 10,481 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Intermediate Municipal Income on December 1, 1987, assuming the 2.75%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $ 9,725 . The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 18,486 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 5,323 for
dividends and $ 844 for capital gain distributions. Initial
offering of Class T of Intermediate Municipal Income took place on
September 10, 1992. Class T returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class T's
12b-1 fee had been reflected, total returns prior to September 10,
1992 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class B of Intermediate Municipal Income would
have grown to $ 18,622 .
INTERMEDIATE MUNICIPAL INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,202 $ 7,176 $ 1,244 $ 18,622 $ 55,623 $ 57,303 $ 13,995
1996 10,029 6,395 1,221 17,645 43,282 46,910 13,744
1995 10,000 5,714 1,218 16,932 33,851 35,730 13,310
1994 9,056 4,616 1,103 14,775 24,712 25,688 12,990
1993 10,077 4,469 1,197 15,743 24,457 24,627 12,634
1992 10,674 3,940 0 14,614 22,213 21,471 12,305
1991 10,405 3,007 0 13,412 18,745 18,258 11,941
1990 10,250 2,151 0 12,401 15,575 15,610 11,594
1989 10,222 1,363 0 11,585 16,137 15,875 10,910
1988 10,135 642 0 10,777 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Intermediate Municipal Income on December 1, 1987, the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$ 18,282 . If distributions had not been reinvested, the amount
of distributions earned from the class over time would have been
smaller, and cash payments for the period would have amounted to
$ 5,232 for dividends and $ 868 for capital gain
distributions. Initial offering of Class B of Intermediate Municipal
Income took place on June 30, 1994. Class B returns prior to June 30,
1994 through September 10, 1992 are those of Class T which reflect a
12b-1 fee of 0.25%. Class B returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class B's
12b-1 fee had been reflected, total returns prior to June 30, 1994
would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Class C of Intermediate Municipal Income would
have grown to $ 18,626 .
INTERMEDIATE MUNICIPAL INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,202 $ 7,180 $ 1,244 $ 18,626 $ 55,623 $ 57,303 $ 13,995
1996 10,029 6,394 1,221 17,645 43,282 46,910 13,744
1995 10,000 5,714 1,218 16,932 33,851 35,730 13,310
1994 9,056 4,616 1,103 14,775 24,712 25,688 12,990
1993 10,077 4,469 1,197 15,743 24,457 24,627 12,634
1992 10,674 3,940 0 14,614 22,213 21,471 12,305
1991 10,405 3,007 0 13,412 18,745 18,258 11,941
1990 10,250 2,151 0 12,401 15,575 15,610 11,594
1989 10,222 1,363 0 11,585 16,137 15,875 10,910
1988 10,135 642 0 10,777 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Intermediate Municipal Income on December 1, 1987, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$18,282 . If distributions had not been reinvested, the amount
of distributions earned from the class over time would have been
smaller, and cash payments for the period would have amounted to
$ 5,232 for dividends and $ 868 for capital gain
distributions. Initial offering of Class C of Intermediate Municipal
Income took place on November 3, 1997. Class C returns prior to
November 3, 1997 through June 30, 1994 are those of Class B which
reflect a 12b-1 fee of 0.90% (1.00% prior to January 1, 1996). Class C
returns prior to June 30, 1994 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.25%. Class C returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class C's 12b-1 fee had been reflected, total returns prior to
November 3, 1997 through January 1, 1996 and prior to June 30,
1994 would have been lower.
During the 10-year period ended November 30, 1997, a hypothetical
$10,000 investment in Institutional Class of Intermediate Municipal
Income would have grown to $ 19,339 .
INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,202 $ 7,892 $ 1,245 $ 19,339 $ 55,623 $ 57,303 $ 13,995
1996 10,029 6,911 1,222 18,162 43,282 46,910 13,744
1995 9,981 6,041 1,216 17,238 33,851 35,730 13,310
1994 9,066 4,762 1,105 14,933 24,712 25,688 12,990
1993 10,077 4,516 1,198 15,791 24,457 24,627 12,634
1992 10,674 3,946 0 14,620 22,213 21,471 12,305
1991 10,405 3,007 0 13,412 18,745 18,258 11,941
1990 10,250 2,151 0 12,401 15,575 15,610 11,594
1989 10,222 1,363 0 11,585 16,137 15,875 10,910
1988 10,135 642 0 10,777 12,333 11,953 10,425
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Intermediate Municipal Income on December 1,
1987, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial in v estment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 18,973 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 5,605 for dividends and $ 868 for
capital gain distributions.
During the period March 16, 1994 (commencement of operations of the
fund) to November 30, 1997, a hypothetical $10,000 investment in Class
A of Short-Intermediate Municipal Income would have grown to
$ 11,725 , including the effect of Class A's maximum 1.50% sales
charge.
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,047 $ 1,613 $ 65 $ 11,725 $ 22,204 $ 22,099 $ 10,971
1996 10,057 1,154 32 11,243 17,277 18,090 10,774
1995 10,086 717 0 10,803 13,513 13,779 10,435
1994* 9,623 254 0 9,877 9,865 9,907 10,183
</TABLE>
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Short-Intermediate Municipal Income on March 16, 1994, assuming the
1.50% maximum sales charge had been in effect, the net amount invested
in Class A shares was $9,850. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 11,660 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 1,478 for
dividends and $ 59 for capital gain distributions. Initial
offering of Class A of Short-Intermediate Municipal Income took place
on September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T, which reflect a 12b-1 fee of 0.15%.
During the period March 16, 1994 (commencement of operations of the
fund) to November 30, 1997, a hypothetical $10,000 investment in Class
T of Short-Intermediate Municipal Income would have grown to
$ 11,733 , including the effect of Class T's maximum 1.50% sales
charge.
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,057 $ 1,611 $ 65 $ 11,733 $ 22,204 $ 22,099 $ 10,971
1996 10,057 1,153 32 11,242 17,277 18,090 10,774
1995 10,086 717 0 10,803 13,513 13,779 10,435
1994* 9,623 254 0 9,877 9,865 9,907 10,183
</TABLE>
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Short-Intermediate Municipal Income on March 16, 1994, assuming the
1.50% maximum sales charge had been in effect, the net amount invested
in Class T shares was $9,850. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 11,658 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $ 1,476 for
dividends and $ 59 for capital gain distributions.
During the period March 16, 1994 (commencement of operations of the
fund) to November 30, 1997, a hypothetical $10,000 investment in
Institutional Class of Short-Intermediate Municipal Income would have
grown to $ 11,940 .
SHORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
November 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,210 $ 1,664 $ 66 $ 11,940 $ 22,204 $ 22,099 $ 10,971
1996 10,210 1,181 32 11,423 17,277 18,090 10,774
1995 10,230 734 0 10,964 13,513 13,779 10,435
1994* 9,770 257 0 10,027 9,865 9,907 10,183
</TABLE>
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Short-Intermediate Municipal Income on March
16, 1994, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $ 11,711 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $ 1,523 for dividends and $60 for
capital gain distributions. Initial offering of Institutional Class of
Short-Intermediate Municipal Income took place on July 3, 1995.
Institutional Class returns prior to July 3, 1995 are those of Class T
which reflect a 12b-1 fee of 0.15%. Total returns for Institutional
Class prior to July 3, 1995 would have been higher if Class T's 12b-1
fee had not been reflected.
INTERNATIONAL INDICES, MARKET CAPITALIZATION, AND NATIONAL STOCK
MARKET RETURN. The following tables show the total market
capitalization of certain countries according to the Morgan Stanley
Capital International Indices database, the total market
capitalization of Latin American countries according to the
International Finance Corporation Emerging Market database, and
the performance of national stock markets as measured in U.S. dollars
by the Morgan Stanley Capital International stock market indices for
the twelve months ended December 31, 1997. Of course, these
results are not indicative of future stock market performance or the
classes' performance. Market conditions during the periods measured
fluctuated widely. Brokerage commissions and other fees are not
factored into the values of the indices.
MARKET CAPITALIZATION. Companies outside the U.S. now make up over
one-half of the world's stock market capitalization. According to
Morgan Stanley Capital International, the size of the markets as
measured in U.S. dollars grew from $5749.5 ($10078.9 including the
U.S.) billion in 1996 to to $6207.8 ($12040.3 including the U.S.)
billion in 1997.
The following table measures the total market capitalization of
certain countries according to the M organ S tanley
C apital I nternational indices database. The value of
the markets are measured in billions of U.S. dollars as of
December 31, 1997.
TOTAL MARKET CAPITALIZATION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Australia $ 164.1 Japan $ 1 ,498 . 6
Austria 23.0 Netherlands 3 37.9
Belgium 75.5 Norway 31.5
Canada 30 5.9 Singapore/Malaysia 54.5/49.0
Denmark 67.7 Spain 158.3
France 4 74.5 Sweden 154.5
Germany 584.7 Switzerland 465.6
Hong Kong 167.0 United Kingdom 1,284.8
Italy 238.9 United States 6,209.9
</TABLE>
The following table measures the total market capitalization of Latin
American countries according to the International Finance
Corporation Emerging Markets database. The value of the markets is
measured in millions of U.S. dollars as of December 31, 1997.
TOTAL MARKET CAPITALIZATION - LATIN AMERICA
Argentina $ 3 8 .1
Brazil 1 36.7
Chile 33.0
Colombia 8.2
Mexico 112.5
Venezuela 13.1
Peru 10.3
Total Latin America 351.9
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents
the performance of national stock markets as measured in U.S. dollars
by the Morgan Stanley Capital International stock market indices for
the twelve months ended December 31, 1997. The second table
shows the same performance as measured in local currency. Each table
measures total return based on the period's change in price, dividends
paid on stocks in the index, and the effect of reinvesting dividends
net of any applicable foreign taxes. These are unmanaged indices
composed of a sampling of selected companies representing an
approximation of the market structure of the designated country.
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN U.S. DOLLARS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Australia - 10.4 % Japan - 23.7 %
Austria 1.6 % Netherlands 23.8 %
Belgium 13.6 % Norway 6.2 %
Canada 12.8 % Singapore/Malaysia - 30.0 /- 68.3 %
Denmark 34.5 % Spain 25 . 4 %
France 11.9 % Sweden 12.9 %
Germany 24.6 % Switzerland 44.2 %
Hong Kong - 23.3 % United Kingdom 22.6 %
Italy 35.5 % United States 33.4 %
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN LOCAL CURRENCY
Australia 9.2 % Japan - 14.5 %
Austria 18.5 % Netherlands 45.1 %
Belgium 32.4 % Norway 22.7 %
Canada 17.8 % Singapore/Malaysia - 15.7 /- 51.1 %
Denmark 56.1 % Spain 46.9 %
France 29.5 % Sweden 31.2 %
Germany 45.3 % Switzerland 56.7 %
Hong Kong - 23.2 % United Kingdom 27.5 %
Italy 57.5 % United States 33.4 %
</TABLE>
The following table shows the average annualized stock market returns
measured in U.S. dollars as of December 31, 1997.
STOCK MARKET PERFORMANCE
FIVE YEARS ENDED TEN YEARS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1997
Germany 1 5.32 % 39.05 %
Hong Kong 0.86 % 107.89 %
Japan -4.11 % -3.22 %
Spain 26.67 % 41.73 %
United Kingdom 17.42 % 46.60 %
United States 24.58 % 63.22 %
PERFORMANCE COMPARISONS. A class's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on total return, assume reinvestment of distributions, do
not take sales charges or trading fees into consideration, and are
prepared without regard to tax consequences. Lipper may also rank bond
funds based on yield. In addition to mutual fund rankings, performance
may be compared to stock, bond, and money market mutual fund
performance indices prepared by Lipper or other organizations. When
comparing these indices, it is important to remember the risk and
return characteristics of each type of investment. For example, while
stock mutual funds may offer higher potential returns, they also carry
the highest degree of share price volatility. Likewise, money market
funds may offer greater stability of principal, but generally do not
offer the higher potential returns available from stock mutual funds.
From time to time, performance may also be compared to other mutual
funds tracked by financial or business publications and periodicals.
For example, a class may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that
rates mutual funds on the basis of risk-adjusted performance. Rankings
that compare the performance of Fidelity funds to one another in
appropriate categories over specific periods of time may also be
quoted in advertising.
A class's performance may also be compared to that of a benchmark
index representing the universe of securities in which the fund may
invest. The total return of a benchmark index reflects reinvestment of
all dividends and capital gains paid by securities included in the
index. Unlike a class returns, however, the index returns do not
reflect brokerage commissions, transaction fees, or other costs of
investing directly in the securities included in the index.
Each of TechnoQuant Growth, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
and Balanced may compare its performance to that of the Standard &
Poor's 500 Index, a widely recognized, unmanaged index of common
stocks.
International Capital Appreciation may compare its performance to that
of the Morgan Stanley Capital International AC World Index ex USA
(Gross), a market capitalization weighted equity index comprising 46
counties-20 developed markets and 26 emerging markets.
Overseas may compare its performance to that of the Morgan Stanley
Capital International Europe, Australasia, Far East (EAFE)
Index, an unmanaged, market capitalization weighted
index that is designed to represent the performance of developed stock
markets outside of the United States and Canada . The index returns
for periods after January 1, 1997 are adjusted for tax withholding
rates applicable to U.S.-based mutual funds organized as Massachusetts
business trusts.
Mid-Cap may compare its performance to that of the Standard & Poor's
MidCap 400 Index, a widely recognized, unmanaged index of 400
medium-capitalization stocks.
Balanced may compare its performance to that of the Lehman Brothers
Aggregate Bond Index, a market value weighted performance benchmark
for investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities. Issues
included in the index have an outstanding par value of at least $100
million and maturities of at least one year. Government and corporate
issues include all public obligations of the U.S. Treasury (excluding
flower bonds and foreign-targeted issues) and U.S. Government
agencies, as well as nonconvertible investment-grade, SEC-registered
corporate debt. Mortgage-backed securities include 15- and 30-year
fixed-rate securities backed by mortgage pools of the Government
National Mortgage Association (GNMA), Federal Home Loan Mortgage
Corporation (FHLMC), and Fannie Mae. Asset-backed securities include
credit card, auto, and home equity loans.
Emerging Markets Income may compare its performance to that of the
J.P. Morgan Emerging Markets Bond Index Plus, a market capitalization
weighted total return index of U.S. dollar- and other external
currency-denominated Brady bonds, loans, Eurobonds, and local market
debt instruments traded in emerging markets.
Each of High Yield and Strategic Income may compare its performance to
that of the Merrill Lynch High Yield Master Index, a market
capitalization weighted index of all domestic and yankee high-yield
bonds with an outstanding par value of at least $50 million and
maturities of at least one year. Issues included in the index have a
credit rating lower than BBB-/Baa3 but are not in default (DDD1 or
lower). Split-rated issues (i.e., rated investment-grade by one rating
agency and high-yield by another) are included in the index based on
the issue's corresponding composite rating. Structured-note issues,
deferred interest bonds, and pay-in-kind bonds are excluded.
Mortgage Securities may compare its performance to that of the
Lehman Brothers Mortgage Securities Index, a market value weighted
performance benchmark of 15-and 30-year fixed-rate securities backed
by mortgage pools of the Government National Mortgage Association
(GNMA), Federal Home Loan Mortgage Corporation (FHLMC), and Federal
National Mortgage Association (FNMA). Graduated payments mortgages
(GPMs) and balloons are included in the index, buydowns, manufactured
homes, and graduated equity mortgages (GEMs) are not included in the
index.
Government Investment may compare its performance to that of the
Lehman Brothers Government Bond Index, a market value weighted index
of U.S. government and government agency securities (other than
mortgage securities) with maturities of one year or more. Issues
included in the index have a par value of at least $100 million.
Issues include all public obligations of the U.S. Treasury (excluding
flower bonds and foreign-targeted issues) and U.S. Government agencies
and quasi-federal corporations, and corporate debt guaranteed by the
U.S. Government.
Intermediate Bond may compare its performance to that of the Lehman
Brothers Intermediate Government/Corporate Bond Index, a market value
weighted performance benchmark for government and corporate fixed-rate
debt issues. Issues included in the index have an outstanding par
value of at least $100 million and maturities between one and 10
years. Government and corporate issues include all public obligations
of the U.S. Treasury (excluding flower bonds and foreign-targeted
issues) and U.S. government agencies, as well as nonconvertible
investment-grade, SEC-registered corporate debt.
Short Fixed-Income may compare its performance to that of the Lehman
Brothers 1-3 Year Government/Corporate Bond Index, a market value
weighted performance benchmark for government and corporate fixed-rate
debt issues. Issues included in the index have an outstanding par
value of at least $100 million and maturities between one and three
years. Government and corporate issues include all public obligations
of the U.S. Treasury (excluding flower bonds and foreign-targeted
issues) and U.S. Government agencies, as well as nonconvertible
investment-grade, SEC-registered corporate debt.
Strategic Income may compare its performance to that of the Fidelity
Strategic Income Composite Benchmark which is a hypothetical
representation of the performance of the fund's general investment
categories according to their respective weighting in the fund's
neutral mix. The Fidelity Strategic Income Composite Benchmark
represents Strategic Income's four general investment categories
according to their respective weighting in the fund's neutral mix (40%
high yield, 30% U.S. Government and investment-grade, 15% emerging
markets and 15% foreign developed markets). The following indices are
used to calculate the Fidelity Strategic Income Composite Benchmark:
high yield - the Merrill Lynch High Yield Master Index (40%), a market
capitalization weighted index of all domestic and yankee high-yield
bonds with an outstanding par value of at least $50 million and
maturities of at least one year; U.S. Government and
investment - grade - the Lehman Brothers Government Bond Index
(30%) is a market value weighted index of U.S. government and
government agency securities (other than mortgage securities) with
maturities of one year or more. Issues included in the index have a
par value of at least $100 million. Issues include all public
obligations of the U.S. Treasury (excluding flower bonds and
foreign-targeted issues) and U.S. Government agencies and
quasi-federal corporations, and corporate debt guaranteed by the U.S.
Government; foreign developed markets - the Salomon Brothers
Non-U.S. Dollar World Government Bond Index (15%), is a
market-capitalization weighted index that tracks the performance of 16
world Government bond markets, excluding the United States. Issues
included in the Index have fixed-rate coupons and maturities of at
least one year; emerging markets - the J.P. Morgan Emerging Markets
Bond Index Plus (15%), a markets capitalization weighted total return
index of U.S. dollar-and other external currency-denominated Brady
bonds, loans, Eurobonds, and local market debt instruments traded in
emerging markets.
Each class of the municipal funds may compare its performance to that
of the Lehman Brothers Municipal Bond Index, a total return
performance benchmark for investment-grade municipal bonds with
maturities of at least one year. I ntermediate Municipal Income
may compare its performance to that of the Lehman Brothers 1-17 Year
Municipal Bond Index, a total return performance benchmark for
investment-grade municipal bonds with maturities between one and 17
years. Short-Intermediate Municipal Income may compare its performance
to that of the Lehman Brothers 1-5 Year Municipal Bond Index, a total
return performance benchmark for investment-grade municipal bonds with
maturities between one and five years. Issues included in each index
have been issued after December 31, 1990 and have an outstanding par
value of at least $50 million. Subsequent to December 31, 1995, zero
coupon bonds and issues subject to the alternative minimum tax are
included in each index.
A class may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks or other depository
institutions. Mutual funds differ from bank investments in several
respects. For example, a fund may offer greater liquidity or higher
potential returns than CDs, a fund does not guarantee your principal
or your return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates total returns in
the same method as the classes. The classes may also compare
performance to that of other compilations or indices that may be
developed and made available in the future.
A fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual
municipal bond. Unlike municipal mutual funds, individual municipal
bonds offer a stated rate of interest and, if held to maturity,
repayment of principal. Although some individual municipal bonds might
offer a higher return, they do not offer the reduced risk of a mutual
fund that invests in many different securities. The initial investment
requirements and sales charges of many municipal mutual funds are
lower than the purchase cost of individual municipal bonds, which are
generally issued in $5,000 denominations and are subject to direct
brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include the following: other Fidelity
funds; retirement investing; model portfolios or allocations; and
saving for college or other goals. In addition, Fidelity may quote or
reprint financial or business publications and periodicals as they
relate to current economic and political conditions, fund management,
portfolio composition, investment philosophy, investment techniques,
the desirability of owning a particular mutual fund, and Fidelity
services and products.
Each fund may be advertised as part of certain asset allocation
programs involving other Fidelity or non-Fidelity mutual funds. These
asset allocation programs may advertise a model portfolio and its
performance results.
Each fund may be advertised as part of a no transaction fee (NTF)
program in which Fidelity and non-Fidelity mutual funds are offered.
An NTF program may advertise performance results.
A fund may present its fund number, QuotronTM number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A class may quote various measures of volatility and
benchmark correlation in advertising. In addition, a fund may compare
these measures to those of other funds. Measures of volatility seek to
compare a class' historical share price fluctuations or total returns
to those of a benchmark. Measures of benchmark correlation indicate
how valid a comparative benchmark may be. All measures of volatility
and correlation are calculated using averages of historical data. In
advertising, a fund may also discuss or illustrate examples of
interest rate sensitivity.
MOMENTUM INDICATORS indicate a class's price movements over specific
periods of time. Each point on the momentum indicator represents the
class's percentage change in price movements over that period.
A class may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a class at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a
$1,000 investment earning a taxable return of 10% annually would have
an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after
ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.
As of December 31, 1997, FMR advised over $ 30 billion in
tax-free fund assets, $ 99 billion in money market fund assets,
$ 395 billion in equity fund assets, $ 71 billion in
international fund assets, and $ 24 billion in Spartan fund
assets. The funds may reference the growth and variety of money market
mutual funds and the adviser's innovation and participation in the
industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the
purpose of researching and managing investments abroad.
In addition to performance rankings, each class of each bond fund may
compare its total expense ratio to the average total expense ratio of
similar funds tracked by Lipper. A class's total expense ratio is a
significant factor in comparing bond and money market investments
because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
CLASS A SHARES ONLY
Pursuant to Rule 22d-1 under the 1940 Act, FDC exercises its right to
waive Class A's front-end sales charge on shares acquired through
reinvestment of dividends and capital gains or in connection with
a fund's merger with or acquisition of any investment company or
trust. In addition, FDC has chosen to waive Class A's front-end sales
charge in certain instances because of efficiencies involved in those
sales of shares. The sales charge will not apply:
1. to shares purchased for an insurance company separate account used
to fund annuity contracts for employee benefit plans (including 403(b)
programs, but otherwise as defined in ERISA);
2. to shares purchased by a trust institution or bank trust department
for a managed account that is charged an asset-based fee. Employee
benefit plans and accounts managed by third parties do not qualify for
this waiver;
3. to shares purchased by a broker-dealer for a managed account that
is charged an asset-based fee. Employee benefit plans do not qualify
for this waiver;
4. to shares purchased by a registered investment adviser that is not
part of an organization primarily engaged in the brokerage business
for an account that is managed on a discretionary basis and is charged
an asset-based fee. Employee benefit plan s do not qualify for
this waiver;
5. to shares purchased for an employee benefit plan having $25 million
or more in plan assets; or
6. to shares purchased prior to December 31, 1998 by shareholders who
have closed their Class A Municipal Bond, Class A California Municipal
Income, or Class A New York Municipal Income accounts prior to
December 31, 1997. This waiver is limited to purchases of up to
$10,000; shareholders are entitled to this waiver after the original
load waiver certificate is received by FIIOC .
CLASS T SHARES ONLY
Pursuant to Rule 22d-1 under the 1940 Act, FDC exercises its right to
waive Class T's front-end sales charge on shares acquired through
reinvestment of dividends and capital gains or in connection with a
fund's merger with or acquisition of any investment company or trust.
In addition, FDC has chosen to waive Class T's front-end sales charge
in certain instances because of efficiencies involved in those sales
of shares. The sales charge will not apply:
1. to shares purchased for an insurance company separate account used
to fund annuity contracts for employee benefit plans (including 403(b)
programs, but otherwise as defined in ERISA);
2. to shares purchased by a trust institution or bank trust department
for a managed account that is charged an asset-based fee. Accounts
managed by third parties do not qualify for this waiver;
3. to shares purchased by a broker-dealer for a managed account that
is charged an asset-based fee;
4. to shares purchased by a registered investment adviser that is not
part of an organization primarily engaged in the brokerage business
for an account that is managed on a discretionary basis and is charged
an asset-based fee;
5. to shares purchased for an employee benefit plan;
6. to shares purchased for a Fidelity or Fidelity Advisor account
(including purchases by exchange) with the proceeds of a distribution
from (i) an insurance company separate account used to fund annuity
contracts for employee benefit plans that are invested in Fidelity
Advisor or Fidelity funds, or (ii) an employee benefit plan that is
invested in Fidelity Advisor or Fidelity funds. (Distributions other
than those transferred to an IRA account must be transferred directly
into a Fidelity account.);
7. to shares purchased for any state, county, or city, or any
governmental instrumentality, department, authority or agency;
8. to shares purchased with redemption proceeds from other mutual fund
complexes on which the investor has paid a front-end or contingent
deferred sales charge;
9. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or FIL or their direct or indirect subsidiaries
(a Fidelity Trustee or employee), the spouse of a Fidelity Trustee or
employee, a Fidelity Trustee or employee acting as custodian for a
minor child, or a person acting as trustee of a trust for the sole
benefit of the minor child of a Fidelity Trustee or employee;
10. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code) investing
$100,000 or more;
11. to shares purchased by a bank trust officer, registered
representative, or other employee (or a member of one of their
immediate families) of investment professionals having agreements with
FDC;
12. to shares purchased for a charitable remainder trust or life
income pool established for the benefit of a charitable organization
(as defined for purposes of Section 501(c)(3) of the Internal Revenue
Code);
13. to shares purchased with distributions of income, principal, and
capital gains from Fidelity Defined trusts; or
14. to shares purchased prior to December 31, 1998 by shareholders who
have closed their Class T Municipal Bond, Class T California Municipal
Income, or Class T New York Municipal Income accounts prior to
December 31, 1997. This waiver is limited to purchases of up to
$10,000; shareholders are entitled to this waiver after the original
load waiver certificate is received by FIIOC .
STRATEGIC OPPORTUNITIES: INITIAL CLASS ONLY
Pursuant to Rule 22d-1 under the 1940 Act, FDC exercises its right to
waive Initial Class's front-end sales charge on shares acquired
through reinvestment of dividends and capital gain distributions or in
connection with the fund's merger with or acquisition of any
investment company or trust. In addition, FDC has chosen to waive
Initial Class's sales charge in certain instances because of
efficiencies involved in those sales of shares. The sales charge will
not apply:
1. to shares purchased in connection with an employee benefit plan
(including the Fidelity-sponsored 403(b) and corporate IRA programs
but otherwise as defined in the Employee Retirement Income Security
Act) maintained by a U.S. employer and having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in
Fidelity mutual funds, or as part of an employee benefit plan
maintained by a U.S. employer that is a member of a parent-subsidiary
group of corporations (within the meaning of Section 1563(a)(1) of the
Internal Revenue Code, with "50%" substituted for "80%") any member of
which maintains an employee benefit plan having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in
Fidelity mutual funds, or as part of an employee benefit plan
maintained by a non-U.S. employer having 200 or more eligible
employees, or a minimum of $3,000,000 in assets invested in Fidelity
mutual funds, the assets of which are held in a bona fide trust for
the exclusive benefit of employees participating therein;
2. to shares purchased by an insurance company separate account used
to fund annuity contracts purchased by employee benefit plans
(including 403(b) programs, but otherwise as defined in the Employee
Retirement Income Security Act), which, in the aggregate, have either
more than 200 eligible employees or a minimum of $3,000,000 in assets
invested in Fidelity funds;
3. to shares in a Fidelity account purchased (including purchases by
exchange) with the proceeds of a distribution from an employee benefit
plan provided that: (i) at the time of the distribution, the employer,
or an affiliate (as described in exemption 1 above) of such employer,
maintained at least one employee benefit plan that qualified for
exemption (1) and that had at least some portion of its assets
invested in one or more mutual funds advised by FMR, or in one or more
accounts or pools advised by Fidelity Management Trust Company; and
(ii) either (a) the distribution is transferred from the plan to a
Fidelity IRA account within 60 days from the date of the distribution
or (b) the distribution is transferred directly from the plan into
another Fidelity account;
4. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code) investing
$100,000 or more;
5. to shares purchased for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as
defined for purposes of Section 501(c)(3) of the Internal Revenue
Code);
6. to shares purchased by an investor participating in the Fidelity
Trust Portfolios program (these investors must make initial
investments of $100,000 or more in the Trust Portfolios funds and
must, during the initial six-month period, reach and maintain an
aggregate balance of at least $500,000 in all accounts and subaccounts
purchased through the Trust Portfolios program);
7. to shares purchased by a mutual fund for which FMR or an affiliate
serves as investment manager;
8. to shares purchased through Portfolio Advisory Services or Fidelity
Charitable Advisory Services;
9. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or FIL or their direct or indirect subsidiaries
(a Fidelity Trustee or employee), the spouse of a Fidelity Trustee or
employee, a Fidelity Trustee or employee acting as custodian for a
minor child, or a person acting as trustee of a trust for the sole
benefit of the minor child of a Fidelity Trustee or employee;
10. to shares purchased by a bank trust officer, registered
representative, or other employee of a qualified recipient. Qualified
recipients are securities dealers or other entities, including banks
and other financial institutions, who have sold the fund's shares
under special arrangements in connection with FDC's sales activities;
11. to shares purchased by contributions and exchanges to the
following prototype or prototype-like retirement plans sponsored by
FMR Corp. or FMR and that are marketed and distributed directly to
plan sponsors or participants without any intervention or assistance
from any intermediary distribution channel: The Fidelity
Traditional IRA, The Fidelity Roth IRA, The Fidelity Roth
Conversion IRA, T he Fidelity Rollover IRA, The Fidelity SEP-IRA
and SARSEP, The Fidelity SIMPLEIRA, The Fidelity Retirement
Plan, Fidelity Defined Benefit Plan, The Fidelity Group IRA, The
Fidelity 403(b) Program, The Fidelity Investments 401(a) Prototype
Plan for Tax-Exempt Employers, and The CORPORATEplan for Retirement
(Profit Sharing and Money Purchase Plan);
12. to shares purchased as part of a pension or profit-sharing plan as
defined in Section 401(a) of the Internal Revenue Code that maintains
all of its mutual fund assets in Fidelity mutual funds, provided the
plan executes a Fidelity non-prototype sales charge waiver request
form confirming its qualification;
13. to shares purchased by a registered investment adviser (RIA) for
his or her discretionary accounts, provided he or she executes a
Fidelity RIA load waiver agreement which specifies certain aggregate
minimum and operating provisions. This waiver is available only for
shares purchased directly from Fidelity, without a broker, unless
purchased through a brokerage firm which is a correspondent of
National Financial Services Corporation (NFSC). The waiver is
unavailable, however, if the RIA is part of an organization
principally engaged in the brokerage business, unless the brokerage
firm in the organization is an NFSC correspondent; or
14. to shares purchased by a trust institution or bank trust
department for its non-discretionary, non-retirement fiduciary
accounts, provided it executes a Fidelity Trust load waiver agreement
which specifies certain aggregate minimum and operating provisions.
This waiver is available only for shares purchased either directly
from Fidelity or through a bank-affiliated broker, and is unavailable
if the trust department or institution is part of an organization not
principally engaged in banking or trust activities.
The Initial Class's sales charge may be reduced to reflect
sales charges previously paid, or that would have been paid absent a
reduction for some purchases made directly with Fidelity as noted in
the prospectus, in connection with investments in other Fidelity
funds. This includes reductions for investments in prototype-like
retirement plans sponsored by FMR or FMR Corp., which are listed
above .
CLASS B AND CLASS C SHARES ONLY
The contingent deferred sales charge (CDSC) on Class B and Class C
shares may be waived (1) in the case of disability or death, provided
that the shares are redeemed within one year following the death or
the initial determination of disability; (2) in connection with a
total or partial redemption related to certain distributions from
retirement plans or accounts at age 70, which are permitted without
penalty pursuant to the Internal Revenue Code; (3) in connection with
redemptions through the Fidelity Advisor Systematic Withdrawal
Program; or (4) (APPLICABLE TO CLASS C ONLY) in connection with any
redemptions from an employee benefit plan (including 403(b) programs,
but otherwise as defined by ERISA).
A sales load waiver form must accompany each transaction
available for each class .
INSTITUTIONAL CLASS SHARES ONLY
Institutional Class Shares are offered to:
1. Broker-dealer managed accounts programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans (including 403(b) programs, but otherwise as defined by
ERISA) must have at least $50 million in plan assets;
2. Registered investment advisor managed account programs ,
provided the registered investment advisor is not part of an
organization primarily engaged in the brokerage business and the
program (i) charges an asset-based fee, and (ii) will have at least $1
million invested in the Institutional Class of the Advisor funds. In
addition, non-employee benefit plan accounts in the programs must be
managed on a discretionary basis;
3. Trust institution and bank trust department managed accounts
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds; and
5. Current or former Trustees or officers of a Fidelity fund or
current or retired officer, directors, or regular employees of FMR
Corp. or Fidelity International Limited or their direct or indirect
subsidiaries (Fidelity Trustee or employee), spouses of Fidelity
Trustees or employees, Fidelity Trustees or employees acting as a
custodian for a minor child, or persons acting as trustee of a trust
for the sole benefit of the minor child of a Fidelity Trustee or
employee.
For purchases made by managed account programs or insurance company
separate accounts, FDC reserves the right to w a ive the
requirement that $1 million be invested in the Institutional Class of
the Advisor funds.
FOR CLASS A AND CLASS T SHARES ONLY
FINDER'S FEE. For all funds except the Short-Term Bond Funds, on
eligible purchases of (i) Class A shares in amounts of $1 million or
more that qualify for a Class A load waiver, (ii) Class A shares in
amounts of $25 million or more, or (iii) Class T shares in amounts of
$1 million or more, investment professionals will be compensated with
a fee at the rate of 0.25% of the purchase amount. Class A eligible
purchases are the following purchases made through broker-dealers and
banks: an individual trade of $25 million or more; an individual trade
of $1 million or more that is load waived; a trade which brings the
value of the accumulated account(s) of an investor (including an
employee benefit plan) past $25 million; a load waived trade that
brings the value of the accumulated account(s) of an investor
(including an employee benefit plan) past $1 million; a trade for an
investor with an accumulated account value of $25 million or more; a
load waived trade for an investor with an accumulated account value of
$1 million or more; an incremental trade toward an investor's $25
million "Letter of Intent"; and an incremental load waived trade
toward an investor's $1 million "Letter of Intent". Class T eligible
purchases are the following purchases made through broker-dealers and
banks: an individual trade of $1 million or more; a trade which brings
the value of the accumulated account(s) of an investor (including an
employee benefit plan) past $1 million; a trade for an investor with
an accumulated account value of $1 million or more; and an incremental
trade toward an investor's $1 million "Letter of Intent."
For the Short-Term Bond Funds, on eligible purchases of (i) Class A
shares in amounts of $1 million or more, or (ii) Class T shares in
amounts of $1 million or more, investment professionals will be
compensated with a fee at the rate of 0.25% of the purchase amount.
Class A eligible purchases are the following purchases made through
broker-dealers and banks: an individual trade of $1 million or more; a
trade which brings the value of the accumulated account(s) of an
investor (including an employee benefit plan) past $1 million; a trade
for an investor with an accumulated account value of $1 million or
more; and an incremental trade toward an investor's $1 million "Letter
of Intent." Class T eligible purchases are the following purchases
made through broker-dealers and banks: an individual trade of $1
million or more; a trade which brings the value of the accumulated
account(s) of an investor (including an employee benefit plan) past $1
million; a trade for an investor with an accumulated account value of
$1 million or more; and an incremental trade toward an investor's $1
million "Letter of Intent."
Any assets on which a finder's fee has been paid will bear a
contingent deferred sales charge (Class A or Class T CDSC) if they do
not remain in Class A or Class T shares of the Fidelity Advisor Funds,
or Daily Money Class shares of Treasury Fund, Prime Fund or Tax-Exempt
Fund, for a period of at least one uninterrupted year. The Class A or
Class T CDSC will be 0.25% of the lesser of the cost of the Class A or
Class T shares, as applicable, at the initial date of purchase or the
value of the Class A or Class T shares, as applicable, at redemption,
not including any reinvested dividends or capital gains. Class A and
Class T shares acquired through distributions (dividends or capital
gains) will not be subject to a Class A or Class T CDSC. In
determining the applicability and rate of any Class A or Class T CDSC
at redemption, Class A or Class T shares representing reinvested
dividends and capital gains, if any, will be redeemed first, followed
by those Class A or Class T shares, as applicable that have been held
for the longest period of time.
With respect to employee benefit plans, the Class A or Class T CDSC
does not apply to the following types of redemptions: (i) plan loans
or distributions or (ii) exchanges to non-Advisor fund investment
options. With respect to Individual Retirement Accounts, the Class A
or Class T CDSC does not apply to redemptions made for disability,
payment of death benefits, or required partial distributions starting
at age 70 1/2.
CLASS A, CLASS T, CLASS B, AND CLASS C SHARES ONLY
QUANTITY DISCOUNTS. To obtain a reduction of the front-end sales
charge on Class A or Class T shares, you or your investment
professional must notify the transfer agent at the time of purchase
whenever a quantity discount is applicable to your purchase. Upon such
notification, you will receive the lowest applicable front-end sales
charge.
For purposes of qualifying for a reduction in front-end sales charges
under the Combined Purchase, Rights of Accumulation or Letter of
Intent programs, the following may qualify as an individual or a
"company" as defined in Section 2(a)(8) of the 1940 Act: an
individual, spouse, and their children under age 21 purchasing for
his, her, or their own account; a trustee, administrator or other
fiduciary purchasing for a single trust estate or a single fiduciary
account or for a single or a parent-subsidiary group of "employee
benefits plans" (as defined in Section 3(3) of ERISA); and tax-exempt
organizations as defined under Section 501(c)(3) of the Internal
Revenue Code.
RIGHTS OF ACCUMULATION permit reduced front-end sales charges on any
future purchases of Class A or Class T shares after you have reached a
new breakpoint in a fund's sales charge schedule. The value of
currently held (i) Fidelity Advisor fund Class A, Class T, Class B and
Class C shares, (ii) Advisor B Class and Advisor C Class shares of
Treasury Fund and (iii) Daily Money Class shares of Treasury Fund,
Prime Fund, and Tax-Exempt Fund acquired by exchange from any Fidelity
Advisor fund, is determined at the current day's NAV at the close of
business, and is added to the amount of your new purchase valued at
the current offering price to determine your reduced front-end sales
charge.
LETTER OF INTENT. You may obtain Class A or Class T shares at the same
reduced front-end sales charge by filing a non-binding Letter of
Intent (Letter) within 90 days of the start of Class A or Class T
purchases. Each Class A or Class T investment you make after signing
the Letter will be entitled to the front-end sales charge applicable
to the total investment indicated in the Letter. For example, a $2,500
purchase of Class A or Class T shares toward a $50,000 Letter would
receive the same reduced sales charge as if the $50,000 ($500,000 for
the Short-Term Bond Funds) had been invested at one time. Purchases of
Class B and Class C shares during the 13-month period also will count
toward the completion of the Letter. To ensure that you receive a
reduced front-end sales charge on future purchases, you or your
investment professional must inform Fidelity that the Letter is in
effect each time Class A or Class T shares are purchased. Reinvested
income and capital gain distributions do not count toward the
completion of the Letter.
Your initial investment must be at least 5% of the total amount you
plan to invest. Out of the initial purchase, Class A or Class T shares
equal to 5% of the dollar amount specified in the Letter will be
registered in your name and held in escrow. The Class A or Class T
shares held in escrow cannot be redeemed or exchanged until the Letter
is satisfied or the additional sales charges have been paid. You will
earn income dividends and capital gain distributions on escrowed Class
A or Class T shares. The escrow will be released when your purchase of
the total amount has been completed. You are not obligated to complete
the Letter.
If you purchase more than the amount specified in the Letter and
qualify for a future front-end sales charge reduction, the front-end
sales charge will be adjusted to reflect your total purchase at the
end of 13 months. Surplus funds will be applied to the purchase of
additional Class A or Class T shares at the then-current offering
price applicable to the total purchase.
If you do not complete your purchase under the Letter within the
13-month period, 30 days' written notice will be provided for you to
pay the increased front-end sales charges due. Otherwise, sufficient
escrowed Class A or Class T shares will be redeemed to pay such
charges.
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM. You can make regular
investments in Class A, Class T, Class B, Class C or Institutional
Class shares of the funds monthly, bimonthly, quarterly, or
semi-annually with the Systematic Investment Program by completing the
appropriate section of the account application and attaching a voided
personal check with your bank's magnetic ink coding number across the
front. If your bank account is jointly owned, be sure that all owners
sign.
You may cancel your participation in the Systematic Investment Program
at any time without payment of a cancellation fee. You will receive a
confirmation from the transfer agent for every transaction, and a
debit entry will appear on your bank statement.
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM. If you own Class A,
Class T, or Institutional Class shares worth $10,000 or more, you can
have monthly, quarterly or semi-annual checks sent from your account
to you, to a person named by you, or to your bank checking account. If
you own Class B or Class C shares worth $10,000 or more you can have
monthly or quarterly checks sent from your account to you, to a person
named by you, or to your bank checking account. Aggregate redemptions
per 12-month period from your Class B or Class C account may not
exceed 10% of the value of the account and are not subject to a CDSC;
and you may set your withdrawal amount as a percentage of the value of
your account or a fixed dollar amount. Your Systematic Withdrawal
Program payments are drawn from Class A, Class T, Class B, Class C, or
Institutional Class share redemptions, as applicable. If Systematic
Withdrawal Plan redemptions exceed income dividends earned on your
shares, your account eventually may be exhausted.
ALL CLASSES
Each fund is open for business and its net asset value per share
(NAV) is calculated each day the New York Stock Exchange (NYSE) is
open for trading. The NYSE has designated the following holiday
closings for 1998: New Year's Day, Martin Luther King's Birthday,
Presidents ' Day, Good Friday, Memorial Day, Independence Day
(observed), Labor Day, Thanksgiving Day, and Christmas Day. Although
FMR expects the same holiday schedule to be observed in the future,
the NYSE may modify its holiday schedule at any time. In addition,
on days when the Federal Reserves Wire System is closed, federal
funds wires cannot be sent until the next business day.
FSC normally determines each class's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
SEC. To the extent that portfolio securities are traded in other
markets on days when the NYSE is closed, a class's NAV may be affected
on days when investors do not have access to a fund to purchase or
redeem shares. In addition, trading in some of a fund's portfolio
securities may not occur on days when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing a fund's NAV. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to
give shareholders at least 60 days' notice prior to terminating or
modifying its exchange privilege. Under the Rule, the 60-day
notification requirement may be waived if (i) the only effect of a
modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the
time of an exchange, or (ii) the fund suspends the redemption of the
shares to be exchanged as permitted under the 1940 Act or the rules
and regulations thereunder, or the fund to be acquired suspends the
sale of its shares because it is unable to invest amounts effectively
in accordance with its investment objective and policies.
In the prospectus, each fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your
distributions at the then-current NAV. All subsequent distributions
will then be reinvested until you provide Fidelity with alternate
instructions.
DIVIDENDS. A portion of each fund's income may qualify for the
dividends-received deduction available to corporate shareholders to
the extent that the fund's income is derived from qualifying
dividends. Because each fund may earn other types of income, such as
interest, income from securities loans, non-qualifying dividends, and
short-term capital gains, the percentage of dividends from the funds
that qualify for the deduction will generally be less than 100%. For
those funds whose income is primarily derived from interest, dividends
will not qualify for the dividends-received deduction available to
corporate shareholders. Short-term capital gains are distributed as
dividend income, but do not qualify for the dividends-received
deduction. To the extent that a municipal fund's income is designated
as federally tax-exempt interest, the daily dividends declared by the
fund are also federally tax-exempt. For any fund that invests
significantly in foreign securities, corporate shareholders should not
expect fund dividends to qualify for the dividends-received deduction.
Each fund will notify corporate shareholders annually of the
percentage of fund dividends that qualifies for the dividends-received
deduction. A portion of each fund's dividends derived from certain
U.S. Government securities may be exempt from state and local
taxation. Gains (losses) attributable to foreign currency fluctuations
are generally taxable as ordinary income and, therefore, will increase
(decrease) dividend distributions. If a fund's distributions exceed
its net investment company taxable income during a taxable year, all
or a portion of the distributions made in the same taxable year would
be recharacterized as a return of capital to shareholders, thereby
reducing each shareholder's cost basis in the fund. Mortgage security
paydown gains (losses) on mortgage securities purchased by a fund on
or prior to June 8, 1997 are generally taxable as ordinary income and,
therefore, increase (decrease) taxable dividend distributions. Each
fund will send to shareholders a notice in January describing the tax
status of dividends and capital gains distributions, if any, for the
prior year .
S hareholders are required to report tax-exempt income on their
federal tax returns. Shareholders who earn other income, such as
Social Security benefits, may be subject to federal income tax on up
to 85% of such benefits to the extent that their income, including
tax-exempt income, exceeds certain base amounts.
Each municipal fund purchases securities whose interest FMR believes
is free from federal income tax. Generally, issuers or other parties
have entered into covenants requiring continuing compliance with
federal tax requirements to preserve the tax-free status of interest
payments over the life of the security. If at any time the covenants
are not complied with, or if the IRS otherwise determines that the
issuer did not comply with relevant tax requirements, interest
payments from a security could become federally taxable retroactive to
the date the security was issued. For certain types of structured
securities, the tax status of the pass-through of tax-free income may
also be based on the federal tax treatment of the structure.
As a result of t he Tax Reform Act of 1986, interest on certain
"private activity" securities is subject to the federal alternative
minimum tax (AMT), although the interest continues to be excludable
from gross income for other tax purposes. Interest from private
activity securities is a tax preference item for the purposes of
determining whether a taxpayer is subject to the AMT and the amount of
AMT tax to be paid, if any. Private activity securities issued after
August 7, 1986 to benefit a private or industrial user or to finance a
private facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after
April 30, 1993 and short-term capital gains distributed by a fund
are t axable to shareholders as dividends, not as capital gains.
Corporate investors should note that a tax preference item for
purposes of the corporate AMT is 75% of the amount by which adjusted
current earnings (which include tax-exempt interest) exceeds the
alternative minimum taxable income of the corporation. If a
shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss
will be disallowed to the extent of the amount of the exempt-interest
dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by a fund
on the sale of securities and distributed to shareholders are
federally taxable as long-term capital gains, regardless of the length
of time shareholders have held their shares. If a shareholder receives
a capital gain distribution on shares of a fund, and such shares are
held six months or less and are sold at a loss, the portion of the
loss equal to the amount of the capital gain distribution will be
considered a long-term loss for tax purposes. Short-term capital gains
distributed by each fund are taxable to shareholders as dividends, not
as capital gains.
As of November 30, 1997, TechnoQuant Growth hereby designates
approximately $ 48,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of October 31, 1997, Overseas hereby designates approximately
$ 18,690,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of November 30, 1997, Mid Cap hereby designates approximately
$ 4,130,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of November 30, 1997, Equity Growth hereby designates approximately
$ 116,982,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of October 31, 1997, Growth Opportunities hereby designates
approximately $ 108,011,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of November 30, 1997, Growth Opportunities hereby designates
approximately $66,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of November 30, 1997, Strategic Opportunities hereby designates
approximately $ 15,640,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of November 30, 1997, Large Cap hereby designates approximately
$ 688,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of November 30, 1997, Growth & Income hereby designates
approximately $ 81,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of November 30, 1997, Equity Income hereby designates approximately
$ 17,867,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of October 31, 1997, Balanced hereby designates approximately
$ 29,059,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of December 31, 1997, Emerging Markets Income hereby designates
approximately $ 1,123,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of October 31, 1997, High Yield hereby designates approximately
$ 5,255,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of December 31, 1997, Strategic Income hereby designates
approximately $ 863,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of October 31, 1997, Government Investment had a capital loss
carryforward aggregating approximately $ 6,368,000 . This loss
carryforward, of which $3,26 1 ,000, $2, 767 ,000, and
$340,000 will expire on October 31, 200 2, 2004, and
200 5 , respectively, is available to offset future capital
gains .
A s of November 30, 1997, Intermediate Bond had a capital loss
carryforward aggregating approximately $ 15,259,000 . This loss
carryforward, of which $2,841,000, $1,035,000, $134,000, $9,840,000
and $ 1,409 ,000 will expire on November 30, 1998, 1999,
2002, 2004, and 200 5 , respectively, is available to offset
future capital gains.
As of October 31, 1997, Short Fixed-Income had a capital loss
carryforward aggregating approximately $ 42,980,000 . This loss
carryforward, of which $63,000, $286,000, $38,000, $336,000,
$17,692,000, $19,457,000 , $2,265,000 , and $2,843,000
will expire on October 31, 1998, 1999, 2000, 2001, 2002, 2003,
2004, and 200 5 , respectively, is available to offset
future capital gains.
As of October 31, 1997, Municipal Income had a capital loss
carryforward aggregating approximately $ 16,425,000 . This loss
carryforward, of which $ 2 , 646 ,000, $7,511,000 and
$6,268,000 will expire on October 31, 2002, 2003, and 2004,
respectively, is available to offset future capital gains.
As of December 31, 1997, Municipal Bond had a capital loss
carryforward aggregating approximately $8,535,000. This loss
carryforward, all of which will expire December 31, 2003, is available
to offset future capital gains.
As of November 30, 1997, Intermediate Municipal Income hereby
designates approximately $68,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of November 30, 1997, Short-Intermediate Municipal Income hereby
designates approximately $12,00 0 as a capital gain dividend for
the purpose of the dividend-paid deduction.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business
trusts, state law provides for a pass-through of the state and local
income tax exemption afforded to direct owners of U.S. Government
securities. Some states limit this pass-through to mutual funds
that invest a certain amount in U.S. Government securities, and some
types of securities, such as repurchase agreements and some
agency - backed securities, may not qualify for this benefit. The
tax treatment of your dividend distributions from a fund will be the
same as if you directly owned a proportionate share of the U.S.
Government securities. Because the income earned on most U.S.
Government securities is exempt from state and local income taxes, the
portion of dividends fro m a fund attributable to these
securities will also be free from income taxes. The exemption from
state and local income taxation does not preclude states from
assessing other taxes on the ownership of U.S. Government securities.
In a number of states, corporate franchise (income) tax laws do not
exempt interest earned on U.S. Government securities, whether such
securities are held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments
may also impose taxes on other payments or gains with respect to
foreign securities. If, at the close of its fiscal year, more than 50%
of a fund's total assets are invested in securities of foreign
issuers, the fund may elect to pass through foreign taxes paid and
thereby allow shareholders to take a credit or deduction on their
individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a "
regulated investment company" for tax purposes, so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company
and avoid being subject to federal income or excise taxes at the fund
level, each fund intends to distribute substantially all of its net
investment income and net realized capital gains within each
calendar year as well as on a fiscal year basis, and intends to
comply with other tax rules applicable to regulated investment
companies.
E ach fund is treated as a separate entity from the other funds,
if any, in its trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders of a
fund may be subject to state and local taxes on fund distributions,
and shares may also be subject to state and local personal property
taxes. Investors should consult their tax advisers to determine
whether a fund is suitable for their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the 1940 Act, control of a company is presumed where one individual or
group of individuals owns more than 25% of the voting stock of that
company. Therefore, through their ownership of voting common stock and
the execution of the shareholders' voting agreement, members of the
Johnson family may be deemed, under the 1940 Act, to form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures
for personal investing and restricts certain transactions. For
example, all personal trades in most securities require pre-clearance,
and participation in initial public offerings is prohibited. In
addition, restrictions on the timing of personal investing in relation
to trades by Fidelity funds and on short-term trading have been
adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board and executive officers of
the trust are listed below. Except as indicated, each individual has
held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR. The business address of each Trustee, Member of the
Advisory Board and officer who is an "interested person" (as defined
in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees and Members of the Advisory
Board is Fidelity Investments, P.O. Box 9235, Boston, Massachusetts
02205-9235. Those Trustees who are "interested persons" by virtue of
their affiliation with either the trust or FMR are indicated by an
asterisk (*).
*EDWARD C. JOHNSON 3d (67), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc. Abigail Johnson, Vice
President of certain Equity funds, is Mr. Johnson's daughter.
J. GARY BURKHEAD (56), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage Group
(1997). Previously, Mr. Burkhead served as President of Fidelity
Management & Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste Services,
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer). In addition, he is a
member of advisory boards of Texas A&M University and the University
of Texas at Austin.
PHYLLIS BURKE DAVIS (66), Trustee. Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (54), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is currently a Trustee for the Forum For
International Policy, a Board Member for the Virginia Neurological
Institute, and a Senior Advisor of the Harvard Journal of World
Affairs. In addition, Mr. Gates also serves as a member of the
corporate board for LucasVarity PLC (automotive components and diesel
engines), Charles Stark Draper Laboratory (non-profit), NACCO
Industries, Inc. (mining and manufacturing), and TRW Inc. (original
equipment and replacement products).
E. BRADLEY JONES (70), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (original equipment and replacement
products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc. (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (65), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of the National Arts Stabilization Fund, Chairman
of the Board of Trustees of the Greenwich Hospital Association, a
Member of the Public Oversight Board of the American Institute of
Certified Public Accountants' SEC Practice Section (1995), and as a
Public Governor of the National Association of Securities Dealers,
Inc. (1996).
*PETER S. LYNCH (54), Trustee, is Vice Chairman and Director of
FMR. Prior to May 31, 1990, he was a Director of FMR and
Executive Vice President of FMR (a position he held until March 31,
1991); Vice President of Fidelity Magellan Fund and FMR Growth Group
Leader; and Managing Director of FMR Corp. Mr. Lynch was also Vice
President of Fidelity Investments Corporate Services (1991-1992). In
addition, he serves as a Trustee of Boston College, Massachusetts Eye
& Ear Infirmary, Historic Deerfield (1989) and Society for the
Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston.
WILLIAM O. McCOY (64), Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), and the Kenan Transport Co. (1996).
Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member
of the Board of Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH (68), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director of York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp.
(hydraulic systems, building systems, and metal products, 1992), CUNO,
Inc. (liquid and gas filtration products, 1996), and Associated
Estates Realty Corporation (a real estate investment trust, 1993). Mr.
McDonough served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996 and
Brush-Wellman Inc. (metal refining) from 1983-1997.
MARVIN L. MANN (64), Trustee (1993) , is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) Imation Corp. (imaging and information storage, 1997) and
Infomart (marketing services, 1991), a Trammell Crow Co. In addition,
he serves as the Campaign Vice Chairman of the Tri-State United Way
(1993) and is a member of the University of Alabama President's
Cabinet.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
President and a Director of FMR (1997); and President and a Director
of Fidelity Investments Money Management, Inc., (199 8 ),
Fidelity Management & Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director, and Senior Vice
President of FMR Corp.
THOMAS R. WILLIAMS (69), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of ConAgra, Inc. (agricultural products), Georgia Power Company
(electric utility), National Life Insurance Company of Vermont,
American Software, Inc., and AppleSouth, Inc. (restaurants, 1992).
ROBERT LAWRENCE (45), is Vice President of certain Equity Funds
(1997), Vice President of Fidelity Real Estate High Income Fund
(1995) and Fidelity Estate High Income Fund II (1996), and Senior
Vice President of FMR (1993).
FRED L. HENNING, JR. (58), is Vice President of Fidelity's
Fixed-Income Group (1995) , Senior Vice President of FMR
(1995), and Senior Vice President of FIMM (1998). Before
assuming his current responsibilities, Mr. Henning was head of
Fidelity's Money Market Division.
BART A. GRENIER, (38) is Vice President of certain High-Income Bond
Funds (1997). Mr. Grenier rejoined Fidelity in August 1997 from DDJ
Capital Management, LLC, where he had served as Managing Director
since April 1997. Mr. Grenier originally joined Fidelity in 1991 as a
senior analyst. Mr. Grenier served as Director of High-Income Group
Research and as Director of U.S. Equity Research from 1994 to March
1996. He later became Group Leader of the Income-Growth and Asset
Allocation-Income Groups in 1996 and Assistant Equity Division Head in
1997.
JOHN H. CARLSON (47), is Vice President of Fidelity Advisor Emerging
Markets Income Fund (1996) and Fidelity Advisor Strategic Income Fund
(1996), and other funds advised by FMR. Prior to joining Fidelity in
1995, Mr. Carlson spent three years with Lehman Brothers as executive
director of emerging markets and senior vice president and head trader
at Lehman's Latin American emerging markers fixed-income desk.
DWIGHT CHURCHILL (44), is Vice President of Bond funds, Group Leader
of the Bond Group, Senior Vice President of FMR (1997) , and
Vice President of FIMM (1998). Mr. Churchill joined Fidelity in
1993 as Vice President and Group Leader of Taxable Fixed-Income
Investments .
M ARGARET L. EAGLE (48), is Vice President of Fidelity Advisor
High Yield and Fidelity Advisor Strategic Income Fund (1997). Prior to
her current responsibilities, Ms. Eagle was a fixed-income analyst and
managed a variety of Fidelity funds.
GEORGE A. FISCHER (36), is Vice President of Fidelity Advisor
Municipal Bond Fund (1997) and other funds advised by FMR. Prior to
his current responsibilities, Mr. Fischer has managed a variety of
Fidelity funds.
KEVIN E. GRANT (37), is Vice President of Fidelity Advisor Balanced
Fund (1996), Fidelity Advisor Intermediate Bond Fund (1995), Fidelity
Advisor Mortgage Securities (1995), and other funds advised by FMR.
Since joining Fidelity in 1993, Mr. Grant has managed a variety of
Fidelity funds. Prior to joining Fidelity, Mr. Grant was vice
president and chief mortgage strategist at Morgan Stanley for three
years.
CURTIS HOLLINGSWORTH (40), is Vice President of Fidelity Advisor
Government Investment Fund (1996), Fidelity Advisor Strategic Income
Fund (1996), and other funds advised by FMR. Prior to his current
responsibilities, Mr. Hollingsworth has managed a variety of Fidelity
funds.
HARRIS LEVITON (36), is Vice President of Strategic Opportunities
(1996). Prior to his current responsibilities, Mr. Leviton has managed
a variety of Fidelity funds.
ABIGAIL JOHNSON (36), is Vice President of certain Equity Funds
(1997), and is a Director of FMR Corp (1994). Before assuming her
current responsibilities, Ms. Johnson managed a number of Fidelity
funds. Edward C. Johnson 3d, Trustee and President of the funds, is
Ms. Johnson's father.
NORMAN U. LIND (41), is Vice President of Fidelity Advisor
Short-Intermediate Municipal Income Fund (1995) , Fidelity Advisor
Intermediate Municipal Income Fund (1998), and other funds advised
by FMR. Prior to his current responsibilities, Mr. Lind managed a
variety of Fidelity funds.
KEVIN R. MCCAREY (37), is Vice President of Fidelity Advisor
International Capital Appreciation Fund (1997) and other funds advised
by FMR. Prior to his current responsibilities, Mr. McCarey has managed
a variety of Fidelity funds.
RICHARD R. MACE, JR. (36), is Vice President of Fidelity Advisor
Overseas Fund (1996), and other funds advised by FMR. Prior to his
current responsibilities, Mr. Mace has managed a variety of Fidelity
funds.
JONATHAN D. SHORT (34), is Vice Presi d ent of Fidelity Advisor
Municipal Income Fund (1998), and other funds advised by FMR.
P rio r to his current responsibilities, Mr. Short assisted on
Fidelity Advisor Municipal Income Fund and managed a variety of
Fidelity funds .
RICHARD A. SPILLANE, JR. (46), is Vice President of certain Equity
Funds, and Senior Vice President of FMR (1997). Since joining Fidelity
Mr. Spillane is Chief Investment Officer for Fidelity
International, Limited. Prior to that position, Mr. Spillane served as
Director of Research.
THOMAS M. SPRAGUE (40), is Vice President of Large Cap (1997), and
another fund advised by FMR. Prior to is current responsibilities, Mr.
Sprague has managed a variety of Fidelity funds.
BETH TERRANA (40), is Vice President of Fidelity Advisor Growth &
Income Fund (1996) , and other funds advised by FMR. Prior to
her current responsibilities, Ms. Terrana managed a variety of
Fidelity funds.
JENNIFER S. UHRIG (36), is Vice President of Fidelity Advisor Equity
Growth Fund (1996), and other funds advised by FMR. Prior to her
current responsibilities, Ms. Uhrig has managed a variety of Fidelity
funds.
GEORGE A. VANDERHEIDEN (52), is Vice President of Growth
Opportunities, and other funds advised by FMR. Prior to his current
responsibilities, Mr. Vanderheiden has managed a variety of Fidelity
funds.
ERIC D. ROITER (49), Secretary (1998) , is Vice President
(199 8 ) , and General Counsel of FMR (1998). Mr. Roiter
was an Adjunct Member, Faculty of Law, at Columbia University Law
School (1996-1997). Prior to joining Fidelity, Mr. Roiter was a
partner at Debevoise & Plimpton (1981-1997) and served as Assistant
General Counsel of the U.S. Securities and Exchange Commission
(1979-1981).
RICHARD A. SILVER (50), Treasurer (1997), is Treasurer of the Fidelity
funds and is an employee of FMR (1997). Before joining FMR, Mr. Silver
served as Executive Vice President, Fund Accounting & Administration
at First Data Investor Services Group, Inc. (1996-1997). Prior to
1996, Mr. Silver was Senior Vice President and Chief Financial Officer
at The Colonial Group, Inc. Mr. Silver also served as Chairman of the
Accounting/Treasurer's Committee of the Investment Company Institute
(1987-1993).
THOMAS D. MAHER (52), Assistant Vice President, is Assistant Vice
President of Fidelity's Municipal Bond Fund s (1996) and of
Fidelity's Money Market Funds .
JOHN H. COSTELLO (51), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (51), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THOMAS J. SIMPSON (39), Assistant Treasurer, is Assistant Treasurer of
Fidelity's municipal bond funds (1996) and of Fidelity's money market
funds (1996) and an employee of FMR (1996). Prior to joining FMR, Mr.
Simpson was Vice President and Fund Controller of Liberty Investment
Services (1987-1995).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended in 1997, or calendar year
ended December 31, 1997, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggregate
Compensation
from a
FundA
J. Gary Ralph Phyllis Richard Robert Edward E. Donald Peter William Gerald Edward Marvin Thomas
Burkhead F. Burke J. M. C. Bradley J. S. O. C. H. L. R.
(Double Cox Davis Flynn Gates Johnson Jones Kirk Lynch McCoy McDonough Malone Mann Williams
Dagger) (Double 3d (Double (Double (Double
Dagger) (Double Dagger) Dagger) Dagger)
(Double Dagger) (Double (Double
Dagger) Dagger) Dagger)
(Double
Dagger)
TechnoQuant
$ 0 $ 8 $ 8 $ 0 $ 5 $ 0 $ 8 $ 8 $ 0 $ 5 $ 10 $ 0 $ 8 $ 8
Growth**,B
International
0 20 20 0 17 0 20 20 0 20 25 0 20 20
Capital
AppreciationB,++
Overseas*,B,C
0 481 471 64 121 0 474 474 0 260 575 66 481 478
MidCap**,B
0 144 141 6 66 0 142 142 0 94 175 6 144 144
Equity
0 2,067 2,022 127 783 0 2,038 2,038 0 1,110 2,506 123 2,067 2,069
Growth**,B,D,N
Growth
0 7,159 7,008 860 5,170 0 7,060 7,060 0 7,213 8,573 929 7,159 7,115
Opportunities
**,B,E,N,O
Strategic
0 265 259 0 170 0 261 261 0 227 326 0 265 265
Opportunities**,B
Large Cap**,B
0 24 24 1 11 0 24 24 0 16 29 1 24 24
Growth &
0 23 23 0 16 0 23 23 0 16 29 0 23 23
Income**,B
Equity
0 1,202 1,177 66 965 0 1,186 1,186 0 1,237 1,460 64 1,202 1,203
Income**,B,F,N
Balanced*,B,G,N
0 1,236 1,209 178 839 0 1,219 1,219 0 1,232 1,470 198 1,236 1,227
Emerging
0 49 48 0 33 0 49 49 0 42 61 0 49 49
Markets
Income***,B
High Yield*,B,H,N
0 1,013 991 123 729 0 998 998 0 1,021 1,212 132 1,013 1,006
Strategic
0 67 66 0 45 0 66 66 0 57 83 0 67 67
Income***,B
Mortgage
0 204 199 82 98 0 200 200 0 202 235 68 204 204
Securities *,B,I,P
Government
0 92 90 15 57 0 91 91 0 90 105 14 92 91
Investment*,B,J
Intermediate
0 197 193 13 151 0 194 194 0 202 239 13 197 197
Bond**,B,K
Short Fixed-
0 166 161 25 109 0 164 164 0 164 197 28 166 165
Income*,B,L
Municipal
0 200 195 30 131 0 197 197 0 197 237 34 200 198
Income*,B,M
Municipal
0 395 386 0 326 0 389 389 0 404 486 0 395 395
Bond***,B
Intermediate
0 27 27 2 21 0 27 27 0 28 33 2 27 27
Municipal
Income**,B
Short-Intermediat
0 11 11 1 8 0 11 11 0 11 13 1 11 11
e Municipal
Income**,B
TOTAL
0 214,500 210,000 0 176,000 0 211,500 211,500 0 214,500 264,500 0 214,500 214,500
COMPENSATION
FROM THE FUND
COMPLEX +,A
</TABLE>
* Fiscal year ended October 31.
** Fiscal year ended November 30.
*** Fiscal year ended December 31.
(double dagger) Interested trustees of each fund and Mr. Burkhead are
compensated by FMR.
(double dagger)(double dagger) Richard J. Flynn and Edward H. Malone
served on the Board of Trustees through December 31, 1996.
(double dagger)(double dagger)(double dagger) During the period from
May 1, 1996 through December 31, 1996, William O. McCoy served as a
Member of the Advisory Board for the funds. Mr. McCoy was appointed
to the Board of Trustees of Advisor Series II, III, IV, V, VI, Income
Fund, and Municipal Trust effective January 1, 1997. Mr. McCoy was
elected to the Board of Trustees of Advisor Series I, VII, and VIII on
July 16, 1997, September 17, 1997, and June 18, 1997,
respectively .
+ Information is as of December 31, 1997 for 230 funds in the
complex.
++ Figures presented are estimates for the fund's first fiscal year
end October 31, 1998.
A Compensation figures include cash, amounts required to be
deferred, and may include amounts deferred at the election of
Trustees. For the calendar year ended December 31, 1997, the Trustees
accrued required deferred compensation from the funds as follows:
Ralph F. Cox, $75,000, Phyllis Burke Davis, $75,000, Robert M. Gates,
$62,500, E. Bradley Jones, $75,000, Donald J. Kirk, $75,000, William
O. McCoy, $75,000, Gerald C. McDonough, $87,500, Marvin L. Mann,
$75,000, and Thomas R. Williams, $75,000. Certain of the
non-interested Trustees elected voluntarily to defer a portion of
their compensation: Ralph F. Cox, $53,699, Marvin L. Mann, $53,699,
and Thomas R. Williams, $62,462.
B Compensation figures include cash, and may include amounts
required to be deferred and amounts deferred at the election of
Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 12 , Phyllis Burke Davis, $ 12 , Robert M. Gates,
$0, Richard J. Flynn, $ 0 , E. Bradley Jones, $12 ,
Donald J. Kirk, $ 12 , William O. McCoy, $ 0 , Gerald C.
McDonough, $ 12 , Edward H. Malone, $ 12 , Marvin L. Mann,
$ 12 , and Thomas R. Williams, $ 12.
D The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 925 , Phyllis Burke Davis, $ 925 , Robert M.
Gates, $330, Richard J. Flynn, $ 0 , E. Bradley Jones,
$ 925 , Donald J. Kirk, $ 925 , William O. McCoy,
$ 330 , Gerald C. McDonough, $ 1,078 , Edward H. Malone,
$ 4 , Marvin L. Mann, $ 925 , and Thomas R. Williams,
$ 925.
E The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 3,130 , Phyllis Burke Davis, $ 3,130 , Richard J.
Flynn, $ 0 , Robert M. Gates, $2,446, E. Bradley Jones,
$ 3,130 , Donald J. Kirk, $ 3,130 , William O. McCoy,
$ 3,044 , Gerald C. McDonough, $ 3,624 , Edward H. Malone,
$ 165 , Marvin L. Mann, $ 3,130 , and Thomas R. Williams,
$ 3,130 .
F The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $541 , Phyllis Burke Davis, $ 541 , Richard J. Flynn,
$ 0 , Robert M. Gates, $454, E. Bradley Jones,
$ 541 , Donald J. Kirk, $ 541 , William O. McCoy,
$ 552 , Gerald C. McDonough, $ 631 , Edward H. Malone,
$ 2 , Marvin L. Mann, $ 541 , and Thomas R. Williams,
$ 541 .
G The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 535 , Phyllis Burke Davis, $ 535 , Richard J. Flynn,
$ 0 , Robert M. Gates, $397, E. Bradley Jones,
$ 535 , Donald J. Kirk, $ 535 , William O. McCoy,
$ 508 , Gerald C. McDonough, $ 617 , Edward H. Malone,
$ 41 , Marvin L. Mann, $ 535 , and Thomas R. Williams,
$ 535 .
H The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 442 , Phyllis Burke Davis, $ 442 , Richard J. Flynn,
$ 0 , Robert M. Gates, $345, E. Bradley Jones,
$ 442 , Donald J. Kirk, $ 442 , William O. McCoy,
$ 430 , Gerald C. McDonough, $ 512 , Edward H. Malone,
$ 23 , Marvin L. Mann, $ 442 , and Thomas R. Williams,
$ 442 .
I The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 6 , Phyllis Burke Davis, $ 6 , Richard J. Flynn,
$ 0 , Robert M. Gates, $0, E. Bradley Jones, $ 6 ,
Donald J. Kirk, $ 6 , William O. McCoy, $ 0 , Gerald C.
McDonough, $ 6 , Edward H. Malone, $ 6, Marvin L. Mann,
$ 6, and Thomas R. Williams, $ 6 .
J The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 4 , Phyllis Burke Davis, $ 4 , Richard J. Flynn,
$ 0 , Robert M. Gates, $0, E. Bradley Jones, $ 4 ,
Donald J. Kirk, $ 4 , William O. McCoy, $ 0 , Gerald C.
McDonough, $ 4 , Edward H. Malone, $ 4 , Marvin L. Mann,
$ 4 , and Thomas R. Williams, $ 4 .
K The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 1 , Phyllis Burke Davis, $ 1 , Richard J. Flynn,
$ 0 , Robert M. Gates, $0, E. Bradley Jones, $ 1 ,
Donald J. Kirk, $ 1 , William O. McCoy, $ 0 , Gerald C.
McDonough, $ 1 , Edward H. Malone, $ 1 , Marvin L. Mann,
$ 1 , and Thomas R. Williams, $ 1 .
L The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 6 , Phyllis Burke Davis, $ 6 , Richard J. Flynn,
$ 0 , Robert M. Gates, $0, E. Bradley Jones, $ 6 ,
Donald J. Kirk, $ 6 , William O. McCoy, $ 0 , Gerald C.
McDonough, $ 6 , Edward H. Malone, $ 6 , Marvin L. Mann,
$ 6 , and Thomas R. Williams, $ 6 .
M The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $ 7 , Phyllis Burke Davis, $ 7 , Richard J. Flynn,
$ 0 , Robert M. Gates, $0, E. Bradley Jones, $ 7 ,
Donald J. Kirk, $ 7 , William O. McCoy, $0 , Gerald C.
McDonough, $ 7 , Edward H. Malone, $ 7 , Marvin L. Mann,
$ 7 , and Thomas R. Williams, $ 7 .
N For the fiscal period ended in 1997, certain of the
non-interested trustees' aggregate compensation from certain funds
includes accrued voluntary deferred compensation as follows: Equity
Growth (Cox, $870, Malone, $119, Mann, $870, Williams, $767); Growth
Opportunities (Cox, $3,178, Malone, $764, Mann, $3,178, Williams,
$2,464); Equity Income (Cox, $502, Malone, $62, Mann, $502, Williams,
$449); Balanced (Cox, $557, Malone, $157, Mann, $557, Williams $410);
and High Yield (Cox, $450, Malone, $109, Mann, $450, Williams,
$348).
O Aggregate compensation from Growth Opportunities for the one
month period ended November 30, 1997: J. Gary Burkhead, $0, Ralph F.
Cox, $697, Phyllis Burke Davis, $697, Richard J. Flynn, $0, Robert M.
Gates, $688, Edward C. Johnson 3d, $0, E. Bradley Jones, $697, Donald
J. Kirk, $697, Peter S. Lynch, $0, William O. McCoy, $688, Gerald C.
McDonough, $851, Edward H. Malone, $14, Marvin L. Mann, $697, and
Thomas R. Williams, $697.
P Aggregate compensation from Mortgage Securities for the three
month period ended October 31, 1997: J. Gary Burkhead, $0, Ralph F.
Cox, $51, Phyllis Burke Davis, $51, Richard J. Flynn, $0, Robert M.
Gates, $51, Edward C. Johnson 3d, $0, E. Bradley Jones, $51, Donald J.
Kirk, $51, Peter S. Lynch, $0, William O. McCoy, $51, Gerald C.
McDonough, $63, Edward H. Malone, $0, Marvin L. Mann, $51, and Thomas
R. Williams, $51 .
U nder a deferred compensation plan adopted in September 1995
and amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are subject to vesting and are treated as though
equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds including funds in each major
investment discipline and representing a majority of Fidelity's assets
under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 31, 1997, the following owned of record or
beneficially 5% or more of the outstanding shares of the classes of
the following Fidelity Advisor funds:
ADVISOR BALANCED - CLASS A: EQ Financial Consultants, New York,
NY (16.66%).
ADVISOR BALANCED - CLASS T : CIGNA, Hartford, CT (21.29%); Smith
Barney, New York, NY (5.24%).
ADVISOR BALANCED - CLASS B: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (5.20%).
ADVISOR BALANCED - CLASS C: Leonard & Co., Birmingham, MI
(22.04%); Smith Barney, New York, NY (15.25%); Wheat First Butcher
Singer, Inc., Richmond, VA (11.35%); Securities America, Inc.,
Omaha, NE (6.72%).
ADVISOR BALANCED - INSTITUTIONAL CLASS: Whitney National Bank,
New Orleans, LA (27.72%); Valley National Bank, Clifton, NJ
(13.40%); Charles Schwab and Co., Inc., San Francisco, CA (9.61%);
South Holland Bancorp, South Holland, IL (6.63%); Donaldson,
Lufkin & Jenrette, New York, NY (5.18%).
ADVISOR EMERGING MARKETS INCOME - CLASS A: Linsco/Private
Ledger, San Diego, CA (17.62%); Washington Square Securi ties,
Minneapolis, MN (7.96%); FMR Corp., Boston, MA (5.92%); Dain
Rauscher, Inc., Minneapolis, MN (5.72%).
ADVISOR EMERGING MARKETS INCOME - CLASS T: FMR Corp., Boston,
MA (9.60%).
ADVISOR EMERGING MARKETS INCOME - CLASS B: Donaldson, Lufkin &
Jenrette, New York, NY (6.48%).
ADVISOR EMERGING MARKETS INCOME - CLASS C: Securities America,
Inc., Omaha, NE (50.33%); FMR Corp., Boston, MA (10.39%);
Wash ington Square Securities, Minneapolis, MN (5.28%).
ADVISOR EMERGING MARKETS INCOME - INSTITUTIONAL CLASS:
Donaldson, Lufkin & Jenrette, New York, NY (11.91%).
ADVISOR EQUITY GROWTH - CLASS A: FIS Securities, Inc.,
Providence, RI (10.26%).
ADVISOR EQUITY GROWTH - CLASS T : CIGNA, Hartford, CT (9.00%);
Smith Barney, New York, NY (5.34%).
ADVISOR EQUITY GROWTH - CLASS B: FIS Securities, Inc.,
Providence, RI (8.85%).
ADVISOR EQUITY GROWTH - CLASS C: Citicorp Investment Services,
New York, NY (14.43%); Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (11.50%); Smith Barney, New York, NY (10.36%);
Private Brokers CLEA, Dallas, TX (7.24%); J. W. Charles Securities,
Boca Raton, FL (5.46%); Financial Designs Corporation, San
Gabriel, CA (5.26%).
ADVISOR EQUITY INCOME - CLASS A: FIS Securities, Inc.,
Providence, RI (7.57%).
ADVISOR EQUITY INCOME - CLASS T: Smith Barney, New York, NY
(5.01%).
ADVISOR EQUITY INCOME - CLASS B: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (7.27%); Smith Barney, New York, NY
(7.04%); Donaldson, Lufkin & Jenrette, New York, NY (5.31%).
ADVISOR EQUITY INCOME - CLASS C: Intersecurities, Inc., Largo, FL
(11.34%); Merrill Lynch Pierce Fenner & Smith, Jacksonv ille, FL
(9.54%); Private Brokers CLEA, Dallas, TX (9.29%); Securities
America, Inc., Omaha, NE (5.85%).
ADVISOR EQUITY INCOME - INSTITUTIONAL CLASS: BankBoston, Boston, MA
(34.68%); First National Bank of Ohio, Akron, OH (12.45%).
ADVISOR GOVERNMENT INVESTMENT - CLASS A: Walnut Street Securities,
Inc., Clayton, MO (31.16%); Vestax Securities, Hudson, OH (7.88%);
Wilmington Trust Company, Wilmington, DE (7.41%); FMR Corp., Boston,
MA (6.28%); EQ Financial Consultants, New York, NY (5.29%).
ADVISOR GOVERNMENT INVESTMENT - CLASS T: Smith Barney, New York, NY
(6.76%); Oriental Financial Services Corp., Hato Rey, PR (6.09%).
ADVISOR GOVERNMENT INVESTMENT - CLASS B: Royal Alliance Assoc.,
Inc., Birmingham, AL (6.11%); Donaldson, Lufkin & Jenrette, New York,
NY (5.46%); Smith Barney, New York, NY (5.22%); Merrill Lynch Pierce
Fenner & Smith, Jacksonville, FL (5.16%).
ADVISOR GOVERNMENT INVESTMENT - CLASS C: Royal Alliance Assoc.,
Inc., Birmingham, AL (38.63%); Prudential Securities, New York, NY
(37.36%); A. G. Edwards & Sons, St. Louis, MO (8.06%);
Intersecurities, Inc., Largo, FL (6.01%); ONB Investment Services,
Inc., Evansville, IA (5.02%).
ADVISOR GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS: First Hawaiian
Bank, Honolulu, HI (56.08%); Alpha Capital Management, Long Beach, CA
(16.98%); First Security Trust Company, Coral Gables, FL (6.19%).
ADVISOR GROWTH & INCOME - CLASS A: PaineWebber, Inc., Weehawken, NJ
(7.55%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(6.57%); EQ Financial Consultants, New York, NY (5.18%).
ADVISOR GROWTH & INCOME - CLASS T: Commonwealth Equity Services,
Waltham, MA (15.20%); Securities America, Inc., Omaha, NE
(11.47%).
ADVISOR GROWTH & INCOME - CLASS B: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (15.79%); PaineWebber, Inc., Weehawken, NJ
(6.37%); A. G. Edwards & Sons, St. Louis, MO (5.17%).
ADVISOR GROWTH & INCOME - CLASS C: Allmerica Investments,
Worcester, MA (16.22%); Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (11.42%); Royal Alliance Assoc., Inc., Birmingham, AL
(8.20%); J. W. Charles Securities, Boca Raton, FL (7.51%).
ADVISOR GROWTH & INCOME - INSTITUTIONAL CLASS: First Hawaiian Bank,
Honolulu, HI (78.60%).
ADVISOR GROWTH OPPORTUNITIES - CLASS T: CIGNA, Hartford, CT
(16.32%); Smith Barney, New York, NY (6.55%).
ADVISOR GROWTH OPPORTUNITIES - CLASS B: Merrill Lynch Pierce Fenner
& Smith, Jacksonville, FL (8.75%); A. G. Edwards & Sons, St. Louis, MO
(6.30%); Prudential Securities, New York, NY (5.60%); Smith Barney,
New York, NY (5.12%).
ADVISOR GROWTH OPPORTUNITIES - CLASS C: Merrill Lynch Pierce Fenner
& Smith, Jacksonville, FL (18.83%); Smith Barney, New York, NY
(11.34%); Prudential Securities, New York, NY (8.91%); A. G. Edwards &
Sons, St. Louis, MO (6.72%).
ADVISOR GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS: Charles Schwab
and Co., Inc., San Francisco, CA (10.37%); Marshall & Ilsley Trust
Co., Milwaukee, WI (8.43%); Frost National Bank, San Antonio, TX
(8.21%); Donaldson, Lufkin & Jenrette, New York, NY (5.37%).
ADVISOR HIGH YIELD - CLASS A: FIS Securities, Inc., Providence, RI
(11.59%); CIGNA, Hartford, CT (5.79%); Wells Fargo Bank, San
Francisco, CA (5.45%).
ADVISOR HIGH YIELD - CLASS T: Manulife Financial, Canada (7.23%);
Smith Barney, New York, NY (6.09%).
ADVISOR HIGH YIELD - CLASS B: Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (11.26%); Prudential Securities, New York, NY
(6.55%).
ADVISOR HIGH YIELD - CLASS C: Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (33.03%); Smith Barney, New York, New York
(15.32%).
ADVISOR HIGH YIELD - INSTITUTIONAL CLASS: Charles Schwab and Co.,
Inc., San Francisco, CA (31.90%); Donaldson, Lufkin & Jenrette, New
York, NY (11.28%); Resources Trust Company, Englewood, CO (5.12%).
ADVISOR INTERMEDIATE BOND - CLASS A: FIS Securities, Inc.,
Providence, RI (31.20%); Corelink Financial, Providence, RI
(14.42%).
ADVISOR INTERMEDIATE BOND - CLASS T: PaineWebber, Inc., Weehawken,
NJ (6.36%).
ADVISOR INTERMEDIATE BOND - CLASS C: Royal Alliance Assoc., Inc.,
Birmingham, AL (43.88%); A. G. Edwards & Sons, St. Louis, MO (22.61%);
Offerman & Co., Minneapolis, MN (13.59%); Wheat First Butcher Singer,
Inc., Richmond, VA (6.21%): Smith Barney, New York, NY (5.13%).
ADVISOR INTERMEDIATE BOND - INSTITUTIONAL CLASS: Mercantile Bank,
N.A., St. Louis, MO (16.52%); Amivest Corporation, New York, NY
(6.11%); Magna Bank, Belleville, IL (5.27%); Marquis Investments Inc.,
New Orleans, LA (5.24%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS A: FMR Corp., Boston,
MA (27.74%); Summit Trust Company, Summit, NJ (26.66%); Gerson
Horowitz Green Sec. Corp., New York, NY (13.63%); Locust Street
Securities, Inc., Des Moines, IA (13.07%); FSC Securities Corp.,
Atlanta, GA (10.10%); Corelink Financial, Providence, RI (8.77%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS T: Royal Alliance
Assoc., Inc., Birmingham, AL (9.47%); Smith Barney, New York, NY
(6.59%); Commonwealth Equity Services, Waltham, MA (6.08%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS B: Merrill Lynch
Pierce Fenner & Smith, Jacksonville, FL (11.45%); Prudential
Securities, New York, NY (6.64%); Donaldson, Lufkin & Jenrette, New
York, NY (6.45%); National Financial Services Corporation, Boston, MA
(6.19%); Royal Alliance Assoc., Inc., Birmingham, AL (6.15%); A. G.
Edwards & Sons, St. Louis, MO (5.72%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS C: Walnut Street
Securities, Inc., Clayton, MO (66.96%): FMR Corp., Boston, MA
(27.25%); A. G. Edwards & Sons, St. Louis, MO (5.79%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS: South
Holland Bancorp, South Holland, IL (13.57%); Wells Fargo Bank, San
Francisco, CA (11.94%); Citizens National Bank of Evansville,
Evansville, IN (9.88%); Laird Norton Co., Seattle, WA (9.76%); Arvest
Trust Company, Rogers, AR (8.11%); Frost National Bank, San Antonio,
TX (7.77%); Tompkins County Trust Company, Ithaca, NY (7.69%); Liberty
National Bank & Trust, Oklahoma City, OK (5.46%).
ADVISOR INTERNATIONAL CAPITAL APPRECIATION - CLASS A: FMR Corp.,
Boston, MA (49.70%); Prudential Securities, New York, NY (16.68%);
Jackson National Financial, Inc., Lansing, MI (10.09%); PaineWebber,
Inc., Weehawken, NJ (8.85%); Investment Architects, Inc., Alamo, CA
(8.36%); United Securities Alliance, Bensalem, PA (5.10%).
ADVISOR INTERNATIONAL CAPITAL APPRECIATION - CLASS T: Cambridge
Investment Research, Fairfield, IA (27.90%); MML Investors Services,
Inc., Springfield, MA (10.30%); Donahue Securities, Cincinnati, OH
(9.63%); Investacorp, Miami Lakes, FL (6.68%).
ADVISOR INTERNATIONAL CAPITAL APPRECIATION - CLASS B: Guardian
Investor Services Corporation, New York, NY (21.38%); FMR Corp.,
Boston, MA (16.55%); Donahue Securities, Cincinnati, OH (14.20%);
Ilicob Sales Corp., Lockport, NY (6.84%); David A. Noyes & Co.,
Chicago, IL (6.80%).
ADVISOR INTERNATIONAL CAPITAL APPRECIATION - CLASS C: Merrill Lynch
Pierce Fenner & Smith, Jacksonville, FL (22.36%); FMR Corp., Boston,
MA (19.86%); Investacorp, Miami Lakes, FL (15.27%); Financial Network
Investment Corporation, Torrance, CA (6.52%); Prudential Securities,
New York, NY (6.02%); St. Bernard Financial Services, Russellville, AR
(5.09%).
ADVISOR INTERNATIONAL CAPITAL APPRECIATION - INSTITUTIONAL CLASS:
FMR Corp., Boston, MA (99.50%).
ADVISOR LARGE CAP - CLASS A: A. G. Edwards & Sons, St. Louis, MO
(10.52%); Chase Manhattan Bank, N. A., Rochester, NY (7.94%); FMR
Corp., Boston, MA (5.55%).
ADVISOR LARGE CAP - CLASS T: Dain Rauscher, Inc., Minneapolis, MN
(6.84%); Securities America, Inc., Omaha, NE (6.10%).
ADVISOR LARGE CAP -CLASS B: Dain Rauscher, Inc., Minneapolis, MN
(18.08%); Prudential Securities, New York, NY (7.89%).
ADVISOR LARGE CAP - CLASS C: A. G. Edwards & Sons, St. Louis, MO
(23.72%); PaineWebber, Inc., Weehawken, NJ (20.32%); Washington Square
Securities, Minneapolis, MN (12.22%); FMR Corp., Boston, MA (10.17%);
Securities Corporation of Iowa, Cedar Rapids, IA (5.01%).
ADVISOR LARGE CAP - INSTITUTIONAL CLASS: FMR Corp., Boston, MA
(40.50%); South Holland Bancorp, South Holland, IL (27.90%); Charles
Schwab and Co., Inc., San Francisco, CA (10.88%).
ADVISOR MID CAP - CLASS A: Securities America, Inc., Omaha, NE
(8.37%).
ADVISOR MID CAP - CLASS T: Dain Rauscher, Inc., Minneapolis, MN
(8.27%); Smith Barney, New York, NY (7.21%); Commonwealth Equity
Services, Waltham, MA (5.36%); Donaldson, Lufkin & Jenrette, New York,
NY (5.34%).
ADVISOR MID CAP - CLASS B: Dain Rauscher, Inc., Minneapolis, MN
(12.71%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(9.06%); Smith Barney, New York, NY (7.65%).
ADVISOR MID CAP - CLASS C: Washington Square Securities,
Minneapolis, MN (12.85%); Financial Network Investment Corporation,
Torrance, CA (9.61%); Robert Thomas Securities, Inc., St. Petersburg,
FL (7.96%); Intersecurities, Inc., Largo, FL (7.46%); Merrill Lynch
Pierce Fenner & Smith, Jacksonville, FL (6.30%); PaineWebber, Inc.,
Weehawken, NJ (5.74%); Prudential Securities, New York, NY
(5.06%).
ADVISOR MID CAP - INSTITUTIONAL CLASS: First Hawaiian Bank,
Honolulu, HI (53.30%); Fidelity Personal Trust Services, Boston, MA
(8.52%); First Citizens Bank & Trust Company, Raleigh, NC (6.22%).
ADVISOR MORTGAGE SECURITIES - CLASS A: FMR Corp., Boston, MA
(53.94%); Quest Capital Strategies, Inc., Santa Ana Heights, CA
(14.28%); CIGNA, Hartford, CT (7.00%).
ADVISOR MORTGAGE SECURITIES - CLASS T: Commonwealth Equity
Services, Waltham, MA (33.08%); LaSalle St. Securities, Inc., Chicago,
IL (6.09%); Compass Securities Corp., Newton, MA (6.03%).
ADVISOR MORTGAGE SECURITIES - CLASS B: Merrill Lynch Pierce Fenner
& Smith, Jacksonville, FL (10.21%); 1717 Capital Management Company,
Newark, DE (10.13%); Nathan & Lewis Securities, New York, NY (7.91%);
Walnut Street Securities, Inc., Clayton, MO (7.42%); Washington Square
Securities, Minneapolis, MN (7.08%); Commercial Federal Bank, Denver,
CO (6.59%); FMR Corp., Boston, MA (5.36%).
ADVISOR MORTGAGE SECURITIES - INSTITUTIONAL CLASS: Magna Bank,
Belleville, IL (29.50%); Reliance Financial Services, Defiance, OH
(9.76%); Drovers Bank, York, PA (7.73%); The Rock Island Bank, Rock
Island, IL (5.55%); Oak Brook Bank, Oak Brook, IL (5.17%).
ADVISOR MORTGAGE SECURITIES - INITIAL CLASS: National Financial
Services Corporation, Boston, MA (7.50%).
ADVISOR MUNICIPAL INCOME FUND - CLASS A: Northeast Securities,
Inc., Westbury, NY (28.00%); Everen Securities, Inc., Chicago, IL
(14.61%); Mutual Services Corporation, Palm Beach Garden, FL (8.00%);
1717 Capital Management Company, Newark, DE (7.48%).
ADVISOR MUNICIPAL INCOME - CLASS T: Smith Barney, New York, NY
(8.46%); A. G. Edwards & Sons, St. Louis, MO (6.05%); Royal Alliance
Assoc., Inc., Birmingham, AL (5.26%).
ADVISOR MUNICIPAL INCOME - CLASS B: Donaldson, Lufkin & Jenrette,
New York, NY (7.64%); Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (6.74%).
ADVISOR MUNICIPAL INCOME - CLASS C: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (27.12%); Intersecurities, Inc., Largo, FL
(15.66%); Washington Square Securities, Minneapolis, MN (12.02%);
Smith Barney, New York, NY (7.94%); FSC Securities Corp., Atlanta, GA
(6.57%); Investment Management & Research, St. Petersburg, FL (6.11%);
Cowles, Sabol & Co., Inc., Encino, CA (5.86%); Delta Equity Services
Corp., North Easton, MA (5.03%); Walnut Street Securities, Inc.,
Clayton, MO (5.01%).
ADVISOR MUNICIPAL INCOME - INSTITUTIONAL CLASS: Peoples Bank and
Trust Co., Indianapolis, IN (23.16%); Tompkins County Trust Company,
Ithaca, NY (13.47%); FMR Corp., Boston, MA (8.07%); Century Trust,
Rochester, PA (7.66%); University Bank, Houston, TX (7.02%); Arvest
Trust Company, Rogers, AR (6.22%).
ADVISOR OVERSEAS - CLASS A: Wilmington Trust Company, Wilmington,
DE (6.48%); EQ Financial Consultants, New York, NY (6.23%).
ADVISOR OVERSEAS - CLASS T: Smith Barney, New York, NY (7.01%);
Great West Life/Benefits Corp., Englewood, CO (6.51%).
ADVISOR OVERSEAS - CLASS B: Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (7.04%); Smith Barney, New York, NY (5.22%).
ADVISOR OVERSEAS - CLASS C: Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (25.52%); Securities America, Inc., Omaha, NE
(18.79%); Intersecurities, Inc., Largo, FL (6.86%); A. G. Edwards &
Sons, St. Louis, MO (6.33%).
ADVISOR OVERSEAS - INSTITUTIONAL CLASS: First National Bank, Iowa
City, IA (18.70%); Charles Schwab and Co., Inc., San Francisco, CA
(11.99%); Bingham, Dana & Gould L.L.P., Boston, MA (11.32%); First
Hawaiian Bank, Honolulu, HI (7.39%); One Valley Bank, N.A.,
Charleston, WV (6.11%); First Commercial Trust Company, Little Rock,
AR (5.25%).
ADVISOR SHORT FIXED-INCOME - CLASS A: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (91.35%).
ADVISOR SHORT FIXED-INCOME - CLASS T: Royal Alliance Assoc., Inc.,
Birmingham, AL (6.85%); PaineWebber, Inc., Weehawken, NJ (6.02%);
Smith Barney, New York, NY (5.15%).
ADVISOR SHORT FIXED-INCOME - CLASS C: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (61.05%); Smith Barney, New York, NY (15.44%);
Intersecurities, Inc., Largo, FL (5.55%); Capital Analysts, Inc.,
Radnor, PA (5.01%).
ADVISOR SHORT FIXED-INCOME - INSTITUTIONAL CLASS: First Hawaiian
Bank, Honolulu, HI (39.22%); South Holland Bancorp, South Holland, IL
(17.48%); First National Bank of Springfield, Springfield, IL
(13.80%).
ADVISOR SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A: FIS
Securities, Inc., Providence, RI (49.60%); FMR Corp., Boston, MA
(17.86%); Donaldson, Lufkin & Jenrette, New York, NY (16.10%); Metlife
Securities, Inc., Denver, CO (13.45%); Investment Advisors &
Consultants, Inc., Ocean, NJ (6.33%).
ADVISOR SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T: Key
Investments, Cleveland, OH (17.24%); Cowles, Sabol & Co., Inc.,
Encino, CA (9.86%).
ADVISOR SHORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS:
Peoples Bank and Trust Co., Indianapolis, IN (30.37%); First American
Bank & Trust, Fort Atkinson, WI (29.53%); FMR Corp., Boston, MA
(16.17%); University Bank, Houston, TX (11.98%).
ADVISOR STRATEGIC INCOME - CLASS A: FIS Securities, Inc.,
Providence, RI (31.23%).
ADVISOR STRATEGIC INCOME - CLASS T: Royal Alliance Assoc., Inc.,
Birmingham, AL (8.56%); Donaldson, Lufkin & Jenrette, New York, NY
(6.41%); Financial Network Investment Corporation, Torrance, CA
(5.10%).
ADVISOR STRATEGIC INCOME - CLASS B: G. W. & Wade Asset Management
Co., Wellesley, MA (26.47%); FIS Securities, Inc., Providence, RI
(5.75%).
ADVISOR STRATEGIC INCOME - CLASS C: Sunpoint Securities, Inc.,
Longview, TX (34.02%); Securities America, Inc., Omaha, NE (15.86%);
Advanced Financial Planning, Brentwood, TN (8.11%); Robert Thomas
Securities, Inc., St. Petersburg, FL (6.64%); Smith Barney, New York,
NY (6.48%); Midsouth Capital, Inc., Columbia, SC (6.03%);
Intersecurities, Inc., Largo, FL (5.02%).
ADVISOR STRATEGIC INCOME - INSTITUTIONAL CLASS: Charles Schwab and
Co., Inc., San Francisco, CA (77.50%); ESOR & Co., Green Bay, WI
(8.49%); Donaldson, Lufkin & Jenrette, New York, NY (6.31%); Bingham,
Dana & Gould L.L.P., Boston, MA (5.85%).
ADVISOR STRATEGIC OPPORTUNITIES - CLASS A: Fortis Investors, St.
Paul, MN (6.64%); FMR Corp., Boston, MA (5.74%); A. G. Edwards & Sons,
St. Louis, MO (5.12%).
ADVISOR STRATEGIC OPPORTUNITIES - CLASS T: Merrill Lynch Pierce
Fenner & Smith, Jacksonville, FL (11.66%); CIGNA, Hartford, CT
(9.40%); A. G. Edwards & Sons, St. Louis, MO (6.15%).
ADVISOR STRATEGIC OPPORTUNITIES - CLASS B: Smith Barney, New York,
NY (6.52%); Donaldson, Lufkin & Jenrette, New York, NY (5.70%);
Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL (5.57%).
ADVISOR STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS: National
Bank of Alaska, Anchorage, AK (17.72%); Calton & Assoc., Tampa, FL
(17.00%); Whitney National Bank, New Orleans, LA (11.07%); Evergreen
Bank, N.A., Glens Falls, NY (10.31%); Equitable Trust Company,
Nashville, TN (9.50%); Thumb National Bank and Trust, Pigeon, MI
(5.72%); First Tennessee Bank, Memphis, TN (5.57%); Benefit Services
Corporation, Atlanta, GA (5.04%).
ADVISOR STRATEGIC OPPORTUNITIES - INITIAL CLASS: FMR Corp., Boston,
MA (7.62%).
ADVISOR TECHNOQUANT GROWTH - CLASS A: Merrill Lynch Pierce
Fenner & Smith, Jacksonville, FL (44.28%); Piper Jaffrey & Hopwood,
Inc., Minneapolis, MN (10.80%); PaineWebber, Inc., Weehawken, NJ
(8.64%).
ADVISOR TECHNOQUANT GROWTH - CLASS T: Offerman & Co., Minneapolis,
MN (7.69%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(6.76%); A. G. Edwards & Sons, St. Louis, MO (5.94%); PaineWebber,
Inc., Weehawken, NJ (5.29%).
ADVISOR TECHNOQUANT GROWTH - CLASS B: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (38.63%); Piper Jaffrey & Hopwood, Inc.,
Minneapolis, MN (14.58%); Prudential Securities, New York, NY
(5.89%).
ADVISOR TECHNOQUANT GROWTH - CLASS C: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (24.52%); Investors Security, Inc., Suffolk,
VA (20.98%); Securities Corp. of Iowa, Cedar Rapids, IA (19.60%); FMR
Corp., Boston, MA (9.44%); Prudential Securities, New York, NY
(6.07%).
ADVISOR TECHNOQUANT GROWTH - INSTITUTIONAL CLASS: FMR Corp.,
Boston, MA (56.16%); Donaldson, Lufkin & Jenrette, New York, NY
(14.42%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(13.21%).
As of December 31, 1997, approximately 7.54% of Emerging Markets
Income's, 62.18% of International Capital Appreciation's, 3.59% of
Large Cap's, and 2.06% of TechnoQuant Growth's total outstanding
shares were held by an FMR affiliate. FMR Corp. is the ultimate parent
company of this FMR affiliate. By virtue of his ownership interest in
FMR Corp., as described in the "FMR" section on page 119, Mr. Edward
C. Johnson 3d, President and Trustee of the fund, may be deemed to be
a beneficial owner of these shares. As of the above date, with the
exception of Mr. Johnson 3d's deemed ownership of Emerging Markets
Income's, International Capital Appreciation's, Large Cap's, and
TechnoQuant Growth's shares, the Trustees, Members of the Advisory
Board, and officers of the funds owned, in the aggregate, less than 1%
of each class's total outstanding shares.
A shareholder owning of record or beneficially more than 25% of
a fund's outstanding shares may be considered a controlling person.
That shareholder's vote could have a more significant effect on
matters presented at a shareholders' meeting than votes of other
shareholders.
MANAGEMENT CONTRACTS
MANAGEMENT SERVICES. Each fund employs FMR to furnish investment
advisory and other services. Under the terms of its management
contract with each fund, FMR acts as investment adviser and, subject
to the supervision of the Board of Trustees, directs the investments
of the fund in accordance with its investment objective, policies, and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trusts or of FMR, and all personnel of
each fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, pricing and bookkeeping agent, and
securities lending agent, as applicable, each fund or each class
thereof, as applicable, pays all of its expenses that are not assumed
by those parties. Each fund pays for the typesetting, printing, and
mailing of its proxy materials to shareholders, legal expenses, and
the fees of the custodian, auditor and non-interested Trustees. Each
fund's management contract further provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of each fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders of the applicable classes. Other expenses paid by each
fund, or each class thereof, as applicable, 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 securities laws and making necessary
filings under state securities laws. Each fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation
to which the fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under the management
contract, Equity Income pays FMR a monthly management fee at the
annual rate of 0.50% of its average net assets throughout the month.
For the services of FMR under the management contract, TechnoQuant
Growth, International Capital Appreciation, Mid Cap, Equity Growth,
Large Cap, Growth & Income, Balanced, Emerging Markets Income, High
Yield, Strategic Income, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, Municipal Income, Municipal
Bond, Intermediate Municipal Income, and Short-Intermediate Municipal
Income pays FMR a monthly management fee which has two components: a
group fee rate and an individual fund fee rate.
For the services of FMR under the management contract, Overseas,
Growth Opportunities, and Strategic Opportunities each pays FMR a
monthly management fee which has two components: a basic fee, which is
the sum of a group fee rate and an individual fund fee rate, and a
performance adjustment based on a comparison of the performance of
Growth Opportunities and Strategic Opportunities to that of S&P 500
and the performance of Overseas to that of the Morgan Stanley Capital
International Europe, Australasia, Far East Index (EAFE).
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.
FMR is each fund's manager pursuant to management contracts dated and
approved by shareholders on the dates shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C>
FUND DATE OF MANAGEMENT CONTRACT DATE OF SHAREHOLDER APPROVAL
TechnoQuant Growth 12/1/96 12/23/96*
International Capital Appreciation 10/16/97 10/31/97*
Overseas 10/31/97 9/17/97
Mid Cap 1/18/96 1/18/96*
Equity Growth 8/1/97 7/16/97
Growth Opportunities 2/28/98 7/16/97
Strategic Opportunities 2/28/98 6/18/97
Large Cap 1/18/96 1/18/96*
Growth & Income 12/1/96 12/23/96*
Equity Income 8/1/86 7/23/86
Balanced 1/1/95 12/14/94
Emerging Markets Income 7/1/97 6/18/97
High Yield 1/1/95 12/14/94
Strategic Income 10/31/97 6/18/97
Mortgage Securities 8/1/94 7/13/94
Government Investment 1/1/95 12/14/94
Intermediate Bond 1/1/95 12/14/94
Short Fixed-Income 1/1/95 12/14/94
Municipal Income 12/1/94 11/16/94
Municipal Bond 1/1/94 12/15/93
Intermediate Municipal Income 7/1/95 6/14/95
Short-Intermediate Municipal Income 7/1/95 6/14/95
</TABLE>
* Approved by FMR, then the sole shareholder of the fund.
BOND FUNDS
The following fee schedule is the current fee schedule for all bond
funds, except Emerging Markets Income, Strategic Income, Mortgage
Securities, and Municipal Bond.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate 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 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 372 .1200
This fee schedule has been approved by the shareholders of each bond
fund, except Emerging Markets Income, Strategic Income, Mortgage
Securities, and Municipal Bond.
MORTGAGE SECURITIES AND MUNICIPAL BOND. The following fee schedule is
the current fee schedule for Mortgage Securities and Municipal Bond.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate 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 400 .1507
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
On August 1, 1994, FMR voluntarily revised the group fee rate schedule
for Mortgage Securities and Municipal Bond, and added new breakpoints,
pending shareholder approval of a new management contract reflecting
the additional breakpoints. The revised group fee rate schedule is
identical to the above schedule for average group assets under $156
billion. For average group assets in excess of $156 billion, the group
fee rate schedule voluntarily adopted by FMR is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 120 - 156 billion .1450% $150 billion .1736%
156 - 192 .1400 175 .1690
192 - 228 .1350 200 .1652
228 - 264 .1300 225 .1618
264 - 300 .1275 250 .1587
300 - 336 .1250 275 .1560
336 - 372 .1225 300 .1536
Over 372 .1200 325 .1514
350 .1494
375 .1476
400 .1459
On January 1, 1996, FMR voluntarily added new breakpoints to the
(revised, in the case of Mortgage Securities and Municipal Bond)
schedule for average group assets in excess of $372 billion, pending
shareholder approval of a new management contract reflecting the
additional breakpoints. The (revised, in the case of Mortgage
Securities and Municipal Bond) group fee rate schedule and its
extensions provide for lower management fee rates as FMR's assets
under management increase. For average group assets in excess of $372
billion, the group fee rate schedule voluntarily adopted by FMR is as
follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 372 - 408 billion .1200% $ 400 billion .1459
408 - 444 .1175 425 .1443
444 - 480 .1150 450 .1427
480 - 516 .1125 475 .1413
Over 516 .1100 500 .1399
525 .1385
550 .1372
EMERGING MARKETS INCOME AND STRATEGIC INCOME The following fee
schedule is the current fee schedule for Emerging Markets Income and
Strategic Income.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate 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 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350 425 .1443
228 - 264 .1300 450 .1427
264 - 300 .1275 475 .1413
300 - 336 .1250 500 .1399
336 - 372 .1225 525 .1385
372 - 408 .1200 550 .1372
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
This fee schedule has been approved by the shareholders of Emerging
Markets Income and Strategic Income.
EQUITY FUNDS
The following fee schedule is the current fee schedule for all equity
funds (except Equity Income).
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 0 - 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2924
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
This fee schedule has been approved by the shareholders of each equity
fund except Equity Income.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown below on the left. The schedule
below on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $ 549.8 billion of group net assets - the
approximate level for December 199 7 - was . 2942 % for
equity funds and .1 372 % for fixed-income funds, which is the
weighted average of the respective fee rates for each level of group
net assets up to $ 549.8 billion.
The individual fund fee rates for each fund (except Equity Income) are
set forth in the following chart. Based on the average group net
assets of the funds advised by FMR for December 1997 the annual basic
fee rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
TechnoQuant Growt h 0.2942 % + 0.30% = 0.5942%
International Capital Appreciation* 0.2942 % + 0.45% = 0.7442 %
Overseas 0.2942 % + 0.45% = 0.7442 %
Mid Cap 0.2942 % + 0.30% = 0.5942 %
Equity Growth 0.2942 % + 0.30% = 0.5942 %
Growth Opportunities 0.2942 % + 0.30% = 0.5942 %
Strategic Opportunities 0.2942 % + 0.30% = 0.5942 %
Large Cap 0.2942 % + 0.30% = 0.5942 %
Growth & Incom e 0.2942 % + 0.20% = 0.4942 %
Balanced 0.2942 % + 0.15% = 0.4442 %
Emerging Markets Income 0.1372 % + 0.55% = 0.6872 %
High Yield 0.1372 % + 0.45% = 0.5872 %
Strategic Income 0.1372 % + 0.45% = 0.5872 %
Mortgage Securities 0.1372 % + 0.30% = 0.4372 %
Government Investment 0.1372 % + 0.30% = 0.4372 %
Intermediate Bond 0.1372 % + 0.30% = 0.4372 %
Short Fixed-Income 0.1372 % + 0.30% = 0.4372 %
Municipal Income 0.1372 % + 0.25% = 0.3872 %
Intermediate Municipal Income 0.1372 % + 0.25% = 0.3872 %
Short-Intermediate Municipal Income 0.1372 % + 0.25% = 0.3872 %
</TABLE>
* Estimate d
One -twelfth of this annual basic fee rate or management fee
rate, as applicable, is applied to each fund's net assets averaged for
the most recent month, giving a dollar amount, which is the fee for
that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for each of
Overseas, Growth Opportunities, and Strategic Opportunities, is
subject to upward or downward adjustment, depending upon whether, and
to what extent, the fund's investment performance for the performance
period exceeds, or is exceeded by, the record of the S&P 500 (Growth
Opportunities and Strategic Opportunities), or the cap-weighted EAFE
(Overseas) (the Indices) over the same period. The performance period
consists of the most recent month plus the previous 35 months.
Each percentage point of difference, calculated to the nearest 0.01%
for Overseas, Growth Opportunities, and Strategic Opportunities (up to
a maximum difference of (plus/minus)10.00) is multiplied by a
performance adjustment rate of 0.02%.
For the purposes of calculating the performance adjustment for each of
Overseas, Growth Opportunities, and Strategic Opportunities, the
fund's investment performance will be based on the average performance
of all classes of the fund weighted according to their average assets
for each month in the performance period.
The performance comparison is made at the end of each month.
One-twelfth (1/12) of this rate is then applied to each fund's average
net assets for the entire performance period, giving the dollar amount
which will be added to (or subtracted from) the basic fee.
The maximum annualized adjustment rate is (plus/minus)0.20% of a
fund's average net assets over the performance period.
A class's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by each class are treated as if
reinvested in that class's shares at the NAV as of the record date for
payment. The record of each Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on a fund's
performance compared to the investment record of the applicable Index,
the controlling factor is not whether the fund's performance is up or
down per se, but whether it is up or down more or less than the record
of the Index. Moreover, the comparative investment performance of each
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
The following table shows the amount of management fees paid by each
fund (Ratios annualized for periods of less than one year) to
FMR for the past three fiscal years, and the amount of negative or
positive performance adjustments to the management fees paid by
Overseas, Growth Opportunities, and Strategic Opportunities.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FISCAL MANAGEMENT FEE+ PERFORMANCE MANAGEMENT FEE
YEAR ADJUSTMENT AS A PERCENTAGE OF
ENDED AVERAGE NET ASSETS
TECHNOQUANT GROWTH 11/30
1997# $ 135,400 N/A 0.60%
OVERSEAS 10/31
1997 9,515,372 $ 734,731 (upward) 0.81
1996 6,353,206 687,829 (downward) 0.68
1995 5,589,729 307,727 (upward) 0.81
MID CAP 11/30
1997 2,182,332 N/A 0.60
1996* 644,430 N/A 0.60
EQUITY GROWTH 11/30
1997 30,254,233 N/A 0.60
1996 23,048,140 N/A 0.61
1995 12,057,390 N/A 0.61
GROWTH OPPORTUNITIES
11/1/97 - 11/30/97++ 8,283,249 2,127,105 (downward) 0.52
10/31
1997 86,854,055 19,295,278 (downward) 0.49
1996 76,294,260 1,076,788 (upward) 0.61
1995 49,903,758 5,210,490 (upward) 0.69
STRATEGIC OPPORTUNITIES
1/1/97- 11/30/97+++ 2,293,268 1,112,763 (downward) 0.40
12/31
1996 3,621,407 962,281 (downward) 0.48
1995 3,510,812 91,269 (upward) 0.62
LARGE CAP 11/30
1997 364,913 N/A 0.60
1996* 100,564 N/A 0.60
GROWTH & INCOME 11/30
1997# 385,672 N/A 0.50
EQUITY INCOME 11/30
1997 14,927,663 N/A 0.50
1996 10,188,385 N/A 0.50
1995 4,257,045 N/A 0.50
BALANCED 10/31
1997 13,236,926 N/A 0.45
1996 16,119,225 N/A 0.50
1995 17,383,377 N/A 0.51
EMERGING MARKETS INCOME 12/31
1997 822,554 N/A 0.69
1996 488,344 N/A 0.69
1995 283,122 N/A 0.70
HIGH YIELD 10/31
1997 14,787,091 N/A 0.59
1996 10,195,539 N/A 0.60
1995 5,796,415 N/A 0.60
FISCAL MANAGEMENT FEE+ PERFORMANCE MANAGEMENT FEE AS A
YEAR ADJUSTMENT PERCENTAGE OF
ENDED AVERAGE NET ASSETS
STRATEGIC INCOME 12/31
1997 $ 967,126 N/A 0.59%
1996 641,715 N/A 0.59
1995 277,990 N/A 0.60
MORTGAGE SECURITIES
8/1/97 - 10/31/97++++ 578,471 N/A 0.44
7/31
1997 2,273,788 N/A 0.44
1996 2,104,873 N/A 0.45
1995 1,707,178 N/A 0.45
GOVERNMENT INVESTMENT 10/31
1997 930,159 N/A 0.44
1996 1,197,929 N/A 0.45
1995 766,114 N/A 0.45
INTERMEDIATE BOND 11/30
1997 2,095,786 N/A 0.44
1996 2,174,162 N/A 0.45
1995 1,703,722 N/A 0.45
SHORT FIXED-INCOME 10/31
1997 1,715,958 N/A 0.44
1996 2,203,578 N/A 0.45
1995 2,889,187 N/A 0.45
MUNICIPAL INCOME 10/31
1997 1,826,656 N/A 0.39
1996 2,266,568 N/A 0.40
1995 2,289,466 N/A 0.40
MUNICIPAL BOND 12/31
1997 3,649,000 N/A 0.39
1996 3,912,000 N/A 0.40
1995 4,282,000 N/A 0.40
INTERMEDIATE MUNICIPAL 11/30
INCOME
1997 255,140 N/A 0.39
1996 310,611 N/A 0.40
1995 292,469 N/A 0.40
SHORT-INTERMEDIATE 11/30
MUNICIPAL INCOME
1997 99,898 N/A 0.39
1996 117,532 N/A 0.40
1995 79,349 N/A 0.40
</TABLE>
# TechnoQuant Growth and Growth & Income commenced operations
on December 31, 1 996.
* Mid Cap and Large Cap commenced operations on February 20,
1996.
+ Management fee includes performance adjustments for Overseas, Growth
Opportunitie s, and Strategic Opportunities.
++ For the fiscal period November 1, 1997 through November
30, 1997.
++ + For the fiscal period January 1, 1997 through November 30,
1997.
++++ For the fiscal period A ugust 1, 1997 through October
31, 1997.
FMR may, from time to time, voluntarily reimburse all or a portion of
a class's expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year.
Expense reimbursements by FMR will increase a class's total returns
and yield, and repayment of the reimbursement by a class will lower
its total returns and yield.
SUB-ADVISERS. On behalf of TechnoQuant Growth, Mid Cap, Equity Growth,
Growth Opportunities, Strategic Opportunities, Large Cap, Growth &
Income, Equity Income, Balanced, High Yield, Mortgage Securities,
Intermediate Bond, and Short Fixed-Income, FMR has entered into
sub-advisory agreements with FMR U.K. and FMR Far East. On behalf of
International Capital Appreciation, Overseas, Emerging Markets
Income , and Strategic Income, FMR has entered into sub-advisory
agreements with FMR U.K., FMR Far East, FIJ, and FIIA. FIIA, in turn,
has entered into a sub-advisory agreement with FIIA(U.K.)L. Pursuant
to the sub-advisory agreements, FMR may receive investment advice and
research services outside the United States from the sub-advisers.
On behalf of TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth & Income,
Balanced, High Yield, Mortgage Securities, Intermediate Bond,
and Short Fixed-Income, FMR may also grant FMR U.K. and FMR Far East
investment management authority as well as the authority to buy and
sell securities if FMR believes it would be beneficial to the funds.
On behalf of International Capital Appreciation, Overseas, Emerging
Markets Income, and Strategic Income, FMR may also grant FMR U.K.,
FMR Far East, FIJ, FIIA and FIIA(U.K.)L investment management
authority to buy and sell securities if FMR believes it would be
beneficial to the funds.
Currently, FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L each
focus on issuers in countries other than the United States such as
those in Europe, Asia, and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. FIJ and FIIA are wholly owned subsidiaries
of Fidelity International Limited (FIL), a Bermuda company formed in
1968 which primarily provides investment advisory services to non-U.S.
investment companies and institutional investors investing in
securities throughout the world. Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family own,
directly or indirectly, more than 25% of the voting common stock of
FIL. FIJ was organized in Japan in 1986. FIIA was organized in Bermuda
in 1983. FIIA(U.K.)L was organized in the United Kingdom in 1984, and
is a direct subsidiary of Fidelity Investment Limited and an indirect
subsidiary of FIL.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA, in turn, pays the fees of FIIA(U.K.)L.
For providing non-discretionary investment advice and research
services the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal to
110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of FMR's
monthly management fee with respect to the average net assets held by
the fund for which the sub-adviser has provided FMR with investment
advice and research services.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing investment
advice and research services.
On behalf of TechnoQuant Growth, International Capital Appreciation,
Overseas, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Balanced, Emerging Markets
Income, High Yield, Strategic Income, Mortgage Securities,
Intermediate Bond , and Short Fixed-Income, for providing
discretionary investment management and executing portfolio
transactions, the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a
fee equal to 50% of its monthly management fee (including any
performance adjustment, if applicable) with respect to the fund's
average net assets managed by the sub-adviser on a discretionary
basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
The table below shows the fees paid by FMR to FMR U.K., FMR Far
East, FIIA, and FIJ, and by FIIA to FIIA(U.K.)L for providing
investment advice and research services with respect to certain of the
funds for the fiscal periods ended 1997, 1996, and 1995.
FEES PAID TO FOREIGN SUB-ADVISERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
October 31
Overseas
1997 $ 627,390 $ 594,643 $ 0 $ 0 $ 0
1996 $ 541,988 $ 550,513 $ 0 $ 0 $ 0
1995 $ 364,803 $ 352,004 $ 0 $ 0 $ 0
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
November 30
Equity Growth
1997 $ 139,178 $ 133,255 $ 0 $ 0 $ 0
1996 $ 51,150 $ 49,497 $ 0 $ 0 $ 0
1995 $ 31,519 $ 30,883 $ 0 $ 0 $ 0
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
Growth Opportunities
11/1/97 - $ 87,415 $ 77,694 $ 0 $ 0 $ 0
11/30/97
11/1/96 - $ 852,607 $ 809,300 $ 0 $ 0 $ 0
10/31/97
1996 $ 642,845 $ 645,049 $ 0 $ 0 $ 0
1995 $ 212,175 $ 203,140 $ 0 $ 0 $ 0
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
Strategic Opportunities
1/1/97 - 11/30/97 $ 28,790 $ 27,433 $ 0 $ 0 $ 0
1996 $ 24,977 $ 23,484 $ 0 $ 0 $ 0
1995 $ 5,261 $ 5,862 $ 0 $ 0 $ 0
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
November 30
Equity Income
1997 $ 89,084 $ 85,667 $ 0 $ 0 $ 0
1996 $ 46,448 $ 46,494 $ 0 $ 0 $ 0
1995 $ 23,713 $ 23,140 $ 0 $ 0 $ 0
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
October 31
Balanced
1997 $ 177,487 $ 166,105 $ 0 $ 0 $ 0
1996 $ 235,847 $ 251,109 $ 0 $ 0 $ 0
1995 $ 330,971 $ 304,870 $ 0 $ 0 $ 0
</TABLE>
The other funds paid no investment sub-advisory fees for the fiscal
periods ended 1997, 1996, and 1995.
No fees were paid to FIJ, FIIA, and FIIA(U.K.)L for fiscal periods
ended 1997, 1996 and 1995.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of
each class of shares of the funds, except for Strategic Opportunities:
Initial Class, (the Plans) pursuant to Rule 12b-1 under the 1940 Act
(the Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow Class A, Class T, Class B,
Class C, Institutional Class , and Initial Class shares of the
funds and FMR to incur certain expenses that might be considered to
constitute direct or indirect payment by the funds of distribution
expenses.
Pursuant to the Class A Plans, FDC is paid a distribution fee as a
percentage of Class A's average net assets at an annual rate of up to
0.75% for each of TechnoQuant Growth, International Capital
Appreciation, Overseas, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
and Balanced (the Equity Funds); and up to 0.40% for each of Emerging
Markets Income, High Yield, Strategic Income, Government Investment,
Mortgage Securities, Municipal Income, and Municipal Bond (the Bond
Funds), Intermediate Bond and Intermediate Municipal Income (the
Intermediate-Term Bond Funds), and Short-Intermediate Municipal Income
and Short Fixed-Income (the Short-Term Bond Funds). Pursuant to the
Class T Plans, FDC is paid a distribution fee as a percentage of Class
T's average net assets at an annual rate of up to 0.75% for each of
TechnoQuant Growth, International Capital Appreciation, Equity Growth,
Mid Cap, Large Cap, Growth & Income, and Equity Income; up to 0.65%
for each of Overseas, Growth Opportunities, Strategic Opportunities,
and Balanced; up to 0.40% for each of Emerging Markets Income, High
Yield, Strategic Income, Intermediate Bond, Mortgage Securities,
Government Investment, Municipal Income, Municipal Bond,
Short-Intermediate Municipal Income, Intermediate and Municipal
Income; and up to 0.15% for Short Fixed-Income. Pursuant to the Class
B Plans, FDC is paid a distribution fee as a percentage of Class B's
average net assets at an annual rate of up to 0.75% for each fund with
Class B shares. Pursuant to the Class C Plans, FDC is paid a
distribution fee as a percentage of Class C's average net assets at an
annual rate of up to 0.75% for each fund with Class C shares. For the
purpose of calculating the distribution fees, average net assets are
determined at the close of business on each day throughout the month,
but excluding assets attributable to Class T shares of Equity Income
purchased more than 144 months prior to such day and to Class B shares
of Equity Income purchased more than 144 months prior to such day.
Currently, the Trustees have approved a distribution fee for Class A
at an annual rate of 0.25% for each of the Equity Funds and 0.15% for
each of the Bond Funds, the Intermediate-Term Bond Funds, and the
Short-Term Bond Funds; a distribution fee for Class T at an annual
rate of 0.50% for each of the Equity Funds, 0.25% for each of the Bond
Funds and the Intermediate-Term Bond Funds, and 0.15% for each of the
Short-Term Bond Funds; a distribution fee for Class B at an annual
rate of 0.75% for each of the Equity Funds and 0.65% for each of the
Bond Funds and the Intermediate-Term Bond Funds; and a distribution
fee for Class C at an annual rate of 0.75% for each fund. Class A,
Class T (for all funds except Short-Fixed Income) and Class B (for the
Bond Funds and Intermediate Term Bond Funds) fee rates may be
increased only when, in the opinion of the Trustees, it is in the best
interests of the shareholders of the applicable class to do so. Class
B and Class C of each fund also pay FDC a service fee at an annual
rate of 0.25% of Class B's or Class C's, as applicable, average net
assets determined at the close of business on each day throughout the
month.
Currently, the full amount of distribution fees paid by Class A and
Class T is reallowed to investment professionals (including FDC) as
compensation for their services in connection with the distribution of
Class A or Class T shares, as applicable, and for providing support
services to Class A or Class T shareholders, as applicable, based upon
the level of services provided.
Currently, the full amount of distribution fees paid by Class B is
retained by FDC as compensation for its services and expenses in
connection with the distribution of Class B shares, and the full
amount of service fees paid by Class B is reallowed to investment
professionals (including FDC) for providing personal service to and/or
maintenance of Class B shareholder accounts.
Currently, for the first year of investment, the full amount of
distribution fees paid by Class C is retained by FDC as compensation
for its services and expenses in connection with the distribution of
Class C shares, and the full amount of service fees paid by Class C is
retained by FDC for providing personal service to and/or maintenance
of Class C shareholder accounts. After the first year of investment,
the full amount of distribution fees paid by Class C is reallowed to
investment professionals (including FDC) as compensation for their
services in connection with the distribution of Class C shares, and
the full amount of service fees paid by Class C is reallowed to
investment professionals (including FDC) for providing personal
service to and/or maintenance of Class C shareholder accounts.
The tables below show the distribution fees paid for Class A shares
for the fiscal years ended 1997 , 1996 (Class A shares were not
offered prior to September 3, 1996), for Class T shares for the fiscal
years ended 1997, 1996, and 1995, for Class B shares for the fiscal
years ended 1997, 1996, and 1995, and for Class C shares for the
fiscal year ended 1997 (Class C shares were not offered prior to
November 3, 1997).
CLASS A DISTRIBUTION FEES
1996 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FUND PAID TO RETAINED BY FDC PAID TO RETAINED BY FDC
INVESTMENT INVESTMENT
PROFESSIONALS PROFESSIONALS
TechnoQuant Growth N/A N/A $ 9,431 $ 0
Overseas $ 0 $ 0 6,000 0
Mid Cap 408 0 6,575 0
Equity Growth 1,207 0 36,000 0
Growth Opportunities 1,643 0 28,000+/154,000++ 0
Strategic Opportunities 317 0 2,516 0
Large Cap 161 0 3,619 0
Growth & Income N/A N/A 6,421 0
Equity Income 924 0 32,000 0
Balanced 232 0 11,000 0
Emerging Markets Income 147 0 1,903 0
High Yield 0 0 29,000 0
Strategic Income 152 0 2,600 0
Mortgage Securities N/A N/A 600*/530** 0
Government Investment 39 0 1,086 0
Intermediate Bond 153 0 3,177 0
Short Fixed-Income 35 0 4,666 0
Municipal Income 35 0 2,810 0
Intermediate Municipal Income 37 0 521 0
Short-Intermediate Municipal
Income 62 0 523 0
</TABLE>
+ For the fiscal period November 1, 1997 through November 30,
1997.
++ For the fiscal period November 1, 1996 through October 31,
1997.
* For the fiscal period August 1, 1997 through October 31,
1997.
** For the fiscal period March 3, 1997 through July 31, 1997.
CLASS T DISTRIBUTION FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1995 1996 1997
FUND PAID TO RETAINED PAID TO RETAINED PAID TO RETAINED
INVESTMENT BY FDC INVESTMENT BY FDC INVESTMENT BY FDC
PROFESSIONALS PROFESSIONALS PROFESSIONALS
TechnoQuant N/A N/A N/A N/A $ 59,373 $0
Overseas $ 3,452,001 $ 1,049,755 $ 4,560,000 $ 190,000 5,557,000 0
Mid Cap N/A N/A 460,775 0 1,333,963 0
Equity Growth 6,750,062 2,123,261 13,897,763 256,052 192,298,000 0
Growth
Opportunities 33,781,082 10,228,188 61,123,389 2,461,359 8,370,000+ 0
86,244,000++ 0
Strategic
Opportunities 2,377,409 804,604 3,004,411 0 2,266,860 0
Large Cap N/A N/A 49,326 0 179,058 0
Growth &
Income N/A N/A N/A N/A 254,429 0
Equity Income 2,339,815 710,240 6,628,000 115,000 9,636,000 0
Balanced 16,748,635 5,165,858 16,228,668 870,842 14,549,000 0
Emerging Markets
Income 71,061 12,300 138,085 0 230,572 0
High Yield 2,185,795 33,785 3,616,000 0 4,930,000 0
Strategic
Income 62,957 6,002 185,607 0 276,410 0
Mortgage
Securities N/A N/A N/A N/A 8,099* 0
2,602** 0
Government
Investment 391,918 7,088 572,796 0 427,659 0
Intermediate
Bond 463,806 0 637,019 0 655,179 0
Short Fixed-
Income 933,777 18,975 725,063 0 570,695 0
Municipal
Income 1,358,027 8,150 1,335,656 0 1,062,341 0
Intermediate
Municipal 143,424 1,599 152,707 0 127,082 0
Income
Short-Intermediate
Municipal 27,895 1,646 44,018 0 37,068 0
Income
</TABLE>
+ For the fiscal period November 1, 1997 through November 30,
1997.
++ For the fiscal period November 1, 1996 through October 31,
1997.
* For the fiscal period August 1, 1997 through October 31,
1997.
** For the fiscal period March 3, 1997 through July 31, 1997.
CLASS B DISTRIBUTION AND SERVICE FEES
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund
1995 1996 1997
Distri Distri Distri Share
buti Retain Shareh Retain bu Retaine Shareh Retaine bution Retained holder Retai
on ed by older ed by tion d by older d by Fees by FDC Service ned
Fees FDC Service FDC Fees FDC Service FDC Fee by
Fees Fees FDC
TechnoQuant
N/A N/A N/A N/A N/A N/A N/A N/A $ 44,157 $ 44,157 $ 14,718 $ 0
Growth
Overseas
$ 3,566 $ 3,566 $ 1,155 $ 0 $ 97,000 $ 97,000 $ 22,000 $ 0 216,000 216,000 72,000 0
Mid Cap
N/A N/A N/A N/A 103,330 103,330 34,445 0 325,966 325,966 108,656 0
Equity Growth
N/A N/A N/A N/A N/A N/A N/A N/A 217,000 217,000 73,000 0
Growth
Opportunities
N/A N/A N/A N/A N/A N/A N/A N/A 248,000+ 248,000+ 82,000+ 0+
844,000++ 844,000++ 282,000++ 0++
Strategic
359,793 359,793 116,312 0 744,336 744,336 248,724 0 683,989 683,989 227,996 0
Opportunities
Large Cap
N/A N/A N/A N/A 21,680 21,680 7,479 0 120,477 120,477 40,162 0
Growth &
N/A N/A N/A N/A N/A N/A N/A N/A 88,496 88,496 29,498 0
Income
Equity Income
996,566 996,566 332,413 0 3,015,000 3,015,000 993,000 0 4,396,000 4,396,000 1,465,000 0
Balanced
N/A N/A N/A N/A N/A N/A N/A N/A 47,000 47,000 16,000 0
Emerging
52,283 52,283 17,429 0 32,172 32,172 85,051 0 144,517 144,517 55,579 0
Markets Income
High Yield
537,580 537,580 179,328 0 1,647,000 1,647,000 623,000 0 2,991,000 2,991,000 1,151,000 0
Strategic
139,735 139,735 46,578 0 197,706 197,706 76,042 0 295,764 295,764 113,756 0
Income
Mortgage
Securities
N/A N/A N/A N/A N/A N/A N/A N/A 1,950* 1,950* 749* 0
994** 994** 380**
Government
48,662 48,662 16,159 0 99,118 99,118 37,314 0 112,488 112,488 43,269 0
Investment
Intermediate
65,218 65,218 21,738 0 119,626 119,626 45,490 0 127,539 127,539 49,049 0
Bond
Municipal
163,013 163,013 54,382 0 247,210 247,210 92,908 0 259,150 259,150 99,673 0
Income
Intermediate
28,714 28,714 9,498 0 47,136 47,136 17,926 0 48,596 48,596 18,691 0
Municipal
Income
</TABLE>
+ For the fiscal period November 1, 1997 through November 30,
1997.
++ For the fiscal period November 1, 1996 through October 31,
1997.
* For the fiscal period August 1, 1997 through October 31,
1997.
** For the fiscal period March 3, 1997 through July 31, 1997.
CLASS C DISTRIBUTION AND SERVICE FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1997
Fund Distribution Retained Shareholder Retained
Fees by FDC Service Fee by FDC
TechnoQuant Growth $ 8 $ 8 $ 2 $ 2
Mid Cap 84 84 28 28
Equity Growth 281 281 94 94
Growth Opportunities 1,500 1,500 500 500
Large Cap 12 12 2 2
Growth & Income 113 113 38 38
Equity Income 192 192 64 64
Emerging Markets Income 35 35 12 12
Strategic Income 354 354 118 118
Intermediate Bond 41 41 14 14
Intermediate Municipal Income 4 4 2 2
</TABLE>
Under each Plan, if the payment of management fees by the funds to FMR
is deemed to be indirect financing by the funds of the distribution of
their shares, such payment is authorized by the Plans. Each Class A,
Class T, Class B, and Class C Plan specifically recognizes that FMR
may use its management fee revenue, as well as its past profits or its
other resources, to pay FDC for expenses incurred in connection with
the distribution of the applicable class's shares, including payments
made to third parties that engage in the sale of the applicable
class's shares or to third parties, including banks, that render
shareholder support services. Each Institutional Class and Initial
Class Plan specifically recognizes that FMR may use its management fee
revenue, as well as its past profits or its other resources, to pay
FDC for expenses incurred in connection with the distribution of the
applicable class's shares. FMR directly, or through FDC, may make
payments to third parties, such as banks or broker-dealers, that
engage in the sale of Institutional Class or Initial Class shares or
provide shareholder support services. Currently, the Board of Trustees
has authorized such payments for Class A, Class T, Class B, Class C,
Institutional Class , and Initial Class shares.
For the calendar year ended 1997, payments made by FMR, either
directly or indirectly through FDC, to third parties a mounted
to $0 for Initial Class of Strategic Opportunities, $ 0
for Initial Class of Municipal Bond , and $ 0 for Initial
Class of Mortgage Securities and, for Class A, Class T, Class B, Class
C, and Institutional Class of each fund, amounted to the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUND CLASS A CLASS T CLASS B CLASS C INSTITUTIONAL
TechnoQuant Growth $ 553 $ 1,279 $ 840 $ 108 $ 0
Overseas 3,133 118,512 14,258 973 0
Mid Cap 3,015 36,826 14,781 1,783 0
Equity Growth 4,745 240,014 5,940 2,216 0
Growth Opportunities 49,543 919,539 30,026 16,320 0
Strategic Opportunities 1,181 55,624 36,225 ** 0
Large Cap 1,231 4,415 4,909 270 0
Growth & Income 845 3,867 1,875 1,459 0
Equity Income 8,456 135,812 140,040 2,702 0
Balanced 2,818 187,043 1,528 811 0
Emerging Markets Income 1,393 13,689 8,907 54 0
High Yield 10,641 148,504 93,336 7,295 0
Strategic Income 1,115 10,348 8,708 486 0
Mortgage Securities 28 1,348 77 ** 0
Government Investment 443 19,294 4,504 216 0
Intermediate Bond 1,166 15,953 6,413 486 0
Short Fixed-Income 759 39,601 * 216 0
Municipal Income 364 27,103 5,853 0 0
Intermediate Municipal Income 120 3,776 1,071 0 0
Short-Intermediate Municipal Income 140 2,059 * ** 0
</TABLE>
* Class B is not available for this fund.
** Class C is not available for this fund.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of each Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the applicable class of each fund and its shareholders. In
particular, the Trustees noted that the Institutional Class and
Initial Class Plans do not authorize payments by the applicable class
of a fund other than those made to FMR under its management contract
with the fund. To the extent that each Plan gives FMR and FDC greater
flexibility in connection with the distribution of shares of the
applicable class of each fund, additional sales of fund shares may
result. Furthermore, certain shareholder support services may be
provided more effectively under the Plans by local entities with whom
shareholders have other relationships.
The Class A, Class T, Class B, and Class C Plans do not provide for
specific payments by the applicable class of any of the expenses of
FDC, or obligate FDC or FMR to perform any specific type or level of
distribution activities or incur any specific level of expense in
connection with distribution activities. After payments by FDC for
advertising, marketing and distribution, and payments to third
parties, the amounts remaining, if any, may be used as FDC may elect.
The Plans were approved by the shareholders of each class on the dates
shown in the table below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DATE OF SHAREHOLDER APPROVAL
FUND CLASS A CLASS T CLASS B INSTITUTIONAL
TechnoQuant Growth 12/23/96 12/23/96 12/23/96 12/23/96
Overseas 08/30/96 09/17/97 06/30/95 06/30/95
Mid Cap 08/30/96 01/18/96 01/18/96 01/18/96
Equity Growth 08/30/96 07/16/97 * 09/26/86
Growth Opportunities 08/30/96 01/01/95 * 06/30/95
Strategic Opportunities 08/30/96 06/18/97 06/18/97 06/30/95
Large Cap 08/30/96 01/18/96 01/18/96 01/18/96
Growth & Income 12/23/96 12/23/96 12/23/96 12/23/96
Equity Income 08/30/96 09/10/92 06/26/94 07/23/86
Balanced 08/30/96 01/01/95 * 06/30/95
Emerging Markets Income 08/30/96 06/18/97 06/18/97 06/30/95
High Yield 08/30/96 01/01/95 01/01/95 06/30/95
Strategic Income 08/30/96 10/14/94 10/14/94 06/30/95
Government Investment 08/30/96 01/01/95 01/01/95 06/30/95
Intermediate Bond 08/30/96 01/01/95 01/01/95 11/26/86
Mortgage Securities * * * *
Short Fixed-Income 08/30/96 01/01/95 ** 06/30/95
Municipal Income 08/30/96 12/01/94 12/01/94 06/30/95
Intermediate Municipal Income 08/30/96 07/01/95 07/01/95 11/05/86
Short-Intermediate Municipal Income 08/30/96 07/01/95 ** 06/30/95
</TABLE>
* Not applicable.
** Class B is not available for this fund.
The Plans for the Initial Class of Mortgage Securities and Municipal
Bond were approved by the shareholders of the class on January 21,
1987 and December 31, 1986, respectively.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling, or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
Class A, Class T, Class B, Class C, and Institutional Class of
TechnoQuant Growth, International Capital Appreciation, Overseas, Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities,
Large Cap, Growth & Income, Equity Income, Balanced, Emerging Markets
Income, High Yield, Strategic Income, Mortgage Securities, Government
Investment, Intermediate Bond , and Short Fixed-Income has
entered into a transfer agent agreement with FIIOC, an affiliate of
FMR. Initial Class of Strategic Opportunities and Mortgage Securities
has entered into a transfer agent agreement with FSC, an affiliate of
FMR. Under the terms of the agreements, FIIOC and FSC perform transfer
agency, dividend disbursing, and shareholder services for Class A,
Class T, Class B, Class C, Institutional Class and Initial Class of
each fund. Under the terms of the agreements, FSC perform transfer
agency, dividend disbursing, and shareholder services for Initial
Class of each fund.
For the Initial Class of Municipal Bond and for each class of
Municipal Income, Intermediate Municipal Income, and
Short-Intermediate Municipal Income has entered into a transfer agent
agreement with UMB. Under the terms of the agreements, UMB provides
transfer agency, dividend disbursing, and shareholder services for
each class of each municipal fund. UMB in turn has entered into a
sub-transfer agent agreements with FIIOC and FSC. Under the terms of
the sub-agreements, FIIOC and FSC perform all processing activities
associated with providing these services for each class of each
municipal fund and receives all related transfer agency fees paid to
UMB.
For providing transfer agency services, FSC and FIIOC receive an
account fee and an asset-based fee each paid monthly with respect
to each account in the funds. For retail accounts and certain
institutional accounts, these fees are based on account size and
fund type . For certain institutional retirement accounts,
these fees are based on fund type. For certain other
institutional retirement accounts, these fees are based on account
type (i.e., omnibus or non-omnibus) and, for non-omnibus accounts,
fund type. Th e annual account fees are subject to increase
based on post age rate changes.
For each Equity Fund, the asset-based fees are subject to adjustment
if the year-to-date total return of the S&P 500 exceeds a positive or
negative 15%.
FIIOC and FSC also collect small account fees from certain accounts
with balances of less than $2,500.
FSC and FIIOC pay out-of-pocket expenses associated with providing
transfer agent services. In addition, FSC and FIIOC bear the expense
of typesetting, printing, and mailing prospectuses, statements of
additional information, and all other reports, notices, and statements
to existing shareholders, with the exception of proxy statements.
Each of Emerging Markets, High Yield, Strategic Income, Government
Investment, Mortgage Securities, Intermediate Bond, and Short
Fixed-Income has entered into a service agent agreement with FSC.
Under the terms of the agreements, FSC calculates the NAV and
dividends for each class of each fund, maintains each fund's portfolio
and general accounting records, and administers each fund's securities
lending program.
Each of the Municipal Funds has also entered into a service agent
agreement with UMB. Under the terms of the agreements, UMB provides
pricing and bookkeeping services for each fund. UMB in turn has
entered into a sub-service agent agreements with FSC. Under the terms
of the sub-agreements, FSC performs all processing activities
associated with providing these services, including calculating the
NAV and dividends for each class of each fund and maintaining each
fund's portfolio and general accounting records, and receives all
related pricing and bookkeeping fees paid to UMB.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month. The annual fee rates for pricing and bookkeeping services are
.0600% (for equity funds) .0400% (for fixed-income funds) .0750% (for
international funds) .0750% (for high yield funds) of the first $500
million of average net assets and .0300% (for equity funds) .0200%
(for fixed-income funds) .0375% (for international funds) .0375% (for
high yield funds) of average net assets in excess of $500 million. The
fee, not including reimbursement for out-of-pocket expenses, is
limited to a minimum of $60,000 and a maximum of $800,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND 1997 1996 1995
TechnoQuant Growth $ 55,019 N/A N/A
Overseas 629,811 $ 523,913 $ 358,827
Mid Cap 266,208 65,738* N/A
Equity Growth 813,000 804,585 680,671
Growth Opportunities 78,000 ** 821,769 764,407
836,000 ***
Strategic Opportunities 310,776 + 380,339 315,623
Large Cap 60,755 46,209 * N/A
Growth & Income 67,333 N/A N/A
Equity Income 808,212 751,619 404,628
Balanced 806,920 800,592 758,290
Emerging Markets Income 91,562 62,296 45,004
High Yield 821,882 734,437 296,724
Strategic Income 66,910 60,655 45,067
Mortgage Securities 52,896++ 189,021 151,765
208,321+++
Government Investment 87,365 109,259 68,665
Intermediate Bond 195,556 198,036 151,940
Short Fixed-Income 159,567 197,893 231,369
Municipal Income 191,896 239,476 229,551
Municipal Bond 333,000 298,000 346,000
Intermediate Municipal Income 61,883 65,230 48,976
Short-Intermediate Municipal Income 65,365 58,330 46,467
</TABLE>
* Mid Cap and Large Cap commenced operations on February 20, 1996
** From 11/1/97 - 11/30/97
*** From 11/1/96 - 10/31/97
+ From 1/1/97 - 11/30/97
++ From 8/1/97 - 10/31/97
+++ From 8/1/96 - 7/31/97
F SC also receives fees for administering each taxable fund's
securities lending program. Securities lending fees are based on the
number and duration of individual securities loans. For the fiscal
years ended 1997, 1996, and 1995, the taxable funds incurred no
securities lending fees.
For the municipal funds, the transfer agent fees and charges, and
pricing and bookkeeping fees described above are paid to FIIOC and
FSC, respectively, by UMB, which is entitled to reimbursement from the
class or the fund, as applicable, for these expenses.
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR organized as a Massachusetts corporation 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 each fund, which are continuously offered.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR.
Sales charge revenues collected, and retained by FDC for the past
three fiscal years are shown in the table below. Class C of
Overseas, Balanced, High Yield, Government Investment, and Municipal
Income commenced operations after the funds' fiscal year ended.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Sales CDSC
Charge Revenue
Revenue
Fiscal Year Amount Amount Amount Amount
Paid to Retained Paid to Retained
Ended FDC by FDC FDC by FDC
Techn Nov. 30, $ 54,370 $ 30,175 $ 0 $ 0
oQuan 1997*
t
Growt
h -
Class
A
Techn Nov. 30, 111,714 41,936 0 0
oQuan 1997*
t
Growt
h -
Class
T
Techn Nov. 30, N/A N/A 18,557 18,557
oQuan 1997 *
t
Growt
h -
Class
B
Techn Nov. 30, N/A N/A 0 0
oQuan 1997*
t
Growt
h -
Class
C
Techn Nov. 30, N/A N/A N/A N/A
oQuan 1997*
t
Growt
h -
Institu
tional
Class
Overs Oct. 31, 93,000 25,000 0 0
eas - 1997
Class
A
1996 12,000 1,000 0 0
1995 N/A N/A N/A N/A
Overs Oct. 31, 748,000 202,000 0 0
eas - 1997
Class
T
1996 2,313,000 375,000 0 0
1995 4,446,941 692,471 0 0
Overs Oct. 31, N/A N/A 86,000 86,000
eas - 1997
Class
B
1996 N/A N/A 24,000 24,000
1995 N/A N/A 333 333
Overs Oct. 31, N/A N/A N/A N/A
eas - 1997
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Mid Nov. 30, 68,624 17,485 0 0
Cap - 1997
Class
A
1996** 25,943 4,434 0 0
Mid Nov. 30, 419,798 153,727 0 0
Cap - 1997
Class
T
1996** 1,836,711 304,519 0 0
Mid Nov. 30, N/A N/A 160,918 160,918
Cap - 1997
Class
B
1996** N/A N/A 20,844 20,844
Mid Nov. 30, N/A N/A 0 0
Cap - 1997
Class
C
1996** N/A N/A N/A N/A
Mid Nov. 30, N/A N/A N/A N/A
Cap - 1997
Institu
tional
Class
1996** N/A N/A N/A N/A
Equity Nov. 30, 516,000 163,000 0 0
Growt 1997
h -
Class
A
1996 151,603 16,099 0 0
1995 N/A N/A N/A N/A
Equity Nov. 30, 2,561,000 777,000 0 0
Growt 1997
h -
Class
T
1996 11,845,527 1,998,996 0 0
1995 13,514,763 2,048,524 0 0
Equity Nov. 30, N/A N/A 53,000 53,000
Growt 1997
h -
Class
B
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Equity Nov. 30, N/A N/A 0 0
Growt 1997
h -
Class
C
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Equity Nov. 30, N/A N/A N/A N/A
Growt 1997
h -
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Sales CDSC
Charge Revenue
Revenue
Fiscal Year Amount Amount Amount Amount
Paid to Retained Paid to Retained
Ended FDC by FDC FDC by FDC
Growt Nov. 30, $ 189,000 $ 73,000 $ 0 $ 0
h 19 97***
Oppor
tunitie
s -
Class
A
Oct. 31, 2,096,000 618,000 0 0
19 97
1996 399,713 45,606 0 0
1995 N/A N/A N/A N/A
Growt Nov. 30, 821,000 352,000 0 0
h 1997 ***
Oppor
tunitie
s -
Class
T
Oct. 31, 13,380,000 4,538,000 0 0
1997
1996 49,538,901 7,961,248 0 0
1995 73,545,428 11,459,421 0 0
Growt Nov. 30, N/A N/A 41,000 41,000
h 1997 ***
Oppor
tunitie
s -
Class
B
Oct. 31, N/A N/A 154,000 154,000
1997
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Growt Nov. 30, N/A N/A 0 0
h 1997***
Oppor
tunitie
s -
Class
C
Oct. 31, N/A N/A N/A N/A
1997*****
1995 N/A N/A N/A N/A
Growt Nov. 30, N/A N/A N/A N/A
h 1997***
Oppor
tunitie
s -
Institu
tional
Class
Oct. 31, N/A N/A N/A N/A
1997
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Strate Nov. 30, 28,462 9,936 0 0
gic 1997****
Oppor
tunitie
s -
Class
A
Dec. 31, 15,662 2,958 0 0
1996
1995 N/A N/A N/A N/A
Strate Nov. 30, 187,128 53,056 0 0
gic 1997****
Oppor
tunitie
s -
Class
T
Dec. 31, 909,434 145,926 0 0
1996
1995 1,883,199 144,719 0 0
Strate Nov. 30, N/A N/A 304,658 304,658
gic 1997****
Oppor
tunitie
s -
Class
B
Dec. 31, N/A N/A 243,510 243,510
1996
1995 N/A N/A 40,916 40,916
Strate Nov. 30, N/A N/A N/A N/A
gic 1997****
Oppor
tunitie
s -
Institu
tional
Class
Dec. 31, N/A N/A N/A N/A
1996
1995 N/A N/A N/A N/A
Large Nov. 30, 39,475 12,656 0 0
Cap - 1997
Class
A
1996** 1,495 1,476 0 0
Large Nov. 30, 83,276 28,199 0 0
Cap - 1997
Class
T
1996** 203,839 32,342 0 0
Large Nov. 30, N/A N/A $ 27,546 $ 27,546
Cap - 1997
Class
B
1996** N/A N/A 5,900 5,900
Large Nov. 30, N/A N/A 0 0
Cap - 1997
Class
C
1996** N/A N/A N/A N/A
Large Nov. 30, N/A N/A N/A N/A
Cap - 1997
Institu
tional
Class
1996** N/A N/A N/A N/A
Sales CDSC
Charge Revenue
Revenue
Fiscal Year Amount Amount Amount Amount
Paid to Retained Paid to Retained
Ended FDC by FDC FDC by FDC
Growt Nov. 30, $ 107,155 $ 38,752 $ 0 $ 0
h & 1997*
Incom
e -
Class
A
Growt Nov. 30, 316,414 112,138 0 0
h & 1997*
Incom
e -
Class
T
Growt Nov. 30, N/A N/A 35,346 35,346
h & 1997*
Incom
e -
Class
B
Growt Nov. 30, N/A N/A 0 0
h & 1997*
Incom
e -
Class
C
Growt Nov. 30, N/A N/A N/A N/A
h & 1997*
Incom
e -
Institu
tional
Class
Equity Nov. 30, 461,000 124,000 0 0
Incom 1997
e -
Class
A
1996 108,178 10,945 0 0
1995 N/A N/A N/A N/A
Equity Nov. 30, 1,835,000 533,000 0 0
Incom 1997
e -
Class
T
1996 8,110,513 1,572,831 0 0
1995 10,583,118 1,676,479 0 0
Equity Nov. 30, N/A N/A 1,017,000 1,017,000
Incom 1997
e -
Class
B
1996 N/A N/A 651,390 651,390
1995 N/A N/A 127,493 127,493
Equity Nov. 30, N/A N/A 0 0
Incom 1997
e -
Class
C
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Equity Nov. 30, N/A N/A N/A N/A
Incom 1997
e -
Institut
ional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Balanc Oct. 31, 139,000 37,000 0 0
ed - 1997
Class
A
1996 38,444 5,070 0 0
1995 N/A N/A N/A N/A
Balanc Oct. 31, 1,052,000 275,000 0 0
ed - 1997
Class
T
1996 3,494,533 591,963 0 0
1995 10,070,941 1,674,121 0 0
Balanc Oct. 31, N/A N/A 9,000 9,000
ed - 1997
Class
B
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Balanc Oct. 31, N/A N/A N/A N/A
ed - 1997
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Emerg Dec. 31, 29,709 6,462 0 0
ing 1997
Marke
ts -
Class
A
1996 9,186 1,098 0 0
1995 N/A N/A N/A N/A
Emerg Dec. 31, 142,370 30,730 0 0
ing 1997
Marke
ts -
Class
T
1996 270,379 42,424 0 0
1995 465,187 245,371 0 0
Emerg Dec. 31, N/A N/A 68,657 68,657
ing 1997
Marke
ts -
Class
B
1996 N/A N/A 46,800 46,800
1995 N/A N/A 12,203 12,203
Emerg Dec. 31, N/A N/A 0 0
ing 1997
Marke
ts -
Class
C
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Emerg Dec. 31, N/A N/A N/A N/A
ing 1997
Marke
ts -
Institut
ional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Sales CDSC
Charge Revenue
Revenue
Fiscal Year Amount Amount Amount Amount
Ended Paid to Retained Paid to Retained
FDC by FDC FDC by FDC
High Oct. 31, $ 609,000 $ 162,000 $ 0 $ 0
Yield 1997
-
Class
A
1996 116,000 17,000 0 0
1995 N/A N/A N/A N/A
High Oct. 31, 2,978,000 979,000 0 0
Yield 1997
-
Class
T
1996 8,201,000 1,356,000 0 0
1995 8,787,240 1,328,830 0 0
High Oct. 31, N/A N/A 1,076,000 1,076,000
Yield 1997
-
Class
B
1996 N/A N/A 372,000 372,000
1995 N/A N/A 75,583 75,583
High Oct. 31, N/A N/A N/A N/A
Yield 1997
-
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Strate Dec. 31, 56,247 9,922 0 0
gic 1997
Incom
e -
Class
A
1996 13,287 1,628 0 0
1995 N/A N/A N/A N/A
Strate Dec. 31, 275,540 77,574 0 0
gic 1997
Incom
e -
Class
T
1996 558,381 94,606 0 0
1995 842,000 100,905 0 0
Strate Dec. 31, N/A N/A 89,199 89,199
gic 1997
Incom
e -
Class
B
1996 N/A N/A 56,783 56,783
1995 N/A N/A 23,689 23,689
Strate Dec. 31, N/A N/A 0 0
gic 1997
Incom
e -
Class
C
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Strate Dec. 31, N/A N/A N/A N/A
gic 1997
Incom
e -
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Mortga Oct. 31, 263 180 0 0
ge 19 97+
Securit
ies -
Class
A
July 31, 7,090 67 0 0
1997++
199 6 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Mortg Oct. 31, 8,746 1,749 0 0
age 1997+
Securi
ties -
Class
T
July 31, 9,662 2,170 0 0
1997++
199 6 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Mortg Oct. 31, N/A N/A 72 72
age 1997+
Securi
ties -
Class
B
July 31, N/A N/A 0 0
1997++
199 6 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Mortg Oct. 31, N/A N/A N/A N/A
age 1997+
Securi
ties -
Institu
tional
Class
July 31, N/A N/A N/A N/A
1997++
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Sales CDSC
Charge Revenue
Revenue
Fiscal Year Amount Amount Amount Amount
Ended Paid to Retained Paid to Retained
FDC by FDC FDC by FDC
Gover Oct. 31, $ 31,629 $ 6,913 $ 0 $ 0
nment 1997
Invest
ment -
Class
A
1996 5,077 1,157 0 0
1995 N/A N/A N/A N/A
Gover Oct. 31, 76,261 20,512 0 0
nment 1997
Invest
ment -
Class
T
1996 618,420 101,833 0 0
1995 954,672 144,831 0 0
Gover Oct. 31, N/A N/A 87,840 87,840
nment 1997
Invest
ment -
Class
B
1996 N/A N/A 38,738 38,738
1995 N/A N/A 10,268 10,268
Gover Oct. 31, N/A N/A N/A N/A
nment 1997
Invest
ment -
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Interm Nov. 30, 68,475 24,480 0 0
ediate 1997
Bond
-
Class
A
1996 10,944 1,799 0 0
1995 N/A N/A N/A N/A
Interm Nov. 30, 109,296 31,882 0 0
ediate 1997
Bond
-
Class
T
1996 604,408 100,654 0 0
1995 1,297,536 198,826 0 0
Interm Nov. 30, N/A N/A 68,602 68,602
ediate 1997
Bond
-
Class
B
1996 N/A N/A 56,925 56,925
1995 N/A N/A 20,310 20,310
Interm Nov. 30, N/A N/A 0 0
ediate 1997
Bond
-
Class
C
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Interm Nov. 30, N/A N/A N/A N/A
ediate 1997
Bond
-
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Short Oct. 31, 15,709 3,424 0 0
Fixed- 1997
Incom
e -
Class
A
1996 1,525 231 0 0
1995 N/A N/A N/A N/A
Short Oct. 31, 278,405 63,127 0 0
Fixed- 1997
Incom
e -
Class
T
1996 553,986 95,855 0 0
1995 786,085 167,907 N/A N/A
Short Oct. 31, N/A N/A 0 0
Fixed- 1997
Incom
e -
Class
C
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Short Oct. 31, N/A N/A N/A N/A
Fixed- 1997
Incom
e -
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Munic Oct. 31, 57,657 14,649 0 0
ipal 1997
Incom
e -
Class
A
1996 3,984 599 0 0
1995 N/A N/A N/A N/A
Munic Oct. 31, 173,689 52,646 0 0
ipal 1997
Incom
e -
Class
T
1996 918,111 154,356 0 0
1995 N/A N/A 0 0
Munic Oct. 31, N/A N/A 174,350 174,350
ipal 1997
Incom
e -
Class
B
1996 N/A N/A 130,817 130,817
1995 N/A N/A 0 0
Sales CDSC
Charge Revenue
Revenue
Fiscal Year Amount Amount Amount Amount
Ended Paid to Retained Paid to Retained
FDC by FDC FDC by FDC
Munic Oct. 31, N/A N/A N/A N/A
ipal 1997
Incom
e -
Class
C
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Munic Oct. 31, N/A N/A N/A N/A
ipal 1997
Incom
e -
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Interm Nov. 30, 5,742 1,250 0 0
ediate 1997
Munic
ipal
Incom
e -
Class
A
1996 17 2 0 0
1995 N/A N/A N/A N/A
Interm Nov. 30, $ 21,915 $ 6,612 $ 0 $ 0
ediate 1997
Munic
ipal
Incom
e -
Class
T
1996 78,940 12,934 0 0
1995 375,591 141,432 0 0
Interm Nov. 30, N/A N/A 19,218 19,218
ediate 1997
Munic
ipal
Incom
e -
Class
B
1996 N/A N/A 35,837 35,837
1995 N/A N/A 1,449 1,449
Interm Nov. 30, N/A N/A 0 0
ediate 1997
Munic
ipal
Incom
e -
Class
C
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Interm Nov. 30, N/A N/A N/A N/A
ediate 1997
Munic
ipal
Incom
e -
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
Short- Nov. 30, 1,921 325 0 0
Interm 1997
ediate
Munic
ipal
Incom
e -
Class
A
1996 1,193 172 0 0
1995 N/A N/A N/A N/A
Short- Nov. 30, 44,628 22,934 0 0
Interm 1997
ediate
Munic
ipal
Incom
e -
Class
T
1996 67,305 10,218 0 0
1995 316,185 239,796 0 0
Short- Nov. 30, N/A N/A N/A N/A
Interm 1997
ediate
Munic
ipal
Incom
e -
Institu
tional
Class
1996 N/A N/A N/A N/A
1995 N/A N/A N/A N/A
</TABLE>
* TechnoQuant Growth and Growth & Income commenced operations on
December 31, 1996
** Mid Cap and Large Cap commenced operations on February 20, 1996
*** For the fiscal period November 1, 1997 through November 30,
1997.
**** For the fiscal period January 1, 1997 through November 30,
1997.
***** For the fiscal period November 1, 1996 through October 31,
1997.
+ For the fiscal period August 1, 1997 through October 31,
1997.
++ For the fiscal period August 1, 1996 through July 31, 1997.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Fidelity Advisor TechnoQuant Growth Fund,
Fidelity Advisor Mid Cap Fund, Fidelity Advisor Equity Growth Fund,
Fidelity Advisor Growth Opportunities Fund, Fidelity Advisor Strategic
Opportunities Fund, Fidelity Advisor Large Cap Fund, and Fidelity
Advisor Growth & Income Fund are funds of Fidelity Advisor Series I an
open-end management investment company organized as a Massachusetts
business trust by a Declaration of Trust dated June 24, 1983, as
amended and restated October 26, 1984. On January 29, 1992, the name
was changed from Equity Portfolio Growth to Fidelity Broad Street
Trust by an amendment to the Declaration of Trust. On April 15, 1993,
its name was changed from Fidelity Broad Street Trust to Fidelity
Advisor Series I by an amendment to the Declaration of Trust.
Currently, there are seven funds of the trust: Fidelity Advisor
TechnoQuant Growth Fund, Fidelity Advisor Mid Cap Fund, Fidelity
Advisor Equity Growth Fund, Fidelity Advisor Growth Opportunities
Fund, Fidelity Advisor Strategic Opportunities Fund, Fidelity Advisor
Large Cap Fund, and Fidelity Advisor Growth & Income Fund.
Fidelity Advisor Balanced Fund, Fidelity Advisor High Yield Fund,
Fidelity Advisor Strategic Income Fund, Fidelity Advisor Government
Investment Fund, and Fidelity Advisor Short Fixed-Income Fund are
funds of Fidelity Advisor Series II, an open-end management investment
company organized as a Massachusetts business trust by a Declaration
of Trust dated April 23, 1986. On April 7, 1993, the Board of Trustees
voted to change the name of the trust from Fidelity Diversified Trust
to Fidelity Advisor Series II. Currently, there are five funds of the
trust: Fidelity Advisor Balanced Fund, Fidelity Advisor High Yield
Fund, Fidelity Advisor Strategic Income Fund, Fidelity Advisor
Government Investment Fund, and Fidelity Advisor Short Fixed-Income
Fund.
Fidelity Advisor Equity Income Fund is a fund of Fidelity Advisor
Series III, an open-end management investment company organized as a
Massachusetts business trust by a Declaration of Trust dated May 17,
1982. On January 29, 1986, the name was changed from Equity Portfolio:
Income to Fidelity Franklin Street Trust. On April 15, 1993, the
trust's name was changed to Fidelity Advisor Series III. Currently,
there is one fund of the trust: Fidelity Advisor Equity Income Fund.
Fidelity Advisor Intermediate Bond Fund is a fund of Fidelity Advisor
Series IV, an open-end management investment company organized as a
Massachusetts business trust by a Declaration of Trust dated May 6,
1983. On January 29, 1992, the name of the trust was changed from
Income Portfolios to Fidelity Income Trust, and on April 15, 1993, the
Board of Trustees voted to change the trust's name to Fidelity Advisor
Series IV. An amended and restated Declaration of Trust, dated March
16, 1995, was filed on April 12, 1995. Currently, there are three
funds of the trust: Fidelity Advisor Intermediate Bond Fund, Fidelity
Institutional Short-Intermediate Government Portfolio, and Fidelity
Real Estate High Income Fund.
Fidelity Advisor Municipal Income Fund is a fund of Fidelity Advisor
Series V, an open-end management investment company organized as a
Massachusetts business trust by a Declaration of Trust dated April 23,
1986, as amended and restated July 18, 1991, and as supplemented April
15, 1993. On July 18, 1991, the Board of Trustees voted to change the
name of the trust from Plymouth Investment Series to Fidelity
Investment Series, and on April 15, 1993, the Board voted to change
the trust's name to Fidelity Advisor Series V. An amended and restated
Declaration of Trust dated March 16, 1995 was filed on April 12, 1995.
Currently, there are three funds of the trust: Fidelity Advisor
Municipal Income Fund, Fidelity Advisor New York Municipal Income
Fund, and Fidelity Advisor California Municipal Income Fund.
Fidelity Advisor Intermediate Municipal Income Fund and Fidelity
Advisor Short-Intermediate Municipal Income Fund are funds of Fidelity
Advisor Series VI, an open-end management investment company organized
as a Massachusetts business trust by a Declaration of Trust dated June
1, 1983, as amended and restated October 13, 1995 and supplemented May
5, 1993. On January 29, 1992, the name of the trust was changed from
Tax-Exempt Funds to Fidelity Oliver Street Trust and on April 15,
1993, the Board of Trustees voted to change the name of the trust to
Fidelity Advisor Series VI. Currently, there are two funds of the
trust: Fidelity Advisor Intermediate Municipal Income Fund and
Fidelity Advisor Short-Intermediate Municipal Income Fund.
Fidelity Advisor International Capital Appreciation Fund, Fidelity
Advisor Overseas Fund, and Fidelity Advisor Emerging Markets Income
Fund are funds of Fidelity Advisor Series VIII, an open-end management
investment company organized as a Massachusetts business trust by a
Declaration of Trust dated September 23, 1983, as amended and restated
October 1, 1986, and as supplemented November 29, 1990. On April 15,
1993, the name of the trust was changed from Fidelity Special
Situations Fund to Fidelity Advisor Series VIII. Currently, there are
three funds of the trust: Fidelity Advisor International Capital
Appreciation Fund, Fidelity Advisor Overseas Fund, and Fidelity
Advisor Emerging Markets Income Fund.
Fidelity Advisor Municipal Bond Fund is a fund of Fidelity Municipal
Trust, an open-end management investment company originally organized
as a Maryland corporation on November 22, 1976 and reorganized as a
Massachusetts business trust on June 22, 1984, at which time its name
changed to Fidelity Municipal Bond Portfolio. On March 1, 1986, the
trust's name was changed to Fidelity Municipal Trust. Currently, there
are seven funds of the trust: Fidelity Advisor Municipal Bond Fund,
Spartan Aggressive Municipal Fund, Spartan Insured Municipal Income
Fund, Spartan Ohio Municipal Income Fund, Spartan Michigan Municipal
Income Fund, Spartan Minnesota Municipal Income Fund, and Spartan
Pennsylvania Municipal Income Fund.
Fidelity Advisor Mortgage Securities Fund is a fund of Fidelity Income
Fund, an open-end management investment company organized as a
Massachusetts business trust on August 7, 1984. On October 25, 1987,
the trust's name was changed from Fidelity Mortgage Securities Fund to
Fidelity Income Fund. Currently, there are three funds in the trust:
Fidelity Advisor Mortgage Securities Fund, Fidelity Ginnie Mae Fund,
and Spartan Limited Maturity Government Fund.
The Declarations of Trust permit the Trustees to create additional
funds.
In the event that FMR ceases to be the investment adviser to a trust
or a fund, the right of the trust or fund to use the identifying name
"Fidelity" and "Spartan" may be withdrawn. There is a remote
possibility that one fund might become liable for any misstatement in
its prospectus or statement of additional information about another
fund.
The assets of each trust received for the issue or sale of shares of
each of its funds and all income, earnings, profits, and proceeds
thereof, subject only to the rights of creditors, are especially
allocated to such fund, and constitute the underlying assets of such
fund. The underlying assets of each fund are segregated on the books
of account, and are to be charged with the liabilities with respect to
such fund and with a share of the general liabilities of their
respective trusts. Expenses with respect to each trust are to be
allocated in proportion to the asset value of their respective funds,
except where allocations of direct expense can otherwise be fairly
made. The officers of each trust, subject to the general supervision
of the Board of Trustees, have the power to determine which expenses
are allocable to a given fund, or which are general or allocable to
all of the funds of a certain trust. In the event of the dissolution
or liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is an entity of the type
commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the
trust. Each Declaration of Trust provides that the trust shall not
have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation,
or instrument entered into or executed by the trust or its Trustees
shall include a provision limiting the obligations created thereby to
the trust and its assets. Each Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. Each Declaration of
Trust also provides that its funds shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote.
Each Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their office.
Claims asserted against one class of shares may subject holders of
another class of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value
of net asset value you own. The shares have no preemptive rights, and
Class A, Class T, Class C, Institutional Class, and Initial Class
shares have no conversion rights; the voting and dividend rights, the
conversion rights of Class B shares, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shares are
fully paid and nonassessable, except as set forth under the heading
"Shareholder and Trustee Liability" above. Shareholders representing
10% or more of a trust, a fund, or class of a fund may, as set forth
in the Declaration of Trust, call meetings of a trust, fund or class,
as applicable, for any purpose related to the trust, fund, or class,
as the case may be, including, in the case of a meeting of an entire
trust, the purpose of voting on removal of one or more Trustees. Each
trust or fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the trust or the fund, as determined by the current value
of each shareholder's investment in the funds or trusts. If not so
terminated, each trust and fund will continue indefinitely. Each fund
(except Equity Income and Municipal Bond) may invest all of their
assets in another investment company.
CUSTODIANS. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of International Capital
Appreciation, Mid Cap, Growth Opportunities, Strategic Opportunities,
and Large Cap. The Chase Manhattan Bank, 4 Chase MetroTech Center,
Brooklyn, New York, is custodian of the assets of TechnoQuant Growth,
Overseas, Equity Growth, Growth & Income, Equity Income, Balanced, and
Emerging Markets Income. The Bank of New York, 110 Washington Street,
New York, New York, is custodian of the assets of High Yield,
Strategic Income, Government Investment, Intermediate Bond, Mortgage
Securities and Short Fixed-Income. UMB Bank, n.a., 1010 Grand Avenue,
Kansas City, Missouri, is custodian of the assets of Municipal Income,
Municipal Bond, Intermediate Municipal Income, and Short-Intermediate
Municipal Income. Each custodian is responsible for the safekeeping of
the funds' assets and the appointment of subcustodian banks and
clearing agencies. A custodian takes no part in determining the
investment policies of a fund or in deciding which securities are
purchased or sold by a fund. However, a fund may invest in obligations
of its custodian and may purchase securities from or sell securities
to its custodian. The Bank of New York and The Chase Manhattan Bank,
each headquartered in New York, also may serve as special purpose
custodians of certain assets in connection with repurchase agreement
transactions.
FMR, its officers and directors, its affiliated companies, and the
Board of Trustees may, from time to time, conduct transactions with
various banks, including banks serving as custodians for certain of
the funds advised by FMR. The Boston branch of the custodian bank of
Mid Cap, Growth Opportunities, Strategic Opportunities, and Large Cap
leases its office space from an affiliate of FMR at a lease payment
which, when entered into, was consistent with prevailing market rates.
Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Coopers and Lybrand, LLP , One Post Office Square,
Boston, Massachusetts serves as the independent accountant for Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities,
Large Cap, Equity Income, Balanced, Emerging Markets Income, High
Yield, Strategic Income, Government Investment, Intermediate Bond,
Short Fixed-Income, Municipal Income, Municipal Bond, Intermediate
Municipal Income, and Short-Intermediate Municipal Income. The auditor
examines financial statements for the funds and provides other audit,
tax, and related services.
Price Waterhouse LLP , 160 Federal Street, Boston, Massachusetts
serves as the independent accountant for TechnoQuant Growth,
International Capital Appreciation, Overseas, Growth & Income, and
Mortgage Securities. The auditor examines financial statements for the
funds and provides other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's (except International Capital Appreciation) financial
statements and financial highlights for the fiscal periods ended
October 31, November 30, and December 31, 1997, as appropriate, and
reports of the auditors are included in the funds' Annual Report,
which are separate reports supplied with this SAI. The funds'
financial statements, including the financial highlights, and reports
of the auditors are incorporated herein by reference. For a free
additional copy of a fund's Annual Report, contact Fidelity at
1-800-544-8888, 82 Devonshire Street, Boston, MA 02109, or your
investment professional.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the prerefunded bond is considered to
be the number of days to the announced call date of the bonds. Also,
the maturities of mortgage-backed securities, including collateralized
mortgage obligations, and some asset-backed securities are determined
on a weighted average life basis, which is the average time for
principal to be repaid. For a mortgage security, this average time is
calculated by estimating the timing of principal payments, including
unscheduled prepayments, during the life of the mortgage. The weighted
average life of these securities is likely to be substantially shorter
than their stated final maturity.
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations
when determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for long-term municipal obligations fall within nine
categories. They range from Aaa (highest quality) to C (lowest
quality). Those bonds within the Aa through B categories that Moody's
believes possess the strongest credit attributes within those
categories are designated by the symbol "1."
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL DEBT
Municipal debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA through CCC may be modified by the addition of a plus sign (+) or
minus sign (-) to show relative standing within the major rating
categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF CORPORATE BONDS
Moody's ratings for obligations with an original remaining maturity in
excess of one year fall within nine categories. They range from Aaa
(highest quality) to C (lowest quality). Moody 's applies
numerical modifiers of 1, 2, or 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the issue ranks on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS:
Debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA to CCC may be modified by the addition of a plus sign (+) or minus
sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest-rated issues only in
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1) Financial Statements and Financial Highlights included in
the Annual Reports for Fidelity Advisor Series I on behalf of Fidelity
Advisor Equity Growth Fund, Fidelity Advisor Mid Cap Fund, Fidelity
Advisor TechnoQuant Growth Fund, Fidelity Advisor Growth & Income
Fund, and Fidelity Advisor Large Cap Fund for for the fiscal year
ended November 30, 1997 are included in the funds' prospectuses, are
incorporated by reference into the fund's Statement of Additional
Information, and were filed pursuant to Rule 30d-1 under the
Investment Company Act of 1940 and are incorporated herein by
reference.
(2) Financial Statements and Financial Highlights reflecting the
Registrant's succession to the business of Fidelity Advisor Growth
Opportunities Fund, a fund of Fidelity Advisor Series II (a
Massachusetts business trust) for the fiscal year ended November 30,
1997 are included in the fund's prospectuses, are incorporated by
reference into the fund's Statement of Additional Information, and
were filed pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(3) Financial Statements and Financial Highlights reflecting the
Registrant's succession to the business of Fidelity Advisor Strategic
Opportunities Fund, a fund of Fidelity Advisor Series VIII (a
Massachusetts business trust) for the fiscal year ended November 30,
1997 are included in the fund's prospectuses, are incorporated by
reference into the fund's Statement of Additional Information, and
were filed pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(b) Exhibits:
(1) (a) Amended and Restated Declaration of Trust, dated October 26,
1984, is incorporated herein by reference to Exhibit 1(a) of
Post-Effective Amendment No. 31.
(b) Supplement to the Declaration of Trust, dated February 10, 1987,
is incorporated herein by reference to Exhibit 1(b) of Post-Effective
Amendment No. 31.
(c) Supplement to the Declaration of Trust, dated November 26, 1990,
is incorporated herein by reference to Exhibit 1(c) of Post-Effective
Amendment No. 31.
(d) Supplement to the Declaration of Trust, dated December 20, 1991,
is incorporated herein by reference to Exhibit 1(e) of Post-Effective
Amendment No. 31.
(e) Amendment to the Declaration of Trust, dated May 3, 1993, is
incorporated herein by reference to Exhibit 1(f) of Post-Effective
Amendment No. 31.
(f) Supplement to the Declaration of Trust, dated August 25, 1997,
is incorporated herein by reference to Exhibit 1(f) of Post-Effective
Amendment No. 41.
(2) By-Laws of the Trust are incorporated herein by reference to
Exhibit 2 of Post-Effective Amendment No. 41.
(3) Not applicable.
(4) Not applicable.
(5) (a) Management Contract between Fidelity Advisor Equity Growth
Fund and Fidelity Management & Research Company, dated, September 1,
1997, is incorporated herein by reference to Exhibit 5(a) of
Post-Effective Amendment No. 41.
(b) Management Contract between Fidelity Advisor Mid Cap Fund and
Fidelity Management & Research Company, dated January 18, 1996, is
incorporated herein by reference to Exhibit 5(b) of Post-Effective
Amendment No. 32.
(c) Management Contract between Fidelity Advisor Large Cap Fund and
Fidelity Management & Research Company dated, January 18, 1996, is
incorporated herein by reference to Exhibit 5(c) of Post-Effective
Amendment No. 32.
(d) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Equity Growth Fund, and
Fidelity Management & Research (U.K.) Inc., dated September 1, 1997,
is incorporated herein by reference to Exhibit 5(d) of Post-Effective
Amendment No. 41.
(e) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Equity Growth Fund, and
Fidelity Management & Research (Far East) Inc., dated September 1,
1997, is incorporated herein by reference to Exhibit 5(e) of
Post-Effective Amendment No. 41.
(f) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Mid Cap Fund, and Fidelity
Management & Research (U.K.) Inc., dated January 18, 1996, is
incorporated herein by reference to Exhibit 5(f) of Post-Effective
Amendment No. 32.
(g) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Mid Cap Fund, and Fidelity
Management & Research (Far East) Inc., dated January 18, 1996, is
incorporated herein by reference to Exhibit 5(g) of Post-Effective
Amendment No. 32.
(h) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Large Cap Fund, and Fidelity
Management & Research (U.K.) Inc., dated January 18, 1996, is
incorporated herein by reference to Exhibit 5(h) of Post-Effective
Amendment No. 32.
(i) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Large Cap Fund, and Fidelity
Management & Research (Far East) Inc., dated January 18, 1996, is
incorporated herein by reference to Exhibit 5(i) of Post-Effective
Amendment No. 32.
(j) Management Contract between Fidelity Advisor Growth & Income
Fund and Fidelity Management & Research Company, dated December 1,
1996, is incorporated herein by reference to Exhibit 5(j) of
Post-Effective Amendment No. 38.
(k) Management Contract between Fidelity Advisor TechnoQuant Growth
Fund and Fidelity Management & Research Company, dated December 1,
1996, is incorporated herein by reference to Exhibit 5(k) of
Post-Effective Amendment No. 38.
(l) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Growth & Income Fund, and
Fidelity Management & Research (U.K.) Inc., dated December 1, 1996, is
incorporated herein by reference to Exhibit 5(l) of Post-Effective
Amendment No. 38.
(m) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Growth & Income Fund, and
Fidelity Management & Research (Far East) Inc., dated December 1,
1996, is incorporated herein by reference to Exhibit 5(m) of
Post-Effective Amendment No. 38.
(n) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor TechnoQuant Growth Fund, and
Fidelity Management & Research (U.K.) Inc., dated December 1, 1996, is
incorporated herein by reference to Exhibit 5(n) of Post-Effective
Amendment No. 38.
(o) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor TechnoQuant Growth Fund, and
Fidelity Management & Research (Far East) Inc., dated December 1,
1996, is incorporated herein by reference to Exhibit 5(o) of
Post-Effective Amendment No. 38.
(p) Management Contract between Fidelity Advisor Growth
Opportunities Fund and Fidelity Management & Research Company, dated
February 28, 1998, is filed herein as Exhibit 5(p).
(q) Management Contract between Fidelity Advisor Strategic
Opportunities Fund and Fidelity Management & Research Company, dated
February 28, 1998, is filed herein as Exhibit 5(q).
(r) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Growth Opportunities Fund, and
Fidelity Management & Research (U.K.) Inc., dated February 28, 1998,
is filed herein as Exhibit 5(r).
(s) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Strategic Opportunities Fund,
and Fidelity Management & Research (U.K.) Inc., dated February 28,
1998, is filed herein as Exhibit 5(s).
(t) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Growth Opportunities Fund, and
Fidelity Management & Research (Far East) Inc., dated February 28,
1998, is filed herein as Exhibit 5(t).
(u) Sub-Advisory Agreement between Fidelity Management & Research
Company, on behalf of Fidelity Advisor Strategic Opportunities Fund,
and Fidelity Management & Research (Far East) Inc., dated February 28,
1998, is filed herein as Exhibit 5(u).
(6) (a) General Distribution Agreement between Fidelity Advisor
Equity Portfolio Growth (currently known as Fidelity Advisor Equity
Growth Fund) and Fidelity Distributors Corporation, dated April 1,
1987, is incorporated herein by reference to Exhibit 6(a) of
Post-Effective Amendment No. 29.
(b) Amendment to the General Distribution Agreement for Fidelity
Equity Portfolio Growth (currently known as Fidelity Advisor Equity
Growth Fund), dated January 1, 1988, is incorporated herein by
reference to Exhibit 6(b) of Post-Effective Amendment No. 29.
(c) General Distribution Agreement between Fidelity Advisor Mid Cap
Fund and Fidelity Distributors Corporation, dated January 18, 1996, is
incorporated herein by reference to Exhibit 6(c) of Post-Effective
Amendment No. 32.
(d) General Distribution Agreement between Fidelity Advisor Large
Cap Fund and Fidelity Distributors Corporation, dated January 18,
1996, is incorporated herein by reference to Exhibit 6(d) of
Post-Effective Amendment No. 32.
(e) Amendments to the General Distribution Agreement between
Fidelity Advisor Series I on behalf of Fidelity Advisor Equity Growth
Fund, Fidelity Advisor Mid Cap Fund, and Fidelity Advisor Large Cap
Fund and Fidelity Distributors Corporation, dated March 14, 1996 and
July 15, 1996, are incorporated herein by reference to Exhibit 6(a) of
Fidelity Court Street Trust's Post-Effective Amendment No. 61 (File
No. 2-58774).
(f) General Distribution Agreement between Fidelity Advisor Growth &
Income Fund and Fidelity Distributors Corporation, dated December 1,
1996, is incorporated herein by reference to Exhibit 6(h) of
Post-Effective Amendment No. 38.
(g) General Distribution Agreement between Fidelity Advisor
TechnoQuant Growth Fund and Fidelity Distributors Corporation, dated
December 1, 1996, is incorporated herein by reference to Exhibit 6(i)
of Post-Effective Amendment No. 38.
(h) General Distribution Agreement between Fidelity Advisor Growth
Opportunities Fund and Fidelity Distributors Corporation, dated
February 28, 1998, is filed herein as Exhibit 6(h).
(i) General Distribution Agreement between Fidelity Advisor
Strategic Opportunities Fund and Fidelity Distributors Corporation,
dated February 28, 1998, is filed herein as Exhibit 6(i).
(j) Form of Bank Agency Agreement (most recently revised January,
1997) is filed herein as Exhibit 6(j).
(k) Form of Selling Dealer Agreement (most recently revised January,
1997) is filed herein as Exhibit 6(k).
(l) Form of Selling Dealer Agreement for Bank-Related Transactions
(most recently revised January, 1997) is filed herein as Exhibit 6(l).
(7) (a) Retirement Plan for Non-Interested Person Trustees, Directors
or General Partners, as amended on November 16, 1995 , is incorporated
herein by reference to Exhibit 7(a) of Fidelity Select Portfolio's
(File No. 2-69972) Post-Effective Amendment No. 54.
(b) The Fee Deferral plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of September 14, 1995 and
amended through November 14, 1996, is incorporated herein by reference
to Exhibit 7(b) of Fidelity Aberdeen Street Trust's (File No.
33-43529) Post-Effective Amendment No. 19.
(8) (a) Custodian Agreement and Appendix C, dated August 1, 1994,
between The Chase Manhattan Bank, N.A. and Fidelity Advisor Series I
on behalf of Fidelity Advisor Equity Growth Fund is incorporated
herein by reference to Exhibit 8(a) of Fidelity Investment Trust's
Post-Effective Amendment No. 59 (File No. 2-90649).
(b) Appendix A, dated October 17, 1996, to the Custodian Agreement,
dated August 1, 1994, between The Chase Manhattan Bank, N.A. and
Fidelity Advisor Series I on behalf of Fidelity Advisor Equity Growth
Fund is incorporated herein by reference to Exhibit 8(c) of Fidelity
Charles Street Trust's Post-Effective Amendment No. 57 (File No.
2-73133).
(c) Appendix B, dated September 18, 1997, to the Custodian
Agreement, dated August 1, 1994, between The Chase Manhattan Bank,
N.A. and Fidelity Advisor Series I on behalf of Fidelity Advisor
Equity Growth Fund is incorporated herein by reference to Exhibit 8(b)
of Fidelity Charles Street Trust's Post-Effective Amendment No. 62
(File No. 2-73133).
(d) Custodian Agreement and Appendix C, dated September 1, 1994,
between Brown Brothers Harriman & Company and Fidelity Advisor Series
I on behalf of Fidelity Advisor Mid Cap Fund and Fidelity Advisor
Large Cap Fund is incorporated herein by reference to Exhibit 8(a) of
Fidelity Commonwealth Trust's Post-Effective Amendment No. 56 (File
No. 2-52322).
(e) Appendix A, dated October 16, 1997, to the Custodian Agreement,
dated September 1, 1994, between Brown Brothers Harriman & Company and
Fidelity Advisor Series I on behalf of Fidelity Advisor Mid Cap Fund
and Fidelity Advisor Large Cap Fund is incorporated herein by
reference to Exhibit 8(b) of Fidelity Contrafund's Post-Effective
Amendment No. 50 (File No. 2-25235).
(f) Appendix B, dated September 18, 1997, to the Custodian
Agreement, dated September 1, 1994, between Brown Brothers Harriman &
Company and Fidelity Advisor Series I on behalf of Fidelity Advisor
Mid Cap Fund and Fidelity Advisor Large Cap Fund is incorporated
herein by reference to Exhibit 8(c) of Fidelity Contrafund's
Post-Effective Amendment No. 50 (File No. 2-25235).
(g) Fidelity Group Repo Custodian Agreement among The Bank of New
York, J. P. Morgan Securities, Inc., and Fidelity Advisor Series I on
behalf of Fidelity Equity Portfolio Growth (currently known as
Fidelity Advisor Equity Growth Fund), Fidelity Advisor Mid Cap Fund,
and Fidelity Advisor Large Cap Fund, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(d) of Fidelity
Institutional Cash Portfolio's (File No. 2-74808) Post-Effective
Amendment No. 31.
(h) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between The Bank of New York and Fidelity Advisor Series I on behalf
of Fidelity Equity Portfolio Growth (currently known as Fidelity
Advisor Equity Growth Fund), Fidelity Advisor Mid Cap Fund, and
Fidelity Advisor Large Cap Fund, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(e) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(i) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and Fidelity Advisor Series I on
behalf of Fidelity Equity Portfolio Growth (currently known as
Fidelity Advisor Equity Growth Fund), Fidelity Advisor Mid Cap Fund,
and Fidelity Advisor Large Cap Fund, dated November 13, 1995, is
incorporated herein by reference to Exhibit 8(f) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(j) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between Chemical Bank and Fidelity Advisor Series I on behalf of
Fidelity Equity Portfolio Growth (currently known as Fidelity Advisor
Equity Growth Fund), Fidelity Advisor Mid Cap Fund, and Fidelity
Advisor Large Cap Fund, dated November 13, 1995, is incorporated
herein by reference to Exhibit 8(g) of Fidelity Institutional Cash
Portfolios'(File No. 2-74808) Post-Effective Amendment No. 31.
(k) Joint Trading Account Custody Agreement between the The Bank of
New York and Fidelity Advisor Series I on behalf of Fidelity Advisor
Equity Growth Fund, dated May 11, 1995, is incorporated herein by
reference to Exhibit 8(h) of Fidelity Institutional Cash Portfolios'
(File No. 2-74808) Post-Effective Amendment No. 31.
(l) First Amendment to Joint Trading Account Custody Agreement
between the The Bank of New York and Fidelity Advisor Series I on
behalf of Fidelity Advisor Equity Growth Fund, dated July 14, 1995, is
incorporated herein by reference to Exhibit 8(i) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(m) Forms of Custodian Agreement, Appendix B, and Appendix C between
The Chase Manhattan Bank, N.A. and Fidelity Advisor Series I on behalf
of Fidelity Advisor TechnoQuant Growth Fund and Fidelity Advisor
Growth & Income Fund are filed herein as Exhibit 8(m).
(n) Forms of Custodian Agreement, Appendix B, and Appendix C between
Brown Brothers Harriman & Company and Fidelity Advisor Series I on
behalf of Fidelity Advisor Strategic Opportunities Fund and Fidelity
Advisor Growth Opportunities Fund are filed herein as Exhibit 8(n).
(o) Forms of Fidelity Group Repo Custodian Agreement and Schedule 1
among The Bank of New York, J.P. Morgan Securities, Inc., and Fidelity
Advisor Series I on behalf of Fidelity Advisor TechnoQuant Growth
Fund, Fidelity Advisor Growth & Income Fund, Fidelity Advisor
Strategic Opportunities Fund, and Fidelity Advisor Growth
Opportunities Fund are filed herein as Exhibit 8(o).
(p) Forms of Fidelity Group Repo Custodian Agreement and Schedule 1
among Chemical Bank, Greenwich Capital Markets, Inc., and Fidelity
Advisor Series I on behalf of Fidelity Advisor TechnoQuant Growth
Fund, Fidelity Advisor Growth & Income Fund, Fidelity Advisor
Strategic Opportunities Fund, and Fidelity Advisor Growth
Opportunities Fund are filed herein as Exhibit 8(p).
(q) Forms of Joint Trading Account Custody Agreement and First
Amendment to Joint Trading Account Custody Agreement between The Bank
of New York and Fidelity Advisor Series I on behalf of Fidelity
Advisor TechnoQuant Growth Fund, Fidelity Advisor Growth & Income
Fund, Fidelity Advisor Strategic Opportunities Fund, and Fidelity
Advisor Growth Opportunities Fund are filed herein as Exhibit 8(q).
(9) Not applicable.
(10) Not applicable.
(11) (a) Consent of Coopers & Lybrand L.L.P. is filed herein as
Exhibit 11(a).
(b) Consent of Price Waterhouse LLP is filed herein as Exhibit
11(b).
(12) Not applicable.
(13) Not applicable.
(14) (a) Fidelity Individual Retirement Account Custodial Agreement
and Disclosure Statement, as currently in effect, is incorporated
herein by reference to Exhibit 14(a) of Fidelity Union Street Trust's
(File No. 2-50318) Post-Effective Amendment No. 87.
(b) Fidelity Institutional Individual Retirement Account Custodial
Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(c) National Financial Services Corporation Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(h) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(d) Fidelity Portfolio Advisory Services Individual Retirement
Account Custodial Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(i) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(e) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(f) National Financial Services Corporation Defined Contribution
Retirement Plan and Trust Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(k) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(g) The CORPORATEplan for Retirement Profit Sharing/401K Plan, as
currently in effect, is incorporated herein by reference to Exhibit
14(l) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(h) The CORPORATEplan for Retirement Money Purchase Pension Plan, as
currently in effect, is incorporated herein by reference to Exhibit
14(m) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(i) Fidelity Investments Section 403(b)(7) Individual Custodial
Account Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) of Fidelity
Commonwealth Trust's (File No. 2-52322) Post-Effective Amendment No.
57.
(j) Plymouth Investments Defined Contribution Retirement Plan and
Trust Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(o) of Fidelity Commonwealth Trust's (File No.
2-52322) Post-Effective Amendment No. 57.
(k) The Fidelity Prototype Defined Benefit Pension Plan and Trust
Basic Plan Document and Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(d) of Fidelity
Securities Fund's (File No. 2-93601) Post-Effective Amendment No. 33.
(l) The Institutional Prototype Plan Basic Plan Document,
Standardized Adoption Agreement, and Non-Standardized Adoption
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(o) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 33.
(m) The CORPORATEplan for Retirement 100SM Profit Sharing/401(k)
Basic Plan Document, Standardized Adoption Agreement, and
Non-Standardized Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) of Fidelity
Securities Fund's (File No. 2-93601) Post-Effective Amendment No. 33.
(n) The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt
Employers Basic Plan Document, Standardized Profit Sharing Plan
Adoption Agreement, Non-Standardized Discretionary Contribution Plan
No. 002 Adoption Agreement, and Non-Standardized Discretionary
Contribution Plan No. 003 Adoption Agreement, as currently in effect,
is incorporated herein by reference to Exhibit 14(g) of Fidelity
Securities Fund's (File No. 2-93601) Post-Effective Amendment No. 33.
(o) Fidelity Investments 403(b) Sample Plan Basic Plan Document and
Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(p) of Fidelity Securities Fund's (File No.
2-93601) Post-Effective Amendment No. 33.
(p) Fidelity Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(c) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 33.
(q) Fidelity SIMPLE-IRA Plan Adoption Agreement, Company Profile
Form, and Plan Document, as currently in effect, is incorporated
herein by reference to Exhibit 14(q) of Fidelity Aberdeen Street
Trust's (File No. 33-43529) Post-Effective Amendment No. 19.
(15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Equity Growth Fund: Class T is incorporated herein by
reference to Exhibit 15(a) of Post-Effective Amendment No. 41.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Equity Growth Fund (formerly known as Fidelity
Advisor Equity Portfolio Growth): Institutional Class is incorporated
herein by reference to Exhibit 15(b) of Post-Effective Amendment No.
38.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Mid Cap Fund: Class T (formerly known as Class A) is
incorporated herein by reference to Exhibit 15(c) of Post-Effective
Amendment No. 38.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Mid Cap Fund: Class B is incorporated herein by
reference to Exhibit 15(d) of Post-Effective Amendment No. 38.
(e) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Mid Cap Fund: Institutional Class is incorporated
herein by reference to Exhibit 15(e) of Post-Effective Amendment No.
38.
(f) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Large Cap Fund: Class T (formerly known as Class A)
is incorporated herein by reference to Exhibit 15(f) of Post-Effective
Amendment No. 38.
(g) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Large Cap Fund: Class B is incorporated herein by
reference to Exhibit 15(g) of Post-Effective Amendment No. 38
(h) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Large Cap Fund: Institutional Class is incorporated
herein by reference to Exhibit 15(h) of Post-Effective Amendment No.
38.
(i) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Equity Growth Fund: Class A is incorporated herein by
reference to Exhibit 15(i) of Post-Effective Amendment No. 34.
(j) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Mid Cap Fund: Class A is incorporated herein by
reference to Exhibit 15(j) of Post-Effective Amendment No. 34.
(k) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Large Cap Fund: Class A is incorporated herein by
reference to Exhibit 15(k) of Post-Effective Amendment No. 34.
(l) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Equity Growth Fund: Class B is incorporated herein by
reference to Exhibit 15(l) of Post-Effective Amendment No. 36.
(m) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth & Income Fund: Class A is incorporated herein
by reference to Exhibit 15(m) of Post-Effective Amendment No. 36.
(n) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth & Income Fund: Class T is incorporated herein
by reference to Exhibit 15(n) of Post-Effective Amendment No. 36.
(o) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth & Income Fund: Class B is incorporated herein
by reference to Exhibit 15(o) of Post-Effective Amendment No. 36.
(p) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth & Income Fund: Institutional Class is
incorporated herein by reference to Exhibit 15(p) of Post-Effective
Amendment No. 38.
(q) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor TechnoQuant Growth Fund: Class A is incorporated
herein by reference to Exhibit 15(q) of Post-Effective Amendment No.
36.
(r) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor TechnoQuant Growth Fund: Class T is incorporated
herein by reference to Exhibit 15(r) of Post-Effective Amendment No.
36.
(s) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor TechnoQuant Growth Fund: Class B is incorporated
herein by reference to Exhibit 15(s) of Post-Effective Amendment No.
36.
(t) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor TechnoQuant Growth Fund: Institutional Class is
incorporated herein by reference to Exhibit 15(t) of Post-Effective
Amendment No. 38.
(u) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Equity Growth Fund: Class C is incorporated herein by
reference to Exhibit 15(u) of Post-Effective Amendment No. 41.
(v) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Mid Cap Fund: Class C is incorporated herein by
reference to Exhibit 15(v) of Post-Effective Amendment No. 41.
(w) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Large Cap Fund: Class C is incorporated herein by
reference to Exhibit 15(w) of Post-Effective Amendment No. 41.
(x) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor TechnoQuant Growth Fund: Class C is incorporated
herein by reference to Exhibit 15(x) of Post-Effective Amendment No.
41.
(y) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth & Income Fund: Class C is incorporated herein
by reference to Exhibit 15(y) of Post-Effective Amendment No. 41.
(z) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth Opportunities Fund: Class A is filed herein as
Exhibit 15(z).
(aa) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth Opportunities Fund: Class T is filed herein as
Exhibit 15(aa).
(bb) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth Opportunities Fund: Class B is filed herein as
to Exhibit 15(bb).
(cc) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth Opportunities Fund: Class C is filed herein as
Exhibit 15(cc).
(dd) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Growth Opportunities Fund: Institutional Class is
filed herein as Exhibit 15(dd).
(ee) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Strategic Opportunities Fund: Class A is filed herein
as Exhibit 15(ee).
(ff) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Strategic Opportunities Fund: Class T is filed herein
as Exhibit 15(ff).
(gg) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Strategic Opportunities Fund: Class B is filed herein
as Exhibit 15(gg).
(hh) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Strategic Opportunities Fund: Institutional Class is
filed herein as Exhibit 15(hh).
(16) (a) Schedule for computation of cumulative total returns and
average annual returns is incorporated herein by reference to 16(a) of
Post-Effective Amendment No. 29.
(b) Schedule for computation of adjusted net asset value and
moving averages calculations incorporated herein by reference to
Exhibit 16(b) of Post-Effective Amendment No. 29.
(17) Financial Data Schedules for Fidelity Advisor Equity Growth
Fund, Fidelity Advisor Mid Cap Fund, Fidelity Advisor Large Cap Fund,
Fidelity Advisor TechnoQuant Growth Fund, Fidelity Advisor Growth &
Income Fund, Fidelity Advisor Growth Opportunities Fund, and Fidelity
Advisor Strategic Opportunities Fund are filed herein as exhibit 27.
(18) Rule 18f-3 Plan, dated October 16, 1997, is incorporated herein
by reference to Exhibit 18 of Post-Effective Amendment No. 41.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of the Registrant is substantially the same as
the Boards of other Fidelity funds, each of which has Fidelity
Management & Research Company as its investment adviser. In addition,
the officers of these funds are substantially identical. Nonetheless,
the Registrant takes the position that it is not under common control
with these other funds since the power residing in the respective
Boards and officers arises as the result of an official position with
the respective funds.
Item 26. Number of Holders of Securities
As of December 31, 1997
Title of Class: Shares of Beneficial Interest
Name of Series Number of Recordholders
Fidelity Advisor Equity Growth Fund: Class A 3,413
Fidelity Advisor Equity Growth Fund: Class T 198,992
Fidelity Advisor Equity Growth Fund: Class B 7,069
Fidelity Advisor Equity Growth Fund: Class C 168
Fidelity Advisor Equity Growth Fund: Institutional Class 6,714
Fidelity Advisor Mid Cap Fund: Class A 809
Fidelity Advisor Mid Cap Fund: Class T 32,734
Fidelity Advisor Mid Cap Fund: Class B 6,812
Fidelity Advisor Mid Cap Fund: Class C 97
Fidelity Advisor Mid Cap Fund: Institutional Class 575
Fidelity Advisor Large Cap Fund: Class A 305
Fidelity Advisor Large Cap Fund: Class T 4,493
Fidelity Advisor Large Cap Fund: Class B 2,425
Fidelity Advisor Large Cap Fund: Class C 16
Fidelity Advisor Large Cap Fund: Institutional Class 81
Fidelity Advisor Growth & Income Fund: Class A 703
Fidelity Advisor Growth & Income Fund: Class T 10,311
Fidelity Advisor Growth & Income Fund: Class B 2,261
Fidelity Advisor Growth & Income Fund: Class C 88
Fidelity Advisor Growth & Income Fund: Institutional Class 629
Fidelity Advisor TechnoQuant Growth Fund: Class A 375
Fidelity Advisor TechnoQuant Growth Fund: Class T 2,504
Fidelity Advisor TechnoQuant Growth Fund: Class B 920
Fidelity Advisor TechnoQuant Growth Fund: Class C 13
Fidelity Advisor TechnoQuant Growth Fund: Institutional Class 16
Fidelity Advisor Strategic Opportunities Fund: Initial Class 978
Fidelity Advisor Strategic Opportunities Fund Class A 442
Fidelity Advisor Strategic Opportunities Fund: Class T 59,603
Fidelity Advisor Strategic Opportunities Fund Class B 17,190
Fidelity Advisor Strategic Opportunities Fund Institutional Class
439
Fidelity Advisor Growth Opportunities Fund Class A 13,482
Fidelity Advisor Growth Opportunities Fund Class T 702,323
Fidelity Advisor Growth Opportunities Fund Class B 35,076
Fidelity Advisor Growth Opportunities Fund Class C 1,005
Fidelity Advisor Growth Opportunities Fund Institutional Class 2766
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It states
that the Registrant shall indemnify any present or past Trustee or
officer to the fullest extent permitted by law against liability and
all expenses reasonably incurred by him in connection with any claim,
action, suit, or proceeding in which he is involved by virtue of his
service as a Trustee, an officer, or both. Additionally, amounts paid
or incurred in settlement of such matters are covered by this
indemnification. Indemnification will not be provided in certain
circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of
the duties involved in the conduct of the particular office involved.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against
any loss, liability, claim, damages or expense arising by reason of
any person acquiring any shares, based upon the ground that the
registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Registrant included a materially misleading statement or
omission. However, the Registrant does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with,
information furnished to the Registrant by or on behalf of the
Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of
willful misfeasance, bad faith, gross negligence, and reckless
disregard of the obligations and duties under the Distribution
Agreement.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("Service") is appointed transfer agent, the Registrant agrees to
indemnify and hold Service harmless against any losses, claims,
damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names the
Service and/or the Registrant as a party and is not based on and does
not result from Service's willful misfeasance, bad faith or negligence
or reckless disregard of duties, and arises out of or in connection
with Service's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by Service's willful misfeasance, bad faith or
negligence or reckless disregard of duties) which results from the
negligence of the Registrant, or from Service's acting upon any
instruction(s) reasonably believed by it to have been executed or
communicated by any person duly authorized by the Registrant, or as a
result of Service's acting in reliance upon advice reasonably believed
by Service to have been given by counsel for the Registrant, or as a
result of Service's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Pursuant to the agreement by which Fidelity Investments Institutional
Operations Company, Inc. ("FIIOC") is appointed transfer agent, the
Registrant agrees to indemnify and hold FIIOC harmless against any
losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names FIIOC
and/or the Registrant as a party and is not based on and does not
result from FIIOC's willful misfeasance, bad faith or negligence or
reckless disregard of duties, and arises out of or in connection with
FIIOC's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by FIIOC's willful misfeasance, bad faith or negligence
or reckless disregard of duties) which results from the negligence of
the Registrant, or from FIIOC's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of FIIOC's
acting in reliance upon advice reasonably believed by FIIOC to have
been given by counsel for the Registrant, or as a result of FIIOC's
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held,
during the past two fiscal years, the following positions of a
substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the
Board and Director of FMR, FMR Corp., FIMM, FMR
(U.K.) Inc., and FMR (Far East) Inc.; Chairman of the
Board and Representative Director of Fidelity
Investments Japan Limited; President and Trustee of
funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FIMM, FMR (U.K.) Inc., and FMR (Far
East) Inc.; Previously, General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
Marta Amieva Vice President of FMR.
John H. Carlson Vice President of FMR and of funds advised by FMR.
Dwight D. Churchill Senior Vice President of FMR and Vice President of
Bond Funds advised by FMR.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR.
William Danoff Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Scott E. DeSano Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
George C. Domolky Vice President of FMR.
Walter C. Donovan Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and of funds advised by FMR.
William R. Ebsworth Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR
(U.K.) Inc., and FMR (Far East) Inc.; Secretary of
FIMM.
Robert Gervis Vice President of FMR.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Kevin E. Grant Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Senior Vice President of FMR and Vice President of
Money Market Funds advised by FMR.
Bart A. Grenier Vice President of High-Income Funds advised by
FMR;Vice President of FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
Richard Hazelwood Vice President of FMR.
Fred L. Henning Jr. Senior Vice President of FMR and Vice President of
Fixed-Income funds advised by FMR.
Bruce T. Herring Vice President of FMR.
John R. Hickling Vice President of FMR and of a fund advised by FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curt Hollingsworth Vice President of FMR and of funds advised by FMR.
Abigail P. Johnson Senior Vice President of FMR and Vice President of
funds advised by FMR; Associate Director and Senior
Vice President of Equity funds advised by FMR.
David B. Jones Vice President of FMR.
Steven Kaye Vice President of FMR and of a fund advised by FMR.
Francis V. Knox Vice President of FMR; Compliance Officer of FMR
(U.K.) Inc.
Robert A. Lawrence Senior Vice President of FMR and Vice President of
Fidelity Real Estate High Income and Fidelity Real
Estate High income II funds advised by FMR; Associate
Director and Senior Vice President of Equity funds
advised by FMR; Previously, Vice President of High
Income funds advised by FMR.
Harris Leviton Vice President of FMR and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Mark G. Lohr Vice President of FMR; Treasurer of FMR, FMR (U.K.)
Inc., FMR (Far East) Inc., and FIMM.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Charles A. Mangum Vice President of FMR and of a fund advised by FMR.
Kevin McCarey Vice President of FMR and of a fund advised by FMR.
Diane M. McLaughlin Vice President of FMR.
Neal P. Miller Vice President of FMR.
David L. Murphy Vice President of FMR and of funds advised by FMR.
Scott A. Orr Vice President of FMR and of funds advised by FMR.
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR.
Kennedy P. Richardson Vice President of FMR.
Eric D. Roiter Senior Vice President and General Counsel of FMR and
Secretary of funds advised by FMR.
Mark S. Rzepczynski Vice President of FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Richard A. Silver Vice President of FMR.
Carol A. Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Previously, Senior Vice President and Director of
Operations and Compliance of FMR (U.K.) Inc.
Thomas M. Sprague Vice President of FMR and of funds advised by FMR.
Robert E. Stansky Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Scott D. Stewart Vice President of FMR.
Cynthia L. Strauss Vice President of FMR.
Thomas Sweeney Vice President of FMR and of a fund advised by FMR.
Beth F. Terrana Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR and Vice President of
funds advised by FMR.
Steven S. Wymer Vice President of FMR and of a fund advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
25 Lovat Lane, London, EC3R 8LL, England
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FMR U.K.,
FMR, FMR Corp., FIMM, and FMR (Far East) Inc.;
Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR Corp.;
Chairman of the Board and Representative Director of
Fidelity Investments Japan Limited; President and
Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FIMM, FMR (U.K.) Inc., and FMR (Far
East) Inc.; Previously, General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
Mark G. Lohr Treasurer of FMR U.K., FMR, FMR (Far East) Inc., and
FIMM; Previously, Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR U.K., FMR, FMR (Far
East) Inc., and FIMM; Previously, Treasurer of FMR
Corp.
Francis V. Knox Compliance Officer of FMR U.K.; Previously, Vice
President of FMR.
Jay Freedman Clerk of FMR U.K., FMR (Far East) Inc., and FMR
Corp.; Assistant Clerk of FMR; Secretary of FIMM.
Sarah H. Zenoble Senior Vice President and Director of Operations
andCompliance.
(3) FIDELITY MANAGEMENT & RESEARCH COMPANY (FAR EAST) INC. (FMR FAR
EAST)
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
FMR Far East provides investment advisory services to Fidelity
Management & Research Company and Fidelity Management Trust Company.
The directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FMR Far
East, FMR, FMR Corp., FIMM, and FMR (U.K.)
Inc.; Chairman of the Executive Committee of
FMR; President and Chief Executive Officer of
FMR Corp.; Chairman of the Board and
Representative Director of Fidelity Investments
Japan Limited; President and Trustee of funds
advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice
President and Trustee of funds advised by FMR;
President and Director of FIMM, FMR (U.K.)
Inc., and FMR (Far East) Inc.; Previously,
General Counsel, Managing Director, and Senior
Vice President of FMR Corp.
Billy Wilder Vice President of FMR Far East; President and
Representative Director of Fidelity Investments
Japan Limited.
Mark G. Lohr Treasurer of FMR Far East, FMR, FMR (U.K.)
Inc., and FIMM; Previously, Vice President of
FMR.
Stephen G. Manning Assistant Treasurer of FMR Far East, FMR,
FMR (U.K.) Inc., and FIMM; Vice President and
Treasurer of FMR Corp.
Jay Freedman Clerk of FMR Far East, FMR (U.K.) Inc., and
FMR Corp.; Assistant Clerk of FMR; Secretary
of FIMM.
Robert H. Auld Senior Vice President of FMR Far East.
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
most funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Eric D. Roiter Senior Vice President Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the
funds' respective custodian The Chase Manhattan Bank, 1 Chase
Manhattan Plaza, New York, N.Y. or Brown Brothers Harriman & Co., 40
Water Street, Boston, MA.
Item 31. Management Services
Not applicable
Item 32. Undertakings
The Registrant, on behalf of Fidelity Advisor Equity Growth Fund,
Fidelity Advisor Mid Cap Fund, Fidelity Advisor Large Cap Fund,
Fidelity Advisor Growth & Income Fund, Fidelity Advisor TechnoQuant
Growth Fund, Fidelity Advisor Strategic Opportunities Fund, and
Fidelity Advisor Growth Opportunities Fund, provided the information
required by Item 5A is contained in the annual report, undertakes to
furnish to each person to whom a prospectus has been delivered, upon
their request and without charge, a copy of the Registrant's latest
annual report to shareholders.
The Registrant undertakes for Fidelity Advisor Strategic
Opportunities Fund and Fidelity Advisor Growth Opportunities Fund: (1)
to call a meeting of shareholders for the purpose of voting upon the
questions of removal of a trustee or trustees, when requested to do so
by record holders of not less than 10% of its outstanding shares; and
(2) to assist in communications with other shareholders pursuant to
Section 16(c)(1) and (2) of the 1934 Act, whenever shareholders
meeting the qualifications set forth in Section 16(c) seek the
opportunity to communicate with other shareholders with a view toward
requesting a meeting.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for the effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment No. 43 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, and Commonwealth of
Massachusetts, on the 27th day of February 1998.
FIDELITY ADVISOR SERIES I
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d (dagger) President and Trustee February 27, 1998
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer February 27, 1998
Richard A. Silver
/s/Robert C. Pozen Trustee February 27, 1998
Robert C. Pozen
/s/Ralph F. Cox * Trustee February 27, 1998
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee February 27, 1998
Phyllis Burke Davis
/s/Robert M. Gates ** Trustee February 27, 1998
Robert M. Gates
/s/E. Bradley Jones * Trustee February 27, 1998
E. Bradley Jones
/s/Donald J. Kirk * Trustee February 27, 1998
Donald J. Kirk
/s/Peter S. Lynch * Trustee February 27, 1998
Peter S. Lynch
/s/Marvin L. Mann * Trustee February 27, 1998
Marvin L. Mann
/s/William O. McCoy * Trustee February 27, 1998
William O. McCoy
/s/Gerald C. McDonough * Trustee February 27, 1998
Gerald C. McDonough
/s/Thomas R. Williams * Trustee February 27, 1998
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson 3d___________ /s/Peter S. Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead_______________ /s/William O. McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox __________________ /s/Gerald C. McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis_____________ /s/Marvin L. Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley Jones________________ /s/Thomas R. Williams ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk __________________
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash Portfolios
Fidelity Advisor Series III Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series IV Fidelity Investment Trust
Fidelity Advisor Series V Fidelity Magellan Fund
Fidelity Advisor Series VI Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VII Fidelity Money Market Trust
Fidelity Advisor Series VIII Fidelity Mt. Vernon Street Trust
Fidelity Beacon Street Trust Fidelity Municipal Trust
Fidelity Boston Street Trust Fidelity Municipal Trust II
Fidelity California Municipal Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust II Fidelity New York Municipal Trust II
Fidelity Capital Trust Fidelity Phillips Street Trust
Fidelity Charles Street Trust Fidelity Puritan Trust
Fidelity Commonwealth Trust Fidelity Revere Street Trust
Fidelity Concord Street Trust Fidelity School Street Trust
Fidelity Congress Street Fund Fidelity Securities Fund
Fidelity Contrafund Fidelity Select Portfolios
Fidelity Corporate Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Court Street Trust Fidelity Summer Street Trust
Fidelity Court Street Trust II Fidelity Trend Fund
Fidelity Covington Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Daily Money Fund Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Union Street Trust II
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Newbury Street Trust
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund Variable Insurance Products Fund III
Fidelity Hastings Street Trust
</TABLE>
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d_ July 17, 1997
Edward C. Johnson 3d
Exhibit 5(p)
MANAGEMENT CONTRACT
BETWEEN
FIDELITY ADVISOR SERIES I:
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT MADE this 28th day of February, 1998, by and between
Fidelity Advisor Series I, 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 Growth Opportunities
Fund (hereinafter called the "Portfolio"), and Fidelity Management &
Research Company, a Massachusetts corporation (hereinafter called the
"Adviser") as set forth in its entirety below.
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 hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Basic Fee
and a Performance Adjustment. The Performance Adjustment is added to
or subtracted from the Basic Fee depending on whether the Portfolio
experienced better or worse performance than the Standard and Poor's
500 Index (the "Index"). The Performance Adjustment is not cumulative.
An increased fee will result even though the performance of the
Portfolio over some period of time shorter than the performance period
has been behind that of the Index, and, conversely, a reduction in the
fee will be made for a month even though the performance of the
Portfolio over some period of time shorter than the performance period
has been ahead of that of the Index. The Basic Fee and the Performance
Adjustment will be computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of
the Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows:
(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 0.5200%
3 - 6 0.4900%
6 - 9 0.4600%
9 - 12 0.4300%
12 - 15 0.4000%
15 - 18 0.3850%
18 - 21 0.3700%
21 - 24 0.3600%
24 - 30 0.3500%
30 - 36 0.3450%
36 - 42 0.3400%
42 - 48 0.3350%
48 - 66 0.3250%
66 - 84 0.3200%
84 - 102 0.3150%
102 - 138 0.3100%
138 - 174 0.3050%
174 - 210 0.3000%
210 - 246 0.2950%
246 - 282 0.2900%
282 - 318 0.2850%
318 - 354 0.2800%
354 - 390 0.2750%
390 - 426 0.2700%
426 - 462 0.2650%
462 - 498 0.2600%
498 - 534 0.2550%
Over 534 0.2500%
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
0.30%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust or other organizational
document) determined as of the close of business on each business day
throughout the month. The resulting dollar amount comprises the Basic
Fee.
(c) Performance Adjustment Rate: The Performance Adjustment Rate is
0.02% for each percentage point (the performance of the Portfolio and
the Index each being calculated to the nearest 0.01%) that the
Portfolio's investment performance for the performance period was
better or worse than the record of the Index as then constituted. The
maximum performance adjustment rate is 0.20%.
The performance period will commence with the first day of the first
full month following the Portfolio's commencement of operations.
During the first eleven months of the performance period for the
Portfolio, there will be no performance adjustment. Starting with the
twelfth month of the performance period, the performance adjustment
will take effect. Following the twelfth month a new month will be
added to the performance period until the performance period equals 36
months. Thereafter the performance period will consist of the current
month plus the previous 35 months.
The Portfolio's investment performance for the performance period
shall be the cumulative monthly asset-weighted investment performance
of all classes of shares of the Portfolio over the performance period.
The asset-weighted investment performance for the Portfolio for a
given month will be calculated by multiplying the investment
performance of each class for the month by its average net assets
(determined as of the close of business on each business day of the
month), adding the results together and dividing the sum by the
aggregate net assets of all classes of the Portfolio for that month.
Any class that does not complete a full month of operations in a given
month will be excluded from the calculation of the Portfolio's
investment performance for that month, and its assets will be excluded
from the aggregate net assets of the Portfolio in determining the
Portfolio's investment performance for that month.
The investment performance of each class will be measured by
comparing (i) the opening net asset value of one share of the class on
the first business day of the month with (ii) the closing net asset
value of one share of the class as of the last business day of such
month. In computing the investment performance of each class and the
investment record of the Index, distributions of realized capital
gains, the value of capital gains taxes per share paid or payable on
undistributed realized long-term capital gains accumulated to the end
of such period and dividends paid out of investment income on the part
of the Portfolio, and all cash distributions of the securities
included in the Index, will be treated as reinvested in accordance
with Rule 205-1 or any other applicable rules under the Investment
Advisers Act of 1940, as the same from time to time may be amended.
Although the investment performance of the Portfolio for the
performance period shall be rounded to the nearest 0.01%, this shall
not prevent the monthly investment performance of the classes or of
the Portfolio from being rounded to a greater number of decimal
places.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will be applied to the average of the net assets of
the Portfolio (computed in the manner set forth in the Fund's
Declaration of Trust or other organizational document) determined as
of the close of business on each business day throughout the month and
the performance period.
(e) In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect for that
month. The Basic Fee Rate will be computed on the basis of and applied
to net assets averaged over that month ending on the last business day
on which this Contract is in effect. The amount of this Performance
Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36-month period ending on the
last business day on which this Contract is in effect provided that if
this Contract has been in effect less than 36 months, the computation
will be made on the basis of the period of time during which it has
been in effect.
4. It is understood that the Portfolio will pay all its expenses,
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 or other investment
instrument.
6. (a) Subject to prior termination as provided in sub-paragraph
(d) of this paragraph 6, this Contract shall continue in force until
July 31, 1998 and indefinitely thereafter, but only so long as the
continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority
of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such
consent on the part of the Fund to be authorized by vote of a majority
of the outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and
(b) of this paragraph 6, the terms of any continuance or modification
of this Contract must have been approved by the vote of a majority of
those Trustees of the Fund who are not parties to the Contract or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days'
prior written notice to the other, terminate this Contract, without
payment of any penalty, by action of its Trustees or Board of
Directors, as the case may be, or with respect to the Portfolio by
vote of a majority of the outstanding voting securities of the
Portfolio. This Contract shall terminate automatically in the event of
its assignment.
7. The Adviser is hereby expressly put on notice of the limitation
of shareholder liability as set forth in the Fund's Declaration of
Trust or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY ADVISOR SERIES I
on behalf of Fidelity Advisor Growth Opportunities Fund
By /s/Robert C. Pozen
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/Robert C. Pozen
President
Exhibit 5(q)
MANAGEMENT CONTRACT
BETWEEN
FIDELITY ADVISOR SERIES I:
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AMENDMENT made this 28th day of February, 1998 by and between
Fidelity Advisor Series I, 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 Strategic
Opportunities Fund (hereinafter called the "Portfolio"), and Fidelity
Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser"), as set forth in its entirety
below.
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 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 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 the 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. Management Fee. The Adviser will be compensated on the following
basis for the services and facilities to be furnished hereunder. The
Adviser shall receive a monthly management fee, payable monthly as
soon as practicable after the last day of each month, composed of a
Basic Fee and a Performance Adjustment. The Performance Adjustment is
added to or subtracted from the Basic Fee depending on whether the
Portfolio experiences better or worse performance than the Standard &
Poor's Daily Stock Price Index of 500 Common Stocks (the "Index"). The
Performance Adjustment is not cumulative. An increased fee will result
even though the performance of the Portfolio over some period of time
shorter than the performance period has been behind that of the Index,
and, conversely, a reduction in the fee will be made for a month even
though the performance of the Portfolio over some period of time
shorter than the performance period has been ahead of that of the
Index. The Basic Fee and the Performance Adjustment will be computed
as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of
the Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows:
(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 .520%
3 - 6 .490
6 - 9 .460
9 - 12 .430
12 - 15 .400
15 - 18 .385
18 - 21 .370
21 - 24 .360
24 - 30 .350
30 - 36 .345
36 - 42 .340
42 - 48 .335
48 - 66 .325
66 - 84 .320
84 - 102 .315
102 - 138 .310
138 - 174 .305
174 - 210 .300
210 - 246 .295
246 - 282 .290
282 - 318 .285
318 - 354 .280
354 - 390 .275
390 - 426 .270
426 - 462 .265
462 - 498 .260
498 - 534 .255
Over 534 .250
(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall
be .30%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust or other organizational
document) determined as of the close of business on each business day
throughout the month. The resulting dollar amount comprises the Basic
Fee.
(c) Performance Adjustment Rate: The Performance Adjustment Rate is
0.02% for each percentage point (the performance of the Portfolio and
the Index each being calculated to the nearest 0.01%) that the
Portfolio's investment performance for the performance period was
better or worse than the investment record of the Index as then
constituted. The maximum performance adjustment rate is 0.20%.
The performance period will commence with the first day of the first
full month following the Portfolio's commencement of operations.
During the first eleven months of the performance period for the
Portfolio, there will be no performance adjustment. Starting with the
twelfth month of the performance period, the performance adjustment
will take effect. Following the twelfth month a new month will be
added to the performance period until the performance period equals 36
months. Thereafter the performance period will consist of the current
month plus the previous 35 months.
The Portfolio's investment performance for the period shall be the
cumulative monthly asset-weighted investment performance of all
classes of shares of the Portfolio over the performance period. The
asset-weighted investment performance for the Portfolio for a given
month will be calculated by multiplying the investment performance of
each class for that month by its average net assets (determined as of
the close of business on each business day of the month), adding the
results together and dividing the sum by the aggregate net assets of
all classes of the Portfolio for that month. Any class that does not
complete a full month of operations in a given month will be excluded
from the calculation of the Portfolio's investment performance for
that month, and its assets will be excluded from the aggregate net
assets of the Portfolio in determining the Portfolio's investment
performance for that month.
The investment performance of each class will be measured by
comparing (i) the opening net asset value of one share of the class on
the first business day of the month with (ii) the closing net asset
value of one share of the class as of the last business day of the
month. In computing the investment performance of each class and the
investment record of the Index, distributions of realized capital
gains, the value of capital gains taxes per share paid or payable on
undistributed realized long-term capital gains accumulated to the end
of such period and dividends paid out of investment income, on the
part of the Portfolio, and all cash distributions of the securities
included in the Index, will be treated as reinvested in accordance
with Rule 205-1 or any other applicable rules under the Investment
Advisers Act of 1940, as the same from time to time may be amended.
Although the investment performance of the Portfolio for the
performance period shall be rounded to the nearest 0.01%, this shall
not prevent the monthly investment performance of the classes or of
the Portfolio from being rounded to a greater number of decimal
places.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will be applied to the average net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration
of Trust or other organizational document) determined as of the close
of business on each business day throughout the month and the
performance period.
(e) In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect for that
month. The Basic Fee Rate will be computed on the basis of and applied
to net assets averaged over that month ending on the last business day
on which this Contract is in effect. The amount of this Performance
Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36-month period ending on the
last business day on which this Contract is in effect provided that if
this Contract has been in effect less than 36 months, the computation
will be made on the basis of the period of time during which it has
been in effect.
4. It is understood that the Portfolio will pay all its expenses
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 or other investment
instrument.
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this contract shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority
of the outstanding voting securities of the Portfolio.
(b) This contract may be modified by mutual consent, such consent on
the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY ADVISOR SERIES I
on behalf of Fidelity Advisor Strategic Opportunities Fund
By /s/ Robert C. Pozen
Robert C. Pozen
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ Robert C. Pozen
Robert C. Pozen
President
Exhibit 5(r)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY ADVISOR SERIES I
ON BEHALF OF
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
AGREEMENT made this 28th day of February, 1998, by and between
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research
(U.K.) Inc. (hereinafter called the "Sub-Advisor"); and Advisor Series
I, a Massachusetts business trust which may issue one or more series
of shares of beneficial interest (hereinafter called the "Trust") on
behalf of Fidelity Advisor Growth Opportunities Fund (hereinafter
called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and securities of issuers located in such
countries, and providing investment advisory services in connection
therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the
extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 110% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers or reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1)
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust or other organizational document of the
Trust and agrees that any obligations of the Trust or the Portfolio
arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
BY: /s/Mark G. Lohr
Treasurer
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/Robert C. Pozen
President
FIDELITY ADVISOR SERIES I ON BEHALF OF
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
BY: /s/Robert C. Pozen
Senior Vice President
Exhibit 5(s)
SUB-ADVISORY AGREEMENT
between
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
and
FIDELITY ADVISOR SERIES I ON BEHALF OF
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
AGREEMENT made this 28th day of February, 1998, by and between
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research
(U.K.) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity
Advisor Series I, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Trust") on behalf of Fidelity Advisor Strategic Opportunities
Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract, on behalf of the Portfolio pursuant to which the Advisor is
to act as investment manager of the Portfolio, and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and securities of issuers located in such
countries, and providing investment advisory services in connection
therewith:
NOW THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 110% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The Services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Fund.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust, or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement: Amendments:
(a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of the
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
By: /s/ Robert C. Pozen ________________
Robert C. Pozen
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By: /s/ Robert C. Pozen ________________
Robert C. Pozen
President
FIDELITY ADVISOR SERIES I on behalf of
Fidelity Advisor Strategic Opportunities Fund
BY: /s/ Robert C. Pozen ________________
Robert C. Pozen
Senior Vice President
Exhibit 5(t)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR SERIES I
ON BEHALF OF
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
AGREEMENT made this 28th day of February, 1998, by and between
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research
(Far East) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity
Advisor Series I, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Trust") on behalf of Fidelity Advisor Growth Opportunities Fund
(hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and securities of issuers located in such
countries, and providing investment advisory services in connection
therewith;
NOW THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the
extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 105% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust or other organizational document of the
Trust and agrees that any obligations of the Trust or the Portfolio
arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
BY: /s/Mark G. Lohr
Treasurer
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: /s/Robert C. Pozen
President
FIDELITY ADVISOR SERIES I ON BEHALF OF
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
BY: /s/Robert C. Pozen
Senior Vice President
Exhibit 5(u)
SUB-ADVISORY AGREEMENT
between
FIDELITY MANAGEMENT & RESEARCH COMPANY
and
FIDELITY MANAGEMENT & RESEARCH (Far East) INC.
and
FIDELITY ADVISOR SERIES I ON BEHALF OF
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
AGREEMENT made this 28th day of February, 1998, by and between
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research
(Far East) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity
Advisor Series I, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called
the "Trust") on behalf of Fidelity Advisor Strategic Opportunities
Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract, on behalf of the Portfolio pursuant to which the Advisor is
to act as investment manager of the Portfolio, and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and securities of issuers located in such
countries, and providing investment advisory services in connection
therewith;
NOW THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 105% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for Fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The Services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Fund.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust, or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement: Amendments:
(a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of the
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY MANAGEMENT & RESEARCH (Far East) Inc.
By: /s/ Robert C. Pozen ________________
Robert C. Pozen
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By: /s/ Robert C. Pozen ________________
Robert C. Pozen
President
FIDELITY ADVISOR SERIES I
on behalf of Fidelity Advisor Strategic Opportunities Fund
BY: /s/ Robert C. Pozen ________________
Robert C. Pozen
Senior Vice President
Exhibit 6(h)
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY ADVISOR SERIES I:
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
and
FIDELITY DISTRIBUTORS CORPORATION
AGREEMENT made this 28th day of February, 1998, by and between
Fidelity Advisor Series I, a Massachusetts business trust which may
issue one or more series of beneficial interest ("Issuer"), with
respect to shares of Fidelity Advisor Growth Opportunities Fund, a
series of the Issuer, and Fidelity Distributors Corporation, a
Massachusetts corporation having its principal place of business in
Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein
contained, the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to
sell shares on behalf of the Issuer during the term of this Agreement
and subject to the registration requirements of the Securities Act of
1933, as amended ("1933 Act"), and of the laws governing the sale of
securities in the various states ("Blue Sky Laws") under the following
terms and conditions: Distributors (i) shall have the right to sell,
as agent on behalf of the Issuer, shares authorized for issue and
registered under the 1933 Act, and (ii) may sell shares under offers
of exchange, if available, between and among the funds advised by
Fidelity Management & Research Company ("FMR") or any of its
affiliates.
2. Sale of Shares by the Issuer - The rights granted to the
Distributor shall be nonexclusive in that the Issuer reserves the
right to sell its shares to investors on applications received and
accepted by the Issuer. Further, the Issuer reserves the right to
issue shares in connection with the merger or consolidation, or
acquisition by the Issuer through purchase or otherwise, with any
other investment company, trust, or personal holding company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its
treasury in the event that in the discretion of the Issuer treasury
shares shall be sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all
shares sold to investors by the Distributor or the issuer will be sold
at the public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner described in the Issuer's current Prospectus
and/or Statement of Additional Information, plus a sales charge (if
any) described in the Issuer's current Prospectus and/or Statement of
Additional Information. The Issuer shall in all cases receive the net
asset value per share on all sales. If a sales charge is in effect,
the Distributor shall have the right subject to such rules or
regulations of the Securities and Exchange Commission as may then be
in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares
of the Issuer.
5. Suspension of Sales - If and whenever the determination of net
asset value is suspended and until such suspension is terminated, no
further orders for shares shall be processed by the Distributor except
such unconditional orders as may have been placed with the Distributor
before it had knowledge of the suspension. In addition, the Issuer
reserves the right to suspend sales and the Distributor's authority to
process orders for shares on behalf of the Issuer if, in the judgment
of the Issuer, it is in the best interests of the Issuer to do so.
Suspension will continue for such period as may be determined by the
Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the Issuer. This shall not prevent the Distributor from entering into
like arrangements (including arrangements involving the payment of
underwriting commissions) with other issuers. This does not obligate
the Distributor to register as a broker or dealer under the Blue Sky
laws of any jurisdiction in which it is not now registered or to
maintain its registration in any jurisdiction in which it is now
registered. If a sales charge is in effect, the Distributor shall
have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the
public offering price only and fix in such agreements the portion of
the sales charge which may be retained by dealers, provided that the
Issuer shall approve the form of the dealer agreement and the dealer
discounts set forth therein and shall evidence such approval by filing
said form of dealer agreement and amendments thereto as an exhibit to
its currently effective Registration Statement under the 1933 Act.
7. Authorized Representations - The Distributor is not authorized by
the Issuer to give any information or to make any representations
other than those contained in the appropriate registration statements
or Prospectuses and Statements of Additional Information filed with
the Securities and Exchange Commission under the 1933 Act (as these
registration statements, Prospectuses and Statements of Additional
Information may be amended from time to time), or contained in
shareholder reports or other material that may be prepared by or on
behalf of the Issuer for the Distributor's use. This shall not be
construed to prevent the Distributor from preparing and distributing
sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be
bought or sold by or through the Distributor, and the Distributor may
participate directly or indirectly in brokerage commissions or
"spreads" for transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it shall take all
action necessary to register shares under the 1933 Act (subject to the
necessary approval of its shareholders) so that there will be
available for sale the number of shares the Distributor may reasonably
be expected to sell. The Issuer shall make available to the
Distributor such number of copies of its currently effective
Prospectus and Statement of Additional Information as the Distributor
may reasonably request. The Issuer shall furnish to the Distributor
copies of all information, financial statements and other papers which
the Distributor may reasonably request for use in connection with the
distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in
connection with the preparation, setting in type and filing of any
registration statement, Prospectus and Statement of Additional
Information under the 1933 Act and amendments for the issuer of its
shares, (b) in connection with the registration and qualification of
shares for sale in the various states in which the Board of Trustees
of the Issuer shall determine it advisable to qualify such shares for
sales (including registering the Issuer as a broker or dealer or any
officer of the Issuer as agent or salesman in any state), (c) of
preparing, setting in type, printing and mailing any report or other
communication to shareholders of the Issuer in their capacity as such,
and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the
Issuer, it is recognized by the Issuer that FMR may make payment to
Distributors with respect to any expenses incurred in the distribution
of shares of the Issuer, such payments payable from the past profits
or other resources of FMR including management fees paid to it by the
Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
the Distributor and each of its directors and officers and each
person, if any, who controls the Distributor within the meaning of
Section 15 of the 1933 Act against any loss, liability, claim, damages
or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damages, or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the ground that
the registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Issuer does not agree to indemnify the Distributor or
hold it harmless to the extent that the statement or omission was made
in reliance upon, and in conformity with, information furnished to the
Issuer by or on behalf of the Distributor. In no case (i) is the
indemnity of the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of
wilful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Issuer to
be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Distributor or any person
indemnified unless the Distributor or person, as the case may be,
shall have notified the Issuer in writing of the claim with a
reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served
upon the Distributor or any such person (or after the Distributor or
such person shall have received notice of service on any designated
agent). However, failure to notify the Issuer of any claim shall not
relieve the Issuer from any liability which it may have to the
Distributor or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. The Issuer shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any claims, but if the Issuer elects to
assume the defense, the defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Issuer elects
to assume the defense of any suit and retain counsel, the Distributor,
officers or directors or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them. If the Issuer does not elect to
assume the defense of any suit, it will reimburse the Distributors,
officers or directors or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Issuer agrees to notify the Distributor
promptly of the commencement of any litigation or proceedings against
it or any of its officers or trustees in connection with the issuance
or sale of any of the shares.
The Distributor also covenants and agrees that it will indemnify and
hold harmless the Issuer and each of its Board members and officers
and each person, if any, who controls the Issuer within the meaning of
Section 15 of the 1933 Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, damages, claim or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the 1933 Act or
any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the
Issuer (as from time to time amended) included an untrue statement of
a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
the Distributor. In no case (i) is the indemnity of the Distributor
in favor of the Issuer or any person indemnified to be deemed to
protect the Issuer or any person against any liability to which the
Issuer or such person would otherwise be subject by reason of wilful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under this Agreement, or (ii) is the Distributor to be liable
under its indemnity agreement contained in this paragraph with respect
to any claim made against the Issuer or any person indemnified unless
the Issuer or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the
nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice
of service on any designated agent). However, failure to notify the
Distributor of any claim shall not relieve the Distributor from any
liability which it may have to the Issuer or any person against whom
the action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. In the case of any notice to
the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of
any suit brought to enforce the claim, but if the Distributor elects
to assume the defense, the defense shall be conducted by counsel
chosen by it and satisfactory to the Issuer, to its officers and Board
and to any controlling person or persons, defendants or defendants in
the suit. In the event that the Distributor elects to assume the
defense of any suit and retain counsel, the Issuer or controlling
persons, defendants or defendants in the suit, shall bear the fees and
expense of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Issuer, officers and Board or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Distributor agrees
to notify the Issuer promptly of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of
the shares.
12. Effective Date - This agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force
until March 31, 1998 and thereafter from year to year, provided
continuance is approved annually by the vote of a majority of the
Board members of the Issuer, and by the vote of those Board members of
the Issuer who are not "interested persons" of the Issuer and, if a
plan under Rule 12b-1 under the Investment Company Act of 1940 is in
effect, by the vote of those Board members of the Issuer who are not
"interested persons" of the Issuer and who are not parties to the
Distribution and Service Plan or this Agreement and have no financial
interest in the operation of the Distribution and Service Plan or in
any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval.
This Agreement shall automatically terminate in the event of its
assignment. As used in this paragraph, the terms "assignment" and
"interested persons" shall have the respective meanings specified in
the Investment Company Act of 1940 as now in effect or as hereafter
amended. In addition to termination by failure to approve continuance
or by assignment, this Agreement may at any time be terminated by
either party upon not less than sixty days' prior written notice to
the other party.
13. Notice - Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Issuer, at 82 Devonshire Street,
Boston, Massachusetts, and if to the Distributor, at 82 Devonshire
Street, Boston, Massachusetts.
14. Limitation of Liability - The Distributor is expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all
cases to the Issuer and its assets. The Distributor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall the Distributor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee of the Issuer. The Distributor understands that
the rights and obligations of each series of shares of the Issuer
under the Issuer's Declaration of Trust are separate and distinct from
those of any and all other series.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its
name and behalf, and its seal affixed, by one of its officers duly
authorized, and the Distributor has executed this instrument in its
name and behalf, and its corporate seal affixed, by one of its
officers duly authorized, as of the day and year first above written.
FIDELITY ADVISOR SERIES I:
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
By /s/Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By /s/Martha B. Willis
President
Exhibit 6(i)
GENERAL DISTRIBUTION AGREEMENT
between
FIDELITY ADVISOR SERIES I
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 28th day of February, 1998, between Fidelity
Advisor Series I, a Massachusetts business trust having it principal
place of business in Boston, Massachusetts and which may issue one or
more series of beneficial interest ("Issuer"), with respect to shares
of Fidelity Advisor Strategic Opportunities Fund, a series of the
Issuer, and Fidelity Distributors Corporation, a Massachusetts
corporation having its principal place of business in Boston,
Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein
contained, the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to
sell shares on behalf of the Issuer during the term of this Agreement
and subject to the registration requirements of the Securities Act of
1933, as amended ("1933 Act"), and of the laws governing the sale of
securities in the various states ("Blue Sky Laws") under the following
terms and conditions: Distributors (i) shall have the right to sell,
as agent on behalf of the Issuer, shares authorized for issue and
registered under the 1933 Act, and (ii) may sell shares under offers
of exchange, if available, between and among the funds advised by
Fidelity Management & Research Company ("FMR") or any of its
affiliates.
2. Sale of Shares by the Issuer - The rights granted to the
Distributor shall be nonexclusive in that the Issuer reserves the
right to sell its shares to investors on applications received and
accepted by the Issuer. Further, the Issuer reserves the right to
issue shares in connection with the merger or consolidation, or
acquisition by the Issuer through purchase or otherwise, with any
other investment company, trust, or personal holding company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its
treasury in the event that in the discretion of the Issuer treasury
shares shall be sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all
shares sold to investors by the Distributor or the issuer will be sold
at the public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner described in the Issuer's current Prospectus
and/or Statement of Additional Information, plus a sales charge (if
any) described in the Issuer's current Prospectus and/or Statement of
Additional Information. The Issuer shall in all cases receive the net
asset value per share on all sales. If a sales charge is in effect,
the Distributor shall have the right subject to such rules or
regulations of the Securities and Exchange Commission as may then be
in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares
of the Issuer. If a fee in connection with shareholder redemptions is
in effect, the Issuer shall collect the fee on behalf of Distributors
and, unless otherwise agreed upon by the Issuer and Distributors,
Distributors shall be entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net
asset value is suspended and until such suspension is terminated, no
further orders for shares shall be processed by the Distributor except
such unconditional orders as may have been placed with the Distributor
before it had knowledge of the suspension. In addition, the Issuer
reserves the right to suspend sales and the Distributor's authority to
process orders for shares on behalf of the Issuer if, in the judgment
of the Issuer, it is in the best interests of the Issuer to do so.
Suspension will continue for such period as may be determined by the
Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the Issuer. This shall not prevent the Distributor from entering into
like arrangements (including arrangements involving the payment of
underwriting commissions) with other issuers. This does not obligate
the Distributor to register as a broker or dealer under the Blue Sky
laws of any jurisdiction in which it is not now registered or to
maintain its registration in any jurisdiction in which it is now
registered. If a sales charge is in effect, the Distributor shall
have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the
public offering price only and fix in such agreements the portion of
the sales charge which may be retained by dealers, provided that the
Issuer shall approve the form of the dealer agreement and the dealer
discounts set forth therein and shall evidence such approval by filing
said form of dealer agreement and amendments thereto as an exhibit to
its currently effective Registration Statement under the 1933 Act.
7. Authorized Representations - The Distributor is not authorized by
the Issuer to give any information or to make any representations
other than those contained in the appropriate registration statements
or Prospectuses and Statements of Additional Information filed with
the Securities and Exchange Commission under the 1933 Act (as these
registration statements, Prospectuses and Statements of Additional
Information may be amended from time to time), or contained in
shareholder reports or other material that may be prepared by or on
behalf of the Issuer for the Distributor's use. This shall not be
construed to prevent the Distributor from preparing and distributing
sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be
bought or sold by or through the Distributor, and the Distributor may
participate directly or indirectly in brokerage commissions or
"spreads" for transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it shall take all
action necessary to register shares under the 1933 Act (subject to the
necessary approval of its shareholders) so that there will be
available for sale the number of shares the Distributor may reasonably
be expected to sell. The Issuer shall make available to the
Distributor such number of copies of its currently effective
Prospectus and Statement of Additional Information as the Distributor
may reasonably request. The Issuer shall furnish to the Distributor
copies of all information, financial statements and other papers which
the Distributor may reasonably request for use in connection with the
distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in
connection with the preparation, setting in type and filing of any
registration statement, Prospectus and Statement of Additional
Information under the 1933 Act and amendments for the issuer of its
shares, (b) in connection with the registration and qualification of
shares for sale in the various states in which the Board of Trustees
of the Issuer shall determine it advisable to qualify such shares for
sales (including registering the Issuer as a broker or dealer or any
officer of the Issuer as agent or salesman in any state), (c) of
preparing, setting in type, printing and mailing any report or other
communication to shareholders of the Issuer in their capacity as such,
and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the
Issuer, it is recognized by the Issuer that FMR may make payment to
Distributors with respect to any expenses incurred in the distribution
of shares of the Issuer, such payments payable from the past profits
or other resources of FMR including management fees paid to it by the
Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
the Distributor and each of its directors and officers and each
person, if any, who controls the Distributor within the meaning of
Section 15 of the 1933 Act against any loss, liability, claim, damages
or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damages, or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the ground that
the registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Issuer does not agree to indemnify the Distributor or
hold it harmless to the extent that the statement or omission was made
in reliance upon, and in conformity with, information furnished to the
Issuer by or on behalf of the Distributor. In no case (i) is the
indemnity of the Issuer in favor of the Distributor or any person
indemnified to be deemed to protect the Distributor or any person
against any liability to the Issuer or its security holders to which
the Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Issuer to
be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Distributor or any person
indemnified unless the Distributor or person, as the case may be,
shall have notified the Issuer in writing of the claim with a
reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served
upon the Distributor or any such person (or after the Distributor or
such person shall have received notice of service on any designated
agent). However, failure to notify the Issuer of any claim shall not
relieve the Issuer from any liability which it may have to the
Distributor or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. The Issuer shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any claims, but if the Issuer elects to
assume the defense, the defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Issuer elects
to assume the defense of any suit and retain counsel, the Distributor,
officers or directors or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them. If the Issuer does not elect to
assume the defense of any suit, it will reimburse the Distributors,
officers or directors or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Issuer agrees to notify the Distributor
promptly of the commencement of any litigation or proceedings against
it or any of its officers or trustees in connection with the issuance
or sale of any of the shares.
The Distributor also covenants and agrees that it will indemnify and
hold harmless the Issuer and each of its Board members and officers
and each person, if any, who controls the Issuer within the meaning of
Section 15 of the 1933 Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, damages, claim or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the 1933 Act or
any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the
Issuer (as from time to time amended) included an untrue statement of
a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
the Distributor. In no case (i) is the indemnity of the Distributor
in favor of the Issuer or any person indemnified to be deemed to
protect the Issuer or any person against any liability to which the
Issuer or such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under this Agreement, or (ii) is the Distributor to be liable
under its indemnity agreement contained in this paragraph with respect
to any claim made against the Issuer or any person indemnified unless
the Issuer or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the
nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice
of service on any designated agent). However, failure to notify the
Distributor of any claim shall not relieve the Distributor from any
liability which it may have to the Issuer or any person against whom
the action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. In the case of any notice to
the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of
any suit brought to enforce the claim, but if the Distributor elects
to assume the defense, the defense shall be conducted by counsel
chosen by it and satisfactory to the Issuer, to its officers and Board
and to any controlling person or persons, defendants or defendants in
the suit. In the event that the Distributor elects to assume the
defense of any suit and retain counsel, the Issuer or controlling
persons, defendants or defendants in the suit, shall bear the fees and
expense of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Issuer, officers and Board or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Distributor agrees
to notify the Issuer promptly of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of
the shares.
12. Effective Date - This agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force
until March 31, 1998 and thereafter from year to year, provided
continuance is approved annually by the vote of a majority of the
Board members of the Issuer, and by the vote of those Board members of
the Issuer who are not "interested persons" of the Issuer and, if a
plan under Rule 12b-1 under the Investment Company Act of 1940 is in
effect, by the vote of those Board members of the Issuer who are not
"interested persons" of the Issuer and who are not parties to the
Distribution and Service Plan or this Agreement and have no financial
interest in the operation of the Distribution and Service Plan or in
any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval.
This Agreement shall automatically terminate in the event of its
assignment. As used in this paragraph, the terms "assignment" and
"interested persons" shall have the respective meanings specified in
the Investment Company Act of 1940 as now in effect or as hereafter
amended. In addition to termination by failure to approve continuance
or by assignment, this Agreement may at any time be terminated by
either party upon not less than sixty days' prior written notice to
the other party.
13. Notice - Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Issuer, at 82 Devonshire Street,
Boston, Massachusetts, and if to the Distributor, at 82 Devonshire
Street, Boston, Massachusetts.
14. Limitation of Liability - The Distributor is expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all
cases to the Issuer and its assets. The Distributor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall the Distributor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee of the Issuer. The Distributor understands that
the rights and obligations of each series of shares of the Issuer
under the Issuer's Declaration of Trust are separate and distinct from
those of any and all other series.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its
name and behalf, and its seal affixed, by one of its officers duly
authorized, and the Distributor has executed this instrument in its
name and behalf, and its corporate seal affixed, by one of its
officers duly authorized, as of the day and year first above written.
FIDELITY ADVISOR SERIES I
By /s/ Robert C. Pozen
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By /s/ Martha B. Willis
Martha B. Willis
President
Exhibit 6(j)
FORM OF
BANK AGENCY AGREEMENT
We at Fidelity Distributors Corporation offer to make available to
your customers shares of the mutual funds, or the separate series or
classes of the mutual funds, listed on Schedules A and B attached to
this Agreement (the "Portfolios"). We may periodically change the
list of Portfolios by giving you written notice of the change. We are
the Portfolios' principal underwriter and act as agent for the
Portfolios. You (____________________________________) are a division
or affiliate of a bank (____________________________________) and
desire to make Portfolio shares available to your customers on the
following terms:
1. Certain Defined Terms: As used in this Agreement, the term
"Prospectus" means the applicable Portfolio's prospectus and related
statement of additional information, whether in paper format or
electronic format, included in the Portfolio's then currently
effective registration statement (or post-effective amendment
thereto), and any information that we or the Portfolio may issue to
you as a supplement to such prospectus or statement of additional
information (a "sticker"), all as filed with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of
1933.
2. Making Portfolio Shares Available to Your Customers: (a) In all
transactions covered by this Agreement: (i) you will act as agent for
your customers; in no transaction are you authorized to act as agent
for us or for any Portfolio; (ii) you will initiate transactions only
upon your customers' orders; (iii) we will execute transactions only
upon receiving instructions from you acting as agent for your
customers; and (iv) each transaction will be for your customer's
account and not for your own account. Each transaction will be
without recourse to you, provided that you act in accordance with the
terms of this Agreement.
(b) You agree to make Portfolio shares available to your customers
only at the applicable public offering price in accordance with the
Prospectus. If your customer qualifies for a reduced sales charge
pursuant to a special purchase plan (for example, a quantity discount,
letter of intent, or right of accumulation) as described in the
Prospectus, you agree to make Portfolio shares available to your
customer at the applicable reduced sales charge. You agree to deliver
or cause to be delivered to each customer, at or prior to the time of
any purchase of shares, a copy of the then current prospectus
(including any stickers thereto), unless such prospectus has already
been delivered to the customer, and to each customer who so requests,
a copy of the then current statement of additional information
(including any stickers thereto).
(c) You agree to order Portfolio shares from us only to cover
purchase orders that you have already received from your customers, or
for your own investment. You will not withhold placing customers'
orders so as to profit yourself as a result of such withholding (for
example, by a change in a Portfolio's net asset value from that used
in determining the offering price to your customers).
(d) We will accept your purchase orders only at the public offering
price applicable to each order, as determined in accordance with the
Prospectus. We will not accept from you a conditional order for
Portfolio shares. All orders are subject to acceptance or rejection
by us in our sole discretion. We may, without notice, suspend sales
or withdraw the offering of Portfolio shares, or make a limited
offering of Portfolio shares.
(e) The placing of orders with us will be governed by instructions
that we will periodically issue to you. You must pay for Portfolio
shares in New York or Boston clearing house funds or in federal funds
in accordance with such instructions, and we must receive your payment
on or before the settlement date established in accordance with Rule
15c6-1 under the Securities Exchange Act of 1934 (the "1934 Act").
(f) You agree to comply with all applicable state and federal laws
and with the rules and regulations of authorized regulatory agencies
thereunder. You agree to make Portfolio shares available to your
customers only in states where you may legally make such Portfolio's
shares available. You will not make available shares of any Portfolio
unless such shares are registered under the applicable state and
federal laws and the rules and regulations thereunder.
(g) Certificates evidencing Portfolio shares are not available; any
transaction in Portfolio shares will be effected and evidenced by
book-entry on the records maintained by Fidelity Investments
Institutional Operations Company, Inc. ("FIIOC"). A confirmation
statement evidencing transactions in Portfolio shares will be
transmitted to you.
(h) You may designate FIIOC to execute your customers' transactions
in Portfolio shares in accordance with the terms of any account,
program, plan, or service established or used by your customers, and
to confirm each transaction to your customers on your behalf on a
fully disclosed basis. At the time of the transaction, you guarantee
the legal capacity of your customers and any co-owners of such shares
so transacting in such shares.
3. Your Compensation: (a) Your fee, if any, for acting as agent
with respect to sales of Portfolio shares will be as provided in the
Prospectus or in the applicable schedule of agency fees issued by us
and in effect at the time of the sale. Upon written notice to you, we
or any Portfolio may change or discontinue any schedule of agency
fees, or issue a new schedule.
(b) If a Portfolio has adopted a plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (a "Plan"), we may make
distribution payments or service payments to you under the Plan. If a
Portfolio does not have a currently effective Plan, we or Fidelity
Management & Research Company may make distribution payments or
service payments to you from our own funds. Any distribution payments
or service payments will be made in the amount and manner set forth in
the Prospectus or in the applicable schedule of distribution payments
or service payments issued by us and then in effect. Upon written
notice to you, we or any Portfolio may change or discontinue any
schedule of distribution payments or service payments, or issue a new
schedule. A schedule of distribution payments or service payments
will be in effect with respect to a Portfolio that has a Plan only so
long as that Portfolio's Plan remains in effect.
(c) After the effective date of any change in or discontinuance of
any schedule of agency fees, distribution payments, or service
payments, or the termination of a Plan, any agency fees, distribution
payments, or service payments will be allowable or payable to you only
in accordance with such change, discontinuance, or termination. You
agree that you will have no claim against us or any Portfolio by
virtue of any such change, discontinuance, or termination. In the
event of any overpayment by us of any agency fee, distribution
payment, or service payment, you will remit such overpayment.
(d) If, within seven (7) business days after our confirmation of
the original purchase order for shares of a Portfolio, such shares are
redeemed by the issuing Portfolio or tendered for redemption by the
customer, you agree (i) to refund promptly to us the full amount of
any agency fee, distribution payment, or service payment paid to you
on such shares, and (ii) if not yet paid to you, to forfeit the right
to receive any agency fee, distribution payment, or service payment
payable to you on such shares. We will notify you of any such
redemption within ten (10) days after the date of the redemption.
4. Certain Types of Accounts: (a) You may instruct FIIOC to
register purchased shares in your name and account as nominee for your
customers. If you hold Portfolio shares as nominee for your
customers, all Prospectuses, proxy statements, periodic reports, and
other printed material will be sent to you, and all confirmations and
other communications to shareholders will be transmitted to you. You
will be responsible for forwarding such printed material,
confirmations, and communications, or the information contained
therein, to all customers for whose account you hold any Portfolio
shares as nominee. However, we or FIIOC on behalf of itself or the
Portfolios will be responsible for the costs associated with your
forwarding such printed material, confirmations, and communications.
You will be responsible for complying with all reporting and tax
withholding requirements with respect to the customers for whose
account you hold any Portfolio shares as nominee.
(b) With respect to accounts other than those accounts referred to
in paragraph 4(a) above, you agree to provide us with all information
(including certification of taxpayer identification numbers and
back-up withholding instructions) necessary or appropriate for us to
comply with legal and regulatory reporting requirements.
(c) Accounts opened or maintained pursuant to the NETWORKING system
of the National Securities Clearing Corporation ("NSCC") will be
governed by applicable NSCC rules and procedures and any agreement or
other arrangement with us relating to NETWORKING.
(d) If you hold Portfolio shares in an omnibus account for two or
more customers, you will be responsible for determining, in accordance
with the Prospectus, whether, and the extent to which, a CDSC is
applicable to a purchase of Portfolio shares from such a customer, and
you agree to transmit immediately to us any CDSC to which such
purchase was subject. You hereby represent that if you hold Portfolio
shares subject to a CDSC, you have the capability to track and account
for such charge, and we reserve the right, at our discretion, to
verify that capability by inspecting your tracking and accounting
system or otherwise.
5. Status as Registered Broker/Dealer or "Bank": (a) Each party to
this Agreement represents to the other party that it is either (i) a
registered broker/dealer under the 1934 Act, or (ii) a "bank" as
defined in Section 3(a)(6) of the 1934 Act.
(b) If a party is a registered broker/dealer, such party represents
that it is qualified to act as a broker/dealer in the states where it
transacts business, and it is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"). It agrees
to maintain its broker/dealer registration and qualifications and its
NASD membership in good standing throughout the term of this
Agreement. It agrees to abide by all of the NASD's rules and
regulations, including the NASD's Conduct Rules -- in particular,
Section 2830 of such Rules, which section is deemed a part of and is
incorporated by reference in this Agreement. This Agreement will
terminate automatically without notice in the event that a party's
NASD membership is terminated.
(c) If you are a "bank", you represent that you are duly authorized
to engage in the transactions to be performed under this Agreement,
and you agree to comply with all applicable federal and state laws,
including the rules and regulations of all applicable federal and
state bank regulatory agencies and authorities. This Agreement will
terminate automatically without notice in the event that you cease to
be a "bank" as defined in Section 3(a)(6) of the 1934 Act.
(d) Nothing in this Agreement shall cause you to be our partner,
employee, or agent, or give you any authority to act for us or for any
Portfolio. Neither we nor any Portfolio shall be liable for any of
your acts or obligations as a dealer under this Agreement.
6. Information Relating to the Portfolios: (a) No person is
authorized to make any representations concerning shares of a
Portfolio other than those contained in the Portfolio's Prospectus.
In ordering Portfolio shares from us under this Agreement, you will
rely only on the representations contained in the Prospectus. Upon
your request, we will furnish you with a reasonable number of copies
of the Portfolios' current prospectuses or statements of additional
information or both (including any stickers thereto).
(b) Any printed or electronic information that we furnish you
(other than the Portfolios' Prospectuses and periodic reports) is our
sole responsibility and not the responsibility of the respective
Portfolios. You agree that the Portfolios will have no liability or
responsibility to you with respect to any such printed or electronic
information. We or the respective Portfolio will bear the expense of
qualifying its shares under the state securities laws.
(c) You may not use any sales literature or advertising material
(including material disseminated through radio, television, or other
electronic media) concerning Portfolio shares, other than the printed
or electronic information referred to in paragraph 6(b) above, in
connection with making Portfolio shares available to your customers
without obtaining our prior written approval. You may not distribute
or make available to investors any information that we furnish you
marked "FOR DEALER USE ONLY" or that otherwise indicates that it is
confidential or not intended to be distributed to investors.
7. Indemnification: (a) We will indemnify and hold you harmless
from any claim, demand, loss, expense, or cause of action resulting
from the misconduct or negligence, as measured by industry standards,
of us, our agents and employees, in carrying out our obligations under
this Agreement. Such indemnification will survive the termination of
this Agreement.
(b) You will indemnify and hold us harmless from any claim, demand,
loss, expense, or cause of action resulting from the misconduct or
negligence, as measured by industry standards, of you, your agents and
employees, in carrying out your obligations under this Agreement.
Such indemnification will survive the termination of this Agreement.
8. Customer Lists: We hereby agree that we shall not use any list of
your customers which may be obtained in connection with this Agreement
for the purpose of solicitation of any product or service without your
express written consent. However, nothing in this paragraph or
otherwise shall be deemed to prohibit or restrict us or our affiliates
in any way from solicitations of any product or service directed at,
without limitation, the general public, any segment thereof, or any
specific individual, provided such solicitation is not based upon such
list.
9. Duration of Agreement: This Agreement, with respect to any Plan,
will continue in effect for one year from its effective date, and
thereafter will continue automatically for successive annual periods;
provided, however, that such continuance is subject to termination at
any time without penalty if a majority of a Portfolio's Trustees who
are not interested persons of the Portfolio (as defined in the
Investment Company Act of 1940 (the "1940 Act")), or a majority of the
outstanding shares of the Portfolio, vote to terminate or not to
continue the Plan. This Agreement, other than with respect to a Plan,
will continue in effect from year to year after its effective date,
unless terminated as provided herein.
10. Amendment and Termination of Agreement: (a) We may amend any
provision of this Agreement by giving you written notice of the
amendment. Either party to this Agreement may terminate the Agreement
without cause by giving the other party at least thirty (30) days'
written notice of its intention to terminate. This Agreement will
terminate automatically in the event of its assignment (as defined in
the 1940 Act).
(b) In the event that (i) an application for a protective decree
under the provisions of the Securities Investor Protection Act of 1970
is file against you; (ii) you file a petition in bankruptcy or a
petition seeking similar relief under any bankruptcy, insolvency, or
similar law, or a proceeding is commenced against you seeking such
relief; or (iii) you are found by the SEC, the NASD, or any other
federal or state regulatory agency or authority to have violated any
applicable federal or state law, rule or regulation arising out of
your activities as a broker/dealer or in connection with this
Agreement, this Agreement will terminate effective immediately upon
our giving notice of termination to you. You agree to notify us
promptly and to immediately suspend making Portfolio shares available
to your customers in the event of any such filing or violation, or in
the event that you cease to be a member in good standing of the NASD
or you cease to be a "bank" as defined in Section 3(a)(6) of the 1934
Act.
(c) Your or our failure to terminate this Agreement for a
particular cause will not constitute a waiver of the right to
terminate this Agreement at a later date for the same or another
cause. The termination of this Agreement with respect to any one
Portfolio will not cause its termination with respect to any other
Portfolio.
11. Arbitration: In the event of a dispute, such dispute will be
settled by arbitration before arbitrators sitting in Boston,
Massachusetts in accordance with the NASD's Code of Arbitration
Procedure in effect at the time of the dispute. The arbitrators will
act by majority decision and their award may allocate attorneys' fees
and arbitration costs between us. Their award will be final and
binding between us, and such award may be entered as a judgment in any
court of competent jurisdiction.
12. Notices: All notices required or permitted to be given under this
Agreement shall be given in writing and delivered by personal
delivery, by postage prepaid mail, or by facsimile machine or a
similar means of same day delivery (with a confirming copy by mail).
All notices to us shall be given or sent to us at our offices located
at 82 Devonshire Street, Mail Zone L12A, Boston, Massachusetts 02109,
Attn: Bank Wholesale Market. All notices to you shall be given or
sent to you at the address specified by you below. Each of us may
change the address to which notices shall be sent by giving notice to
the other party in accordance with this paragraph 12.
13. Miscellaneous: This Agreement, as it may be amended from time to
time, shall become effective as of the date when it is accepted and
dated below by us. This Agreement is to be construed in accordance
with the laws of the Commonwealth of Massachusetts. This Agreement
supersedes and cancels any prior agreement between us, whether oral or
written, relating to the sale of shares of the Portfolios or any other
subject covered by this Agreement. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions of this Agreement or otherwise affect
their construction or effect.
Very truly yours,
FIDELITY DISTRIBUTORS
CORPORATION
Please return two signed copies of this Agreement to Fidelity
Distributors Corporation. Upon acceptance, one countersigned copy
will be returned to you for your files.
_____________________________________
Name of Firm
Address: _____________________________
_____________________________________
_____________________________________
By __________________________________
Authorized Representative
_____________________________________
Name and Title (please print or type)
ACCEPTED AND AGREED:
FIDELITY DISTRIBUTORS CORPORATION
By __________________________________
Dated: ________________
** DISCARD THIS PAGE AND ATTACH REVISED SCHEDULES A AND B **
Exhibit 6(k)
FORM OF
SELLING DEALER AGREEMENT
We at Fidelity Distributors Corporation invite you
(______________________________) to distribute shares of the mutual
funds, or the separate series or classes of the mutual funds, listed
on Schedule A attached to this Agreement (the "Portfolios"). We may
periodically change the list of Portfolios by giving you written
notice of the change. We are the Portfolios' principal underwriter
and, as agent for the Portfolios, we offer to sell Portfolio shares to
you on the following terms:
1. Certain Defined Terms: As used in this Agreement, the term
"Prospectus" means the applicable Portfolio's prospectus and related
statement of additional information, whether in paper format or
electronic format, included in the Portfolio's then currently
effective registration statement (or post-effective amendment
thereto), and any information that we or the Portfolio may issue to
you as a supplement to such prospectus or statement of additional
information (a "sticker"), all as filed with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of
1933.
2. Purchases of Portfolio Shares for Sale to Customers: (a) In
offering and selling Portfolio shares to your customers, you agree to
act as dealer for your own account; you are not authorized to act as
agent for us or for any Portfolio.
(b) You agree to offer and sell Portfolio shares to your customers
only at the applicable public offering price in accordance with the
Prospectus. If your customer qualifies for a reduced sales charge
pursuant to a special purchase plan (for example, a quantity discount,
letter of intent, or right of accumulation) as described in the
Prospectus, you agree to offer and sell Portfolio shares to your
customer at the applicable reduced sales charge. You agree to deliver
or cause to be delivered to each customer, at or prior to the time of
any purchase of shares, a copy of the then current prospectus
(including any stickers thereto), unless such prospectus has already
been delivered to the customer, and to each customer who so requests,
a copy of the then current statement of additional information
(including any stickers thereto).
(c) You agree to purchase Portfolio shares from us only to cover
purchase orders that you have already received from your customers, or
for your own investment. You also agree not to purchase any Portfolio
shares from your customers at a price lower than the applicable
redemption price, determined in the manner described in the
Prospectus. You will not withhold placing customers' orders so as to
profit yourself as a result of such withholding (for example, by a
change in a Portfolio's net asset value from that used in determining
the offering price to your customers).
(d) We will accept your purchase orders only at the public offering
price applicable to each order, as determined in accordance with the
Prospectus. We will not accept from you a conditional order for
Portfolio shares. All orders are subject to acceptance or rejection
by us in our sole discretion. We may, without notice, suspend sales
or withdraw the offering of Portfolio shares, or make a limited
offering of Portfolio shares.
(e) The placing of orders with us will be governed by instructions
that we will periodically issue to you. You must pay for Portfolio
shares in New York or Boston clearing house funds or in federal funds
in accordance with such instructions, and we must receive your payment
on or before the settlement date established in accordance with Rule
15c6-1 under the Securities Exchange Act of 1934 (the "1934 Act"). If
we do not receive your payment on or before such settlement date, we
may, without notice, cancel the sale, or, at our option, sell the
shares that you ordered back to the issuing Portfolio, and we may hold
you responsible for any loss suffered by us or the issuing Portfolio
as a result of your failure to make payment as required.
(f) You agree to comply with all applicable state and federal laws
and with the rules and regulations of authorized regulatory agencies
thereunder. You agree to offer and sell Portfolio shares only in
states where you may legally offer and sell such Portfolio's shares.
You will not offer shares of any Portfolio for sale unless such shares
are registered for sale under the applicable state and federal laws
and the rules and regulations thereunder.
(g) Certificates evidencing Portfolio shares are not available; any
transaction in Portfolio shares will be effected and evidenced by
book-entry on the records maintained by Fidelity Investments
Institutional Operations Company, Inc. ("FIIOC"). A confirmation
statement evidencing transactions in Portfolio shares will be
transmitted to you.
(h) You may designate FIIOC to execute your customers' transactions
in Portfolio shares in accordance with the terms of any account,
program, plan, or service established or used by your customers, and
to confirm each transaction to your customers on your behalf. At the
time of the transaction, you guarantee the legal capacity of your
customers and any co-owners of such shares so transacting in such
shares.
3. Your Compensation: (a) Your concession, if any, on your sales of
Portfolio shares will be as provided in the Prospectus or in the
applicable schedule of concessions issued by us and in effect at the
time of our sale to you. Upon written notice to you, we or any
Portfolio may change or discontinue any schedule of concessions, or
issue a new schedule.
(b) If a Portfolio has adopted a plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (a "Plan"), we may make
distribution payments or service payments to you under the Plan. If a
Portfolio does not have a currently effective Plan, we or Fidelity
Management & Research Company may make distribution payments or
service payments to you from our own funds. Any distribution payments
or service payments will be made in the amount and manner set forth in
the Prospectus or in the applicable schedule of distribution payments
or service payments issued by us and then in effect. Upon written
notice to you, we or any Portfolio may change or discontinue any
schedule of distribution payments or service payments, or issue a new
schedule. A schedule of distribution payments or service payments
will be in effect with respect to a Portfolio that has a Plan only so
long as that Portfolio's Plan remains in effect.
(c) After the effective date of any change in or discontinuance of
any schedule of concessions, distribution payments, or service
payments, or the termination of a Plan, any concessions, distribution
payments, or service payments will be allowable or payable to you only
in accordance with such change, discontinuance, or termination. You
agree that you will have no claim against us or any Portfolio by
virtue of any such change, discontinuance, or termination. In the
event of any overpayment by us of any concession, distribution
payment, or service payment, you will remit such overpayment.
(d) If any Portfolio shares sold to you by us under the terms of
this Agreement are redeemed by the issuing Portfolio or tendered for
redemption by the customer within seven (7) business days after the
date of our confirmation of your original purchase order for such
shares, you agree (i) to refund promptly to us the full amount of any
concession, distribution payment, or service payment allowed or paid
to you on such shares, and (ii) if not yet allowed or paid to you, to
forfeit the right to receive any concession, distribution payment, or
service payment allowable or payable to you on such shares. We will
notify you of any such redemption within ten (10) days after the date
of the redemption.
4. Certain Types of Accounts: (a) You may instruct FIIOC to
register purchased shares in your name and account as nominee for your
customers. If you hold Portfolio shares as nominee for your
customers, all Prospectuses, proxy statements, periodic reports, and
other printed material will be sent to you, and all confirmations and
other communications to shareholders will be transmitted to you. You
will be responsible for forwarding such printed material,
confirmations, and communications, or the information contained
therein, to all customers for whose account you hold any Portfolio
shares as nominee. However, we or FIIOC on behalf of itself or the
Portfolios will be responsible for the costs associated with your
forwarding such printed material, confirmations, and communications.
You will be responsible for complying with all reporting and tax
withholding requirements with respect to the customers for whose
account you hold any Portfolio shares as nominee.
(b) With respect to accounts other than those accounts referred to
in paragraph 4(a) above, you agree to provide us with all information
(including certification of taxpayer identification numbers and
back-up withholding instructions) necessary or appropriate for us to
comply with legal and regulatory reporting requirements.
(c) Accounts opened or maintained pursuant to the NETWORKING system
of the National Securities Clearing Corporation ("NSCC") will be
governed by applicable NSCC rules and procedures and any agreement or
other arrangement with us relating to NETWORKING.
(d) If you hold Portfolio shares in an omnibus account for two or
more customers, you will be responsible for determining, in accordance
with the Prospectus, whether, and the extent to which, a CDSC is
applicable to a purchase of Portfolio shares from such a customer, and
you agree to transmit immediately to us any CDSC to which such
purchase was subject. You hereby represent that if you hold Portfolio
shares subject to a CDSC, you have the capability to track and account
for such charge, and we reserve the right, at our discretion, to
verify that capability by inspecting your tracking and accounting
system or otherwise.
5. Status as Registered Broker/Dealer: (a) Each party to this
Agreement represents to the other party that (i) it is registered as a
broker/dealer under the 1934 Act, (ii) it is qualified to act as a
broker/dealer in the states where it transacts business, and (iii) it
is a member in good standing of the National Association of Securities
Dealers, Inc. ("NASD"). Each party agrees to maintain its
broker/dealer registration and qualifications and its NASD membership
in good standing throughout the term of this Agreement. Each party
agrees to abide by all of the NASD's rules and regulations, including
the NASD's Conduct Rules -- in particular, Section 2830 of such Rules,
which section is deemed a part of and is incorporated by reference in
this Agreement. This Agreement will terminate automatically without
notice in the event that either party's NASD membership is terminated.
(b) Nothing in this Agreement shall cause you to be our partner,
employee, or agent, or give you any authority to act for us or for any
Portfolio. Neither we nor any Portfolio shall be liable for any of
your acts or obligations as a dealer under this Agreement.
6. Information Relating to the Portfolios: (a) No person is
authorized to make any representations concerning shares of a
Portfolio other than those contained in the Portfolio's Prospectus.
In buying Portfolio shares from us under this Agreement, you will rely
only on the representations contained in the Prospectus. Upon your
request, we will furnish you with a reasonable number of copies of the
Portfolios' current prospectuses or statements of additional
information or both (including any stickers thereto).
(b) Any printed or electronic information that we furnish you
(other than the Portfolios' Prospectuses and periodic reports) is our
sole responsibility and not the responsibility of the respective
Portfolios. You agree that the Portfolios will have no liability or
responsibility to you with respect to any such printed or electronic
information. We or the respective Portfolio will bear the expense of
qualifying its shares under the state securities laws.
(c) You may not use any sales literature or advertising material
(including material disseminated through radio, television, or other
electronic media) concerning Portfolio shares, other than the printed
or electronic information referred to in paragraph 6(b) above, in
connection with the offer or sale of Portfolio shares without
obtaining our prior written approval. You may not distribute or make
available to investors any information that we furnish you marked "FOR
DEALER USE ONLY" or that otherwise indicates that it is confidential
or not intended to be distributed to investors.
7. Indemnification: (a) We will indemnify and hold you harmless
from any claim, demand, loss, expense, or cause of action resulting
from the misconduct or negligence, as measured by industry standards,
of us, our agents and employees, in carrying out our obligations under
this Agreement. Such indemnification will survive the termination of
this Agreement.
(b) You will indemnify and hold us harmless from any claim, demand,
loss, expense, or cause of action resulting from the misconduct or
negligence, as measured by industry standards, of you, your agents and
employees, in carrying out your obligations under this Agreement.
Such indemnification will survive the termination of this Agreement.
8. Customer Lists: We hereby agree that we shall not use any list of
your customers which may be obtained in connection with this Agreement
for the purpose of solicitation of any product or service without your
express written consent. However, nothing in this paragraph or
otherwise shall be deemed to prohibit or restrict us or our affiliates
in any way from solicitations of any product or service directed at,
without limitation, the general public, any segment thereof, or any
specific individual, provided such solicitation is not based upon such
list.
9. Duration of Agreement: This Agreement, with respect to any Plan,
will continue in effect for one year from its effective date, and
thereafter will continue automatically for successive annual periods;
provided, however, that such continuance is subject to termination at
any time without penalty if a majority of a Portfolio's Trustees who
are not interested persons of the Portfolio (as defined in the
Investment Company Act of 1940 (the "1940 Act")), or a majority of the
outstanding shares of the Portfolio, vote to terminate or not to
continue the Plan. This Agreement, other than with respect to a Plan,
will continue in effect from year to year after its effective date,
unless terminated as provided herein.
10. Amendment and Termination of Agreement: (a) We may amend any
provision of this Agreement by giving you written notice of the
amendment. Either party to this Agreement may terminate the Agreement
without cause by giving the other party at least thirty (30) days'
written notice of its intention to terminate. This Agreement will
terminate automatically in the event of its assignment (as defined in
the 1940 Act).
(b) In the event that (i) an application for a protective decree
under the provisions of the Securities Investor Protection Act of 1970
is filed against you; (ii) you file a petition in bankruptcy or a
petition seeking similar relief under any bankruptcy, insolvency, or
similar law, or a proceeding is commenced against you seeking such
relief; or (iii) you are found by the SEC, the NASD, or any other
federal or state regulatory agency or authority to have violated any
applicable federal or state law, rule or regulation arising out of
your activities as a broker/dealer or in connection with this
Agreement, this Agreement will terminate effective immediately upon
our giving notice of termination to you. You agree to notify us
promptly and to immediately suspend sales of Portfolio shares in the
event of any such filing or violation, or in the event that you cease
to be a member in good standing of the NASD.
(c) Your or our failure to terminate this Agreement for a
particular cause will not constitute a waiver of the right to
terminate this Agreement at a later date for the same or another
cause. The termination of this Agreement with respect to any one
Portfolio will not cause its termination with respect to any other
Portfolio.
11. Arbitration: In the event of a dispute, such dispute will be
settled by arbitration before arbitrators sitting in Boston,
Massachusetts in accordance with the NASD's Code of Arbitration
Procedure in effect at the time of the dispute. The arbitrators will
act by majority decision and their award may allocate attorneys' fees
and arbitration costs between us. Their award will be final and
binding between us, and such award may be entered as a judgment in any
court of competent jurisdiction.
12. Notices: All notices required or permitted to be given under this
Agreement shall be given in writing and delivered by personal
delivery, by postage prepaid mail, or by facsimile machine or a
similar means of same day delivery (with a confirming copy by mail).
All notices to us shall be given or sent to us at our offices located
at 82 Devonshire Street, Mail Zone L10A, Boston, Massachusetts 02109,
Attn: Broker Dealer Services Group. All notices to you shall be given
or sent to you at the address specified by you below. Each of us may
change the address to which notices shall be sent by giving notice to
the other party in accordance with this paragraph 12.
13. Miscellaneous: This Agreement, as it may be amended from time to
time, shall become effective as of the date when it is accepted and
dated below by us. This Agreement is to be construed in accordance
with the laws of the Commonwealth of Massachusetts. This Agreement
supersedes and cancels any prior agreement between us, whether oral or
written, relating to the sale of shares of the Portfolios or any other
subject covered by this Agreement. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions of this Agreement or otherwise affect
their construction or effect.
Very truly yours,
FIDELITY DISTRIBUTORS
CORPORATION
Please return two signed copies of this Agreement to Fidelity
Distributors Corporation. Upon acceptance, one countersigned copy
will be returned to you for your files.
_____________________________________
Name of Firm
Address: _____________________________
_____________________________________
_____________________________________
By __________________________________
Authorized Representative
_____________________________________
Name and Title (please print or type)
CRD # _______________________________
ACCEPTED AND AGREED:
FIDELITY DISTRIBUTORS CORPORATION
By __________________________________
Dated: _________________
BEFORE MAILING: DISCARD THIS PAGE AND ATTACH REVISED SCHEDULE A
Exhibit 6(l)
FORM OF
SELLING DEALER AGREEMENT
(FOR BANK-RELATED TRANSACTIONS)
We at Fidelity Distributors Corporation invite you to distribute
shares of the mutual funds, or the separate series or classes of the
mutual funds, listed on Schedules A and B attached to this Agreement
(the "Portfolios"). We may periodically change the list of Portfolios
by giving you written notice of the change. We are the Portfolios'
principal underwriter and, as agent for the Portfolios, we offer to
sell Portfolio shares to you on the following terms:
1. Certain Defined Terms: (a) You
(_____________________________________) are registered as a
broker/dealer under the Securities Exchange Act of 1934 (the "1934
Act") and have executed a written agreement with a bank or bank
affiliate to provide brokerage services to that bank, bank affiliate
and/or their customers. As used in this Agreement, the term "Bank"
means a bank as defined in Section 3(a)(6) of the 1934 Act, or an
affiliate of such a bank, with which you have entered into a written
agreement to provide brokerage services; and the term "Bank Client"
means a customer of such a Bank.
(b) As used in this Agreement, the term "Prospectus" means the
applicable Portfolio's prospectus and related statement of additional
information, whether in paper format or electronic format, included in
the Portfolio's then currently effective registration statement (or
post-effective amendment thereto), and any information that we or the
Portfolio may issue to you as a supplement to such prospectus or
statement of additional information (a "sticker"), all as filed with
the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act of 1933.
2. Purchases of Portfolio Shares for Sale to Customers: (a) In
offering and selling Portfolio shares to your customers, you agree to
act as dealer for your own account; you are not authorized to act as
agent for us or for any Portfolio.
(b) You agree to offer and sell Portfolio shares to your customers
only at the applicable public offering price in accordance with the
Prospectus. If your customer qualifies for a reduced sales charge
pursuant to a special purchase plan (for example, a quantity discount,
letter of intent, or right of accumulation) as described in the
Prospectus, you agree to offer and sell Portfolio shares to your
customer at the applicable reduced sales charge. You agree to deliver
or cause to be delivered to each customer, at or prior to the time of
any purchase of shares, a copy of the then current prospectus
(including any stickers thereto), unless such prospectus has already
been delivered to the customer, and to each customer who so requests,
a copy of the then current statement of additional information
(including any stickers thereto).
(c) You agree to purchase Portfolio shares from us only to cover
purchase orders that you have already received from your customers, or
for your own investment. You also agree not to purchase any Portfolio
shares from your customers at a price lower than the applicable
redemption price, determined in the manner described in the
Prospectus. You will not withhold placing customers' orders so as to
profit yourself as a result of such withholding (for example, by a
change in a Portfolio's net asset value from that used in determining
the offering price to your customers).
(d) We will accept your purchase orders only at the public offering
price applicable to each order, as determined in accordance with the
Prospectus. We will not accept from you a conditional order for
Portfolio shares. All orders are subject to acceptance or rejection
by us in our sole discretion. We may, without notice, suspend sales
or withdraw the offering of Portfolio shares, or make a limited
offering of Portfolio shares.
(e) The placing of orders with us will be governed by instructions
that we will periodically issue to you. You must pay for Portfolio
shares in New York or Boston clearing house funds or in federal funds
in accordance with such instructions, and we must receive your payment
on or before the settlement date established in accordance with Rule
15c6-1 under the 1934 Act. If we do not receive your payment on or
before such settlement date, we may, without notice, cancel the sale,
or, at our option, sell the shares that you ordered back to the
issuing Portfolio, and we may hold you responsible for any loss
suffered by us or the issuing Portfolio as a result of your failure to
make payment as required.
(f) You agree to comply with all applicable state and federal laws
and with the rules and regulations of authorized regulatory agencies
thereunder. You agree to offer and sell Portfolio shares only in
states where you may legally offer and sell such Portfolio's shares.
You will not offer shares of any Portfolio for sale unless such shares
are registered for sale under the applicable state and federal laws
and the rules and regulations thereunder.
(g) Certificates evidencing Portfolio shares are not available; any
transaction in Portfolio shares will be effected and evidenced by
book-entry on the records maintained by Fidelity Investments
Institutional Operations Company, Inc. ("FIIOC"). A confirmation
statement evidencing transactions in Portfolio shares will be
transmitted to you.
(h) You may designate FIIOC to execute your customers' transactions
in Portfolio shares in accordance with the terms of any account,
program, plan, or service established or used by your customers, and
to confirm each transaction to your customers on your behalf on a
fully disclosed basis. At the time of the transaction, you guarantee
the legal capacity of your customers and any co-owners of such shares
so transacting in such shares.
3. Your Compensation: (a) Your concession, if any, on your sales of
Portfolio shares will be as provided in the Prospectus or in the
applicable schedule of concessions issued by us and in effect at the
time of our sale to you. Upon written notice to you, we or any
Portfolio may change or discontinue any schedule of concessions, or
issue a new schedule.
(b) If a Portfolio has adopted a plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (a "Plan"), we may make
distribution payments or service payments to you under the Plan. If a
Portfolio does not have a currently effective Plan, we or Fidelity
Management & Research Company may make distribution payments or
service payments to you from our own funds. Any distribution payments
or service payments will be made in the amount and manner set forth in
the Prospectus or in the applicable schedule of distribution payments
or service payments issued by us and then in effect. Upon written
notice to you, we or any Portfolio may change or discontinue any
schedule of distribution payments or service payments, or issue a new
schedule. A schedule of distribution payments or service payments
will be in effect with respect to a Portfolio that has a Plan only so
long as that Portfolio's Plan remains in effect.
(c) Concessions, distribution payments, and service payments apply
only with respect to (i) shares of the "Fidelity Funds" (as designated
on Schedule A attached to this Agreement) purchased or maintained for
the account of Bank Clients, and (ii) shares of the "Fidelity Advisor
Funds" (as designated on Schedule B attached to this Agreement).
Anything to the contrary notwithstanding, neither we nor any Portfolio
will provide to you, nor may you retain, concessions on your sales of
shares of, or distribution payments or service payments with respect
to assets of, the Fidelity Funds attributable to you or any of your
clients, other than Bank Clients. When you place an order in shares
of the Fidelity Funds with us, you will identify the Bank on behalf of
whose Clients you are placing the order; and you will identify as a
non-Bank Client Order, any order in shares of the Fidelity Funds
placed for the account of a non-Bank Client.
(d) After the effective date of any change in or discontinuance of
any schedule of concessions, distribution payments, or service
payments, or the termination of a Plan, any concessions, distribution
payments, or service payments will be allowable or payable to you only
in accordance with such change, discontinuance, or termination. You
agree that you will have no claim against us or any Portfolio by
virtue of any such change, discontinuance, or termination. In the
event of any overpayment by us of any concession, distribution
payment, or service payment, you will remit such overpayment.
(e) If any Portfolio shares sold to you by us under the terms of
this Agreement are redeemed by the issuing Portfolio or tendered for
redemption by the customer within seven (7) business days after the
date of our confirmation of your original purchase order for such
shares, you agree (i) to refund promptly to us the full amount of any
concession, distribution payment, or service payment allowed or paid
to you on such shares, and (ii) if not yet allowed or paid to you, to
forfeit the right to receive any concession, distribution payment, or
service payment allowable or payable to you on such shares. We will
notify you of any such redemption within ten (10) days after the date
of the redemption.
4. Certain Types of Accounts: (a) You may instruct FIIOC to
register purchased shares in your name and account as nominee for your
customers. If you hold Portfolio shares as nominee for your
customers, all Prospectuses, proxy statements, periodic reports, and
other printed material will be sent to you, and all confirmations and
other communications to shareholders will be transmitted to you. You
will be responsible for forwarding such printed material,
confirmations, and communications, or the information contained
therein, to all customers for whose account you hold any Portfolio
shares as nominee. However, we or FIIOC on behalf of itself or the
Portfolios will be responsible for the costs associated with your
forwarding such printed material, confirmations, and communications.
You will be responsible for complying with all reporting and tax
withholding requirements with respect to the customers for whose
account you hold any Portfolio shares as nominee.
(b) With respect to accounts other than those accounts referred to
in paragraph 4(a) above, you agree to provide us with all information
(including certification of taxpayer identification numbers and
back-up withholding instructions) necessary or appropriate for us to
comply with legal and regulatory reporting requirements.
(c) Accounts opened or maintained pursuant to the NETWORKING system
of the National Securities Clearing Corporation ("NSCC") will be
governed by applicable NSCC rules and procedures and any agreement or
other arrangement with us relating to NETWORKING.
(d) If you hold Portfolio shares in an omnibus account for two or
more customers, you will be responsible for determining, in accordance
with the Prospectus, whether, and the extent to which, a CDSC is
applicable to a purchase of Portfolio shares from such a customer, and
you agree to transmit immediately to us any CDSC to which such
purchase was subject. You hereby represent that if you hold Portfolio
shares subject to a CDSC, you have the capability to track and account
for such charge, and we reserve the right, at our discretion, to
verify that capability by inspecting your tracking and accounting
system or otherwise.
5. Status as Registered Broker/Dealer: (a) Each party to this
Agreement represents to the other party that (i) it is registered as a
broker/dealer under the 1934 Act, (ii) it is qualified to act as a
broker/dealer in the states where it transacts business, and (iii) it
is a member in good standing of the National Association of Securities
Dealers, Inc. ("NASD"). Each party agrees to maintain its
broker/dealer registration and qualifications and its NASD membership
in good standing throughout the term of this Agreement. Each party
agrees to abide by all of the NASD's rules and regulations, including
the NASD's Conduct Rules -- in particular, Section 2830 of such Rules,
which section is deemed a part of and is incorporated by reference in
this Agreement. This Agreement will terminate automatically without
notice in the event that either
party's NASD membership is terminated.
(b) Nothing in this Agreement shall cause you to be our partner,
employee, or agent, or give you any authority to act for us or for any
Portfolio. Neither we nor any Portfolio shall be liable for any of
your acts or obligations as a dealer under this Agreement.
6. Information Relating to the Portfolios: (a) No person is
authorized to make any representations concerning shares of a
Portfolio other than those contained in the Portfolio's Prospectus.
In buying Portfolio shares from us under this Agreement, you will rely
only on the representations contained in the Prospectus. Upon your
request, we will furnish you with a reasonable number of copies of the
Portfolios' current prospectuses or statements of additional
information or both (including any stickers thereto).
(b) Any printed or electronic information that we furnish you
(other than the Portfolios' Prospectuses and periodic reports) is our
sole responsibility and not the responsibility of the respective
Portfolios. You agree that the Portfolios will have no liability or
responsibility to you with respect to any such printed or electronic
information. We or the respective Portfolio will bear the expense of
qualifying its shares under the state securities laws.
(c) You may not use any sales literature or advertising material
(including material disseminated through radio, television, or other
electronic media) concerning Portfolio shares, other than the printed
or electronic information referred to in paragraph 6(b) above, in
connection with the offer or sale of Portfolio shares without
obtaining our prior written approval. You may not distribute or make
available to investors any information that we furnish you marked "FOR
DEALER USE ONLY" or that otherwise indicates that it is confidential
or not intended to be distributed to investors.
7. Indemnification: (a) We will indemnify and hold you harmless
from any claim, demand, loss, expense, or cause of action resulting
from the misconduct or negligence, as measured by industry standards,
of us, our agents and employees, in carrying out our obligations under
this Agreement. Such indemnification will survive the termination of
this Agreement.
(b) You will indemnify and hold us harmless from any claim, demand,
loss, expense, or cause of action resulting from the misconduct or
negligence, as measured by industry standards, of you, your agents and
employees, in carrying out your obligations under this Agreement.
Such indemnification will survive the termination of this Agreement.
8. Customer Lists: We hereby agree that we shall not use any list of
your customers which may be obtained in connection with this Agreement
for the purpose of solicitation of any product or service without your
express written consent. However, nothing in this paragraph or
otherwise shall be deemed to prohibit or restrict us or our affiliates
in any way from solicitations of any product or service directed at,
without limitation, the general public, any segment thereof, or any
specific individual, provided such solicitation is not based upon such
list.
9. Duration of Agreement: This Agreement, with respect to any Plan,
will continue in effect for one year from its effective date, and
thereafter will continue automatically for successive annual periods;
provided, however, that such continuance is subject to termination at
any time without penalty if a majority of a Portfolio's Trustees who
are not interested persons of the Portfolio (as defined in the
Investment Company Act of 1940 (the "1940 Act")), or a majority of the
outstanding shares of the Portfolio, vote to terminate or not to
continue the Plan. This Agreement, other than with respect to a Plan,
will continue in effect from year to year after its effective date,
unless terminated as provided herein.
10. Amendment and Termination of Agreement: (a) We may amend any
provision of this Agreement by giving you written notice of the
amendment. Either party to this Agreement may terminate the Agreement
without cause by giving the other party at least thirty (30) days'
written notice of its intention to terminate. This Agreement will
terminate automatically in the event of its assignment (as defined in
the 1940 Act).
(b) In the event that (i) an application for a protective decree
under the provisions of the Securities Investor Protection Act of 1970
is filed against you; (ii) you file a petition in bankruptcy or a
petition seeking similar relief under any bankruptcy, insolvency, or
similar law, or a proceeding is commenced against you seeking such
relief; or (iii) you are found by the SEC, the NASD, or any other
federal or state regulatory agency or authority to have violated any
applicable federal or state law, rule or regulation arising out of
your activities as a broker/dealer or in connection with this
Agreement, this Agreement will terminate effective immediately upon
our giving notice of termination to you. You agree to notify us
promptly and to immediately suspend sales of Portfolio shares in the
event of any such filing or violation, or in the event that you cease
to be a member in good standing of the NASD.
(c) Your or our failure to terminate this Agreement for a
particular cause will not constitute a waiver of the right to
terminate this Agreement at a later date for the same or another
cause. The termination of this Agreement with respect to any one
Portfolio will not cause its termination with respect to any other
Portfolio.
11. Arbitration: In the event of a dispute, such dispute will be
settled by arbitration before arbitrators sitting in Boston,
Massachusetts in accordance with the NASD's Code of Arbitration
Procedure in effect at the time of the dispute. The arbitrators will
act by majority decision and their award may allocate attorneys' fees
and arbitration costs between us. Their award will be final and
binding between us, and such award may be entered as a judgment in any
court of competent jurisdiction.
12. Notices: All notices required or permitted to be given under this
Agreement shall be given in writing and delivered by personal
delivery, by postage prepaid mail, or by facsimile machine or a
similar means of same day delivery (with a confirming copy by mail).
All notices to us shall be given or sent to us at our offices located
at 82 Devonshire Street, Mail Zone L12A, Boston, Massachusetts 02109,
Attn: Bank Wholesale Market. All notices to you shall be given or
sent to you at the address specified by you below. Each of us may
change the address to which notices shall be sent by giving notice to
the other party in accordance with this paragraph 11.
13. Miscellaneous: This Agreement, as it may be amended from time to
time, shall become effective as of the date when it is accepted and
dated below by us. This Agreement is to be construed in accordance
with the laws of the Commonwealth of Massachusetts. This Agreement
supersedes and cancels any prior agreement between us, whether oral or
written, relating to the sale of shares of the Portfolios or any other
subject covered by this Agreement. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions of this Agreement or otherwise affect
their construction or effect.
Very truly yours,
FIDELITY DISTRIBUTORS
CORPORATION
Please return two signed copies of this Agreement to Fidelity
Distributors Corporation. Upon acceptance, one countersigned copy
will be returned to you for your files.
_____________________________________
Name of Firm
Address: _____________________________
_____________________________________
_____________________________________
By __________________________________
Authorized Representative
_____________________________________
Name and Title (please print or type)
CRD # _______________________________
ACCEPTED AND AGREED:
FIDELITY DISTRIBUTORS CORPORATION
By __________________________________
Dated: ________________
** DISCARD THIS PAGE AND ATTACH REVISED SCHEDULES A AND B **
Exhibit 8(m)
FORM OF
CUSTODIAN AGREEMENT
Dated as of: _________
Between
Each of the Investment Companies
Listed on Appendix "A" Attached Hereto
and
The Chase Manhattan Bank, N.A.
TABLE OF CONTENTS
ARTICLE
Page
I. APPOINTMENT OF CUSTODIAN 1
II. POWERS AND DUTIES OF CUSTODIAN 1
2.01 Safekeeping 1
2.02 Manner of Holding Securities 1
2.03 Security Purchases 2
2.04 Exchanges of Securities 2
2.05 Sales of Securities 3
2.06 Depositary Receipts 3
2.07 Exercise of Rights; Tender Offers 3
2.08 Stock Dividends, Rights, Etc. 3
2.09 Options 4
2.10 Futures Contracts 4
2.11 Borrowing 4
2.12 Interest Bearing Deposits 5
2.13 Foreign Exchange Transactions 5
2.14 Securities Loans 5
2.15 Collections 6
2.16 Dividends, Distributions and Redemptions 6
2.17 Proceeds from Shares Sold 6
2.18 Proxies, Notices, Etc. 6
2.19 Bills and Other Disbursements 7
2.20 Nondiscretionary Functions 7
2.21 Bank Accounts 7
2.22 Deposit of Fund Assets in Securities Systems 7
2.23 Other Transfers 8
2.24 Establishment of Segregated Account 9
2.25 Custodian's Books and Records . 9
2.26 Opinion of Fund's Independent Certified Public
Accountants 9
2.27 Reports of Independent Certified Public Accountants 10
2.28 Overdraft Facility 10
III. PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS 10
3.01 Proper Instructions and Special Instructions 10
3.02 Authorized Persons 11
3.03 Persons Having Access to Assets of the Portfolios 11
3.04 Actions of the Custodian Based on Proper Instructions and
Special Instructions 11
i
IV. SUBCUSTODIANS 11
4.01 Domestic Subcustodians 12
4.02 Foreign Subcustodians and Interim Subcustodians 12
4.03 Special Subcustodians 13
4.04 Termination of a Subcustodian 13
4.05 Certification Regarding Foreign Subcustodians 13
V. STANDARD OF CARE; INDEMNIFICATION 14
5.01 Standard of Care 14
5.02 Liability of Custodian for Actions of Other Persons 15
5.03 Indemnification 15
5.04 Investment Limitations 16
5.05 Fund's Right to Proceed 16
VI. COMPENSATION 17
VII. TERMINATION 17
7.01 Termination of Agreement as to One or More Funds 17
7.02 Termination as to One or More Portfolios 18
VIII. DEFINED TERMS 18
IX. MISCELLANEOUS 19
9.01 Execution of Documents, Etc 19
9.02 Representative Capacity; Nonrecourse Obligations 19
9.03 Several Obligations of the Funds and the Portfolios 19
9.04 Representations and Warranties 19
9.05 Entire Agreement 20
9.06 Waivers and Amendments 20
9.07 Interpretation 20
9.08 Captions 20
9.09 Governing Law 20
9.10 Notices 21
IX. MISCELLANEOUS 21
9.11 Assignment 21
9.12 Counterparts 21
9.13 Confidentiality; Survival of Obligations 21
ii
APPENDICES
Appendix "A" - List of Funds and Portfolios
Appendix "B" - List of Additional Custodians,
Special Subcustodians and Foreign Subcustodians
Appendix "C" - Procedures Relating to
Custodian's Security Interest
iii
Exhibit 8(m)
FORM OF
CUSTODIAN AGREEMENT
AGREEMENT made as of the ___ day of ______ between each of the
Investment Companies Listed on Appendix "A" hereto, as the same may be
amended from time to time (each a "Fund" and collectively the "Funds")
and The Chase Manhattan Bank, N.A. (the "Custodian").
W I T N E S S E T H
WHEREAS, each Fund is or may be organized with one or more series of
shares, each of which shall represent an interest in a separate
portfolio of cash, securities and other assets (all such existing and
additional series now or hereafter listed on Appendix "A" being
hereinafter referred to individually, as a "Portfolio," and
collectively, as the "Portfolios"); and
WHEREAS, each Fund desires to appoint the Custodian as custodian on
behalf of each of its Portfolios in accordance with the provisions of
the Investment Company Act of 1940, as amended (the "1940 Act"), and
the rules and regulations thereunder, under the terms and conditions
set forth in this Agreement, and the Custodian has agreed so to act as
custodian.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF CUSTODIAN
On behalf of each of its Portfolios, each Fund hereby employs and
appoints the Custodian as a custodian, subject to the terms and
provisions of this Agreement. Each Fund shall deliver to the
Custodian, or shall cause to be delivered to the Custodian, cash,
securities and other assets owned by each of its Portfolios from time
to time during the term of this Agreement and shall specify to which
of its Portfolios such cash, securities and other assets are to be
specifically allocated.
ARTICLE II
POWERS AND DUTIES OF CUSTODIAN
As custodian, the Custodian shall have and perform the powers and
duties set forth in this Article II. Pursuant to and in accordance
with Article IV hereof, the Custodian may appoint one or more
Subcustodians (as hereinafter defined) to exercise the powers and
perform the duties of the Custodian set forth in this Article II and
references to the Custodian in this Article II shall include any
Subcustodian so appointed.
Section 2.01. Safekeeping. The Custodian shall keep safely all
cash, securities and other assets of each Fund's Portfolios delivered
to the Custodian and, on behalf of such Portfolios, the Custodian
shall, from time to time, accept delivery of cash, securities and
other assets for safekeeping.
Section 2.02. Manner of Holding Securities.
(a) The Custodian shall at all times hold securities of each Fund's
Portfolios either: (i) by physical possession of the share
certificates or other instruments representing such securities in
registered or bearer form; or (ii) in book-entry form by a Securities
System (as hereinafter defined) in accordance with the provisions of
Section 2.22 below.
(b) The Custodian shall at all times hold registered securities of
each Portfolio in the name of the Custodian, the Portfolio or a
nominee of either of them, unless specifically directed by Proper
Instructions to hold such registered securities in so-called street
name; provided that, in any event, all such securities and other
assets shall be held in an account of the Custodian containing only
assets of a Portfolio, or only assets held by the Custodian as a
fiduciary or custodian for customers; and provided further, that the
records of the Custodian shall indicate at all times the Portfolio or
other customer for which such securities and other assets are held in
such account and the respective interests therein.
Section 2.03. Security Purchases. Upon receipt of Proper
Instructions (as hereinafter defined), the Custodian shall pay for and
receive securities purchased for the account of a Portfolio, provided
that payment shall be made by the Custodian only upon receipt of the
securities: (a) by the Custodian; (b) by a clearing corporation of a
national securities exchange of which the Custodian is a member; or
(c) by a Securities System. Notwithstanding the foregoing, upon
receipt of Proper Instructions: (i) in the case of a repurchase
agreement, the Custodian may release funds to a Securities System
prior to the receipt of advice from the Securities System that the
securities underlying such repurchase agreement have been transferred
by book-entry into the Account (as hereinafter defined) maintained
with such Securities System by the Custodian, provided that the
Custodian's instructions to the Securities System require that the
Securities System may make payment of such funds to the other party to
the repurchase agreement only upon transfer by book-entry of the
securities underlying the repurchase agreement into the Account; (ii)
in the case of time deposits, call account deposits, currency
deposits, and other deposits, foreign exchange transactions, futures
contracts or options, pursuant to Sections 2.09, 2.10, 2.12 and 2.13
hereof, the Custodian may make payment therefor before receipt of an
advice or confirmation evidencing said deposit or entry into such
transaction; (iii) in the case of the purchase of securities, the
settlement of which occurs outside of the United States of America,
the Custodian may make payment therefor and receive delivery of such
securities in accordance with local custom and practice generally
accepted by Institutional Clients (as hereinafter defined) in the
country in which the settlement occurs, but in all events subject to
the standard of care set forth in Article V hereof; and (iv) in the
case of the purchase of securities in which, in accordance with
standard industry custom and practice generally accepted by
Institutional Clients with respect to such securities, the receipt of
such securities and the payment therefor take place in different
countries, the Custodian may receive delivery of such securities and
make payment therefor in accordance with standard industry custom and
practice for such securities generally accepted by Institutional
Clients, but in all events subject to the standard of care set forth
in Article V hereof. For purposes of this Agreement, an
"Institutional Client" shall mean a major commercial bank,
corporation, insurance company, or substantially similar institution,
which, as a substantial part of its business operations, purchases or
sells securities and makes use of custodial services.
Section 2.04. Exchanges of Securities. Upon receipt of Proper
Instructions, the Custodian shall exchange securities held by it for
the account of a Portfolio for other securities in connection with any
reorganization, recapitalization, split-up of shares, change of par
value, conversion or other event relating to the securities or the
issuer of such securities, and shall deposit any such securities in
accordance with the terms of any reorganization or protective plan.
The Custodian shall, without receiving Proper Instructions: surrender
securities in temporary form for definitive securities; surrender
securities for transfer into the name of the Custodian, a Portfolio or
a nominee of either of them, as permitted by Section 2.02(b); and
surrender securities for a different number of certificates or
instruments representing the same number of shares or same principal
amount of indebtedness, provided that the securities to be issued will
be delivered to the Custodian or a nominee of the Custodian.
Section 2.05. Sales of Securities. Upon receipt of Proper
Instructions, the Custodian shall make delivery of securities which
have been sold for the account of a Portfolio, but only against
payment therefor in the form of: (a) cash, certified check, bank
cashier's check, bank credit, or bank wire transfer; (b) credit to the
account of the Custodian with a clearing corporation of a national
securities exchange of which the Custodian is a member; or (c) credit
to the Account of the Custodian with a Securities System, in
accordance with the provisions of Section 2.22 hereof.
Notwithstanding the foregoing: (i) in the case of the sale of
securities, the settlement of which occurs outside of the United
States of America, such securities shall be delivered and paid for in
accordance with local custom and practice generally accepted by
Institutional Clients in the country in which the settlement occurs,
but in all events subject to the standard of care set forth in Article
V hereof; (ii) in the case of the sale of securities in which, in
accordance with standard industry custom and practice generally
accepted by Institutional Clients with respect to such securities, the
delivery of such securities and receipt of payment therefor take place
in different countries, the Custodian may deliver such securities and
receive payment therefor in accordance with standard industry custom
and practice for such securities generally accepted by Institutional
Clients, but in all events subject to the standard of care set forth
in Article V hereof; and (iii) in the case of securities held in
physical form, such securities shall be delivered and paid for in
accordance with "street delivery custom" to a broker or its clearing
agent, against delivery to the Custodian of a receipt for such
securities, provided that the Custodian shall have taken reasonable
steps to ensure prompt collection of the payment for, or the return
of, such securities by the broker or its clearing agent, and provided
further that the Custodian shall not be responsible for the selection
of or the failure or inability to perform of such broker or its
clearing agent.
Section 2.06. Depositary Receipts. Upon receipt of Proper
Instructions, the Custodian shall surrender securities to the
depositary used for such securities by an issuer of American
Depositary Receipts or International Depositary Receipts (hereinafter
referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such securities and written evidence
satisfactory to the Custodian that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such securities
in the name of the Custodian or a nominee of the Custodian, for
delivery to the Custodian at such place as the Custodian may from time
to time designate. Upon receipt of Proper Instructions, the Custodian
shall surrender ADRs to the issuer thereof, against a written receipt
therefor adequately describing the ADRs surrendered and written
evidence satisfactory to the Custodian that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to
deliver the securities underlying such ADRs to the Custodian.
Section 2.07. Exercise of Rights; Tender Offers. Upon receipt of
Proper Instructions, the Custodian shall: (a) deliver warrants, puts,
calls, rights or similar securities to the issuer or trustee thereof,
or to the agent of such issuer or trustee, for the purpose of exercise
or sale, provided that the new securities, cash or other assets, if
any, acquired as a result of such actions are to be delivered to the
Custodian; and (b) deposit securities upon invitations for tenders
thereof, provided that the consideration for such securities is to be
paid or delivered to the Custodian, or the tendered securities are to
be returned to the Custodian. Notwithstanding any provision of this
Agreement to the contrary, the Custodian shall take all necessary
action, unless otherwise directed to the contrary in Proper
Instructions, to comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall promptly notify each applicable Fund of such
action in writing by facsimile transmission or in such other manner as
such Fund and the Custodian may agree in writing.
Section 2.08. Stock Dividends, Rights, Etc. The Custodian shall
receive and collect all stock dividends, rights and other items of
like nature and, upon receipt of Proper Instructions, take action with
respect to the same as directed in such Proper Instructions.
Section 2.09. Options. Upon receipt of Proper Instructions and in
accordance with the provisions of any agreement between the Custodian,
any registered broker-dealer and, if necessary, a Fund on behalf of
any applicable Portfolio relating to compliance with the rules of the
Options Clearing Corporation or of any registered national securities
exchange or similar organization(s), the Custodian shall: (a) receive
and retain confirmations or other documents, if any, evidencing the
purchase or writing of an option on a security or securities index by
the applicable Portfolio; (b) deposit and maintain in a segregated
account, securities (either physically or by book-entry in a
Securities System), cash or other assets; and (c) pay, release and/or
transfer such securities, cash or other assets in accordance with
notices or other communications evidencing the expiration, termination
or exercise of such options furnished by the Options Clearing
Corporation, the securities or options exchange on which such options
are traded, or such other organization as may be responsible for
handling such option transactions. Each Fund, on behalf of its
applicable Portfolios, and the broker-dealer shall be responsible for
the sufficiency of assets held in any segregated account established
in compliance with applicable margin maintenance requirements and the
performance of other terms of any option contract.
Section 2.10. Futures Contracts. Upon receipt of Proper
Instructions, or pursuant to the provisions of any futures margin
procedural agreement among a Fund, on behalf of any applicable
Portfolio, the Custodian and any futures commission merchant (a
"Procedural Agreement"), the Custodian shall: (a) receive and retain
confirmations, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by the applicable
Portfolio; (b) deposit and maintain in a segregated account, cash,
securities and other assets designated as initial, maintenance or
variation "margin" deposits intended to secure the applicable
Portfolio's performance of its obligations under any futures contracts
purchased or sold or any options on futures contracts written by the
Portfolio, in accordance with the provisions of any Procedural
Agreement designed to comply with the rules of the Commodity Futures
Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organization(s),
regarding such margin deposits; and (c) release assets from and/or
transfer assets into such margin accounts only in accordance with any
such Procedural Agreements. Each Fund, on behalf of its applicable
Portfolios, and such futures commission merchant shall be responsible
for the sufficiency of assets held in the segregated account in
compliance with applicable margin maintenance requirements and the
performance of any futures contract or option on a futures contract in
accordance with its terms.
Section 2.11. Borrowing. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of a Portfolio to lenders or their
agents, or otherwise establish a segregated account as agreed to by
the applicable Fund on behalf of such Portfolio and the Custodian, as
collateral for borrowings effected by such Portfolio, provided that
such borrowed money is payable by the lender (a) to or upon the
Custodian's order, as Custodian for such Portfolio, and (b)
concurrently with delivery of such securities.
Section 2.12. Interest Bearing Deposits.
Upon receipt of Proper Instructions directing the Custodian to
purchase interest bearing fixed term and call deposits (hereinafter
referred to collectively, as "Interest Bearing Deposits") for the
account of a Portfolio, the Custodian shall purchase such Interest
Bearing Deposits in the name of the Portfolio with such banks or trust
companies (including the Custodian, any Subcustodian or any subsidiary
or affiliate of the Custodian) (hereinafter referred to as "Banking
Institutions") and in such amounts as the applicable Fund may direct
pursuant to Proper Instructions. Such Interest Bearing Deposits may
be denominated in U.S. Dollars or other currencies, as the applicable
Fund on behalf of its Portfolio may determine and direct pursuant to
Proper Instructions. The Custodian shall include in its records with
respect to the assets of each Portfolio appropriate notation as to the
amount and currency of each such Interest Bearing Bank Deposit, the
accepting Banking Institution and all other appropriate details, and
shall retain such forms of advice or receipt evidencing such account,
if any, as may be forwarded to the Custodian by the Banking
Institution. The responsibilities of the Custodian to each Fund for
Interest Bearing Deposits accepted on the Custodian's books in the
United States on behalf of the Fund's Portfolios shall be that of a
U.S. bank for a similar deposit. With respect to Interest Bearing
Deposits other than those accepted on the Custodian's books, (a) the
Custodian shall be responsible for the collection of income as set
forth in Section 2.15 and the transmission of cash and instructions to
and from such accounts; and (b) the Custodian shall have no duty with
respect to the selection of the Banking Institution or, so long as the
Custodian acts in accordance with Proper Instructions, for the failure
of such Banking Institution to pay upon demand. Upon receipt of
Proper Instructions, the Custodian shall take such reasonable actions
as the applicable Fund deems necessary or appropriate to cause each
such Interest Bearing Deposit Account to be insured to the maximum
extent possible by all applicable deposit insurers including, without
limitation, the Federal Deposit Insurance Corporation.
Section 2.13. Foreign Exchange Transactions
(a) Foreign Exchange Transactions Other Than as Principal. Upon
receipt of Proper Instructions, the Custodian shall settle foreign
exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery on behalf of and for the account of a
Portfolio with such currency brokers or Banking Institutions as the
applicable Fund may determine and direct pursuant to Proper
Instructions. The Custodian shall be responsible for the transmission
of cash and instructions to and from the currency broker or Banking
Institution with which the contract or option is made, the safekeeping
of all certificates and other documents and agreements evidencing or
relating to such foreign exchange transactions and the maintenance of
proper records as set forth in Section 2.25. The Custodian shall have
no duty with respect to the selection of the currency brokers or
Banking Institutions with which a Fund deals on behalf of its
Portfolios or, so long as the Custodian acts in accordance with Proper
Instructions, for the failure of such brokers or Banking Institutions
to comply with the terms of any contract or option.
(b) Foreign Exchange Contracts as Principal. The Custodian shall
not be obligated to enter into foreign exchange transactions as
principal. However, if the Custodian has made available to a Fund its
services as a principal in foreign exchange transactions, upon receipt
of Proper Instructions, the Custodian shall enter into foreign
exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery on behalf of and for the account of a
Portfolio of such Fund with the Custodian as principal. The Custodian
shall be responsible for the selection of the currency brokers or
Banking Institutions and the failure of such currency brokers or
Banking Institutions to comply with the terms of any contract or
option.
(c) Payments. Notwithstanding anything to the contrary contained
herein, upon receipt of Proper Instructions the Custodian may, in
connection with a foreign exchange contract, make free outgoing
payments of cash in the form of U.S. Dollars or foreign currency prior
to receipt of confirmation of such foreign exchange contract or
confirmation that the countervalue currency completing such contract
has been delivered or received.
Section 2.14. Securities Loans. Upon receipt of Proper
Instructions, the Custodian shall, in connection with loans of
securities by a Portfolio, deliver securities of such Portfolio to the
borrower thereof prior to receipt of the collateral, if any, for such
borrowing; provided that, in cases of loans of securities secured by
cash collateral, the Custodian's instructions to the Securities System
shall require that the Securities System deliver the securities of the
Portfolio to the borrower thereof only upon receipt of the collateral
for such borrowing.
Section 2.15. Collections. The Custodian shall, and shall cause any
Subcustodian to: (a) collect amounts due and payable to each Fund
with respect to portfolio securities and other assets of each of such
Fund's Portfolios; (b) promptly credit to the account of each
applicable Portfolio all income and other payments relating to
portfolio securities and other assets held by the Custodian hereunder
upon Custodian's receipt of such income or payments or as otherwise
agreed in writing by the Custodian and the applicable Fund; (c)
promptly endorse and deliver any instruments required to effect such
collections; (d) promptly execute ownership and other certificates and
affidavits for all federal, state and foreign tax purposes in
connection with receipt of income, capital gains or other payments
with respect to portfolio securities and other assets of each
applicable Portfolio, or in connection with the purchase, sale or
transfer of such securities or other assets; and (e) promptly file any
certificates or other affidavits for the refund or reclaim of foreign
taxes paid, and promptly notify each applicable Fund of any changes to
law, interpretative rulings or procedures regarding such reclaims, and
otherwise use all available measures customarily used to minimize the
imposition of foreign taxes at source, and promptly inform each
applicable Fund of alternative means of minimizing such taxes of which
the Custodian shall become aware (or with the exercise of reasonable
care should have become aware); provided, however, that with respect
to portfolio securities registered in so-called street name, the
Custodian shall use its best efforts to collect amounts due and
payable to each Fund with respect to its Portfolios. The Custodian
shall promptly notify each applicable Fund in writing by facsimile
transmission or in such other manner as each such Fund and the
Custodian may agree in writing if any amount payable with respect to
portfolio securities or other assets of the Portfolios of such Fund(s)
is not received by the Custodian when due. The Custodian shall not be
responsible for the collection of amounts due and payable with respect
to portfolio securities or other assets that are in default.
Section 2.16. Dividends, Distributions and Redemptions. The
Custodian shall promptly release funds or securities: (a) upon
receipt of Proper Instructions, to one or more Distribution Accounts
designated by the applicable Fund or Funds in such Proper
Instructions; or (b) upon receipt of Special Instructions, as
otherwise directed by the applicable Fund or Funds, for the purpose of
the payment of dividends or other distributions to shareholders of
each applicable Portfolio, and payment to shareholders who have
requested repurchase or redemption of their shares of the Portfolio(s)
(collectively, the "Shares"). For purposes of this Agreement, a
"Distribution Account" shall mean an account established at a Banking
Institution designated by the applicable Fund on behalf of one or more
of its Portfolios in Special Instructions.
Section 2.17. Proceeds from Shares Sold. The Custodian shall
receive funds representing cash payments received for Shares issued or
sold from time to time by the Funds, and shall promptly credit such
funds to the account(s) of the applicable Portfolio(s). The Custodian
shall promptly notify each applicable Fund of Custodian's receipt of
cash in payment for Shares issued by such Fund by facsimile
transmission or in such other manner as the Fund and Custodian may
agree in writing. Upon receipt of Proper Instructions, the Custodian
shall: (a) deliver all federal funds received by the Custodian in
payment for Shares in payment for such investments as may be set forth
in such Proper Instructions and at a time agreed upon between the
Custodian and the applicable Fund; and (b) make federal funds
available to the applicable Fund as of specified times agreed upon
from time to time by the applicable Fund and the Custodian, in the
amount of checks received in payment for Shares which are deposited to
the accounts of each applicable Portfolio.
Section 2.18. Proxies, Notices, Etc. The Custodian shall deliver to
each applicable Fund, in the most expeditious manner practicable, all
forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to securities owned by one or more
of the applicable Fund's Portfolios that are received by the
Custodian, any Subcustodian, or any nominee of either of them, and,
upon receipt of Proper Instructions, the Custodian shall execute and
deliver, or cause such Subcustodian or nominee to execute and deliver,
such proxies or other authorizations as may be required. Except as
directed pursuant to Proper Instructions, neither the Custodian nor
any Subcustodian or nominee shall vote upon any such securities, or
execute any proxy to vote thereon, or give any consent or take any
other action with respect thereto.
Section 2.19. Bills and Other Disbursements. Upon receipt of Proper
Instructions, the Custodian shall pay or cause to be paid, all bills,
statements, or other obligations of each Portfolio.
Section 2.20. Nondiscretionary Functions. The Custodian shall
attend to all nondiscretionary details in connection with the sale,
exchange, substitution, purchase, transfer or other dealings with
securities or other assets of each Portfolio held by the Custodian,
except as otherwise directed from time to time pursuant to Proper
Instructions.
Section 2.21. Bank Accounts
(a) Accounts with the Custodian and any Subcustodians. The Custodian
shall open and operate a bank account or accounts (hereinafter
referred to collectively, as "Bank Accounts") on the books of the
Custodian or any Subcustodian provided that such account(s) shall be
in the name of the Custodian or a nominee of the Custodian, for the
account of a Portfolio, and shall be subject only to the draft or
order of the Custodian; provided however, that such Bank Accounts in
countries other than the United States may be held in an account of
the Custodian containing only assets held by the Custodian as a
fiduciary or custodian for customers, and provided further, that the
records of the Custodian shall indicate at all times the Portfolio or
other customer for which such securities and other assets are held in
such account and the respective interests therein. Such Bank Accounts
may be denominated in either U.S. Dollars or other currencies. The
responsibilities of the Custodian to each applicable Fund for deposits
accepted on the Custodian's books in the United States shall be that
of a U.S. bank for a similar deposit. The responsibilities of the
Custodian to each applicable Fund for deposits accepted on any
Subcustodian's books shall be governed by the provisions of Section
5.02.
(b) Accounts With Other Banking Institutions. The Custodian may open
and operate Bank Accounts on behalf of a Portfolio, in the name of the
Custodian or a nominee of the Custodian, at a Banking Institution
other than the Custodian or any Subcustodian, provided that such
account(s) shall be in the name of the Custodian or a nominee of the
Custodian, for the account of a Portfolio, and shall be subject only
to the draft or order of the Custodian; provided however, that such
Bank Accounts may be held in an account of the Custodian containing
only assets held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian
shall indicate at all times the Portfolio or other customer for which
such securities and other assets are held in such account and the
respective interests therein. Such Bank Accounts may be denominated
in either U.S. Dollars or other currencies. Subject to the provisions
of Section 5.01(a), the Custodian shall be responsible for the
selection of the Banking Institution and for the failure of such
Banking Institution to pay according to the terms of the deposit.
(c) Deposit Insurance. Upon receipt of Proper Instructions, the
Custodian shall take such reasonable actions as the applicable Fund
deems necessary or appropriate to cause each deposit account
established by the Custodian pursuant to this Section 2.21 to be
insured to the maximum extent possible by all applicable deposit
insurers including, without limitation, the Federal Deposit Insurance
Corporation.
Section 2.22. Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain domestic securities owned by a
Portfolio in: (a) The Depository Trust Company; (b) the Participants
Trust Company; (c) any book-entry system as provided in (i) Subpart O
of Treasury Circular No. 300, 31 CFR 306.115, (ii) Subpart B of
Treasury Circular Public Debt Series No. 27-76, 31 CFR 350.2, or (iii)
the book-entry regulations of federal agencies substantially in the
form of 31 CFR 306.115; or (d) any other domestic clearing agency
registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Securities Exchange Act of 1934 (or as may
otherwise be authorized by the Securities and Exchange Commission to
serve in the capacity of depository or clearing agent for the
securities or other assets of investment companies) which acts as a
securities depository and the use of which each applicable Fund has
previously approved by Special Instructions (as hereinafter defined)
(each of the foregoing being referred to in this Agreement as a
"Securities System"). Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following provisions:
(A) The Custodian may deposit and/or maintain securities held
hereunder in a Securities System, provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which Account shall not contain any assets of the
Custodian other than assets held as a fiduciary, custodian, or
otherwise for customers and shall be so designated on the books and
records of the Securities System.
(B) The Securities System shall be obligated to comply with the
Custodian's directions with respect to the securities held in such
Account and shall not be entitled to a lien against the assets in such
Account for extensions of credit to the Custodian other than for
payment of the purchase price of such assets.
(C) Each Fund hereby designates the Custodian as the party in whose
name any securities deposited by the Custodian in the Account are to
be registered.
(D) The books and records of the Custodian shall at all times
identify those securities belonging to each Portfolio which are
maintained in a Securities System.
(E) The Custodian shall pay for securities purchased for the account
of a Portfolio only upon (w) receipt of advice from the Securities
System that such securities have been transferred to the Account of
the Custodian, and (x) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account of such
Portfolio. The Custodian shall transfer securities sold for the
account of a Portfolio only upon (y) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account of the Custodian, and (z) the making of an
entry on the records of the Custodian to reflect such transfer and
payment for the account of such Portfolio. Copies of all advices from
the Securities System relating to transfers of securities for the
account of a Portfolio shall identify such Portfolio and shall be
maintained for such Portfolio by the Custodian. The Custodian shall
deliver to each applicable Fund on the next succeeding business day
daily transaction reports which shall include each day's transactions
in the Securities System for the account of each applicable Portfolio.
Such transaction reports shall be delivered to each applicable Fund or
any agent designated by such Fund pursuant to Proper Instructions, by
computer or in such other manner as such Fund and the Custodian may
agree in writing.
(F) The Custodian shall, if requested by a Fund pursuant to Proper
Instructions, provide such Fund with all reports obtained by the
Custodian or any Subcustodian with respect to a Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System.
(G) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any Securities System (except the federal
book-entry system) on behalf of any Portfolio as promptly as
practicable and shall take all actions reasonably practicable to
safeguard the securities of any Portfolio maintained with such
Securities System.
Section 2.23. Other Transfers.
(a) Upon receipt of Proper Instructions, the Custodian shall transfer
to or receive from a third party that has been appointed to serve as
an additional custodian of one or more Portfolios (an "Additional
Custodian") securities, cash and other assets of such Portfolio(s) in
accordance with such Proper Instructions. Each Additional Custodian
shall be identified as such on Appendix B, as the same may be amended
from time to time in accordance with the provisions of Section
9.06(c).
(b) Upon receipt of Special Instructions, the Custodian shall make
such other dispositions of securities, funds or other property of a
Portfolio in a manner or for purposes other than as expressly set
forth in this Agreement, provided that the Special Instructions
relating to such disposition shall include a statement of the purpose
for which the delivery is to be made, the amount of funds and/or
securities to be delivered, and the name of the person or persons to
whom delivery is to be made, and shall otherwise comply with the
provisions of Sections 3.01 and 3.03 hereof.
Section 2.24. Establishment of Segregated Account. Upon receipt of
Proper Instructions, the Custodian shall establish and maintain on its
books a segregated account or accounts for and on behalf of a
Portfolio, into which account or accounts may be transferred cash
and/or securities or other assets of such Portfolio, including
securities maintained by the Custodian in a Securities System pursuant
to Section 2.22 hereof, said account or accounts to be maintained:
(a) for the purposes set forth in Sections 2.09, 2.10 and 2.11 hereof;
(b) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the SEC relating to the
maintenance of segregated accounts by registered investment companies;
or (c) for such other purposes as set forth, from time to time, in
Special Instructions.
Section 2.25. Custodian's Books and Records. The Custodian shall
provide any assistance reasonably requested by a Fund in the
preparation of reports to such Fund's shareholders and others, audits
of accounts, and other ministerial matters of like nature. The
Custodian shall maintain complete and accurate records with respect to
securities and other assets held for the accounts of each Portfolio as
required by the rules and regulations of the SEC applicable to
investment companies registered under the 1940 Act, including: (a)
journals or other records of original entry containing a detailed and
itemized daily record of all receipts and deliveries of securities
(including certificate and transaction identification numbers, if
any), and all receipts and disbursements of cash; (b) ledgers or other
records reflecting (i) securities in transfer, (ii) securities in
physical possession, (iii) securities borrowed, loaned or
collateralizing obligations of each Portfolio, (iv) monies borrowed
and monies loaned (together with a record of the collateral therefor
and substitutions of such collateral), (v) dividends and interest
received, (vi) the amount of tax withheld by any person in respect of
any collection made by the Custodian or any Subcustodian, and (vii)
the amount of reclaims or refunds for foreign taxes paid; and (c)
cancelled checks and bank records related thereto. The Custodian
shall keep such other books and records of each Fund as such Fund
shall reasonably request. All such books and records maintained by
the Custodian shall be maintained in a form acceptable to the
applicable Fund and in compliance with the rules and regulations of
the SEC, including, but not limited to, books and records required to
be maintained by Section 31(a) of the 1940 Act and the rules and
regulations from time to time adopted thereunder. All books and
records maintained by the Custodian pursuant to this Agreement shall
at all times be the property of each applicable Fund and shall be
available during normal business hours for inspection and use by such
Fund and its agents, including, without limitation, its independent
certified public accountants. Notwithstanding the preceding sentence,
no Fund shall take any actions or cause the Custodian to take any
actions which would cause, either directly or indirectly, the
Custodian to violate any applicable laws, regulations or orders.
Section 2.26. Opinion of Fund's Independent Certified Public
Accountants. The Custodian shall take all reasonable action as a Fund
may request to obtain from year to year favorable opinions from such
Fund's independent certified public accountants with respect to the
Custodian's activities hereunder in connection with the preparation of
the Fund's Form N-1A and the Fund's Form N-SAR or other periodic
reports to the SEC and with respect to any other requirements of the
SEC.
Section 2.27. Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund a
written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the
Custodian under this Agreement, including, without limitation, the
Custodian's accounting system, internal accounting control and
procedures for safeguarding cash, securities and other assets,
including cash, securities and other assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report
shall be of sufficient scope and in sufficient detail as may
reasonably be required by any Fund and as may reasonably be obtained
by the Custodian.
Section 2.28. Overdraft Facility. In the event that the Custodian
is directed by Proper Instructions to make any payment or transfer of
funds on behalf of a Portfolio for which there would be, at the close
of business on the date of such payment or transfer, insufficient
funds held by the Custodian on behalf of such Portfolio, the Custodian
may, in its discretion, provide an overdraft (an "Overdraft") to the
applicable Fund on behalf of such Portfolio, in an amount sufficient
to allow the completion of such payment. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the applicable Fund and the Custodian; and (b)
shall accrue interest from the date of the Overdraft to the date of
payment in full by the applicable Fund on behalf of the applicable
Portfolio at a rate agreed upon in writing, from time to time, by the
Custodian and the applicable Fund. The Custodian and each Fund
acknowledge that the purpose of such Overdrafts is to temporarily
finance the purchase or sale of securities for prompt delivery in
accordance with the terms hereof, or to meet emergency expenses not
reasonably foreseeable by such Fund. The Custodian shall promptly
notify each applicable Fund in writing (an "Overdraft Notice") of any
Overdraft by facsimile transmission or in such other manner as such
Fund and the Custodian may agree in writing. At the request of the
Custodian, each applicable Fund, on behalf of one or more of its
Portfolios, shall pledge, assign and grant to the Custodian a security
interest in certain specified securities of the applicable Portfolio,
as security for Overdrafts provided to such Portfolio, under the terms
and conditions set forth in Appendix "C" attached hereto.
ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS
Section 3.01. Proper Instructions and Special Instructions.
(a) Proper Instructions. As used herein, the term "Proper
Instructions" shall mean: (i) a tested telex, a written (including,
without limitation, facsimile transmission) request, direction,
instruction or certification signed or initialed by or on behalf of
the applicable Fund by one or more Authorized Persons (as hereinafter
defined); (ii) a telephonic or other oral communication by one or more
Authorized Persons; or (iii) a communication effected directly between
an electro-mechanical or electronic device or system (including,
without limitation, computers) by or on behalf of the applicable Fund
by one or more Authorized Persons; provided, however, that
communications of the types described in clauses (ii) and (iii) above
purporting to be given by an Authorized Person shall be considered
Proper Instructions only if the Custodian reasonably believes such
communications to have been given by an Authorized Person with respect
to the transaction involved. Proper Instructions in the form of oral
communications shall be confirmed by the applicable Fund by tested
telex or in writing in the manner set forth in clause (i) above, but
the lack of such confirmation shall in no way affect any action taken
by the Custodian in reliance upon such oral instructions prior to the
Custodian's receipt of such confirmation. Each Fund and the Custodian
are hereby authorized to record any and all telephonic or other oral
instructions communicated to the Custodian. Proper Instructions may
relate to specific transactions or to types or classes of
transactions, and may be in the form of standing instructions.
(b) Special Instructions. As used herein, the term "Special
Instructions" shall mean Proper Instructions countersigned or
confirmed in writing by the Treasurer or any Assistant Treasurer of
the applicable Fund or any other person designated by the Treasurer of
such Fund in writing, which countersignature or confirmation shall be
(i) included on the same instrument containing the Proper Instructions
or on a separate instrument relating thereto, and (ii) delivered by
hand, by facsimile transmission, or in such other manner as the
applicable Fund and the Custodian agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, telecopy or telex number
agreed upon from time to time by the Custodian and the applicable
Fund.
Section 3.02. Authorized Persons. Concurrently with the execution
of this Agreement and from time to time thereafter, as appropriate,
each Fund shall deliver to the Custodian, duly certified as
appropriate by a Treasurer or Assistant Treasurer of such Fund, a
certificate setting forth: (a) the names, titles, signatures and
scope of authority of all persons authorized to give Proper
Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of such Fund (collectively, the
"Authorized Persons" and individually, an "Authorized Person"); and
(b) the names, titles and signatures of those persons authorized to
issue Special Instructions. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set
forth therein and shall be considered to be in full force and effect
until delivery to the Custodian of a similar certificate to the
contrary. Upon delivery of a certificate which deletes the name(s) of
a person previously authorized by a Fund to give Proper Instructions
or to issue Special Instructions, such persons shall no longer be
considered an Authorized Person or authorized to issue Special
Instructions for that Fund.
Section 3.03. Persons Having Access to Assets of the Portfolios.
Notwithstanding anything to the contrary contained in this Agreement,
no Authorized Person, Trustee, officer, employee or agent of any Fund
shall have physical access to the assets of any Portfolio of that Fund
held by the Custodian nor shall the Custodian deliver any assets of a
Portfolio for delivery to an account of such person; provided,
however, that nothing in this Section 3.03 shall prohibit (a) any
Authorized Person from giving Proper Instructions, or any person
authorized to issue Special Instructions from issuing Special
Instructions, so long as such action does not result in delivery of or
access to assets of any Portfolio prohibited by this Section 3.03; or
(b) each Fund's independent certified public accountants from
examining or reviewing the assets of the Portfolios of the Fund held
by the Custodian. Each Fund shall deliver to the Custodian a written
certificate identifying such Authorized Persons, Trustees, officers,
employees and agents of such Fund.
Section 3.04. Actions of Custodian Based on Proper Instructions and
Special Instructions. So long as and to the extent that the Custodian
acts in accordance with (a) Proper Instructions or Special
Instructions, as the case may be, and (b) the terms of this Agreement,
the Custodian shall not be responsible for the title, validity or
genuineness of any property, or evidence of title thereof, received by
it or delivered by it pursuant to this Agreement.
ARTICLE IV
SUBCUSTODIANS
The Custodian may, from time to time, in accordance with the relevant
provisions of this Article IV, appoint one or more Domestic
Subcustodians, Foreign Subcustodians, Interim Subcustodians and
Special Subcustodians to act on behalf of a Portfolio. (For purposes
of this Agreement, all duly appointed Domestic Subcustodians, Foreign
Subcustodians, Interim Subcustodians, and Special Subcustodians are
hereinafter referred to collectively, as "Subcustodians.")
Section 4.01. Domestic Subcustodians. The Custodian may, at any
time and from time to time, appoint any bank as defined in Section
2(a)(5) of the 1940 Act meeting the requirements of a custodian under
Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act on behalf of one or more Portfolios as a
subcustodian for purposes of holding cash, securities and other assets
of such Portfolios and performing other functions of the Custodian
within the United States (a "Domestic Subcustodian"); provided, that,
the Custodian shall notify each applicable Fund in writing of the
identity and qualifications of any proposed Domestic Subcustodian at
least thirty (30) days prior to appointment of such Domestic
Subcustodian, and such Fund may, in its sole discretion, by written
notice to the Custodian executed by an Authorized Person disapprove of
the appointment of such Domestic Subcustodian. If, following notice
by the Custodian to each applicable Fund regarding appointment of a
Domestic Subcustodian and the expiration of thirty (30) days after the
date of such notice, such Fund shall have failed to notify the
Custodian of its disapproval thereof, the Custodian may, in its
discretion, appoint such proposed Domestic Subcustodian as its
subcustodian.
Section 4.02. Foreign Subcustodians and Interim Subcustodians.
(a) Foreign Subcustodians. The Custodian may, at any time and from
time to time, appoint: (i) any bank, trust company or other entity
meeting the requirements of an "eligible foreign custodian" under
Section 17(f) of the 1940 Act and the rules and regulations thereunder
or by order of the Securities and Exchange Commission exempted
therefrom, or (ii) any bank as defined in Section 2(a)(5) of the 1940
Act meeting the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder to act on behalf of
one or more Portfolios as a subcustodian for purposes of holding cash,
securities and other assets of such Portfolios and performing other
functions of the Custodian in countries other than the United States
of America (a "Foreign Subcustodian"); provided, that, prior to the
appointment of any Foreign Subcustodian, the Custodian shall have
obtained written confirmation of the approval of the Board of Trustees
or other governing body or entity of each applicable Fund on behalf of
its applicable Portfolio(s) (which approval may be withheld in the
sole discretion of such Board of Trustees or other governing body or
entity) with respect to (i) the identity and qualifications of any
proposed Foreign Subcustodian, (ii) the country or countries in which,
and the securities depositories or clearing agencies, if any, through
which, any proposed Foreign Subcustodian is authorized to hold
securities and other assets of the applicable Portfolio(s), and (iii)
the form and terms of the subcustodian agreement to be entered into
between such proposed Foreign Subcustodian and the Custodian. Each
such duly approved Foreign Subcustodian and the countries where and
the securities depositories and clearing agencies through which they
may hold securities and other assets of the applicable Portfolios
shall be listed on Appendix "B" attached hereto, as it may be amended,
from time to time, in accordance with the provisions of Section
9.05(c) hereof. Each Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment by one of
its Portfolios which is to be held in a country in which no Foreign
Subcustodian is authorized to act, in order that there shall be
sufficient time for the Custodian to effect the appropriate
arrangements with a proposed foreign subcustodian, including obtaining
approval as provided in this Section 4.02(a). The Custodian shall not
amend any subcustodian agreement entered into with a Foreign
Subcustodian, or agree to change or permit any changes thereunder, or
waive any rights under such agreement, which materially affect a
Fund's rights or the Foreign Subcustodian's obligations or duties to
a Fund under such agreement, except upon prior approval pursuant to
Special Instructions.
(b) Interim Subcustodians. Notwithstanding the foregoing, in the
event that a Portfolio shall invest in a security or other asset to be
held in a country in which no Foreign Subcustodian is authorized to
act, the Custodian shall promptly notify the applicable Fund in
writing by facsimile transmission or in such other manner as such Fund
and Custodian shall agree in writing of the unavailability of an
approved Foreign Subcustodian in such country; and the Custodian
shall, upon receipt of Special Instructions, appoint any Person
designated by the applicable Fund in such Special Instructions to hold
such security or other asset. (Any Person appointed as a subcustodian
pursuant to this Section 4.02(b) is hereinafter referred to as an
"Interim Subcustodian.")
Section 4.03. Special Subcustodians. Upon receipt of Special
Instructions, the Custodian shall, on behalf of one or more
Portfolios, appoint one or more banks, trust companies or other
entities designated in such Special Instructions to act as a
subcustodian for purposes of: (i) effecting third-party repurchase
transactions with banks, brokers, dealers or other entities through
the use of a common custodian or subcustodian; (ii) establishing a
joint trading account for the applicable Portfolio(s) and other
registered open-end management investment companies for which Fidelity
Management & Research Company serves as investment adviser, through
which such Portfolios and such other investment companies shall
collectively participate in certain repurchase transactions; (iii)
providing depository and clearing agency services with respect to
certain variable rate demand note securities; and (iv) effecting any
other transactions designated by each applicable Fund in Special
Instructions. (Each such designated subcustodian is hereinafter
referred to as a "Special Subcustodian.") Each such duly appointed
Special Subcustodian shall be listed on Appendix "B" attached hereto,
as it may be amended from time to time in accordance with the
provisions of Section 9.05(c) hereof. In connection with the
appointment of any Special Subcustodian, the Custodian shall enter
into a subcustodian agreement with the Special Subcustodian in form
and substance approved by each applicable Fund, provided that such
agreement shall in all events comply with the provisions of the 1940
Act and the rules and regulations thereunder and the terms and
provisions of this Agreement. The Custodian shall not amend any
subcustodian agreement entered into with a Special Subcustodian, or
agree to change or permit any changes thereunder, or waive any rights
under such agreement, except upon prior approval pursuant to Special
Instructions.
Section 4.04. Termination of a Subcustodian. The Custodian shall
(i) cause each Domestic Subcustodian and Foreign Subcustodian to, and
(ii) use its best efforts to cause each Interim Subcustodian and
Special Subcustodian to, perform all of its obligations in accordance
with the terms and conditions of the subcustodian agreement between
the Custodian and such Subcustodian. In the event that the Custodian
is unable to cause such Subcustodian to fully perform its obligations
thereunder, the Custodian shall forthwith, upon the receipt of Special
Instructions, terminate such Subcustodian with respect to each
applicable Fund and, if necessary or desirable, appoint a replacement
Subcustodian in accordance with the provisions of Section 4.01 or
Section 4.02, as the case may be. In addition to the foregoing, the
Custodian (A) may, at any time in its discretion, upon written
notification to each applicable Fund, terminate any Domestic
Subcustodian, Foreign Subcustodian or Interim Subcustodian, and (B)
shall, upon receipt of Special Instructions, terminate any
Subcustodian with respect to each applicable Fund, in accordance with
the termination provisions under the applicable subcustodian
agreement.
Section 4.05. Certification Regarding Foreign Subcustodians. Upon
request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign Subcustodian
then acting on behalf of the Custodian for such Fund and its
Portfolios; (ii) the countries in which and the securities
depositories and clearing agents through which each such Foreign
Subcustodian is then holding cash, securities and other assets of any
Portfolio of such Fund; and (iii) such other information as may be
requested by such Fund to ensure compliance with Rule 17(f)-5 under
the 1940 Act.
ARTICLE V
STANDARD OF CARE; INDEMNIFICATION
Section 5.01. Standard of Care.
(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and
obligations under this Agreement, and shall be liable to each Fund for
all loss, damage and expense suffered or incurred by such Fund or its
Portfolios resulting from the failure of the Custodian to exercise
such reasonable care and diligence.
(b) Actions Prohibited by Applicable Law, Etc. In no event shall the
Custodian incur liability hereunder if the Custodian or any
Subcustodian or Securities System, or any subcustodian, securities
depository or securities system utilized by any such Subcustodian, or
any nominee of the Custodian or any Subcustodian (individually, a
"Person") is prevented, forbidden or delayed from performing, or omits
to perform, any act or thing which this Agreement provides shall be
performed or omitted to be performed, by reason of: (i) any provision
of any present or future law or regulation or order of the United
States of America, or any state thereof, or of any foreign country, or
political subdivision thereof or of any court of competent
jurisdiction; or (ii) any act of God or war or other similar
circumstance beyond the control of the Custodian, unless, in each
case, such delay or nonperformance is caused by (A) the negligence,
misfeasance or misconduct of the applicable Person, or (B) a
malfunction or failure of equipment operated or utilized by the
applicable Person other than a malfunction or failure beyond such
Person's control and which could not reasonably be anticipated and/or
prevented by such Person.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to any Fund or
Portfolio, (i) the Custodian shall, (ii) the Custodian shall cause any
applicable Domestic Subcustodian or Foreign Subcustodian to, and (iii)
the Custodian shall use its best efforts to cause any applicable
Interim Subcustodian or Special Subcustodian to, use all commercially
reasonable efforts and take all reasonable steps under the
circumstances to mitigate the effects of such event and to avoid
continuing harm to the Funds and the Portfolios.
(d) Advice of Counsel. The Custodian shall be entitled to receive
and act upon advice of counsel on all matters. The Custodian shall be
without liability for any action reasonably taken or omitted in good
faith pursuant to the advice of (i) counsel for the applicable Fund or
Funds, or (ii) at the expense of the Custodian, such other counsel as
the applicable Fund(s) and the Custodian may agree upon; provided,
however, with respect to the performance of any action or omission of
any action upon such advice, the Custodian shall be required to
conform to the standard of care set forth in Section 5.01(a).
(e) Expenses of the Funds. In addition to the liability of the
Custodian under this Article V, the Custodian shall be liable to each
applicable Fund for all reasonable costs and expenses incurred by such
Fund in connection with any claim by such Fund against the Custodian
arising from the obligations of the Custodian hereunder, including,
without limitation, all reasonable attorneys' fees and expenses
incurred by such Fund in asserting any such claim, and all expenses
incurred by such Fund in connection with any investigations, lawsuits
or proceedings relating to such claim; provided, that such Fund has
recovered from the Custodian for such claim.
(f) Liability for Past Records. The Custodian shall have no
liability in respect of any loss, damage or expense suffered by a
Fund, insofar as such loss, damage or expense arises from the
performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for such Fund
by entities other than the Custodian prior to the Custodian's
appointment as custodian for such Fund.
Section 5.02. Liability of Custodian for Actions of Other Persons.
(a) Domestic Subcustodians and Foreign Subcustodians. The Custodian
shall be liable for the actions or omissions of any Domestic
Subcustodian or any Foreign Subcustodian to the same extent as if such
action or omission were performed by the Custodian itself. In the
event of any loss, damage or expense suffered or incurred by a Fund
caused by or resulting from the actions or omissions of any Domestic
Subcustodian or Foreign Subcustodian for which the Custodian would
otherwise be liable, the Custodian shall promptly reimburse such Fund
in the amount of any such loss, damage or expense.
(b) Interim Subcustodians. Notwithstanding the provisions of Section
5.01 to the contrary, the Custodian shall not be liable to a Fund for
any loss, damage or expense suffered or incurred by such Fund or any
of its Portfolios resulting from the actions or omissions of an
Interim Subcustodian unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, in the event of any such loss, damage or
expense, the Custodian shall take all reasonable steps to enforce such
rights as it may have against such Interim Subcustodian to protect the
interests of the Funds and the Portfolios.
(c) Special Subcustodians and Additional Custodians. Notwithstanding
the provisions of Section 5.01 to the contrary and except as otherwise
provided in any subcustodian agreement to which the Custodian, a Fund
and any Special Subcustodian or Additional Custodian are parties, the
Custodian shall not be liable to a Fund for any loss, damage or
expense suffered or incurred by such Fund or any of its Portfolios
resulting from the actions or omissions of a Special Subcustodian or
Additional Subcustodian, unless such loss, damage or expense is caused
by, or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, that in the event of any such loss,
damage or expense, the Custodian shall take all reasonable steps to
enforce such rights as it may have against any Special Subcustodian or
Additional Custodian to protect the interests of the Funds and the
Portfolios.
(d) Securities Systems. Notwithstanding the provisions of Section
5.01 to the contrary, the Custodian shall not be liable to a Fund for
any loss, damage or expense suffered or incurred by such Fund or any
of its Portfolios resulting from the use by the Custodian of a
Securities System, unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, that in the event of any such loss,
damage or expense, the Custodian shall take all reasonable steps to
enforce such rights as it may have against the Securities System to
protect the interests of the Funds and the Portfolios.
(e) Reimbursement of Expenses. Each Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the
Custodian on behalf of such Fund in connection with the fulfillment of
its obligations under this Section 5.02; provided, however, that such
reimbursement shall not apply to expenses occasioned by or resulting
from the negligence, misfeasance or misconduct of the Custodian.
Section 5.03. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, each Fund severally and not jointly agrees to
indemnify and hold harmless the Custodian and its nominees from all
loss, damage and expense (including reasonable attorneys' fees)
suffered or incurred by the Custodian or its nominee caused by or
arising from actions taken by the Custodian on behalf of such Fund in
the performance of its duties and obligations under this Agreement;
provided, however, that such indemnity shall not apply to loss, damage
and expense occasioned by or resulting from the negligence,
misfeasance or misconduct of the Custodian or its nominee. In
addition, each Fund agrees severally and not jointly to indemnify any
Person against any liability incurred by reason of taxes assessed to
such Person, or other loss, damage or expenses incurred by such
Person, resulting from the fact that securities and other property of
such Fund's Portfolios are registered in the name of such Person;
provided, however, that in no event shall such indemnification be
applicable to income, franchise or similar taxes which may be imposed
or assessed against any Person.
(b) Notice of Litigation, Right to Prosecute, Etc. No Fund shall be
liable for indemnification under this Section 5.03 unless a Person
shall have promptly notified such Fund in writing of the commencement
of any litigation or proceeding brought against such Person in respect
of which indemnity may be sought under this Section 5.03. With
respect to claims in such litigation or proceedings for which
indemnity by a Fund may be sought and subject to applicable law and
the ruling of any court of competent jurisdiction, such Fund shall be
entitled to participate in any such litigation or proceeding and,
after written notice from such Fund to any Person, such Fund may
assume the defense of such litigation or proceeding with counsel of
its choice at its own expense in respect of that portion of the
litigation for which such Fund may be subject to an indemnification
obligation; provided, however, a Person shall be entitled to
participate in (but not control) at its own cost and expense, the
defense of any such litigation or proceeding if such Fund has not
acknowledged in writing its obligation to indemnify the Person with
respect to such litigation or proceeding. If such Fund is not
permitted to participate or control such litigation or proceeding
under applicable law or by a ruling of a court of competent
jurisdiction, such Person shall reasonably prosecute such litigation
or proceeding. A Person shall not consent to the entry of any
judgment or enter into any settlement in any such litigation or
proceeding without providing each applicable Fund with adequate notice
of any such settlement or judgment, and without each such Fund's prior
written consent. All Persons shall submit written evidence to each
applicable Fund with respect to any cost or expense for which they are
seeking indemnification in such form and detail as such Fund may
reasonably request.
Section 5.04. Investment Limitations. If the Custodian has
otherwise complied with the terms and conditions of this Agreement in
performing its duties generally, and more particularly in connection
with the purchase, sale or exchange of securities made by or for a
Portfolio, the Custodian shall not be liable to the applicable Fund
and such Fund agrees to indemnify the Custodian and its nominees, for
any loss, damage or expense suffered or incurred by the Custodian and
its nominees arising out of any violation of any investment or other
limitation to which such Fund is subject.
Section 5.05. Fund's Right to Proceed. Notwithstanding anything to
the contrary contained herein, each Fund shall have, at its election
upon reasonable notice to the Custodian, the right to enforce, to the
extent permitted by any applicable agreement and applicable law, the
Custodian's rights against any Subcustodian, Securities System, or
other Person for loss, damage or expense caused such Fund by such
Subcustodian, Securities System, or other Person, and shall be
entitled to enforce the rights of the Custodian with respect to any
claim against such Subcustodian, Securities System or other Person,
which the Custodian may have as a consequence of any such loss, damage
or expense, if and to the extent that such Fund has not been made
whole for any such loss or damage. If the Custodian makes such Fund
whole for any such loss or damage, the Custodian shall retain the
ability to enforce its rights directly against such Subcustodian,
Securities System or other Person. Upon such Fund's election to
enforce any rights of the Custodian under this Section 5.05, such Fund
shall reasonably prosecute all actions and proceedings directly
relating to the rights of the Custodian in respect of the loss, damage
or expense incurred by such Fund; provided that, so long as such Fund
has acknowledged in writing its obligation to indemnify the Custodian
under Section 5.03 hereof with respect to such claim, such Fund shall
retain the right to settle, compromise and/or terminate any action or
proceeding in respect of the loss, damage or expense incurred by such
Fund without the Custodian's consent and provided further, that if
such Fund has not made an acknowledgement of its obligation to
indemnify, such Fund shall not settle, compromise or terminate any
such action or proceeding without the written consent of the
Custodian, which consent shall not be unreasonably withheld or
delayed. The Custodian agrees to cooperate with each Fund and take
all actions reasonably requested by such Fund in connection with such
Fund's enforcement of any rights of the Custodian. Each Fund agrees
to reimburse the Custodian for all reasonable out-of-pocket expenses
incurred by the Custodian on behalf of such Fund in connection with
the fulfillment of its obligations under this Section 5.05; provided,
however, that such reimbursement shall not apply to expenses
occasioned by or resulting from the negligence, misfeasance or
misconduct of the Custodian.
ARTICLE VI
COMPENSATION
On behalf of each of its Portfolios, each Fund shall compensate the
Custodian in an amount, and at such times, as may be agreed upon in
writing, from time to time, by the Custodian and such Fund.
ARTICLE VII
TERMINATION
Section 7.01. Termination of Agreement as to One or More Funds.
With respect to each Fund, this Agreement shall continue in full force
and effect until the first to occur of: (a) termination by the
Custodian by an instrument in writing delivered or mailed to such
Fund, such termination to take effect not sooner than ninety (90) days
after the date of such delivery; (b) termination by such Fund by an
instrument in writing delivered or mailed to the Custodian, such
termination to take effect not sooner than thirty (30) days after the
date of such delivery; or (c) termination by such Fund by written
notice delivered to the Custodian, based upon such Fund's
determination that there is a reasonable basis to conclude that the
Custodian is insolvent or that the financial condition of the
Custodian is deteriorating in any material respect, in which case
termination shall take effect upon the Custodian's receipt of such
notice or at such later time as such Fund shall designate. In the
event of termination pursuant to this Section 7.01 by any Fund (a
"Terminating Fund"), each Terminating Fund shall make payment of all
accrued fees and unreimbursed expenses with respect to such
Terminating Fund within a reasonable time following termination and
delivery of a statement to the Terminating Fund setting forth such
fees and expenses. Each Terminating Fund shall identify in any notice
of termination a successor custodian or custodians to which the cash,
securities and other assets of its Portfolios shall, upon termination
of this Agreement with respect to such Terminating Fund, be delivered.
In the event that no written notice designating a successor custodian
shall have been delivered to the Custodian on or before the date when
termination of this Agreement as to a Terminating Fund shall become
effective, the Custodian may deliver to a bank or trust company doing
business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities
and other assets of such Terminating Fund's Portfolios held by the
Custodian and all instruments held by the Custodian relative thereto
and all other property of the Terminating Fund's Portfolios held by
the Custodian under this Agreement. Thereafter, such bank or trust
company shall be the successor of the Custodian with respect to such
Terminating Fund under this Agreement. In the event that securities
and other assets of such Terminating Fund's Portfolios remain in the
possession of the Custodian after the date of termination hereof with
respect to such Terminating Fund owing to failure of the Terminating
Fund to appoint a successor custodian, the Custodian shall be entitled
to compensation for its services in accordance with the fee schedule
most recently in effect, for such period as the Custodian retains
possession of such securities and other assets, and the provisions of
this Agreement relating to the duties and obligations of the Custodian
and the Terminating Fund shall remain in full force and effect. In
the event of the appointment of a successor custodian, it is agreed
that the cash, securities and other property owned by a Terminating
Fund and held by the Custodian, any Subcustodian or nominee shall be
delivered to the successor custodian; and the Custodian agrees to
cooperate with such Terminating Fund in the execution of documents and
performance of other actions necessary or desirable in order to
substitute the successor custodian for the Custodian under this
Agreement.
Section 7.02. Termination as to One or More Portfolios. This
Agreement may be terminated as to one or more of a Fund's Portfolios
(but less than all of its Portfolios) by delivery of an amended
Appendix "A" deleting such Portfolios pursuant to Section 9.05(b)
hereof, in which case termination as to such deleted Portfolios shall
take effect thirty (30) days after the date of such delivery. The
execution and delivery of an amended Appendix "A" which deletes one or
more Portfolios shall constitute a termination of this Agreement only
with respect to such deleted Portfolio(s), shall be governed by the
preceding provisions of Section 7.01 as to the identification of a
successor custodian and the delivery of cash, securities and other
assets of the Portfolio(s) so deleted, and shall not affect the
obligations of the Custodian and any Fund hereunder with respect to
the other Portfolios set forth in Appendix "A," as amended from time
to time.
ARTICLE VIII
DEFINED TERMS
The following terms are defined in the following sections:
Term Section
Account 2.22
ADRs 2.06
Additional Custodian 2.23(a)
Authorized Person(s) 3.02
Banking Institution 2.12(a)
Business Day Appendix "C"
Bank Accounts 2.21
Distribution Account 2.16
Domestic Subcustodian 4.01
Foreign Subcustodian 4.02(a)
Fund Preamble
Institutional Client 2.03
Interim Subcustodian 4.02(b)
Overdraft 2.28
Overdraft Notice 2.28
Person 5.01(b)
Portfolio Preamble
Procedural Agreement 2.10
Proper Instructions 3.01(a)
SEC 2.22
Securities System 2.22
Shares 2.16
Special Instructions 3.01(b)
Special Subcustodian 4.03
Subcustodian Article IV
Terminating Fund 7.01
1940 Act Preamble
ARTICLE IX
MISCELLANEOUS
Section 9.01. Execution of Documents, Etc.
(a) Actions by each Fund. Upon request, each Fund shall execute and
deliver to the Custodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in
connection with the performance by the Custodian or any Subcustodian
of their respective obligations to such Fund under this Agreement or
any applicable subcustodian agreement with respect to such Fund,
provided that the exercise by the Custodian or any Subcustodian of any
such rights shall in all events be in compliance with the terms of
this Agreement.
(b) Actions by Custodian. Upon receipt of Proper Instructions, the
Custodian shall execute and deliver to each applicable Fund or to such
other parties as such Fund(s) may designate in such Proper
Instructions, all such documents, instruments or agreements as may be
reasonable and necessary or desirable in order to effectuate any of
the transactions contemplated hereby.
Section 9.02. Representative Capacity; Nonrecourse Obligations. A
COPY OF THE DECLARATION OF TRUST OR OTHER ORGANIZATIONAL DOCUMENT OF
EACH FUND IS ON FILE WITH THE SECRETARY OF THE STATE OF THE FUND'S
FORMATION, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT
EXECUTED ON BEHALF OF THE TRUSTEES OF ANY FUND AS INDIVIDUALS, AND THE
OBLIGATIONS OF THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE
TRUSTEES, OFFICERS, SHAREHOLDERS OR PARTNERS OF ANY FUND INDIVIDUALLY,
BUT ARE BINDING ONLY UPON THE ASSETS AND PROPERTY OF EACH FUND'S
RESPECTIVE PORTFOLIOS. THE CUSTODIAN AGREES THAT NO SHAREHOLDER,
TRUSTEE, OFFICER OR PARTNER OF ANY FUND MAY BE HELD PERSONALLY LIABLE
OR RESPONSIBLE FOR ANY OBLIGATIONS OF ANY FUND ARISING OUT OF THIS
AGREEMENT.
Section 9.03. Several Obligations of the Funds and the Portfolios.
WITH RESPECT TO ANY OBLIGATIONS OF A FUND ON BEHALF OF ANY OF ITS
PORTFOLIOS ARISING OUT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE OBLIGATIONS ARISING UNDER SECTIONS 2.28, 5.03, 5.05
and ARTICLE VI HEREOF, THE CUSTODIAN SHALL LOOK FOR PAYMENT OR
SATISFACTION OF ANY OBLIGATION SOLELY TO THE ASSETS AND PROPERTY OF
THE PORTFOLIO TO WHICH SUCH OBLIGATION RELATES AS THOUGH EACH FUND HAD
SEPARATELY CONTRACTED WITH THE CUSTODIAN BY SEPARATE WRITTEN
INSTRUMENT WITH RESPECT TO EACH OF ITS PORTFOLIOS.
Section 9.04. Representations and Warranties.
(a) Representations and Warranties of Each Fund. Each Fund hereby
severally and not jointly represents and warrants that each of the
following shall be true, correct and complete with respect to each
Fund at all times during the term of this Agreement: (i) the Fund is
duly organized under the laws of its jurisdiction of organization and
is registered as an open-end management investment company under the
1940 Act; and (ii) the execution, delivery and performance by the Fund
of this Agreement are (w) within its power, (x) have been duly
authorized by all necessary action, and (y) will not (A) contribute to
or result in a breach of or default under or conflict with any
existing law, order, regulation or ruling of any governmental or
regulatory agency or authority, or (B) violate any provision of the
Fund's corporate charter, Declaration of Trust or other organizational
document, or bylaws, or any amendment thereof or any provision of its
most recent Prospectus or Statement of Additional Information.
(b) Representations and Warranties of the Custodian. The Custodian
hereby represents and warrants to each Fund that each of the following
shall be true, correct and complete at all times during the term of
this Agreement: (i) the Custodian is duly organized under the laws of
its jurisdiction of organization and qualifies to act as a custodian
to open-end management investment companies under the provisions of
the 1940 Act; and (ii) the execution, delivery and performance by the
Custodian of this Agreement are (w) within its power, (x) have been
duly authorized by all necessary action, and (y) will not (A)
contribute to or result in a breach of or default under or conflict
with any existing law, order, regulation or ruling of any governmental
or regulatory agency or authority, or (B) violate any provision of the
Custodian's corporate charter, or other organizational document, or
bylaws, or any amendment thereof.
Section 9.05. Entire Agreement. This Agreement constitutes the
entire understanding and agreement of the Fund, on the one hand, and
the Custodian, on the other, with respect to the subject matter hereof
and accordingly, supersedes as of the effective date of this Agreement
any custodian agreement heretofore in effect between each Fund and the
Custodian.
Section 9.06. Waivers and Amendments. No provision of this
Agreement may be waived, amended or terminated except by a statement
in writing signed by the party against which enforcement of such
waiver, amendment or termination is sought; provided, however: (a)
Appendix "A" listing the Portfolios of each Fund for which the
Custodian serves as custodian may be amended from time to time to add
one or more Portfolios for one or more Funds, by each applicable
Fund's execution and delivery to the Custodian of an amended Appendix
"A", and the execution of such amended Appendix by the Custodian, in
which case such amendment shall take effect immediately upon execution
by the Custodian; (b) Appendix "A" may be amended from time to time to
delete one or more Portfolios (but less than all of the Portfolios) of
one or more of the Funds, by each applicable Fund's execution and
delivery to the Custodian of an amended Appendix "A", in which case
such amendment shall take effect thirty (30) days after such delivery,
unless otherwise agreed by the Custodian and each applicable Fund in
writing; (c) Appendix "B" listing Foreign Subcustodians, Special
Subcustodians and Additional Custodians approved by any Fund may be
amended from time to time to add or delete one or more Foreign
Subcustodians, Special Subcustodians or Additional Custodians for a
Fund or Funds by each applicable Fund's execution and delivery to the
Custodian of an amended Appendix "B", in which case such amendment
shall take effect immediately upon execution by the Custodian; and (d)
Appendix "C" setting forth the procedures relating to the Custodian's
security interest with respect to each Fund may be amended only by an
instrument in writing executed by each applicable Fund and the
Custodian.
Section 9.07. Interpretation. In connection with the operation of
this Agreement, the Custodian and any Fund may agree in writing from
time to time on such provisions interpretative of or in addition to
the provisions of this Agreement with respect to such Fund as may in
their joint opinion be consistent with the general tenor of this
Agreement. No interpretative or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment
of this Agreement or affect any other Fund.
Section 9.08. Captions. Headings contained in this Agreement, which
are included as convenient references only, shall have no bearing upon
the interpretation of the terms of the Agreement or the obligations of
the parties hereto.
Section 9.09. Governing Law. Insofar as any question or dispute may
arise in connection with the custodianship of foreign securities
pursuant to an agreement with a Foreign Subcustodian that is governed
by the laws of the State of New York, the provisions of this Agreement
shall be construed in accordance with and governed by the laws of the
State of New York, provided that in all other instances this Agreement
shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts, in each case without giving effect to
principles of conflicts of law.
Section 9.10. Notices. Except in the case of Proper Instructions or
Special Instructions, notices and other writings contemplated by this
Agreement shall be delivered by hand or by facsimile transmission
(provided that in the case of delivery by facsimile transmission,
notice shall also be mailed postage prepaid to the parties at the
following addresses:
(a) If to any Fund:
c/o Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02109
Attn: Treasurer of the Fidelity Funds
Telephone: (617) 563-7000
Telefax: (617) 476-4195
(b) If to the Custodian:
The Chase Manhattan Bank, N.A.
Four Chase Metrotech Center, 8th Floor
Brooklyn, New York 11245
Attn: Don Gandy, Vice President
Telephone: (718) 242-3439
Telefax: (718) 242-1374
or to such other address as a Fund or the Custodian may have
designated in writing to the other.
Section 9.11. Assignment. This Agreement shall be binding on and
shall inure to the benefit of each Fund severally and the Custodian
and their respective successors and assigns, provided that, subject to
the provisions of Section 7.01 hereof, neither the Custodian nor any
Fund may assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of the other party.
Section 9.12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
With respect to each Fund, this Agreement shall become effective when
one or more counterparts have been signed and delivered by such Fund
and the Custodian.
Section 9.13. Confidentiality; Survival of Obligations. The parties
hereto agree that each shall treat confidentially the terms and
conditions of this Agreement and all information provided by each
party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by
any other party hereto solely for the purpose of rendering services
pursuant to this Agreement and, except as may be required in carrying
out this Agreement, shall not be disclosed to any third party without
the prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when provided
or thereafter becomes publicly available other than through a breach
of this Agreement, or that is required to be disclosed by any bank
examiner of the Custodian or any Subcustodian, any auditor of the
parties hereto, by judicial or administrative process or otherwise by
applicable law or regulation. The provisions of this Section 9.13 and
Sections 9.01, 9.02, 9.03, 9.09, Section 2.28, Section 3.04, Section
7.01, Article V and Article VI hereof and any other rights or
obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in its name and behalf on the day and year first above
written.
Each of the Investment Companies Listed on The Chase Manahattan Bank,
N.A.
Appendix "A" Attached Hereto, on Behalf
of each of Their Respective Portfolios
[Signature Lines Omitted]
Exhibit 8(m)
FORM OF
Appendix "B"
To
Custodian Agreement
Between
The Chase Manhattan Bank, N.A. and Each of the Investment
Companies Listed on Appendix "A" thereto
Dated as of _________
The following is a list of Additional Custodians, Special
Subcustodians and Foreign Subcustodians under the Custodian Agreement
dated as of ___________ (the "Custodian Agreement"):
A. Additional Custodians:
CUSTODIAN PURPOSE
Bank of New York FICASH
FITERM
B. Special Subcustodians:
SUBCUSTODIAN PURPOSE
Bank of New York FICASH
Citibank, N.A. Global Bond Certificates*
C. Foreign Subcustodians:
COUNTRY FOREIGN SUBCUSTODIAN DEPOSITORY
Argentina Chase Manhattan Bank, N.A., Buenos Aires Caja de Valores,
S.A.
Australia The Chase Manhattan Bank, Austraclear Limited
Sydney
RITS
Austria Creditanstalt-Bankverein, Osterreichsche Kontrollbank
Vienna Aktiengesellschaft (OEKB)
Bahrain British Bank of the Middle East, Manama None
Bangladesh Standard Chartered Bank, Dhaka None
Belgium Generale Bank, Caisse Interprofessionnelle
Brussels de Depot et de Virement de Titres (CIK)
___________________
* Citibank, N.A. will act as Special Subcustodian with respect to
global bond certificates for the following
portfolios only: Fidelity Advisor Series VIII: Fidelity Advisor
Emerging Markets Income Fund;
Fidelity Investment Trust: Fidelity New Markets Income Fund.
Bermuda The Bank of Bermuda, Limited None Hamilton
Bostawana Barclays Bank of Bostawana Ltd., None
Gaborone
Brazil Banco Chase Manhattan, S.A. Sao Paolo Stock Exchange
Sao Paolo (BOVESPA); Sistema Especial de Liquidacao
e Custodia (SELIC);
Rio de Janeiro Stock Exchange
(BVRJ)
Canada Canada Trustco Mortgage Company, Canadian Depository for
Toronto Securities Ltd. (CDS)
Royal Bank of Canada
Chile Chase Manhattan Bank, Santiago None
China-Shanghai Hongkong & Shanghai Banking Shanghai Securities
Central Corp., Ltd. Clearing & Registration Corp.
(SSCCRC)
China-Shenzhen Hongkong & Shanghai Banking Shenzhen Securities
Corp., Ltd. Registrars Corp., Ltd. (SSRC)
Colombia Cititrust Colombia S.A., Sociedad Fiduciaria, None
Bogota
Cyprus Barclays Bank PLC, Cyprus None
Czech Republic Ceskoslovenska Obchodni Banka, A.S., Prague Securities
Center (SCP)
Denmark Den Danske Bank, Copenhagen Vaerdipapircentralen-VP Center
Ecuador Citibank, N.A., Quito None
Egypt National Bank of Egypt, Cairo Misr for Clearing, Settlement
and
Depository
Finland Merita Bank, Ltd., Pankkitarkastus Virasto Helsinki
("Securities Association")
France Banque Paribas, Paris SICOVAM
Germany Dresdner Bank A.G., Frankfurt Deutscher Kassenverein AG
(DKV)
Ghana Barclays Bank of Ghana Ltd., Accra None
Greece Barclays Bank Plc, Athens Apothetirio Titlon, A.E.
Hong Kong Chase Manhattan Bank, Hong Kong Securities
Hong Kong Clearing Co. (HKSCC), Central
Clearing & Settlement System
(CCASS)
Hungary Citibank Budapest Rt., Budapest Central Depository &
Clearing House
(Budapest) Ltd. (KELER Ltd.)
India Deutsche Bank AG, Mumbai
Hongkong & Shanghai Banking Corp. Ltd., None
Mumbai
Indonesia Hongkong & Shanghai Banking Corp. Ltd., None
Jakarta
Ireland Bank of Ireland, Dublin CREST
Israel Bank Leumi Le-Israel, B. M., Tel Aviv Tel Aviv Stock
Exchange
(TASE) Clearinghouse Ltd.
Ivory Coast Societe Generale de Banques en Cote d'Ivoire
None
Italy Chase Manhattan Bank, Milan Monte Titoli S.p.A.
Japan The Fuji Bank, Limited, Tokyo Japan Securities
Depository Center (JASDEC)
Jordan Arab Bank, PLC, Amman None
Kenya Barclays Bank of Kenya Ltd., Nairobi None
Lebanon The British Bank of the Middle East (BBME) Midclear
Luxembourg Banque Generale du Luxembourg None
Malaysia The Chase Manhattan Bank, Malaysian Central Depository
(M) Berhad, Kuala Lumpur Sdn. Bhd. (MCD)
Mauritius Hongkong & Shanghai Banking Corp. Ltd., Central
Depository & Settlement Co., Ltd.
Port Louis
Mexico Chase Manhattan Bank, Mexico, S.A. Institucion para el
Deposito de
Institucion de Banca Multiple Valores-S.D. INDEVAL, S.A.
de C.V.
Morocco Banque Commerciale du Maroc, None
Casablanca
Namibia Standard Bank Namibia Ltd., Windhoek None
Netherlands ABN-AMRO, Bank N.V., Nederlands Centraal Instituut
Amsterdam voor Giraal Effectenverkeer BV
(NECIGEF)/KAS Associatie, N.V.
New Zealand National Nominees Ltd., Auckland New Zealand Securities
Depository
Limited
Norway Den norske Bank ASA, Oslo Verdipapirsentralen (VPS)
Oman British Bank of the Middle East, Muscat None
Pakistan Citibank, N. A., Karachi Central Depository
Company of Pakistan Limited
Deutsche Bank AG, Karachi
Peru Citibank, N.A., Lima None
Philippines Hongkong & Shanghai Banking The Philippines Central
Depository,
Corp., Ltd., Manila Inc.
Poland Bank Handlowy W. Warzawie, S.A., Warsaw National Depository
of Securities
Portugal Banco Espirito Santo e Commercial Central de Valores
Mobiliaros
de Lisboa, S.A., Lisbon (Interbolsa)
Russia Chase Manhattan Bank International, None Moscow
Singapore Chase Manhattan Bank, Singapore Central Depository (Pte)
Ltd. (CDP)
Slovak Republic Ceskoslovenska Obchodna, Banka, A.S. Stredisko
Cennych Papierov (SCP)
Bratislava
South Africa Standard Bank of South Africa, Ltd., The Central
Depository Limited
Johannesburg
South Korea Hongkong & Shanghai Banking Corp., Ltd., Korean
Securities Depository
Seoul (KSD)
Spain Chase Manhattan Bank, N.A., Madrid Servicio de Compensacion y
Liquidacion de Valores (SCLV)
Sri Lanka Hongkong & Shanghai Banking Corp. Ltd., Central Depository
System
Colombo (Pvt) Limited (CDS)
Swaziland Stanbic Bank Swaziland Limited, Mbabane None
Sweden Skandinaviska Enskilda Banken, Stockholm
Vardepappercentralen VPC AB
Switzerland Union Bank of Switzerland, Schweizerische Effekten-
Zurich Giro A.G. (SEGA)
Taiwan Chase Manhattan Bank, Taipei Taiwan Securities Central
Depository Co., Ltd. (TSCD)
Thailand Chase Manhattan Bank, Bangkok Thailand Securities
Depository
Company Limited (TSD)
Transnational CEDEL, S.A. Luxembourg
Turkey Chase Manhattan Bank, Istanbul Takas ve Saklama A.S. (TvS)
United Kingdom Chase Manhattan Bank, London CREST
First Chicago NBD Corporation, London
Uruguay The First National Bank of Boston, Montevideo None
Venezuela Citibank, N.A., Caracas None
Zambia Barclays Bank of Zambia Ltd., Lusaka Lusaka Stock Exchange
Zimbabwe Barclays Bank of Zimbabwe Ltd., Harare None
Each of the Investment Companies Listed on
Appendix "A" to the Custodian Agreement,
on Behalf of Each of Their Respective Portfolios
[Signature Lines Omitted]
Exhibit 8(m)
FORM OF
Appendix "C" to the
Custodian Agreement
Between
Each of the Investment Companies
Listed on Appendix "A" Thereto
And
THE CHASE MANHATTAN BANK, N.A.
Dated as of ____________
PROCEDURES RELATING TO CUSTODIAN'S SECURITY INTEREST
As security for any Overdrafts (as defined in the Custodian
Agreement) of any Portfolio, the applicable Fund, on behalf of such
Portfolio, shall pledge, assign and grant to the Custodian a security
interest in Collateral (as hereinafter defined), under the terms,
circumstances and conditions set forth in this Appendix "C".
Section 1. Defined Terms. As used in this Appendix "C" the
following terms shall have the following respective meanings:
(a) "Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which the Custodian is closed for business.
(b) "Collateral" shall mean, with respect to any Portfolio,
securities held by the Custodian on behalf of the Portfolio having a
fair market value (as determined in accordance with the procedures set
forth in the prospectus for the Portfolio) equal to the aggregate of
all Overdraft Obligations of such Portfolio: (i) identified in any
Pledge Certificate executed on behalf of such Portfolio; or (ii)
designated by the Custodian for such Portfolio pursuant to Section 3
of this Appendix C. Such securities shall consist of marketable
securities held by the Custodian on behalf of such Portfolio or, if no
such marketable securities are held by the Custodian on behalf of such
Portfolio, such other securities designated by the applicable Fund in
the applicable Pledge Certificate or by the Custodian pursuant to
Section 3 of this Appendix C.
(c) "Overdraft Obligations" shall mean, with respect to any
Portfolio, the amount of any outstanding Overdraft(s) provided by the
Custodian to such Portfolio together with all accrued interest
thereon.
(d) "Pledge Certificate" shall mean a Pledge Certificate in the form
attached to this Appendix "C" as Schedule 1 executed by a duly
authorized officer of the applicable Fund and delivered by such Fund
to the Custodian by facsimile transmission or in such other manner as
the applicable Fund and the Custodian may agree in writing.
(e) "Release Certificate" shall mean a Release Certificate in the
form attached to this Appendix "C" as Schedule 2 executed by a duly
authorized officer of the Custodian and delivered by the Custodian to
the applicable Fund by facsimile transmission or in such other manner
as such Fund and the Custodian may agree in writing.
(f) "Written Notice" shall mean a written notice executed by a duly
authorized officer of the party delivering the notice and delivered by
facsimile transmission or in such other manner as the applicable Fund
and the Custodian shall agree in writing.
Section 2. Pledge of Collateral. To the extent that any Overdraft
Obligations of a Portfolio are not satisfied by the close of business
on the first Business Day following the Business Day on which the
applicable Fund receives Written Notice requesting security for such
Overdraft Obligation and stating the amount of such Overdraft
Obligation, the applicable Fund, on behalf of such Portfolio, shall
pledge, assign and grant to the Custodian a first priority security
interest, by delivering to the Custodian, a Pledge Certificate
executed by such Fund on behalf of such Portfolio describing the
applicable Collateral. Such Written Notice may, in the discretion of
the Custodian, be included within or accompany the Overdraft Notice
relating to the applicable Overdraft Obligations.
Section 3. Failure to Pledge Collateral. In the event that the
applicable Fund shall fail: (a) to pay, on behalf of the applicable
Portfolio, the Overdraft Obligation described in such Written Notice;
(b) to deliver to the Custodian a Pledge Certificate pursuant to
Section 2; or (c) to identify substitute securities pursuant to
Section 6 upon the sale or maturity of any securities identified as
Collateral, the Custodian may, by Written Notice to the applicable
Fund specify Collateral which shall secure the applicable Overdraft
Obligation. Such Fund, on behalf of any applicable Portfolio, hereby
pledges, assigns and grants to the Custodian a first priority security
interest in any and all Collateral specified in such Written Notice;
provided that such pledge, assignment and grant of security shall be
deemed to be effective only upon receipt by the applicable Fund of
such Written Notice.
Section 4. Delivery of Additional Collateral. If at any time the
Custodian shall notify a Fund by Written Notice that the fair market
value of the Collateral securing any Overdraft Obligation of one of
such Fund's Portfolios is less than the amount of such Overdraft
Obligation, such Fund, on behalf of the applicable Portfolio, shall
deliver to the Custodian, within one (1) Business Day following the
Fund's receipt of such Written Notice, an additional Pledge
Certificate describing additional Collateral. If such Fund shall fail
to deliver such additional Pledge Certificate, the Custodian may
specify Collateral which shall secure the unsecured amount of the
applicable Overdraft Obligation in accordance with Section 3 of this
Appendix C.
Section 5. Release of Collateral. Upon payment by a Fund, on behalf
of one of its Portfolios, of any Overdraft Obligation secured by the
pledge of Collateral, the Custodian shall promptly deliver to such
Fund a Release Certificate pursuant to which the Custodian shall
release Collateral from the lien under the applicable Pledge
Certificate or Written Notice pursuant to Section 3 having a fair
market value equal to the amount paid by such Fund on account of such
Overdraft Obligation. In addition, if at any time a Fund shall notify
the Custodian by Written Notice that such Fund desires that specified
Collateral be released and: (a) that the fair market value of the
Collateral securing any Overdraft Obligation shall exceed the amount
of such Overdraft Obligation; or (b) that the Fund has delivered a
Pledge Certificate substituting Collateral for such Overdraft
Obligation, the Custodian shall deliver to such Fund, within one (1)
Business Day following the Custodian's receipt of such Written Notice,
a Release Certificate relating to the Collateral specified in such
Written Notice.
Section 6. Substitution of Collateral. A Fund may substitute
securities for any securities identified as Collateral by delivery to
the Custodian of a Pledge Certificate executed by such Fund on behalf
of the applicable Portfolio, indicating the securities pledged as
Collateral.
Section 7. Security for Individual Portfolios' Overdraft
Obligations. The pledge of Collateral by a Fund on behalf of any of
its individual Portfolios shall secure only the Overdraft Obligations
of such Portfolio. In no event shall the pledge of Collateral by one
of a Fund's Portfolios be deemed or considered to be security for the
Overdraft Obligations of any other Portfolio of such Fund or of any
other Fund.
Section 8. Custodian's Remedies. Upon (a) a Fund's failure to pay
any Overdraft Obligation of an applicable Portfolio within thirty (30)
days after receipt by such Fund of a Written Notice demanding security
therefore, and (b) one (1) Business Day's prior Written Notice to such
Fund, the Custodian may elect to enforce its security interest in the
Collateral securing such Overdraft Obligation, by taking title to (at
the then prevailing fair market value), or selling in a commercially
reasonable manner, so much of the Collateral as shall be required to
pay such Overdraft Obligation in full. Notwithstanding the provisions
of any applicable law, including, without limitation, the Uniform
Commercial Code, the remedy set forth in the preceding sentence shall
be the only right or remedy to which the Custodian is entitled with
respect to the pledge and security interest granted pursuant to any
Pledge Certificate or Section 3. Without limiting the foregoing, the
Custodian hereby waives and relinquishes all contractual and common
law rights of set off to which it may now or hereafter be or become
entitled with respect to any obligations of any Fund to the Custodian
arising under this Appendix "C" to the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Appendix to
be executed in its name and behalf on the day and year first above
written.
Each of the Investment Companies Listed on The Chase Manhattan Bank,
N.A.
Schedule "A" to the Custodian Agreement, on
Behalf of Each of Their Respective Portfolios
[Signature Lines Omitted]
SCHEDULE 1
TO
APPENDIX "C"
PLEDGE CERTIFICATE
This Pledge Certificate is delivered pursuant to the Custodian
Agreement dated as of [ ] (the "Agreement"), between [
] (the "Fund") and [ ] (the "Custodian"). Capitalized terms
used herein without definition shall have the respective meanings
ascribed to them in the Agreement. Pursuant to [Section 2 or Section
4] of Appendix "C" attached to the Agreement, the Fund, on behalf of [
] (the "Portfolio"), hereby pledges, assigns and grants to the
Custodian a first priority security interest in the securities listed
on Exhibit "A" attached to this Pledge Certificate (collectively, the
"Pledged Securities"). Upon delivery of this Pledge Certificate, the
Pledged Securities shall constitute Collateral, and shall secure all
Overdraft Obligations of the Portfolio described in that certain
Written Notice dated , 19 , delivered by the Custodian to
the Fund. The pledge, assignment and grant of security in the Pledged
Securities hereunder shall be subject in all respect to the terms and
conditions of the Agreement, including, without limitation, Sections 7
and 8 of Appendix "C" attached thereto.
IN WITNESS WHEREOF, the Fund has caused this Pledge Certificate to be
executed in its name, on behalf of the Portfolio this day of
19 .
[FUND], on Behalf of [Portfolio]
By: ___________________
Name: ___________________
Title: ___________________
EXHIBIT "A"
TO
PLEDGE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
SCHEDULE 2
TO
APPENDIX "C"
RELEASE CERTIFICATE
This Release Certificate is delivered pursuant to the Custodian
Agreement dated as of [ ] (the "Agreement"), between [
] (the "Fund") and [ ] (the "Custodian"). Capitalized terms
used herein without definition shall have the respective meanings
ascribed to them in the Agreement. Pursuant to Section 5 of Appendix
"C" attached to the Agreement, the Custodian hereby releases the
securities listed on Exhibit "A" attached to this Release Certificate
from the lien under the [Pledge Certificate dated ___________, 19 or
the Written Notice delivered pursuant to Section 3 of Appendix "C"
dated _________, 19 ].
IN WITNESS WHEREOF, the Custodian has caused this Release Certificate
to be executed in its name and on its behalf this day of 19 .
THE CHASE MANHATTAN BANK, N.A.
[Siganture Lines Omitted]
EXHIBIT "A"
TO
RELEASE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
Exhibit 8(n)
FORM OF
CUSTODIAN AGREEMENT
Dated as of: ________________
Between
Each of the Investment Companies
Listed on Appendix "A" Attached Hereto
and
Brown Brothers Harriman & Company
TABLE OF CONTENTS
ARTICLE
Page
I. APPOINTMENT OF CUSTODIAN 1
II. POWERS AND DUTIES OF CUSTODIAN 1
2.01 Safekeeping 1
2.02 Manner of Holding Securities 1
2.03 Security Purchases 2
2.04 Exchanges of Securities 2
2.05 Sales of Securities 3
2.06 Depositary Receipts 3
2.07 Exercise of Rights; Tender Offers 3
2.08 Stock Dividends, Rights, Etc. 3
2.09 Options 4
2.10 Futures Contracts 4
2.11 Borrowing 4
2.12 Interest Bearing Deposits 5
2.13 Foreign Exchange Transactions 5
2.14 Securities Loans 5
2.15 Collections 6
2.16 Dividends, Distributions and Redemptions 6
2.17 Proceeds from Shares Sold 6
2.18 Proxies, Notices, Etc. 6
2.19 Bills and Other Disbursements 7
2.20 Nondiscretionary Functions 7
2.21 Bank Accounts 7
2.22 Deposit of Fund Assets in Securities Systems 7
2.23 Other Transfers 8
2.24 Establishment of Segregated Account 9
2.25 Custodian's Books and Records . 9
2.26 Opinion of Fund's Independent Certified Public
Accountants 9
2.27 Reports of Independent Certified Public Accountants 10
2.28 Overdraft Facility 10
III. PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS 10
3.01 Proper Instructions and Special Instructions 10
3.02 Authorized Persons 11
3.03 Persons Having Access to Assets of the Portfolios 11
3.04 Actions of the Custodian Based on Proper Instructions and
Special Instructions 11
i
IV. SUBCUSTODIANS 11
4.01 Domestic Subcustodians 12
4.02 Foreign Subcustodians and Interim Subcustodians 12
4.03 Special Subcustodians 13
4.04 Termination of a Subcustodian 13
4.05 Certification Regarding Foreign Subcustodians 13
V. STANDARD OF CARE; INDEMNIFICATION 14
5.01 Standard of Care 14
5.02 Liability of Custodian for Actions of Other Persons 15
5.03 Indemnification 15
5.04 Investment Limitations 16
5.05 Fund's Right to Proceed 16
VI. COMPENSATION 17
VII. TERMINATION 17
7.01 Termination of Agreement as to One or More Funds 17
7.02 Termination as to One or More Portfolios 18
VIII. DEFINED TERMS 18
IX. MISCELLANEOUS 19
9.01 Execution of Documents, Etc 19
9.02 Representative Capacity; Nonrecourse Obligations 19
9.03 Several Obligations of the Funds and the Portfolios 19
9.04 Representations and Warranties 19
9.05 Entire Agreement 20
9.06 Waivers and Amendments 20
9.07 Interpretation 20
9.08 Captions 20
9.09 Governing Law 20
9.10 Notices 21
IX. MISCELLANEOUS 21
9.11 Assignment 21
9.12 Counterparts 21
9.13 Confidentiality; Survival of Obligations 21
ii
APPENDICES
Appendix "A" - List of Funds and Portfolios
Appendix "B" - List of Additional Custodians,
Special Subcustodians and Foreign Subcustodians
Appendix "C" - Procedures Relating to
Custodian's Security Interest
Exhibit 8(n)
FORM OF
CUSTODIAN AGREEMENT
AGREEMENT made as of the ___ day of ______ between each of the
Investment Companies Listed on Appendix "A" hereto, as the same may be
amended from time to time (each a "Fund" and collectively the "Funds")
and Brown Brothers Harriman & Company (the "Custodian").
W I T N E S S E T H
WHEREAS, each Fund is or may be organized with one or more series of
shares, each of which shall represent an interest in a separate
portfolio of cash, securities and other assets (all such existing and
additional series now or hereafter listed on Appendix "A" being
hereinafter referred to individually, as a "Portfolio," and
collectively, as the "Portfolios"); and
WHEREAS, each Fund desires to appoint the Custodian as custodian on
behalf of each of its Portfolios in accordance with the provisions of
the Investment Company Act of 1940, as amended (the "1940 Act"), and
the rules and regulations thereunder, under the terms and conditions
set forth in this Agreement, and the Custodian has agreed so to act as
custodian.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF CUSTODIAN
On behalf of each of its Portfolios, each Fund hereby employs and
appoints the Custodian as a custodian, subject to the terms and
provisions of this Agreement. Each Fund shall deliver to the
Custodian, or shall cause to be delivered to the Custodian, cash,
securities and other assets owned by each of its Portfolios from time
to time during the term of this Agreement and shall specify to which
of its Portfolios such cash, securities and other assets are to be
specifically allocated.
ARTICLE II
POWERS AND DUTIES OF CUSTODIAN
As custodian, the Custodian shall have and perform the powers and
duties set forth in this Article II. Pursuant to and in accordance
with Article IV hereof, the Custodian may appoint one or more
Subcustodians (as hereinafter defined) to exercise the powers and
perform the duties of the Custodian set forth in this Article II and
references to the Custodian in this Article II shall include any
Subcustodian so appointed.
Section 2.01. Safekeeping. The Custodian shall keep safely all
cash, securities and other assets of each Fund's Portfolios delivered
to the Custodian and, on behalf of such Portfolios, the Custodian
shall, from time to time, accept delivery of cash, securities and
other assets for safekeeping.
Section 2.02. Manner of Holding Securities.
(a) The Custodian shall at all times hold securities of each Fund's
Portfolios either: (i) by physical possession of the share
certificates or other instruments representing such securities in
registered or bearer form; or (ii) in book-entry form by a Securities
System (as hereinafter defined) in accordance with the provisions of
Section 2.22 below.
(b) The Custodian shall at all times hold registered securities of
each Portfolio in the name of the Custodian, the Portfolio or a
nominee of either of them, unless specifically directed by Proper
Instructions to hold such registered securities in so-called street
name; provided that, in any event, all such securities and other
assets shall be held in an account of the Custodian containing only
assets of a Portfolio, or only assets held by the Custodian as a
fiduciary or custodian for customers; and provided further, that the
records of the Custodian shall indicate at all times the Portfolio or
other customer for which such securities and other assets are held in
such account and the respective interests therein.
Section 2.03. Security Purchases. Upon receipt of Proper
Instructions (as hereinafter defined), the Custodian shall pay for and
receive securities purchased for the account of a Portfolio, provided
that payment shall be made by the Custodian only upon receipt of the
securities: (a) by the Custodian; (b) by a clearing corporation of a
national securities exchange of which the Custodian is a member; or
(c) by a Securities System. Notwithstanding the foregoing, upon
receipt of Proper Instructions: (i) in the case of a repurchase
agreement, the Custodian may release funds to a Securities System
prior to the receipt of advice from the Securities System that the
securities underlying such repurchase agreement have been transferred
by book-entry into the Account (as hereinafter defined) maintained
with such Securities System by the Custodian, provided that the
Custodian's instructions to the Securities System require that the
Securities System may make payment of such funds to the other party to
the repurchase agreement only upon transfer by book-entry of the
securities underlying the repurchase agreement into the Account; (ii)
in the case of time deposits, call account deposits, currency
deposits, and other deposits, foreign exchange transactions, futures
contracts or options, pursuant to Sections 2.09, 2.10, 2.12 and 2.13
hereof, the Custodian may make payment therefor before receipt of an
advice or confirmation evidencing said deposit or entry into such
transaction; (iii) in the case of the purchase of securities, the
settlement of which occurs outside of the United States of America,
the Custodian may make payment therefor and receive delivery of such
securities in accordance with local custom and practice generally
accepted by Institutional Clients (as hereinafter defined) in the
country in which the settlement occurs, but in all events subject to
the standard of care set forth in Article V hereof; and (iv) in the
case of the purchase of securities in which, in accordance with
standard industry custom and practice generally accepted by
Institutional Clients with respect to such securities, the receipt of
such securities and the payment therefor take place in different
countries, the Custodian may receive delivery of such securities and
make payment therefor in accordance with standard industry custom and
practice for such securities generally accepted by Institutional
Clients, but in all events subject to the standard of care set forth
in Article V hereof. For purposes of this Agreement, an
"Institutional Client" shall mean a major commercial bank,
corporation, insurance company, or substantially similar institution,
which, as a substantial part of its business operations, purchases or
sells securities and makes use of custodial services.
Section 2.04. Exchanges of Securities. Upon receipt of Proper
Instructions, the Custodian shall exchange securities held by it for
the account of a Portfolio for other securities in connection with any
reorganization, recapitalization, split-up of shares, change of par
value, conversion or other event relating to the securities or the
issuer of such securities, and shall deposit any such securities in
accordance with the terms of any reorganization or protective plan.
The Custodian shall, without receiving Proper Instructions: surrender
securities in temporary form for definitive securities; surrender
securities for transfer into the name of the Custodian, a Portfolio or
a nominee of either of them, as permitted by Section 2.02(b); and
surrender securities for a different number of certificates or
instruments representing the same number of shares or same principal
amount of indebtedness, provided that the securities to be issued will
be delivered to the Custodian or a nominee of the Custodian.
Section 2.05. Sales of Securities. Upon receipt of Proper
Instructions, the Custodian shall make delivery of securities which
have been sold for the account of a Portfolio, but only against
payment therefor in the form of: (a) cash, certified check, bank
cashier's check, bank credit, or bank wire transfer; (b) credit to the
account of the Custodian with a clearing corporation of a national
securities exchange of which the Custodian is a member; or (c) credit
to the Account of the Custodian with a Securities System, in
accordance with the provisions of Section 2.22 hereof.
Notwithstanding the foregoing: (i) in the case of the sale of
securities, the settlement of which occurs outside of the United
States of America, such securities shall be delivered and paid for in
accordance with local custom and practice generally accepted by
Institutional Clients in the country in which the settlement occurs,
but in all events subject to the standard of care set forth in Article
V hereof; (ii) in the case of the sale of securities in which, in
accordance with standard industry custom and practice generally
accepted by Institutional Clients with respect to such securities, the
delivery of such securities and receipt of payment therefor take place
in different countries, the Custodian may deliver such securities and
receive payment therefor in accordance with standard industry custom
and practice for such securities generally accepted by Institutional
Clients, but in all events subject to the standard of care set forth
in Article V hereof; and (iii) in the case of securities held in
physical form, such securities shall be delivered and paid for in
accordance with "street delivery custom" to a broker or its clearing
agent, against delivery to the Custodian of a receipt for such
securities, provided that the Custodian shall have taken reasonable
steps to ensure prompt collection of the payment for, or the return
of, such securities by the broker or its clearing agent, and provided
further that the Custodian shall not be responsible for the selection
of or the failure or inability to perform of such broker or its
clearing agent.
Section 2.06. Depositary Receipts. Upon receipt of Proper
Instructions, the Custodian shall surrender securities to the
depositary used for such securities by an issuer of American
Depositary Receipts or International Depositary Receipts (hereinafter
referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such securities and written evidence
satisfactory to the Custodian that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such securities
in the name of the Custodian or a nominee of the Custodian, for
delivery to the Custodian at such place as the Custodian may from time
to time designate. Upon receipt of Proper Instructions, the Custodian
shall surrender ADRs to the issuer thereof, against a written receipt
therefor adequately describing the ADRs surrendered and written
evidence satisfactory to the Custodian that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to
deliver the securities underlying such ADRs to the Custodian.
Section 2.07. Exercise of Rights; Tender Offers. Upon receipt of
Proper Instructions, the Custodian shall: (a) deliver warrants, puts,
calls, rights or similar securities to the issuer or trustee thereof,
or to the agent of such issuer or trustee, for the purpose of exercise
or sale, provided that the new securities, cash or other assets, if
any, acquired as a result of such actions are to be delivered to the
Custodian; and (b) deposit securities upon invitations for tenders
thereof, provided that the consideration for such securities is to be
paid or delivered to the Custodian, or the tendered securities are to
be returned to the Custodian. Notwithstanding any provision of this
Agreement to the contrary, the Custodian shall take all necessary
action, unless otherwise directed to the contrary in Proper
Instructions, to comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall promptly notify each applicable Fund of such
action in writing by facsimile transmission or in such other manner as
such Fund and the Custodian may agree in writing.
Section 2.08. Stock Dividends, Rights, Etc. The Custodian shall
receive and collect all stock dividends, rights and other items of
like nature and, upon receipt of Proper Instructions, take action with
respect to the same as directed in such Proper Instructions.
Section 2.09. Options. Upon receipt of Proper Instructions and in
accordance with the provisions of any agreement between the Custodian,
any registered broker-dealer and, if necessary, a Fund on behalf of
any applicable Portfolio relating to compliance with the rules of the
Options Clearing Corporation or of any registered national securities
exchange or similar organization(s), the Custodian shall: (a) receive
and retain confirmations or other documents, if any, evidencing the
purchase or writing of an option on a security or securities index by
the applicable Portfolio; (b) deposit and maintain in a segregated
account, securities (either physically or by book-entry in a
Securities System), cash or other assets; and (c) pay, release and/or
transfer such securities, cash or other assets in accordance with
notices or other communications evidencing the expiration, termination
or exercise of such options furnished by the Options Clearing
Corporation, the securities or options exchange on which such options
are traded, or such other organization as may be responsible for
handling such option transactions. Each Fund, on behalf of its
applicable Portfolios, and the broker-dealer shall be responsible for
the sufficiency of assets held in any segregated account established
in compliance with applicable margin maintenance requirements and the
performance of other terms of any option contract.
Section 2.10. Futures Contracts. Upon receipt of Proper
Instructions, or pursuant to the provisions of any futures margin
procedural agreement among a Fund, on behalf of any applicable
Portfolio, the Custodian and any futures commission merchant (a
"Procedural Agreement"), the Custodian shall: (a) receive and retain
confirmations, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by the applicable
Portfolio; (b) deposit and maintain in a segregated account, cash,
securities and other assets designated as initial, maintenance or
variation "margin" deposits intended to secure the applicable
Portfolio's performance of its obligations under any futures contracts
purchased or sold or any options on futures contracts written by the
Portfolio, in accordance with the provisions of any Procedural
Agreement designed to comply with the rules of the Commodity Futures
Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organization(s),
regarding such margin deposits; and (c) release assets from and/or
transfer assets into such margin accounts only in accordance with any
such Procedural Agreements. Each Fund, on behalf of its applicable
Portfolios, and such futures commission merchant shall be responsible
for the sufficiency of assets held in the segregated account in
compliance with applicable margin maintenance requirements and the
performance of any futures contract or option on a futures contract in
accordance with its terms.
Section 2.11. Borrowing. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of a Portfolio to lenders or their
agents, or otherwise establish a segregated account as agreed to by
the applicable Fund on behalf of such Portfolio and the Custodian, as
collateral for borrowings effected by such Portfolio, provided that
such borrowed money is payable by the lender (a) to or upon the
Custodian's order, as Custodian for such Portfolio, and (b)
concurrently with delivery of such securities.
Section 2.12. Interest Bearing Deposits.
Upon receipt of Proper Instructions directing the Custodian to
purchase interest bearing fixed term and call deposits (hereinafter
referred to collectively, as "Interest Bearing Deposits") for the
account of a Portfolio, the Custodian shall purchase such Interest
Bearing Deposits in the name of the Portfolio with such banks or trust
companies (including the Custodian, any Subcustodian or any subsidiary
or affiliate of the Custodian) (hereinafter referred to as "Banking
Institutions") and in such amounts as the applicable Fund may direct
pursuant to Proper Instructions. Such Interest Bearing Deposits may
be denominated in U.S. Dollars or other currencies, as the applicable
Fund on behalf of its Portfolio may determine and direct pursuant to
Proper Instructions. The Custodian shall include in its records with
respect to the assets of each Portfolio appropriate notation as to the
amount and currency of each such Interest Bearing Bank Deposit, the
accepting Banking Institution and all other appropriate details, and
shall retain such forms of advice or receipt evidencing such account,
if any, as may be forwarded to the Custodian by the Banking
Institution. The responsibilities of the Custodian to each Fund for
Interest Bearing Deposits accepted on the Custodian's books in the
United States on behalf of the Fund's Portfolios shall be that of a
U.S. bank for a similar deposit. With respect to Interest Bearing
Deposits other than those accepted on the Custodian's books, (a) the
Custodian shall be responsible for the collection of income as set
forth in Section 2.15 and the transmission of cash and instructions to
and from such accounts; and (b) the Custodian shall have no duty with
respect to the selection of the Banking Institution or, so long as the
Custodian acts in accordance with Proper Instructions, for the failure
of such Banking Institution to pay upon demand. Upon receipt of
Proper Instructions, the Custodian shall take such reasonable actions
as the applicable Fund deems necessary or appropriate to cause each
such Interest Bearing Deposit Account to be insured to the maximum
extent possible by all applicable deposit insurers including, without
limitation, the Federal Deposit Insurance Corporation.
Section 2.13. Foreign Exchange Transactions
(a) Foreign Exchange Transactions Other Than as Principal. Upon
receipt of Proper Instructions, the Custodian shall settle foreign
exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery on behalf of and for the account of a
Portfolio with such currency brokers or Banking Institutions as the
applicable Fund may determine and direct pursuant to Proper
Instructions. The Custodian shall be responsible for the transmission
of cash and instructions to and from the currency broker or Banking
Institution with which the contract or option is made, the safekeeping
of all certificates and other documents and agreements evidencing or
relating to such foreign exchange transactions and the maintenance of
proper records as set forth in Section 2.25. The Custodian shall have
no duty with respect to the selection of the currency brokers or
Banking Institutions with which a Fund deals on behalf of its
Portfolios or, so long as the Custodian acts in accordance with Proper
Instructions, for the failure of such brokers or Banking Institutions
to comply with the terms of any contract or option.
(b) Foreign Exchange Contracts as Principal. The Custodian shall
not be obligated to enter into foreign exchange transactions as
principal. However, if the Custodian has made available to a Fund its
services as a principal in foreign exchange transactions, upon receipt
of Proper Instructions, the Custodian shall enter into foreign
exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery on behalf of and for the account of a
Portfolio of such Fund with the Custodian as principal. The Custodian
shall be responsible for the selection of the currency brokers or
Banking Institutions and the failure of such currency brokers or
Banking Institutions to comply with the terms of any contract or
option.
(c) Payments. Notwithstanding anything to the contrary contained
herein, upon receipt of Proper Instructions the Custodian may, in
connection with a foreign exchange contract, make free outgoing
payments of cash in the form of U.S. Dollars or foreign currency prior
to receipt of confirmation of such foreign exchange contract or
confirmation that the countervalue currency completing such contract
has been delivered or received.
Section 2.14. Securities Loans. Upon receipt of Proper
Instructions, the Custodian shall, in connection with loans of
securities by a Portfolio, deliver securities of such Portfolio to the
borrower thereof prior to receipt of the collateral, if any, for such
borrowing; provided that, in cases of loans of securities secured by
cash collateral, the Custodian's instructions to the Securities System
shall require that the Securities System deliver the securities of the
Portfolio to the borrower thereof only upon receipt of the collateral
for such borrowing.
Section 2.15. Collections. The Custodian shall, and shall cause any
Subcustodian to: (a) collect amounts due and payable to each Fund
with respect to portfolio securities and other assets of each of such
Fund's Portfolios; (b) promptly credit to the account of each
applicable Portfolio all income and other payments relating to
portfolio securities and other assets held by the Custodian hereunder
upon Custodian's receipt of such income or payments or as otherwise
agreed in writing by the Custodian and the applicable Fund; (c)
promptly endorse and deliver any instruments required to effect such
collections; (d) promptly execute ownership and other certificates and
affidavits for all federal, state and foreign tax purposes in
connection with receipt of income, capital gains or other payments
with respect to portfolio securities and other assets of each
applicable Portfolio, or in connection with the purchase, sale or
transfer of such securities or other assets; and (e) promptly file any
certificates or other affidavits for the refund or reclaim of foreign
taxes paid, and promptly notify each applicable Fund of any changes to
law, interpretative rulings or procedures regarding such reclaims, and
otherwise use all available measures customarily used to minimize the
imposition of foreign taxes at source, and promptly inform each
applicable Fund of alternative means of minimizing such taxes of which
the Custodian shall become aware (or with the exercise of reasonable
care should have become aware); provided, however, that with respect
to portfolio securities registered in so-called street name, the
Custodian shall use its best efforts to collect amounts due and
payable to each Fund with respect to its Portfolios. The Custodian
shall promptly notify each applicable Fund in writing by facsimile
transmission or in such other manner as each such Fund and the
Custodian may agree in writing if any amount payable with respect to
portfolio securities or other assets of the Portfolios of such Fund(s)
is not received by the Custodian when due. The Custodian shall not be
responsible for the collection of amounts due and payable with respect
to portfolio securities or other assets that are in default.
Section 2.16. Dividends, Distributions and Redemptions. The
Custodian shall promptly release funds or securities: (a) upon
receipt of Proper Instructions, to one or more Distribution Accounts
designated by the applicable Fund or Funds in such Proper
Instructions; or (b) upon receipt of Special Instructions, as
otherwise directed by the applicable Fund or Funds, for the purpose of
the payment of dividends or other distributions to shareholders of
each applicable Portfolio, and payment to shareholders who have
requested repurchase or redemption of their shares of the Portfolio(s)
(collectively, the "Shares"). For purposes of this Agreement, a
"Distribution Account" shall mean an account established at a Banking
Institution designated by the applicable Fund on behalf of one or more
of its Portfolios in Special Instructions.
Section 2.17. Proceeds from Shares Sold. The Custodian shall
receive funds representing cash payments received for Shares issued or
sold from time to time by the Funds, and shall promptly credit such
funds to the account(s) of the applicable Portfolio(s). The Custodian
shall promptly notify each applicable Fund of Custodian's receipt of
cash in payment for Shares issued by such Fund by facsimile
transmission or in such other manner as the Fund and Custodian may
agree in writing. Upon receipt of Proper Instructions, the Custodian
shall: (a) deliver all federal funds received by the Custodian in
payment for Shares in payment for such investments as may be set forth
in such Proper Instructions and at a time agreed upon between the
Custodian and the applicable Fund; and (b) make federal funds
available to the applicable Fund as of specified times agreed upon
from time to time by the applicable Fund and the Custodian, in the
amount of checks received in payment for Shares which are deposited to
the accounts of each applicable Portfolio.
Section 2.18. Proxies, Notices, Etc. The Custodian shall deliver to
each applicable Fund, in the most expeditious manner practicable, all
forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to securities owned by one or more
of the applicable Fund's Portfolios that are received by the
Custodian, any Subcustodian, or any nominee of either of them, and,
upon receipt of Proper Instructions, the Custodian shall execute and
deliver, or cause such Subcustodian or nominee to execute and deliver,
such proxies or other authorizations as may be required. Except as
directed pursuant to Proper Instructions, neither the Custodian nor
any Subcustodian or nominee shall vote upon any such securities, or
execute any proxy to vote thereon, or give any consent or take any
other action with respect thereto.
Section 2.19. Bills and Other Disbursements. Upon receipt of Proper
Instructions, the Custodian shall pay or cause to be paid, all bills,
statements, or other obligations of each Portfolio.
Section 2.20. Nondiscretionary Functions. The Custodian shall
attend to all nondiscretionary details in connection with the sale,
exchange, substitution, purchase, transfer or other dealings with
securities or other assets of each Portfolio held by the Custodian,
except as otherwise directed from time to time pursuant to Proper
Instructions.
Section 2.21. Bank Accounts
(a) Accounts with the Custodian and any Subcustodians. The Custodian
shall open and operate a bank account or accounts (hereinafter
referred to collectively, as "Bank Accounts") on the books of the
Custodian or any Subcustodian provided that such account(s) shall be
in the name of the Custodian or a nominee of the Custodian, for the
account of a Portfolio, and shall be subject only to the draft or
order of the Custodian; provided however, that such Bank Accounts in
countries other than the United States may be held in an account of
the Custodian containing only assets held by the Custodian as a
fiduciary or custodian for customers, and provided further, that the
records of the Custodian shall indicate at all times the Portfolio or
other customer for which such securities and other assets are held in
such account and the respective interests therein. Such Bank Accounts
may be denominated in either U.S. Dollars or other currencies. The
responsibilities of the Custodian to each applicable Fund for deposits
accepted on the Custodian's books in the United States shall be that
of a U.S. bank for a similar deposit. The responsibilities of the
Custodian to each applicable Fund for deposits accepted on any
Subcustodian's books shall be governed by the provisions of Section
5.02.
(b) Accounts With Other Banking Institutions. The Custodian may open
and operate Bank Accounts on behalf of a Portfolio, in the name of the
Custodian or a nominee of the Custodian, at a Banking Institution
other than the Custodian or any Subcustodian, provided that such
account(s) shall be in the name of the Custodian or a nominee of the
Custodian, for the account of a Portfolio, and shall be subject only
to the draft or order of the Custodian; provided however, that such
Bank Accounts may be held in an account of the Custodian containing
only assets held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian
shall indicate at all times the Portfolio or other customer for which
such securities and other assets are held in such account and the
respective interests therein. Such Bank Accounts may be denominated
in either U.S. Dollars or other currencies. Subject to the provisions
of Section 5.01(a), the Custodian shall be responsible for the
selection of the Banking Institution and for the failure of such
Banking Institution to pay according to the terms of the deposit.
(c) Deposit Insurance. Upon receipt of Proper Instructions, the
Custodian shall take such reasonable actions as the applicable Fund
deems necessary or appropriate to cause each deposit account
established by the Custodian pursuant to this Section 2.21 to be
insured to the maximum extent possible by all applicable deposit
insurers including, without limitation, the Federal Deposit Insurance
Corporation.
Section 2.22. Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain domestic securities owned by a
Portfolio in: (a) The Depository Trust Company; (b) the Participants
Trust Company; (c) any book-entry system as provided in (i) Subpart O
of Treasury Circular No. 300, 31 CFR 306.115, (ii) Subpart B of
Treasury Circular Public Debt Series No. 27-76, 31 CFR 350.2, or (iii)
the book-entry regulations of federal agencies substantially in the
form of 31 CFR 306.115; or (d) any other domestic clearing agency
registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Securities Exchange Act of 1934 (or as may
otherwise be authorized by the Securities and Exchange Commission to
serve in the capacity of depository or clearing agent for the
securities or other assets of investment companies) which acts as a
securities depository and the use of which each applicable Fund has
previously approved by Special Instructions (as hereinafter defined)
(each of the foregoing being referred to in this Agreement as a
"Securities System"). Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following provisions:
(A) The Custodian may deposit and/or maintain securities held
hereunder in a Securities System, provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which Account shall not contain any assets of the
Custodian other than assets held as a fiduciary, custodian, or
otherwise for customers and shall be so designated on the books and
records of the Securities System.
(B) The Securities System shall be obligated to comply with the
Custodian's directions with respect to the securities held in such
Account and shall not be entitled to a lien against the assets in such
Account for extensions of credit to the Custodian other than for
payment of the purchase price of such assets.
(C) Each Fund hereby designates the Custodian as the party in whose
name any securities deposited by the Custodian in the Account are to
be registered.
(D) The books and records of the Custodian shall at all times
identify those securities belonging to each Portfolio which are
maintained in a Securities System.
(E) The Custodian shall pay for securities purchased for the account
of a Portfolio only upon (w) receipt of advice from the Securities
System that such securities have been transferred to the Account of
the Custodian, and (x) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account of such
Portfolio. The Custodian shall transfer securities sold for the
account of a Portfolio only upon (y) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account of the Custodian, and (z) the making of an
entry on the records of the Custodian to reflect such transfer and
payment for the account of such Portfolio. Copies of all advices from
the Securities System relating to transfers of securities for the
account of a Portfolio shall identify such Portfolio and shall be
maintained for such Portfolio by the Custodian. The Custodian shall
deliver to each applicable Fund on the next succeeding business day
daily transaction reports which shall include each day's transactions
in the Securities System for the account of each applicable Portfolio.
Such transaction reports shall be delivered to each applicable Fund or
any agent designated by such Fund pursuant to Proper Instructions, by
computer or in such other manner as such Fund and the Custodian may
agree in writing.
(F) The Custodian shall, if requested by a Fund pursuant to Proper
Instructions, provide such Fund with all reports obtained by the
Custodian or any Subcustodian with respect to a Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System.
(G) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any Securities System (except the federal
book-entry system) on behalf of any Portfolio as promptly as
practicable and shall take all actions reasonably practicable to
safeguard the securities of any Portfolio maintained with such
Securities System.
Section 2.23. Other Transfers.
(a) Upon receipt of Proper Instructions, the Custodian shall transfer
to or receive from a third party that has been appointed to serve as
an additional custodian of one or more Portfolios (an "Additional
Custodian") securities, cash and other assets of such Portfolio(s) in
accordance with such Proper Instructions. Each Additional Custodian
shall be identified as such on Appendix B, as the same may be amended
from time to time in accordance with the provisions of Section
9.06(c).
(b) Upon receipt of Special Instructions, the Custodian shall make
such other dispositions of securities, funds or other property of a
Portfolio in a manner or for purposes other than as expressly set
forth in this Agreement, provided that the Special Instructions
relating to such disposition shall include a statement of the purpose
for which the delivery is to be made, the amount of funds and/or
securities to be delivered, and the name of the person or persons to
whom delivery is to be made, and shall otherwise comply with the
provisions of Sections 3.01 and 3.03 hereof.
Section 2.24. Establishment of Segregated Account. Upon receipt of
Proper Instructions, the Custodian shall establish and maintain on its
books a segregated account or accounts for and on behalf of a
Portfolio, into which account or accounts may be transferred cash
and/or securities or other assets of such Portfolio, including
securities maintained by the Custodian in a Securities System pursuant
to Section 2.22 hereof, said account or accounts to be maintained:
(a) for the purposes set forth in Sections 2.09, 2.10 and 2.11 hereof;
(b) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the SEC relating to the
maintenance of segregated accounts by registered investment companies;
or (c) for such other purposes as set forth, from time to time, in
Special Instructions.
Section 2.25. Custodian's Books and Records. The Custodian shall
provide any assistance reasonably requested by a Fund in the
preparation of reports to such Fund's shareholders and others, audits
of accounts, and other ministerial matters of like nature. The
Custodian shall maintain complete and accurate records with respect to
securities and other assets held for the accounts of each Portfolio as
required by the rules and regulations of the SEC applicable to
investment companies registered under the 1940 Act, including: (a)
journals or other records of original entry containing a detailed and
itemized daily record of all receipts and deliveries of securities
(including certificate and transaction identification numbers, if
any), and all receipts and disbursements of cash; (b) ledgers or other
records reflecting (i) securities in transfer, (ii) securities in
physical possession, (iii) securities borrowed, loaned or
collateralizing obligations of each Portfolio, (iv) monies borrowed
and monies loaned (together with a record of the collateral therefor
and substitutions of such collateral), (v) dividends and interest
received, (vi) the amount of tax withheld by any person in respect of
any collection made by the Custodian or any Subcustodian, and (vii)
the amount of reclaims or refunds for foreign taxes paid; and (c)
cancelled checks and bank records related thereto. The Custodian
shall keep such other books and records of each Fund as such Fund
shall reasonably request. All such books and records maintained by
the Custodian shall be maintained in a form acceptable to the
applicable Fund and in compliance with the rules and regulations of
the SEC, including, but not limited to, books and records required to
be maintained by Section 31(a) of the 1940 Act and the rules and
regulations from time to time adopted thereunder. All books and
records maintained by the Custodian pursuant to this Agreement shall
at all times be the property of each applicable Fund and shall be
available during normal business hours for inspection and use by such
Fund and its agents, including, without limitation, its independent
certified public accountants. Notwithstanding the preceding sentence,
no Fund shall take any actions or cause the Custodian to take any
actions which would cause, either directly or indirectly, the
Custodian to violate any applicable laws, regulations or orders.
Section 2.26. Opinion of Fund's Independent Certified Public
Accountants. The Custodian shall take all reasonable action as a Fund
may request to obtain from year to year favorable opinions from such
Fund's independent certified public accountants with respect to the
Custodian's activities hereunder in connection with the preparation of
the Fund's Form N-1A and the Fund's Form N-SAR or other periodic
reports to the SEC and with respect to any other requirements of the
SEC.
Section 2.27. Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund a
written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the
Custodian under this Agreement, including, without limitation, the
Custodian's accounting system, internal accounting control and
procedures for safeguarding cash, securities and other assets,
including cash, securities and other assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report
shall be of sufficient scope and in sufficient detail as may
reasonably be required by any Fund and as may reasonably be obtained
by the Custodian.
Section 2.28. Overdraft Facility. In the event that the Custodian
is directed by Proper Instructions to make any payment or transfer of
funds on behalf of a Portfolio for which there would be, at the close
of business on the date of such payment or transfer, insufficient
funds held by the Custodian on behalf of such Portfolio, the Custodian
may, in its discretion, provide an overdraft (an "Overdraft") to the
applicable Fund on behalf of such Portfolio, in an amount sufficient
to allow the completion of such payment. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the applicable Fund and the Custodian; and (b)
shall accrue interest from the date of the Overdraft to the date of
payment in full by the applicable Fund on behalf of the applicable
Portfolio at a rate agreed upon in writing, from time to time, by the
Custodian and the applicable Fund. The Custodian and each Fund
acknowledge that the purpose of such Overdrafts is to temporarily
finance the purchase or sale of securities for prompt delivery in
accordance with the terms hereof, or to meet emergency expenses not
reasonably foreseeable by such Fund. The Custodian shall promptly
notify each applicable Fund in writing (an "Overdraft Notice") of any
Overdraft by facsimile transmission or in such other manner as such
Fund and the Custodian may agree in writing. At the request of the
Custodian, each applicable Fund, on behalf of one or more of its
Portfolios, shall pledge, assign and grant to the Custodian a security
interest in certain specified securities of the applicable Portfolio,
as security for Overdrafts provided to such Portfolio, under the terms
and conditions set forth in Appendix "C" attached hereto.
ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS
Section 3.01. Proper Instructions and Special Instructions.
(a) Proper Instructions. As used herein, the term "Proper
Instructions" shall mean: (i) a tested telex, a written (including,
without limitation, facsimile transmission) request, direction,
instruction or certification signed or initialed by or on behalf of
the applicable Fund by one or more Authorized Persons (as hereinafter
defined); (ii) a telephonic or other oral communication by one or more
Authorized Persons; or (iii) a communication effected directly between
an electro-mechanical or electronic device or system (including,
without limitation, computers) by or on behalf of the applicable Fund
by one or more Authorized Persons; provided, however, that
communications of the types described in clauses (ii) and (iii) above
purporting to be given by an Authorized Person shall be considered
Proper Instructions only if the Custodian reasonably believes such
communications to have been given by an Authorized Person with respect
to the transaction involved. Proper Instructions in the form of oral
communications shall be confirmed by the applicable Fund by tested
telex or in writing in the manner set forth in clause (i) above, but
the lack of such confirmation shall in no way affect any action taken
by the Custodian in reliance upon such oral instructions prior to the
Custodian's receipt of such confirmation. Each Fund and the Custodian
are hereby authorized to record any and all telephonic or other oral
instructions communicated to the Custodian. Proper Instructions may
relate to specific transactions or to types or classes of
transactions, and may be in the form of standing instructions.
(b) Special Instructions. As used herein, the term "Special
Instructions" shall mean Proper Instructions countersigned or
confirmed in writing by the Treasurer or any Assistant Treasurer of
the applicable Fund or any other person designated by the Treasurer of
such Fund in writing, which countersignature or confirmation shall be
(i) included on the same instrument containing the Proper Instructions
or on a separate instrument relating thereto, and (ii) delivered by
hand, by facsimile transmission, or in such other manner as the
applicable Fund and the Custodian agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, telecopy or telex number
agreed upon from time to time by the Custodian and the applicable
Fund.
Section 3.02. Authorized Persons. Concurrently with the execution
of this Agreement and from time to time thereafter, as appropriate,
each Fund shall deliver to the Custodian, duly certified as
appropriate by a Treasurer or Assistant Treasurer of such Fund, a
certificate setting forth: (a) the names, titles, signatures and
scope of authority of all persons authorized to give Proper
Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of such Fund (collectively, the
"Authorized Persons" and individually, an "Authorized Person"); and
(b) the names, titles and signatures of those persons authorized to
issue Special Instructions. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set
forth therein and shall be considered to be in full force and effect
until delivery to the Custodian of a similar certificate to the
contrary. Upon delivery of a certificate which deletes the name(s) of
a person previously authorized by a Fund to give Proper Instructions
or to issue Special Instructions, such persons shall no longer be
considered an Authorized Person or authorized to issue Special
Instructions for that Fund.
Section 3.03. Persons Having Access to Assets of the Portfolios.
Notwithstanding anything to the contrary contained in this Agreement,
no Authorized Person, Trustee, officer, employee or agent of any Fund
shall have physical access to the assets of any Portfolio of that Fund
held by the Custodian nor shall the Custodian deliver any assets of a
Portfolio for delivery to an account of such person; provided,
however, that nothing in this Section 3.03 shall prohibit (a) any
Authorized Person from giving Proper Instructions, or any person
authorized to issue Special Instructions from issuing Special
Instructions, so long as such action does not result in delivery of or
access to assets of any Portfolio prohibited by this Section 3.03; or
(b) each Fund's independent certified public accountants from
examining or reviewing the assets of the Portfolios of the Fund held
by the Custodian. Each Fund shall deliver to the Custodian a written
certificate identifying such Authorized Persons, Trustees, officers,
employees and agents of such Fund.
Section 3.04. Actions of Custodian Based on Proper Instructions and
Special Instructions. So long as and to the extent that the Custodian
acts in accordance with (a) Proper Instructions or Special
Instructions, as the case may be, and (b) the terms of this Agreement,
the Custodian shall not be responsible for the title, validity or
genuineness of any property, or evidence of title thereof, received by
it or delivered by it pursuant to this Agreement.
ARTICLE IV
SUBCUSTODIANS
The Custodian may, from time to time, in accordance with the relevant
provisions of this Article IV, appoint one or more Domestic
Subcustodians, Foreign Subcustodians, Interim Subcustodians and
Special Subcustodians to act on behalf of a Portfolio. (For purposes
of this Agreement, all duly appointed Domestic Subcustodians, Foreign
Subcustodians, Interim Subcustodians, and Special Subcustodians are
hereinafter referred to collectively, as "Subcustodians.")
Section 4.01. Domestic Subcustodians. The Custodian may, at any
time and from time to time, appoint any bank as defined in Section
2(a)(5) of the 1940 Act meeting the requirements of a custodian under
Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act on behalf of one or more Portfolios as a
subcustodian for purposes of holding cash, securities and other assets
of such Portfolios and performing other functions of the Custodian
within the United States (a "Domestic Subcustodian"); provided, that,
the Custodian shall notify each applicable Fund in writing of the
identity and qualifications of any proposed Domestic Subcustodian at
least thirty (30) days prior to appointment of such Domestic
Subcustodian, and such Fund may, in its sole discretion, by written
notice to the Custodian executed by an Authorized Person disapprove of
the appointment of such Domestic Subcustodian. If, following notice
by the Custodian to each applicable Fund regarding appointment of a
Domestic Subcustodian and the expiration of thirty (30) days after the
date of such notice, such Fund shall have failed to notify the
Custodian of its disapproval thereof, the Custodian may, in its
discretion, appoint such proposed Domestic Subcustodian as its
subcustodian.
Section 4.02. Foreign Subcustodians and Interim Subcustodians.
(a) Foreign Subcustodians. The Custodian may, at any time and from
time to time, appoint: (i) any bank, trust company or other entity
meeting the requirements of an "eligible foreign custodian" under
Section 17(f) of the 1940 Act and the rules and regulations thereunder
or by order of the Securities and Exchange Commission exempted
therefrom, or (ii) any bank as defined in Section 2(a)(5) of the 1940
Act meeting the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder to act on behalf of
one or more Portfolios as a subcustodian for purposes of holding cash,
securities and other assets of such Portfolios and performing other
functions of the Custodian in countries other than the United States
of America (a "Foreign Subcustodian"); provided, that, prior to the
appointment of any Foreign Subcustodian, the Custodian shall have
obtained written confirmation of the approval of the Board of Trustees
or other governing body or entity of each applicable Fund on behalf of
its applicable Portfolio(s) (which approval may be withheld in the
sole discretion of such Board of Trustees or other governing body or
entity) with respect to (i) the identity and qualifications of any
proposed Foreign Subcustodian, (ii) the country or countries in which,
and the securities depositories or clearing agencies, if any, through
which, any proposed Foreign Subcustodian is authorized to hold
securities and other assets of the applicable Portfolio(s), and (iii)
the form and terms of the subcustodian agreement to be entered into
between such proposed Foreign Subcustodian and the Custodian. Each
such duly approved Foreign Subcustodian and the countries where and
the securities depositories and clearing agencies through which they
may hold securities and other assets of the applicable Portfolios
shall be listed on Appendix "B" attached hereto, as it may be amended,
from time to time, in accordance with the provisions of Section
9.05(c) hereof. Each Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment by one of
its Portfolios which is to be held in a country in which no Foreign
Subcustodian is authorized to act, in order that there shall be
sufficient time for the Custodian to effect the appropriate
arrangements with a proposed foreign subcustodian, including obtaining
approval as provided in this Section 4.02(a). The Custodian shall not
amend any subcustodian agreement entered into with a Foreign
Subcustodian, or agree to change or permit any changes thereunder, or
waive any rights under such agreement, which materially affect a
Fund's rights or the Foreign Subcustodian's obligations or duties to
a Fund under such agreement, except upon prior approval pursuant to
Special Instructions.
(b) Interim Subcustodians. Notwithstanding the foregoing, in the
event that a Portfolio shall invest in a security or other asset to be
held in a country in which no Foreign Subcustodian is authorized to
act, the Custodian shall promptly notify the applicable Fund in
writing by facsimile transmission or in such other manner as such Fund
and Custodian shall agree in writing of the unavailability of an
approved Foreign Subcustodian in such country; and the Custodian
shall, upon receipt of Special Instructions, appoint any Person
designated by the applicable Fund in such Special Instructions to hold
such security or other asset. (Any Person appointed as a subcustodian
pursuant to this Section 4.02(b) is hereinafter referred to as an
"Interim Subcustodian.")
Section 4.03. Special Subcustodians. Upon receipt of Special
Instructions, the Custodian shall, on behalf of one or more
Portfolios, appoint one or more banks, trust companies or other
entities designated in such Special Instructions to act as a
subcustodian for purposes of: (i) effecting third-party repurchase
transactions with banks, brokers, dealers or other entities through
the use of a common custodian or subcustodian; (ii) establishing a
joint trading account for the applicable Portfolio(s) and other
registered open-end management investment companies for which Fidelity
Management & Research Company serves as investment adviser, through
which such Portfolios and such other investment companies shall
collectively participate in certain repurchase transactions; (iii)
providing depository and clearing agency services with respect to
certain variable rate demand note securities; and (iv) effecting any
other transactions designated by each applicable Fund in Special
Instructions. (Each such designated subcustodian is hereinafter
referred to as a "Special Subcustodian.") Each such duly appointed
Special Subcustodian shall be listed on Appendix "B" attached hereto,
as it may be amended from time to time in accordance with the
provisions of Section 9.05(c) hereof. In connection with the
appointment of any Special Subcustodian, the Custodian shall enter
into a subcustodian agreement with the Special Subcustodian in form
and substance approved by each applicable Fund, provided that such
agreement shall in all events comply with the provisions of the 1940
Act and the rules and regulations thereunder and the terms and
provisions of this Agreement. The Custodian shall not amend any
subcustodian agreement entered into with a Special Subcustodian, or
agree to change or permit any changes thereunder, or waive any rights
under such agreement, except upon prior approval pursuant to Special
Instructions.
Section 4.04. Termination of a Subcustodian. The Custodian shall
(i) cause each Domestic Subcustodian and Foreign Subcustodian to, and
(ii) use its best efforts to cause each Interim Subcustodian and
Special Subcustodian to, perform all of its obligations in accordance
with the terms and conditions of the subcustodian agreement between
the Custodian and such Subcustodian. In the event that the Custodian
is unable to cause such Subcustodian to fully perform its obligations
thereunder, the Custodian shall forthwith, upon the receipt of Special
Instructions, terminate such Subcustodian with respect to each
applicable Fund and, if necessary or desirable, appoint a replacement
Subcustodian in accordance with the provisions of Section 4.01 or
Section 4.02, as the case may be. In addition to the foregoing, the
Custodian (A) may, at any time in its discretion, upon written
notification to each applicable Fund, terminate any Domestic
Subcustodian, Foreign Subcustodian or Interim Subcustodian, and (B)
shall, upon receipt of Special Instructions, terminate any
Subcustodian with respect to each applicable Fund, in accordance with
the termination provisions under the applicable subcustodian
agreement.
Section 4.05. Certification Regarding Foreign Subcustodians. Upon
request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign Subcustodian
then acting on behalf of the Custodian for such Fund and its
Portfolios; (ii) the countries in which and the securities
depositories and clearing agents through which each such Foreign
Subcustodian is then holding cash, securities and other assets of any
Portfolio of such Fund; and (iii) such other information as may be
requested by such Fund to ensure compliance with Rule 17(f)-5 under
the 1940 Act.
ARTICLE V
STANDARD OF CARE; INDEMNIFICATION
Section 5.01. Standard of Care.
(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and
obligations under this Agreement, and shall be liable to each Fund for
all loss, damage and expense suffered or incurred by such Fund or its
Portfolios resulting from the failure of the Custodian to exercise
such reasonable care and diligence.
(b) Actions Prohibited by Applicable Law, Etc. In no event shall the
Custodian incur liability hereunder if the Custodian or any
Subcustodian or Securities System, or any subcustodian, securities
depository or securities system utilized by any such Subcustodian, or
any nominee of the Custodian or any Subcustodian (individually, a
"Person") is prevented, forbidden or delayed from performing, or omits
to perform, any act or thing which this Agreement provides shall be
performed or omitted to be performed, by reason of: (i) any provision
of any present or future law or regulation or order of the United
States of America, or any state thereof, or of any foreign country, or
political subdivision thereof or of any court of competent
jurisdiction; or (ii) any act of God or war or other similar
circumstance beyond the control of the Custodian, unless, in each
case, such delay or nonperformance is caused by (A) the negligence,
misfeasance or misconduct of the applicable Person, or (B) a
malfunction or failure of equipment operated or utilized by the
applicable Person other than a malfunction or failure beyond such
Person's control and which could not reasonably be anticipated and/or
prevented by such Person.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to any Fund or
Portfolio, (i) the Custodian shall, (ii) the Custodian shall cause any
applicable Domestic Subcustodian or Foreign Subcustodian to, and (iii)
the Custodian shall use its best efforts to cause any applicable
Interim Subcustodian or Special Subcustodian to, use all commercially
reasonable efforts and take all reasonable steps under the
circumstances to mitigate the effects of such event and to avoid
continuing harm to the Funds and the Portfolios.
(d) Advice of Counsel. The Custodian shall be entitled to receive
and act upon advice of counsel on all matters. The Custodian shall be
without liability for any action reasonably taken or omitted in good
faith pursuant to the advice of (i) counsel for the applicable Fund or
Funds, or (ii) at the expense of the Custodian, such other counsel as
the applicable Fund(s) and the Custodian may agree upon; provided,
however, with respect to the performance of any action or omission of
any action upon such advice, the Custodian shall be required to
conform to the standard of care set forth in Section 5.01(a).
(e) Expenses of the Funds. In addition to the liability of the
Custodian under this Article V, the Custodian shall be liable to each
applicable Fund for all reasonable costs and expenses incurred by such
Fund in connection with any claim by such Fund against the Custodian
arising from the obligations of the Custodian hereunder, including,
without limitation, all reasonable attorneys' fees and expenses
incurred by such Fund in asserting any such claim, and all expenses
incurred by such Fund in connection with any investigations, lawsuits
or proceedings relating to such claim; provided, that such Fund has
recovered from the Custodian for such claim.
(f) Liability for Past Records. The Custodian shall have no
liability in respect of any loss, damage or expense suffered by a
Fund, insofar as such loss, damage or expense arises from the
performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for such Fund
by entities other than the Custodian prior to the Custodian's
appointment as custodian for such Fund.
Section 5.02. Liability of Custodian for Actions of Other Persons.
(a) Domestic Subcustodians and Foreign Subcustodians. The Custodian
shall be liable for the actions or omissions of any Domestic
Subcustodian or any Foreign Subcustodian to the same extent as if such
action or omission were performed by the Custodian itself. In the
event of any loss, damage or expense suffered or incurred by a Fund
caused by or resulting from the actions or omissions of any Domestic
Subcustodian or Foreign Subcustodian for which the Custodian would
otherwise be liable, the Custodian shall promptly reimburse such Fund
in the amount of any such loss, damage or expense.
(b) Interim Subcustodians. Notwithstanding the provisions of Section
5.01 to the contrary, the Custodian shall not be liable to a Fund for
any loss, damage or expense suffered or incurred by such Fund or any
of its Portfolios resulting from the actions or omissions of an
Interim Subcustodian unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, in the event of any such loss, damage or
expense, the Custodian shall take all reasonable steps to enforce such
rights as it may have against such Interim Subcustodian to protect the
interests of the Funds and the Portfolios.
(c) Special Subcustodians and Additional Custodians. Notwithstanding
the provisions of Section 5.01 to the contrary and except as otherwise
provided in any subcustodian agreement to which the Custodian, a Fund
and any Special Subcustodian or Additional Custodian are parties, the
Custodian shall not be liable to a Fund for any loss, damage or
expense suffered or incurred by such Fund or any of its Portfolios
resulting from the actions or omissions of a Special Subcustodian or
Additional Subcustodian, unless such loss, damage or expense is caused
by, or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, that in the event of any such loss,
damage or expense, the Custodian shall take all reasonable steps to
enforce such rights as it may have against any Special Subcustodian or
Additional Custodian to protect the interests of the Funds and the
Portfolios.
(d) Securities Systems. Notwithstanding the provisions of Section
5.01 to the contrary, the Custodian shall not be liable to a Fund for
any loss, damage or expense suffered or incurred by such Fund or any
of its Portfolios resulting from the use by the Custodian of a
Securities System, unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, that in the event of any such loss,
damage or expense, the Custodian shall take all reasonable steps to
enforce such rights as it may have against the Securities System to
protect the interests of the Funds and the Portfolios.
(e) Reimbursement of Expenses. Each Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the
Custodian on behalf of such Fund in connection with the fulfillment of
its obligations under this Section 5.02; provided, however, that such
reimbursement shall not apply to expenses occasioned by or resulting
from the negligence, misfeasance or misconduct of the Custodian.
Section 5.03. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, each Fund severally and not jointly agrees to
indemnify and hold harmless the Custodian and its nominees from all
loss, damage and expense (including reasonable attorneys' fees)
suffered or incurred by the Custodian or its nominee caused by or
arising from actions taken by the Custodian on behalf of such Fund in
the performance of its duties and obligations under this Agreement;
provided, however, that such indemnity shall not apply to loss, damage
and expense occasioned by or resulting from the negligence,
misfeasance or misconduct of the Custodian or its nominee. In
addition, each Fund agrees severally and not jointly to indemnify any
Person against any liability incurred by reason of taxes assessed to
such Person, or other loss, damage or expenses incurred by such
Person, resulting from the fact that securities and other property of
such Fund's Portfolios are registered in the name of such Person;
provided, however, that in no event shall such indemnification be
applicable to income, franchise or similar taxes which may be imposed
or assessed against any Person.
(b) Notice of Litigation, Right to Prosecute, Etc. No Fund shall be
liable for indemnification under this Section 5.03 unless a Person
shall have promptly notified such Fund in writing of the commencement
of any litigation or proceeding brought against such Person in respect
of which indemnity may be sought under this Section 5.03. With
respect to claims in such litigation or proceedings for which
indemnity by a Fund may be sought and subject to applicable law and
the ruling of any court of competent jurisdiction, such Fund shall be
entitled to participate in any such litigation or proceeding and,
after written notice from such Fund to any Person, such Fund may
assume the defense of such litigation or proceeding with counsel of
its choice at its own expense in respect of that portion of the
litigation for which such Fund may be subject to an indemnification
obligation; provided, however, a Person shall be entitled to
participate in (but not control) at its own cost and expense, the
defense of any such litigation or proceeding if such Fund has not
acknowledged in writing its obligation to indemnify the Person with
respect to such litigation or proceeding. If such Fund is not
permitted to participate or control such litigation or proceeding
under applicable law or by a ruling of a court of competent
jurisdiction, such Person shall reasonably prosecute such litigation
or proceeding. A Person shall not consent to the entry of any
judgment or enter into any settlement in any such litigation or
proceeding without providing each applicable Fund with adequate notice
of any such settlement or judgment, and without each such Fund's prior
written consent. All Persons shall submit written evidence to each
applicable Fund with respect to any cost or expense for which they are
seeking indemnification in such form and detail as such Fund may
reasonably request.
Section 5.04. Investment Limitations. If the Custodian has
otherwise complied with the terms and conditions of this Agreement in
performing its duties generally, and more particularly in connection
with the purchase, sale or exchange of securities made by or for a
Portfolio, the Custodian shall not be liable to the applicable Fund
and such Fund agrees to indemnify the Custodian and its nominees, for
any loss, damage or expense suffered or incurred by the Custodian and
its nominees arising out of any violation of any investment or other
limitation to which such Fund is subject.
Section 5.05. Fund's Right to Proceed. Notwithstanding anything to
the contrary contained herein, each Fund shall have, at its election
upon reasonable notice to the Custodian, the right to enforce, to the
extent permitted by any applicable agreement and applicable law, the
Custodian's rights against any Subcustodian, Securities System, or
other Person for loss, damage or expense caused such Fund by such
Subcustodian, Securities System, or other Person, and shall be
entitled to enforce the rights of the Custodian with respect to any
claim against such Subcustodian, Securities System or other Person,
which the Custodian may have as a consequence of any such loss, damage
or expense, if and to the extent that such Fund has not been made
whole for any such loss or damage. If the Custodian makes such Fund
whole for any such loss or damage, the Custodian shall retain the
ability to enforce its rights directly against such Subcustodian,
Securities System or other Person. Upon such Fund's election to
enforce any rights of the Custodian under this Section 5.05, such Fund
shall reasonably prosecute all actions and proceedings directly
relating to the rights of the Custodian in respect of the loss, damage
or expense incurred by such Fund; provided that, so long as such Fund
has acknowledged in writing its obligation to indemnify the Custodian
under Section 5.03 hereof with respect to such claim, such Fund shall
retain the right to settle, compromise and/or terminate any action or
proceeding in respect of the loss, damage or expense incurred by such
Fund without the Custodian's consent and provided further, that if
such Fund has not made an acknowledgement of its obligation to
indemnify, such Fund shall not settle, compromise or terminate any
such action or proceeding without the written consent of the
Custodian, which consent shall not be unreasonably withheld or
delayed. The Custodian agrees to cooperate with each Fund and take
all actions reasonably requested by such Fund in connection with such
Fund's enforcement of any rights of the Custodian. Each Fund agrees
to reimburse the Custodian for all reasonable out-of-pocket expenses
incurred by the Custodian on behalf of such Fund in connection with
the fulfillment of its obligations under this Section 5.05; provided,
however, that such reimbursement shall not apply to expenses
occasioned by or resulting from the negligence, misfeasance or
misconduct of the Custodian.
ARTICLE VI
COMPENSATION
On behalf of each of its Portfolios, each Fund shall compensate the
Custodian in an amount, and at such times, as may be agreed upon in
writing, from time to time, by the Custodian and such Fund.
ARTICLE VII
TERMINATION
Section 7.01. Termination of Agreement as to One or More Funds.
With respect to each Fund, this Agreement shall continue in full force
and effect until the first to occur of: (a) termination by the
Custodian by an instrument in writing delivered or mailed to such
Fund, such termination to take effect not sooner than ninety (90) days
after the date of such delivery; (b) termination by such Fund by an
instrument in writing delivered or mailed to the Custodian, such
termination to take effect not sooner than thirty (30) days after the
date of such delivery; or (c) termination by such Fund by written
notice delivered to the Custodian, based upon such Fund's
determination that there is a reasonable basis to conclude that the
Custodian is insolvent or that the financial condition of the
Custodian is deteriorating in any material respect, in which case
termination shall take effect upon the Custodian's receipt of such
notice or at such later time as such Fund shall designate. In the
event of termination pursuant to this Section 7.01 by any Fund (a
"Terminating Fund"), each Terminating Fund shall make payment of all
accrued fees and unreimbursed expenses with respect to such
Terminating Fund within a reasonable time following termination and
delivery of a statement to the Terminating Fund setting forth such
fees and expenses. Each Terminating Fund shall identify in any notice
of termination a successor custodian or custodians to which the cash,
securities and other assets of its Portfolios shall, upon termination
of this Agreement with respect to such Terminating Fund, be delivered.
In the event that no written notice designating a successor custodian
shall have been delivered to the Custodian on or before the date when
termination of this Agreement as to a Terminating Fund shall become
effective, the Custodian may deliver to a bank or trust company doing
business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities
and other assets of such Terminating Fund's Portfolios held by the
Custodian and all instruments held by the Custodian relative thereto
and all other property of the Terminating Fund's Portfolios held by
the Custodian under this Agreement. Thereafter, such bank or trust
company shall be the successor of the Custodian with respect to such
Terminating Fund under this Agreement. In the event that securities
and other assets of such Terminating Fund's Portfolios remain in the
possession of the Custodian after the date of termination hereof with
respect to such Terminating Fund owing to failure of the Terminating
Fund to appoint a successor custodian, the Custodian shall be entitled
to compensation for its services in accordance with the fee schedule
most recently in effect, for such period as the Custodian retains
possession of such securities and other assets, and the provisions of
this Agreement relating to the duties and obligations of the Custodian
and the Terminating Fund shall remain in full force and effect. In
the event of the appointment of a successor custodian, it is agreed
that the cash, securities and other property owned by a Terminating
Fund and held by the Custodian, any Subcustodian or nominee shall be
delivered to the successor custodian; and the Custodian agrees to
cooperate with such Terminating Fund in the execution of documents and
performance of other actions necessary or desirable in order to
substitute the successor custodian for the Custodian under this
Agreement.
Section 7.02. Termination as to One or More Portfolios. This
Agreement may be terminated as to one or more of a Fund's Portfolios
(but less than all of its Portfolios) by delivery of an amended
Appendix "A" deleting such Portfolios pursuant to Section 9.05(b)
hereof, in which case termination as to such deleted Portfolios shall
take effect thirty (30) days after the date of such delivery. The
execution and delivery of an amended Appendix "A" which deletes one or
more Portfolios shall constitute a termination of this Agreement only
with respect to such deleted Portfolio(s), shall be governed by the
preceding provisions of Section 7.01 as to the identification of a
successor custodian and the delivery of cash, securities and other
assets of the Portfolio(s) so deleted, and shall not affect the
obligations of the Custodian and any Fund hereunder with respect to
the other Portfolios set forth in Appendix "A," as amended from time
to time.
ARTICLE VIII
DEFINED TERMS
The following terms are defined in the following sections:
Term Section
Account 2.22
ADRs 2.06
Additional Custodian 2.23(a)
Authorized Person(s) 3.02
Banking Institution 2.12(a)
Business Day Appendix "C"
Bank Accounts 2.21
Distribution Account 2.16
Domestic Subcustodian 4.01
Foreign Subcustodian 4.02(a)
Fund Preamble
Institutional Client 2.03
Interim Subcustodian 4.02(b)
Overdraft 2.28
Overdraft Notice 2.28
Person 5.01(b)
Portfolio Preamble
Procedural Agreement 2.10
Proper Instructions 3.01(a)
SEC 2.22
Securities System 2.22
Shares 2.16
Special Instructions 3.01(b)
Special Subcustodian 4.03
Subcustodian Article IV
Terminating Fund 7.01
1940 Act Preamble
ARTICLE IX
MISCELLANEOUS
Section 9.01. Execution of Documents, Etc.
(a) Actions by each Fund. Upon request, each Fund shall execute and
deliver to the Custodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in
connection with the performance by the Custodian or any Subcustodian
of their respective obligations to such Fund under this Agreement or
any applicable subcustodian agreement with respect to such Fund,
provided that the exercise by the Custodian or any Subcustodian of any
such rights shall in all events be in compliance with the terms of
this Agreement.
(b) Actions by Custodian. Upon receipt of Proper Instructions, the
Custodian shall execute and deliver to each applicable Fund or to such
other parties as such Fund(s) may designate in such Proper
Instructions, all such documents, instruments or agreements as may be
reasonable and necessary or desirable in order to effectuate any of
the transactions contemplated hereby.
Section 9.02. Representative Capacity; Nonrecourse Obligations. A
COPY OF THE DECLARATION OF TRUST OR OTHER ORGANIZATIONAL DOCUMENT OF
EACH FUND IS ON FILE WITH THE SECRETARY OF THE STATE OF THE FUND'S
FORMATION, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT
EXECUTED ON BEHALF OF THE TRUSTEES OF ANY FUND AS INDIVIDUALS, AND THE
OBLIGATIONS OF THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE
TRUSTEES, OFFICERS, SHAREHOLDERS OR PARTNERS OF ANY FUND INDIVIDUALLY,
BUT ARE BINDING ONLY UPON THE ASSETS AND PROPERTY OF EACH FUND'S
RESPECTIVE PORTFOLIOS. THE CUSTODIAN AGREES THAT NO SHAREHOLDER,
TRUSTEE, OFFICER OR PARTNER OF ANY FUND MAY BE HELD PERSONALLY LIABLE
OR RESPONSIBLE FOR ANY OBLIGATIONS OF ANY FUND ARISING OUT OF THIS
AGREEMENT.
Section 9.03. Several Obligations of the Funds and the Portfolios.
WITH RESPECT TO ANY OBLIGATIONS OF A FUND ON BEHALF OF ANY OF ITS
PORTFOLIOS ARISING OUT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE OBLIGATIONS ARISING UNDER SECTIONS 2.28, 5.03, 5.05
and ARTICLE VI HEREOF, THE CUSTODIAN SHALL LOOK FOR PAYMENT OR
SATISFACTION OF ANY OBLIGATION SOLELY TO THE ASSETS AND PROPERTY OF
THE PORTFOLIO TO WHICH SUCH OBLIGATION RELATES AS THOUGH EACH FUND HAD
SEPARATELY CONTRACTED WITH THE CUSTODIAN BY SEPARATE WRITTEN
INSTRUMENT WITH RESPECT TO EACH OF ITS PORTFOLIOS.
Section 9.04. Representations and Warranties.
(a) Representations and Warranties of Each Fund. Each Fund hereby
severally and not jointly represents and warrants that each of the
following shall be true, correct and complete with respect to each
Fund at all times during the term of this Agreement: (i) the Fund is
duly organized under the laws of its jurisdiction of organization and
is registered as an open-end management investment company under the
1940 Act; and (ii) the execution, delivery and performance by the Fund
of this Agreement are (w) within its power, (x) have been duly
authorized by all necessary action, and (y) will not (A) contribute to
or result in a breach of or default under or conflict with any
existing law, order, regulation or ruling of any governmental or
regulatory agency or authority, or (B) violate any provision of the
Fund's corporate charter, Declaration of Trust or other organizational
document, or bylaws, or any amendment thereof or any provision of its
most recent Prospectus or Statement of Additional Information.
(b) Representations and Warranties of the Custodian. The Custodian
hereby represents and warrants to each Fund that each of the following
shall be true, correct and complete at all times during the term of
this Agreement: (i) the Custodian is duly organized under the laws of
its jurisdiction of organization and qualifies to act as a custodian
to open-end management investment companies under the provisions of
the 1940 Act; and (ii) the execution, delivery and performance by the
Custodian of this Agreement are (w) within its power, (x) have been
duly authorized by all necessary action, and (y) will not (A)
contribute to or result in a breach of or default under or conflict
with any existing law, order, regulation or ruling of any governmental
or regulatory agency or authority, or (B) violate any provision of the
Custodian's corporate charter, or other organizational document, or
bylaws, or any amendment thereof.
Section 9.05. Entire Agreement. This Agreement constitutes the
entire understanding and agreement of the Fund, on the one hand, and
the Custodian, on the other, with respect to the subject matter hereof
and accordingly, supersedes as of the effective date of this Agreement
any custodian agreement heretofore in effect between each Fund and the
Custodian.
Section 9.06. Waivers and Amendments. No provision of this
Agreement may be waived, amended or terminated except by a statement
in writing signed by the party against which enforcement of such
waiver, amendment or termination is sought; provided, however: (a)
Appendix "A" listing the Portfolios of each Fund for which the
Custodian serves as custodian may be amended from time to time to add
one or more Portfolios for one or more Funds, by each applicable
Fund's execution and delivery to the Custodian of an amended Appendix
"A", and the execution of such amended Appendix by the Custodian, in
which case such amendment shall take effect immediately upon execution
by the Custodian; (b) Appendix "A" may be amended from time to time to
delete one or more Portfolios (but less than all of the Portfolios) of
one or more of the Funds, by each applicable Fund's execution and
delivery to the Custodian of an amended Appendix "A", in which case
such amendment shall take effect thirty (30) days after such delivery,
unless otherwise agreed by the Custodian and each applicable Fund in
writing; (c) Appendix "B" listing Foreign Subcustodians, Special
Subcustodians and Additional Custodians approved by any Fund may be
amended from time to time to add or delete one or more Foreign
Subcustodians, Special Subcustodians or Additional Custodians for a
Fund or Funds by each applicable Fund's execution and delivery to the
Custodian of an amended Appendix "B", in which case such amendment
shall take effect immediately upon execution by the Custodian; and (d)
Appendix "C" setting forth the procedures relating to the Custodian's
security interest with respect to each Fund may be amended only by an
instrument in writing executed by each applicable Fund and the
Custodian.
Section 9.07. Interpretation. In connection with the operation of
this Agreement, the Custodian and any Fund may agree in writing from
time to time on such provisions interpretative of or in addition to
the provisions of this Agreement with respect to such Fund as may in
their joint opinion be consistent with the general tenor of this
Agreement. No interpretative or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment
of this Agreement or affect any other Fund.
Section 9.08. Captions. Headings contained in this Agreement, which
are included as convenient references only, shall have no bearing upon
the interpretation of the terms of the Agreement or the obligations of
the parties hereto.
Section 9.09. Governing Law. Insofar as any question or dispute may
arise in connection with the custodianship of foreign securities
pursuant to an agreement with a Foreign Subcustodian that is governed
by the laws of the State of New York, the provisions of this Agreement
shall be construed in accordance with and governed by the laws of the
State of New York, provided that in all other instances this Agreement
shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts, in each case without giving effect to
principles of conflicts of law.
Section 9.10. Notices. Except in the case of Proper Instructions or
Special Instructions, notices and other writings contemplated by this
Agreement shall be delivered by hand or by facsimile transmission
(provided that in the case of delivery by facsimile transmission,
notice shall also be mailed postage prepaid to the parties at the
following addresses:
(a) If to any Fund:
c/o Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02109
Attn: Treasurer of the Fidelity Funds
Telephone: (617) 563-7000
Telefax: (617) 476-4195
(b) If to the Custodian:
Brown Brothers Harriman & Company
40 Water Street
Boston, Massachusetts 02109
Attn: W. Casey Gildea, Assistant Manager
Telephone: (617) 772-1330
Telefax: (617) 772-2263
or to such other address as a Fund or the Custodian may have
designated in writing to the other.
Section 9.11. Assignment. This Agreement shall be binding on and
shall inure to the benefit of each Fund severally and the Custodian
and their respective successors and assigns, provided that, subject to
the provisions of Section 7.01 hereof, neither the Custodian nor any
Fund may assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of the other party.
Section 9.12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
With respect to each Fund, this Agreement shall become effective when
one or more counterparts have been signed and delivered by such Fund
and the Custodian.
Section 9.13. Confidentiality; Survival of Obligations. The parties
hereto agree that each shall treat confidentially the terms and
conditions of this Agreement and all information provided by each
party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by
any other party hereto solely for the purpose of rendering services
pursuant to this Agreement and, except as may be required in carrying
out this Agreement, shall not be disclosed to any third party without
the prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when provided
or thereafter becomes publicly available other than through a breach
of this Agreement, or that is required to be disclosed by any bank
examiner of the Custodian or any Subcustodian, any auditor of the
parties hereto, by judicial or administrative process or otherwise by
applicable law or regulation. The provisions of this Section 9.13 and
Sections 9.01, 9.02, 9.03, 9.09, Section 2.28, Section 3.04, Section
7.01, Article V and Article VI hereof and any other rights or
obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in its name and behalf on the day and year first above
written.
Each of the Investment Companies Listed on Brown Brothers Harriman &
Company
Appendix "A" Attached Hereto, on Behalf
of each of Their Respective Portfolios
[Signature Lines Omitted]
Exhibit 8(n)
Appendix "B"
To
Custodian Agreement
Between
Brown Brothers Harriman & Co. and Each of the Investment
Companies Listed on Appendix "A" thereto
Dated as of ______________
The following is a list of Additional Custodians, Special
Subcustodians and Foreign Subcustodians under the Custodian Agreement
dated as of September 1, 1994 (the "Custodian Agreement"):
A. Additional Custodians
CUSTODIAN PURPOSE
Bank of New York FICASH
FITERM
B. Special Subcustodians:
SUBCUSTODIAN PURPOSE
Bank of New York FICASH
C. Foreign Subcustodians:
COUNTRY FOREIGN SUBCUSTODIAN DEPOSITORY
Argentina Citibank, N.A., Buenos Aires Caja de Valores, S.A.;
(Citibank, N.A., New York Agt. 7/16/81 Central de Registracion y
New York Agreement Amendment 8/31/90) Liquidacion de Instrumentos
de Endeudamiento Publico (CRYL)
First National Bank of Boston, Buenos Aires
(First Nat. Bank of Boston Agreement 1/15/88
Omnibus Amendment 2/22/94)
Australia National Australia Bank Ltd., Melbourne Austraclear
Limited;
(National Australia Bank Agt. 5/1/85 Reserve Bank Information and
Agreement Amendment 2/13/92 Transfer System (RITS)
Omnibus Amendment 11/22/93)
Austria Creditanstalt-Bankverein, Vienna Oesterreichische
Kontrollbank
(Creditanstalt Bankverein Agreement 12/18/89 Aktiengesellschaft
(OEKB)
Omnibus Amendment 1/17/94)
Bahrain British Bank of the Middle East, Manama None
Bangladesh Standard Chartered Bank, Dhaka None
(Standard Chartered Bank Agreement 2/18/92)
Belgium Banque Bruxelles Lambert, Brussels Caisse
Interprofessionnelle de Depot
(Banque Bruxelles Lambert Agreement 11/15/90 et Virements de Titres
(CIK)
Omnibus Amendment 3/1/94)
Banque Nationale de Belgique (BNB)
Bostwana Barclays Bank of Bostwana Ltd., Gaborone None
(Barclays Bank Agreement 10/5/94)
Brazil First National Bank of Boston, Sao Paulo Sao Paulo Stock
Exchange
(First National Bank of Boston Agreement 1/5/88 (BOVESPA), Sistema
Especial de
Omnibus Amendment 2/22/94) Liquidacao e Custodia (SELIC);
Rio de Janeiro Exchange (BVRJ)
Canada Canadian Imperial Bank of Commerce, Toronto Canadian
Depository for Securities,
(Canadian Imperial Bank of Commerce Ltd., (CDS)
Agreement 9/9/88
Omnibus Amendment 12/1/93)
Royal Bank of Canada, Toronto Bank of Canada
Proposed Agreement
Chile Citibank, N.A., Santiago None
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
China-Shanghai Standard Chartered Bank, Shanghai Shanghai Securities
Central Clearing (Standard Chartered Bank Agreement 2/18/92) &
Registration Corporation (SSCCRC)
China-Shenzhen Standard Chartered Bank, Shenzhen Shenzhen Securities
Registration (Standard Chartered Bank Agreement 2/18/92) Corp.
Ltd., (SSRC)
Colombia Cititrust Colombia , S.A., Sociedad Fiduciaria, Bogota None
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
Citibank N.A. Subsidiary Amendment 10/19/95
Citibank N.A./Cititrust Colombia Agreement 12/2/91)
Czech Republic Ceskoslovenska Obchodni Banka, S.A., Prague Stredisko
Cennych Papiru (SCP)
(Ceskoslovenska Obchodni Banka Agreement 2/28/94)
Czech National Bank
Denmark Den Danske Bank, Copenhagen Vaerdipapircentralen - VP Center
(Den Danske Bank Agreement 1/1/89
Omnibus Amendment 12/1/93)
Ecuador Citibank, N.A., Quito None
(Citibank, N.A. New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
Citibank, Quito Side Letter 7/3/95)
Egypt Citibank, N.A., Cairo Misr for Clearing, Settlement
(Citibank, N.A. New York Agreement 7/16/81 and Depository
New York Agreement Amendment 8/31/90)
Finland Merita Bank Ltd., Helsinki Central Share Register of
Finland Cooperative (CSR)
Helsinki Money Market Center, Ltd.
(HMMC)
Finnish Central Securities
Depository Ltd.
France Banque Paribas, Paris SICOVAM
Agreement 4/2/93) Banque de France
Germany Dresdner Bank AG, Frankfurt Deutscher Kassenverein AG (DKV)
(Dresdner Bank Agreement 10/6/95)
Ghana Barclays Bank of Ghana Ltd., Accra None
(Barclays Bank Agreement 10/5/94)
Greece Citibank, N.A., Athens Apothetirion Titlon A.E.
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
Hong Kong The Hongkong & Shanghai Banking Hong Kong Securities
Clearing Co. Corp., Ltd., Hong Kong Ltd. (HKSCC);
(Hongkong & Shanghai Banking Corp. Agt. 4/19/91 Central Clearing and
Omnibus Supplement 12/29/93) Settlement System (CCASS)
Hungary Citibank Budapest, Rt. Central Depository and Clearing
(Citibank N.A., New York Agreement 7/16/81 House (Budapest) Ltd.,
New York Agreement Amendment 8/31/90 (KELER Ltd.)
Citibank N.A. Subsidiary Amendment 10/19/95
Citibank N.A./Citibank Budapest Agmt. 1/24/92
(amended 6/23/92 and 9/29/92))
India Citibank, N.A., Mumbai National Securities Depository Limted
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
Citibank, Mumbai Amendment 11/17/93)
Standard Chartered Bank, Mumbai
(Standard Chartered Bank Agreement 2/18/92
SCB, Mumbai Annexure and Side Letter 7/18/94)
Indonesia Citibank, N.A., Jakarta None
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
Ireland Allied Irish Banks, plc., Dublin Gilt Settlement Office (GSO)
(Allied Irish Banks Agreement 1/10/89
Omnibus Amendment 4/8/94) CREST
Israel Bank Hapoalim, B.M. Tel-Aviv Stock Exchange
(Bank Hapoalim Agreement 8/27/92) (TASE) Clearinghouse Ltd.
Italy Banca Commerciale Italiana, Milan Monte Titoli S.p.A.
(Banca Commerciale Italiana Agreement 5/8/89
Agreement Amendment 10/8/93 Banca D'Italia
Omnibus Amendment 12/14/93)
Japan Sumitomo Trust & Banking Co., Tokyo Japan Securities Depository
Center
(Sumitomo Trust & Banking Agreement 7/17/92 (JASDEC)
Omnibus Amendment 1/13/94); Bank of Japan
Jordan Arab Bank, plc, Amman None
(Arab Bank Agreement 4/5/95
Kenya Barclays Bank of Kenya Ltd., Nairobi None
(Barclays Bank Agreement 10/5/94)
Lebanon British Bank of the Middle East, Beirut Midclear
Malaysia Hongkong Bank Malaysia Berhad Malaysian Central Depository
Sdn. (Hongkong & Shanghai Banking Corp. Agt. 4/19/91 Bhd. (MCD)
Omnibus Supplement 12/29/93
Malaysia Subsidiary Supplement 5/23/94) Bank Negara Malaysia
Mauritius Hongkong & Shanghai Banking Corp., Ltd., Central Depository
& Settlement Co., Port Louis Ltd.
Mexico Citibank Mexico, S.A., Mexico City Institucion para el
Deposito de
(Citibank N.A., New York Agreement 7/16/81 Valores- S.D. INDEVAL,
S.A. de New York Agreement Amendment 8/31/90 C.V.
Citibank, Mexico, S.A. Amendment 2/7/95)
Banco de Mexico
Morocco Banque Marocaine du Commerce Exterieur, None
Casablanca
(BMCE Agreement 7/6/94)
Namibia Standard Bank Namibia Ltd., Windhoek None
Netherlands ABN-AMRO, Bank N. V., Amsterdam Nederlands Centraal
Instituut voor Giraal Effektenverkeer BV (NECIGEF)/KAS
Associatie N.V. (ABN-AMRO Agreement 12/19/88) (KAS)
De Nederlandsche Bank (DNB)New New Zealand National Australia Bank
Ltd., Melbourne Reserve Bank of New Zealand
(RBNZ)
(National Australia Bank Agreement 5/1/85
Agreement Amendment 2/13/92 New Zealand Securities
Omnibus Amendment 11/22/93 Depository Limited (NZCDS)
New Zealand Addendum 3/7/89)
Norway Den norske Bank ASA, Oslo Verdipapirsentralen (VPS)
(Den norske Bank Agreement 11/16/94)
Oman British Bank of the Middle East, Muscat Muscat Securities Market
Pakistan Standard Chartered Bank, Karachi None
(Standard Chartered Bank Agreement 2/18/92)
Peru Citibank, N.A., Lima Caja de Valores (CAVAL)
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
Philippines Citibank, N.A., Manila The Philippines Central
Depository, (Citibank N.A., New York Agreement 7/16/81 Inc.
New York Agreement Amendment 8/31/90)
Poland Citibank Poland, S.A. National Depository of Securities
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90 National Bank of Poland
Citibank Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Poland S.A. Agt. 11/6/92)
Bank Polska Kasa Opieki S.A., Warsaw
Portugal Banco Espirito Santo e Comercial Central de Valores
Mobiliaros
de Lisboa, S.A., Lisbon (Interbolsa)
(BESCL Agreement 4/26/89
Omnibus Amendment 2/23/94)
Russia Credit Suisse First Boston (Moscow), Ltd Rosvneshtorgbank
Singapore Hongkong & Shanghai Banking Central Depository Pte Ltd.
(CDP)
Corp., Ltd., Singapore
(Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93)
Slovak Republic Ceskoslovenska Obchodna Banka, S.A., Bratislava
Stredisko Cennych Papeirov (SCP)
(Ceskoslovenska Obchodna Banka Agmt. 10/12/94)
National Bank of Slovakia
South Africa First National Bank of Southern Africa Ltd., The Central
Depository (Pty) Ltd. Johannesburg (CD)
(First National Bank of Southern Africa Agmt. 8/7/91)
South Korea Citibank, N.A., Seoul Korean Securities Depository (KSD)
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
Citibank, Seoul Agreement Supplement 10/28/94)
Spain Banco Santander S.A., Madrid Servicio de Compensacion y
(Banco Santander Agreement 12/14/88) Liquidacion de Valores (SCLV)
Banco de Espana
Sri Lanka Hongkong & Shanghai Banking Corp. Ltd., Central Depository
System (Pvt) Colombo Limited (CDS)
(Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93)
Swaziland Barclays Bank of Swaziland Ltd., Mbabne None
(Barclays Bank Agreement 10/5/94)
Sweden Skandinaviska Enskilda Banken, Stockholm Vardepappercentralen
VPC AB
(Skandinaviska Enskilda Banken Agreement 2/20/89
Omnibus Amendment 12/3/93)
Switzerland Swiss Bank Corporation, Basel Schweizerische Effekten -
Giro A.G.
(Swiss Bank Corporation Agreement 3/1/94) (SEGA)
Taiwan Standard Chartered Bank, Taipei Taiwan Securities Central
Depository (Standard Chartered Bank Agmt. 2/18/92) Co. Ltd. (TSCD)
Thailand Hongkong & Shanghai Banking Corp. Ltd., Thailand Securities
Depository
Bangkok Company (TSD)
(Hongkong & Shanghai Banking Corp. Agmt. 4/19/91
Omnibus Amendment 12/29/93)
Transnational Cedel Bank Societe
Anonyme, Luxembourg
Euroclear Clearance System
Societe Cooperative, Belgium
Turkey Citibank, N.A., Istanbul Takas ve Saklama Bankasi A.S. (TvS)
(Citibank N.A., New York Agmt. 7/16/81
New York Agmt. Amendment 8/31/90) Central Bank of Turkey (CBT)
United Kingdom Lloyds Bank PLC, London Central Gilts Office (CGO);
CREST;
Central Money Markets Office
(CMO)
Uruguay First National Bank of Boston, Montevideo None
Venezuela Citibank, N.A., Caracas None
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
Zambia Stanbic Bank Zambia Ltd., Lusaka Lusaka Central Depository
Zimbabwe Stanbic Bank Zimbabwe Ltd., Harare None
Each of the Investment Companies Listed on Appendix "A" to the
Custodian Agreement,
on Behalf of Each of Their Respective Portfolios
[Signature Lines Omitted]
Exhibit 8(n)
FORM OF
Appendix "C" to the
Custodian Agreement
Between
Each of the Investment Companies
Listed on Appendix "A" Thereto
And
BROWN BROTHERS HARRIMAN & COMPANY
Dated as of ____________
PROCEDURES RELATING TO CUSTODIAN'S SECURITY INTEREST
As security for any Overdrafts (as defined in the Custodian
Agreement) of any Portfolio, the applicable Fund, on behalf of such
Portfolio, shall pledge, assign and grant to the Custodian a security
interest in Collateral (as hereinafter defined), under the terms,
circumstances and conditions set forth in this Appendix "C".
Section 1. Defined Terms. As used in this Appendix "C" the
following terms shall have the following respective meanings:
(a) "Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which the Custodian is closed for business.
(b) "Collateral" shall mean, with respect to any Portfolio,
securities held by the Custodian on behalf of the Portfolio having a
fair market value (as determined in accordance with the procedures set
forth in the prospectus for the Portfolio) equal to the aggregate of
all Overdraft Obligations of such Portfolio: (i) identified in any
Pledge Certificate executed on behalf of such Portfolio; or (ii)
designated by the Custodian for such Portfolio pursuant to Section 3
of this Appendix C. Such securities shall consist of marketable
securities held by the Custodian on behalf of such Portfolio or, if no
such marketable securities are held by the Custodian on behalf of such
Portfolio, such other securities designated by the applicable Fund in
the applicable Pledge Certificate or by the Custodian pursuant to
Section 3 of this Appendix C.
(c) "Overdraft Obligations" shall mean, with respect to any
Portfolio, the amount of any outstanding Overdraft(s) provided by the
Custodian to such Portfolio together with all accrued interest
thereon.
(d) "Pledge Certificate" shall mean a Pledge Certificate in the form
attached to this Appendix "C" as Schedule 1 executed by a duly
authorized officer of the applicable Fund and delivered by such Fund
to the Custodian by facsimile transmission or in such other manner as
the applicable Fund and the Custodian may agree in writing.
(e) "Release Certificate" shall mean a Release Certificate in the
form attached to this Appendix "C" as Schedule 2 executed by a duly
authorized officer of the Custodian and delivered by the Custodian to
the applicable Fund by facsimile transmission or in such other manner
as such Fund and the Custodian may agree in writing.
(f) "Written Notice" shall mean a written notice executed by a duly
authorized officer of the party delivering the notice and delivered by
facsimile transmission or in such other manner as the applicable Fund
and the Custodian shall agree in writing.
Section 2. Pledge of Collateral. To the extent that any Overdraft
Obligations of a Portfolio are not satisfied by the close of business
on the first Business Day following the Business Day on which the
applicable Fund receives Written Notice requesting security for such
Overdraft Obligation and stating the amount of such Overdraft
Obligation, the applicable Fund, on behalf of such Portfolio, shall
pledge, assign and grant to the Custodian a first priority security
interest, by delivering to the Custodian, a Pledge Certificate
executed by such Fund on behalf of such Portfolio describing the
applicable Collateral. Such Written Notice may, in the discretion of
the Custodian, be included within or accompany the Overdraft Notice
relating to the applicable Overdraft Obligations.
Section 3. Failure to Pledge Collateral. In the event that the
applicable Fund shall fail: (a) to pay, on behalf of the applicable
Portfolio, the Overdraft Obligation described in such Written Notice;
(b) to deliver to the Custodian a Pledge Certificate pursuant to
Section 2; or (c) to identify substitute securities pursuant to
Section 6 upon the sale or maturity of any securities identified as
Collateral, the Custodian may, by Written Notice to the applicable
Fund specify Collateral which shall secure the applicable Overdraft
Obligation. Such Fund, on behalf of any applicable Portfolio, hereby
pledges, assigns and grants to the Custodian a first priority security
interest in any and all Collateral specified in such Written Notice;
provided that such pledge, assignment and grant of security shall be
deemed to be effective only upon receipt by the applicable Fund of
such Written Notice.
Section 4. Delivery of Additional Collateral. If at any time the
Custodian shall notify a Fund by Written Notice that the fair market
value of the Collateral securing any Overdraft Obligation of one of
such Fund's Portfolios is less than the amount of such Overdraft
Obligation, such Fund, on behalf of the applicable Portfolio, shall
deliver to the Custodian, within one (1) Business Day following the
Fund's receipt of such Written Notice, an additional Pledge
Certificate describing additional Collateral. If such Fund shall fail
to deliver such additional Pledge Certificate, the Custodian may
specify Collateral which shall secure the unsecured amount of the
applicable Overdraft Obligation in accordance with Section 3 of this
Appendix C.
Section 5. Release of Collateral. Upon payment by a Fund, on behalf
of one of its Portfolios, of any Overdraft Obligation secured by the
pledge of Collateral, the Custodian shall promptly deliver to such
Fund a Release Certificate pursuant to which the Custodian shall
release Collateral from the lien under the applicable Pledge
Certificate or Written Notice pursuant to Section 3 having a fair
market value equal to the amount paid by such Fund on account of such
Overdraft Obligation. In addition, if at any time a Fund shall notify
the Custodian by Written Notice that such Fund desires that specified
Collateral be released and: (a) that the fair market value of the
Collateral securing any Overdraft Obligation shall exceed the amount
of such Overdraft Obligation; or (b) that the Fund has delivered a
Pledge Certificate substituting Collateral for such Overdraft
Obligation, the Custodian shall deliver to such Fund, within one (1)
Business Day following the Custodian's receipt of such Written Notice,
a Release Certificate relating to the Collateral specified in such
Written Notice.
Section 6. Substitution of Collateral. A Fund may substitute
securities for any securities identified as Collateral by delivery to
the Custodian of a Pledge Certificate executed by such Fund on behalf
of the applicable Portfolio, indicating the securities pledged as
Collateral.
Section 7. Security for Individual Portfolios' Overdraft
Obligations. The pledge of Collateral by a Fund on behalf of any of
its individual Portfolios shall secure only the Overdraft Obligations
of such Portfolio. In no event shall the pledge of Collateral by one
of a Fund's Portfolios be deemed or considered to be security for the
Overdraft Obligations of any other Portfolio of such Fund or of any
other Fund.
Section 8. Custodian's Remedies. Upon (a) a Fund's failure to pay
any Overdraft Obligation of an applicable Portfolio within thirty (30)
days after receipt by such Fund of a Written Notice demanding security
therefore, and (b) one (1) Business Day's prior Written Notice to such
Fund, the Custodian may elect to enforce its security interest in the
Collateral securing such Overdraft Obligation, by taking title to (at
the then prevailing fair market value), or selling in a commercially
reasonable manner, so much of the Collateral as shall be required to
pay such Overdraft Obligation in full. Notwithstanding the provisions
of any applicable law, including, without limitation, the Uniform
Commercial Code, the remedy set forth in the preceding sentence shall
be the only right or remedy to which the Custodian is entitled with
respect to the pledge and security interest granted pursuant to any
Pledge Certificate or Section 3. Without limiting the foregoing, the
Custodian hereby waives and relinquishes all contractual and common
law rights of set off to which it may now or hereafter be or become
entitled with respect to any obligations of any Fund to the Custodian
arising under this Appendix "C" to the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Appendix to
be executed in its name and behalf on the day and year first above
written.
Each of the Investment Companies Listed on BROWN BROTHERS HARRIMAN &
Schedule "A" to the Custodian Agreement, on COMPANY
Behalf of Each of Their Respective Portfolios
[Signature Lines Omitted]
SCHEDULE 1
TO
APPENDIX "C"
PLEDGE CERTIFICATE
This Pledge Certificate is delivered pursuant to the Custodian
Agreement dated as of [ ] (the "Agreement"), between [
] (the "Fund") and [ ] (the "Custodian"). Capitalized terms
used herein without definition shall have the respective meanings
ascribed to them in the Agreement. Pursuant to [Section 2 or Section
4] of Appendix "C" attached to the Agreement, the Fund, on behalf of [
] (the "Portfolio"), hereby pledges, assigns and grants to the
Custodian a first priority security interest in the securities listed
on Exhibit "A" attached to this Pledge Certificate (collectively, the
"Pledged Securities"). Upon delivery of this Pledge Certificate, the
Pledged Securities shall constitute Collateral, and shall secure all
Overdraft Obligations of the Portfolio described in that certain
Written Notice dated , 19 , delivered by the Custodian to
the Fund. The pledge, assignment and grant of security in the Pledged
Securities hereunder shall be subject in all respect to the terms and
conditions of the Agreement, including, without limitation, Sections 7
and 8 of Appendix "C" attached thereto.
IN WITNESS WHEREOF, the Fund has caused this Pledge Certificate to be
executed in its name, on behalf of the Portfolio this day of
19 .
[FUND], on Behalf of [Portfolio]
By: ___________________
Name: ___________________
Title: ___________________
EXHIBIT "A"
TO
PLEDGE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
SCHEDULE 2
TO
APPENDIX "C"
RELEASE CERTIFICATE
This Release Certificate is delivered pursuant to the Custodian
Agreement dated as of [ ] (the "Agreement"), between [
] (the "Fund") and [ ] (the "Custodian"). Capitalized terms
used herein without definition shall have the respective meanings
ascribed to them in the Agreement. Pursuant to Section 5 of Appendix
"C" attached to the Agreement, the Custodian hereby releases the
securities listed on Exhibit "A" attached to this Release Certificate
from the lien under the [Pledge Certificate dated ___________, 19 or
the Written Notice delivered pursuant to Section 3 of Appendix "C"
dated _________, 19 ].
IN WITNESS WHEREOF, the Custodian has caused this Release Certificate
to be executed in its name and on its behalf this day of 19 .
BROWN BROTHERS HARRIMAN & COMPANY
By: _____________________
Name: _____________________
Title: _____________________
EXHIBIT "A"
TO
RELEASE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
Exhibit 8(o)
Form of
FIDELITY GROUP
REPO CUSTODIAN AGREEMENT
FOR JOINT TRADING ACCOUNT
AGREEMENT dated as of ______, among THE BANK OF NEW YORK, a banking
corporation organized under the laws of the State of New York ("Repo
Custodian"), J.P. MORGAN SECURITIES INC. ("Seller") and each of the
entities listed on Schedule A-1, A-2, A-3 and A-4 (collectively, the
"Funds" and each a "Fund") hereto, acting on behalf of itself or (i)
in the case of the Funds listed on Schedule A-1 or A-2 hereto which
are portfolios or series, acting through the series company listed on
Schedule A-1 or A-2 hereto, (ii) in the case of the accounts listed on
Schedule A-3 hereto, acting through Fidelity Management & Research
Company, and (iii) in the case of the commingled or individual
accounts listed on Schedule A-4 hereto, acting through Fidelity
Management Trust Company (collectively, the "Funds" and each, a
"Fund").
WITNESSETH
WHEREAS, each of the Funds has entered into a master repurchase
agreement dated as of ___________, (the "Master Agreement") with
Seller pursuant to which from time to time one or more of the Funds,
as buyers, and Seller, as seller, may enter into repurchase
transactions effected through one or more joint trading accounts
(collectively, the "Joint Trading Account") established and
administered by one or more custodians of the Funds identified on
Schedule C hereto (each a "Custodian"); and,
WHEREAS, in each such repurchase transaction Seller will sell to such
Funds certain Securities (as hereinafter defined) selected from
Eligible Securities (as hereinafter defined) held by Repo Custodian,
subject to an agreement by Seller to repurchase such Securities; and
WHEREAS, Repo Custodian currently maintains a cash and securities
account (the "Seller Account") for Seller for the purpose of, among
other things, effecting repurchase transactions hereunder; and
WHEREAS, the Funds desire that the Repo Custodian serve as the
custodian for the Funds in connection with the repurchase transactions
effected hereunder, and that the Repo Custodian hold cash, Cash
Collateral (as hereinafter defined) and Securities for the Funds for
the purpose of effecting repurchase transactions hereunder.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Definitions.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "Banking Day" shall mean any day on which the Funds, Seller
Custodian, Repo Custodian, and the Federal Reserve Banks where the
Custodian and the Repo Custodian are located, are each open for
business.
(b) "Cash Collateral" shall mean all cash, denominated in U.S.
Dollars, credited by Repo Custodian to a Transaction Account pursuant
to Paragraphs 3, 6, 8 or 9 of the Master Agreement.
(c) "Custodian" shall have the meaning set forth in the preamble of
this Agreement.
(d) "Eligible Securities" shall mean those securities which are
identified as permissible securities for a particular Transaction
Category.
(e) "FICASH I Transaction" and "FICASH III Transaction " shall mean a
repurchase transaction in which the Repurchase Date is the Banking Day
next following the Sale Date and for which securities issued by the
government of the United States of America that are direct obligations
of the government of the United States of America shall constitute
Eligible Securities.
(f) "FICASH II Transaction" shall mean a repurchase transaction in
which the Repurchase Date is the Banking Day next following the Sale
Date and for which one or more of the following two categories of
securities, as specified by the Funds, shall constitute Eligible
Securities: (x) securities issued by the government of the United
States of America that are direct obligations of the government of the
United States of America, or (y) securities issued by or guaranteed as
to principal and interest by the government of the United States of
America, or by its agencies and/or instrumentalities, including, but
not limited to, the Federal Home Loan Bank, Federal Home Loan Mortgage
Corp., Government National Mortgage Association, Federal National
Mortgage Association, Federal Farm Credit Bank, Federal Intermediate
Credit Bank, Banks for Cooperatives, and Federal Land Banks.
(g) "FITERM I Transaction" and "FITERM III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is a date fixed by
agreement between Seller and the Participating Funds which is not the
Banking Day next following the Sale Date and for which securities
issued by the government of the United States of America that are
direct obligations of the government of the United States of America
shall constitute Eligible Securities.
(h) "FITERM II Transaction" shall mean a repurchase transaction in
which the Repurchase Date is a date fixed by agreement between Seller
and the Participating Funds which is not the Banking Day next
following the Sale Date and for which one or more of the following two
categories of securities, as specified by the Funds, shall constitute
Eligible Securities: (x) securities issued by the government of the
United States of America that are direct obligations of the government
of the United States of America, or (y) securities issued by or
guaranteed as to principal and interest by the government of the
United States of America, or by its agencies and/or instrumentalities,
including, but not limited to, the Federal Home Loan Bank, Federal
Home Loan Mortgage Corp., Government National Mortgage Association,
Federal National Mortgage Association, Federal Farm Credit Bank,
Federal Intermediate Credit Bank, Banks for Cooperatives, and Federal
Land Banks.
(i) "Fund" shall have the meaning set forth in the preamble of this
Agreement.
(j) "Fund Agent" shall mean the agent for the Participating Funds
designated in Paragraph 18 of the Master Agreement.
(k) "Joint Trading Account" shall have the meaning set forth in the
preamble of this Agreement.
(l) "Margin Percentage" with respect to any repurchase transaction
shall be 102% or such other percentage as is agreed to by Seller and
the Participating Funds (except that in no event shall the Margin
Percentage be less than 100%).
(m) "Market Value" shall have the meaning set forth in Paragraph 4 of
the Master Agreement.
(n) "Master Agreement" shall have the meaning set forth in the
preamble of this Agreement.
(o) "1940 Act" shall mean have the meaning set forth in Paragraph
3(c) of this Agreement.
(p) "Partial Payment" shall have the meaning set forth in Section
4(g) of this Agreement.
(q) "Participating Funds" shall mean those Funds that are parties to
a particular repurchase transaction effected through the Joint Trading
Account.
(r) "Pricing Rate" shall mean the per annum percentage rate agreed to
by Seller and the Participating Funds for a repurchase transaction.
(s) "Pricing Services" shall have the meaning set forth in Paragraph
7 of this Agreement.
(t) "Repo Custodian" shall have the meaning set forth in the preamble
of this Agreement.
(u) "Repurchase Date" shall mean the date fixed by agreement between
Seller and the Participating Funds on which the Seller is to
repurchase Securities and Cash Collateral, if any, from the
Participating Funds and the Participating Funds are to resell the
Securities and Cash Collateral, if any, including any date determined
by application of the provisions of Paragraphs 7 and 15 of the Master
Agreement.
(v) "Repurchase Price" for each repurchase transaction shall mean the
Sale Price, plus an incremental amount determined by applying the
Pricing Rate to the Sale Price, calculated on the basis of a 360-day
year and the number of actual days elapsed from (and including) the
Sale Date to (but excluding) the Repurchase Date.
(w) "Sale Date" shall mean the Banking Day on which Securities and
Cash Collateral, if any, are to be sold to the Participating Funds by
Seller pursuant to a repurchase transaction hereunder.
(x) "Sale Price" shall mean the price agreed upon by the
Participating Funds and Seller at which the Securities and Cash
Collateral, if any, are to be sold to the Participating Funds by
Seller.
(y) "Securities" shall mean all Eligible Securities delivered by
Seller or to be delivered by Seller to the Participating Funds
pursuant to a particular repurchase transaction and not yet
repurchased hereunder, together with all rights related thereto and
all proceeds thereof.
(z) "Securities System" shall have the meaning set forth in Paragraph
3(c) of this Agreement.
(aa) "Seller" shall have the meaning set forth in the preamble to
this Agreement.
(bb) "Seller Account" shall have the meaning set forth in the
preamble of this Agreement.
(cc) "Transaction Account" shall mean a cash account established and
maintained by Repo Custodian for the Funds to effect repurchase
transactions pursuant to the Master Agreement.
(dd) "Transaction Category" shall mean the particular type of
repurchase transaction effected hereunder, as determined with
reference to the term of the transaction and the categories of
Securities that constitute Eligible Securities therefor, which term
shall include FICASH I Transactions, FICASH II Transactions, FICASH
III Transactions, FITERM I Transactions, FITERM II Transactions,
FITERM III Transactions, and such other transaction categories as may
from time to time be designated by the Funds by notice to Seller,
Custodian and Repo Custodian.
2. Appointment of Repo Custodian. Upon the terms and conditions set
forth in this Agreement, Repo Custodian is hereby appointed by the
Funds to act as the custodian for the Participating Funds to hold
cash, Cash Collateral and Securities for the purpose of effecting
repurchase transactions for the Participating Funds through the Joint
Trading Account pursuant to the Master Agreement. Repo Custodian
hereby acknowledges the terms of the Master Agreement between the
Funds and Seller (attached as an Exhibit hereto), as amended from time
to time, and agrees to abide by the provisions thereof to the extent
such provisions relate to the responsibilities and operations of Repo
Custodian hereunder.
3. Maintenance of Transaction Accounts.
(a) Repo Custodian shall establish and maintain one or more
Transaction Accounts for the purpose of effecting repurchase
transactions hereunder for the Funds, in each case pursuant to the
Master Agreement. From time to time the Funds may cause Custodian, on
behalf of the Funds, to deposit Securities and cash with Repo
Custodian in the designated Transaction Account, in each case in
accordance with Paragraph 3 of the Master Agreement.
(b) Repo Custodian shall keep all Securities, cash and Cash
Collateral received for the Participating Funds segregated at all
times from those of any other person, firm or corporation in its
possession and shall identify all such Securities, cash and Cash
Collateral as subject to this Agreement and the Master Agreement.
Segregation may be accomplished by physical segregation with respect
to certificated securities held by the Repo Custodian and, in
addition, by appropriate identification on the books and records of
Repo Custodian in the case of all other Securities, cash and Cash
Collateral. Title to all Securities and Cash Collateral under a
repurchase transaction shall pass to the Participating Funds that are
parties to such repurchase transaction. All such Securities and Cash
Collateral shall be held by Repo Custodian for the Participating
Funds, and shall be subject at all times to the proper instructions of
the Participating Funds, or the Custodian on behalf of the
Participating Funds, with respect to the holding, transfer or
disposition of such Securities and Cash Collateral. Repo Custodian
shall include in its records for each Transaction Account all
instructions received by it which evidence an interest of the
Participating Funds in the Securities and Cash Collateral and shall
hold physically segregated any written agreement, receipt or other
writing received by it which evidences an interest of the
Participating Funds in the Securities and Cash Collateral.
(c) Any requirement to "deliver" or "transfer" cash or Cash
Collateral to the Participating Funds or to "credit" a Transaction
Account under this or any other paragraph of this Agreement shall be
made in immediately available funds. If Repo Custodian is required to
"deliver" or "transfer" Securities to the Participating Funds under
this or any other paragraph of this Agreement, Repo Custodian shall
take, or cause to be taken, the following actions to perfect the
Participating Funds' interest in such Securities as an outright
purchaser: (i) in the case of certificated securities and instruments
held by Seller, by physical delivery of the share certificates or
other instruments representing the Securities and by physical
segregation of such certificates or instruments from the Repo
Custodian's other assets in a manner indicating that the Securities
are being held for the Participating Funds (such securities and
instruments to be delivered in form suitable for transfer or
accompanied by duly executed instruments of transfer or assignment in
blank and accompanied by such other documentation as the Participating
Funds may request), (ii) in the case of Securities held in a customer
only account in a clearing agency or federal book-entry system
authorized for use by the Funds and meeting the requirements of Rule
17f-4 under the Investment Company Act of 1940, as amended (the "1940
Act") (such authorized agency or system being referred to herein as a
"Securities System"), by appropriate entry on the books and records of
Repo Custodian identifying the Securities as belonging to the
Participating Funds, or (iii) in the case of Securities held in Repo
Custodian's own account in a Securities System, by transfer to a
customer only account in the Securities System and by appropriate
entry on the books and records of Repo Custodian identifying such
Securities as belonging to the Participating Funds; provided, further,
that Repo Custodian shall confirm to the Participating Funds the
identity of the Securities transferred or delivered. Acceptance of a
"due bill", "trust receipt" or similar receipt or notification of
segregation issued by a third party with respect to Securities held by
such third party shall not constitute good delivery of Securities to
Repo Custodian for purposes of this Agreement or the Master Agreement
and shall expressly violate the terms of this Agreement and the Master
Agreement. The Funds shall identify by notice to Repo Custodian and
Seller those agencies or systems which have been approved by the Funds
for use under this Agreement and the Master Agreement. The Funds
hereby notify Repo Custodian and Seller that the following agencies
and systems have been approved by the Funds for use under this
Agreement and the Master Agreement, until such time as Repo Custodian
and Seller shall have been notified by the Funds to the contrary: (i)
Participants Trust Company; (ii) The Depository Trust Company; and
(iii) any book-entry system as provided in (A) Subpart O of Treasury
Circular No. 300, 31 CFR 306.115, (B) Subpart B of Treasury Circular
Public Debt Series No. 27-76, 31 CFR 350.2, or (C) the book-entry
regulations of federal agencies substantially in the form of 31 CFR
306.115.
4. Repurchase Transactions.
(a) Repo Custodian shall make all credits and debits to the
Transaction Account and effect the transfer of Securities to or from
the Participating Funds upon proper instructions received from the
Participating Funds, or the Custodian on behalf of the Participating
Funds, and shall make all credits and debits to the Seller Account and
effect the transfer of Securities to or from the Seller upon proper
instructions received from Seller. In the event that Repo Custodian
receives conflicting proper instructions from Seller and the
Participating Funds, or the Custodian on behalf of the Participating
Funds, Repo Custodian shall follow the Participating Funds' or the
Custodian's proper instructions. The Participating Funds shall give
Repo Custodian only such instructions as shall be permitted by the
Master Agreement. Notwithstanding the preceding sentence, the
Participating Funds, or the Custodian on behalf of the Participating
Funds, may from time to time instruct Repo Custodian to transfer cash
from the Transaction Account to Custodian.
(b) (i) Whenever on any Banking Day one or more Funds and Seller agree
to enter into a repurchase transaction, Seller and the Participating
Funds, or the Custodian on behalf of the Participating Funds, will
give Repo Custodian proper instructions by telephone or otherwise on
the Sale Date, specifying the Transaction Category, Repurchase Date,
Sale Price, Repurchase Price or the applicable Pricing Rate and the
Margin Percentage for each such repurchase transaction.
(ii) In the case of repurchase transactions in which the Repurchase
Date is the Banking Day next following the Sale Date (x) the
Participating Funds may increase or decrease the Sale Price for any
such repurchase transaction by no more than 10% of the initial Sale
Price by causing to be delivered further proper instructions by
telephone or otherwise to Repo Custodian prior to the close of
business on the Sale Date and (y) Seller and the Participating Funds
may by mutual consent agree to increase or decrease the Sale Price by
more than 10% of the initial Sale Price by causing to be provided
further proper instructions to Repo Custodian by the close of business
on the Sale Date. In any event, Repo Custodian shall not be
responsible for determining whether any such increase or decrease of
the Sale Price exceeds the 10% limitation.
(c) Seller will take such actions as are necessary to ensure that on
the Sale Date the aggregate Market Value of all Securities held by
Repo Custodian for Seller and cash in the Seller Account equals or
exceeds the Margin Percentage of the Sale Price. Seller shall give
Repo Custodian proper instructions specifying with respect to each of
the Securities which is to be the subject of a repurchase transaction
(a) the name of the issuer and the title of the Securities, and (b)
the Market Value of such Securities. Such instructions shall
constitute Seller's instructions to Repo Custodian to transfer the
Securities to the Participating Funds and/or Cash Collateral from the
Seller Account to the Transaction Account.
(d) Prior to the close of business on the Sale Date, the
Participating Funds shall transfer to, or maintain on deposit with,
Repo Custodian in the Transaction Account immediately available funds
in an amount equal to the Sale Price with respect to a particular
repurchase transaction.
(e) Prior to the close of business on the Sale Date, Repo Custodian
shall transfer Securities from Seller to the Participating Funds
and/or cash held in the Seller Account to the Transaction Account and
shall transfer to the Seller Account immediately available funds from
the Transaction Account in accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be
transferred by Seller to the Participating Funds are Eligible
Securities. Any securities which are not Eligible Securities for a
particular repurchase transaction hereunder shall not be included in
the calculations set forth below and shall not be transferred to the
Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value
of the Securities and cash, if any, to be so transferred.
(iii) Repo Custodian shall notify Seller in the event that the
aggregate Market Value of Securities and cash, if any, applicable to
the repurchase transaction is less than the Margin Percentage of the
Sale Price and Seller shall transfer, by the close of business on the
Sale Date, to Repo Custodian additional Securities and/or cash in the
amount of such deficiency. If Seller does not, by the close of
business on the Sale Date, transfer additional Securities and/or cash,
the Market Value of which equals or exceeds such deficiency, Repo
Custodian may, at its option, without notice to Seller, advance the
amount of such deficiency to Seller in order to effectuate the
repurchase transaction. It is expressly agreed that Repo Custodian is
not obligated to make an advance to Seller to enable it to complete
any repurchase transaction.
(iv) Subject to the provisions of Subparagraph (v) below, Repo
Custodian shall cause the Securities applicable to the repurchase
transaction received from Seller to be transferred to the
Participating Funds and shall cause any cash received from Seller to
be transferred to the Transaction Account, against transfer of the
Sale Price from the Transaction Account to the Seller Account, such
transfers of Securities and/or cash and funds to occur simultaneously
on a delivery versus payment basis.
(v) Notwithstanding anything to the contrary, if, for any repurchase
transaction, the amount of immediately available funds in the
Transaction Account is less than the agreed upon Sale Price in
connection with the repurchase transaction immediately prior to
effectuating such repurchase transaction, or if the aggregate Market
Value of the Securities and cash, if any, applicable to such
repurchase transaction is less than the Sale Price multiplied by the
Margin Percentage immediately prior to effectuating such repurchase
transaction, Repo Custodian shall effect the repurchase transaction to
the best of its ability by transferring Securities from Seller to the
Participating Funds and/or cash from the Seller Account to the
Transaction Account with an aggregate Market Value equal to the lesser
of (x) the amount of immediately available funds in the Transaction
Account multiplied by the Margin Percentage and (y) the aggregate
Market Value of the Securities available for transfer from Seller to
the Participating Funds and cash, if any, in the Seller Account,
against the transfer of immediately available funds from the
Transaction Account to the Seller Account in an amount equal to the
aggregate Market Value of the Securities and/or cash to be transferred
divided by the Margin Percentage; provided, however, that in either
such event Repo Custodian shall have the right not to transfer to the
Participating Funds such Securities and not to transfer such cash, if
any, to the Transaction Account and not to transfer from the
designated Transaction Account such funds as Repo Custodian
determines, in its sole discretion, will not be the subject of a
repurchase transaction. The actions of Repo Custodian pursuant to
this subparagraph (e)(v) shall not affect the obligations and
liabilities of the parties to each other pursuant to the Master
Agreement with regard to such repurchase transaction.
(f) In the event that on a Banking Day Seller desires to substitute
Securities applicable to such repurchase transaction with Eligible
Securities and/or Cash Collateral (to the extent provided in the
Master Agreement), Repo Custodian shall perform such substitution in
accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be
transferred to the Participating Funds are Eligible Securities. Any
securities which are not eligible for repurchase transactions
hereunder shall not be included in the calculations set forth below
and shall not be transferred to the Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value
of the Eligible Securities and/or Cash Collateral to be transferred.
Repo Custodian shall not make any substitution if, at the time of
substitution, the aggregate Market Value of all Securities and any
Cash Collateral applicable to such repurchase transaction immediately
after such substitution would be less than the Margin Percentage of
the Repurchase Price (calculated as if the Repurchase Date were the
date of substitution).
(iii) Repo Custodian shall then deliver to the Seller, subject to the
qualifications set forth above, the Securities to be substituted
against the delivery by Repo Custodian of substitute Eligible
Securities to the Participating Funds and/or the crediting of the
Transaction Account with Cash Collateral.
(iv) In the event Seller has caused Repo Custodian to credit the
Transaction Account with Cash Collateral in lieu of substitute
Eligible Securities, and has failed to deliver Eligible Securities
against such Cash Collateral not later than the close of business on
such Banking Day in accordance with the terms of the Master Agreement,
Repo Custodian shall promptly, but in no event later than 10:00 a.m.
the following Banking Day, notify the Participating Funds and Seller
of such failure.
(g) With respect to each repurchase transaction, at 10:00 a.m. New
York time, or at such other time as specified in proper instructions
of the Participating Funds (or the Custodian on behalf of the
Participating Funds) on the Repurchase Date, Repo Custodian shall
debit the Seller Account and credit the Transaction Account in the
amount of the Repurchase Price and shall transfer Securities from the
Participating Funds to the Seller and Cash Collateral, if any, from
the Transaction Account to the Seller Account in accordance with the
following provisions:
(i) If the amount of available funds in the Seller Account equals or
exceeds the Repurchase Price, Repo Custodian shall debit the Seller
Account and credit the Transaction Account in the amount of the
Repurchase Price and shall transfer all Securities applicable to such
repurchase transaction from the Participating Funds to the Seller and
debit the Transaction Account and credit the Seller Account in the
amount of any Cash Collateral applicable to such repurchase
transaction.
(ii) If the amount of available funds in the Seller Account is less
than the Repurchase Price, then Repo Custodian shall notify the Seller
of the amount of the deficiency and Seller shall promptly cause such
amount to be transferred to the Seller Account. If Seller fails to
cause the transfer of the entire amount of the deficiency to the
Seller Account, then Repo Custodian may, at its option and without
notice to Seller, advance to Seller the amount of such remaining
deficiency. It is expressly agreed that Repo Custodian is not
obligated to make any advance to Seller. If, following such transfer
and/or advance, the amount of available funds in the Seller Account
equals or exceeds the Repurchase Price then Repo Custodian shall debit
the Seller Account and credit the Transaction Account in the amount of
the Repurchase Price and shall transfer from the Participating Funds
to the Seller all Securities applicable to such repurchase transaction
and debit the Transaction Account and credit the Seller Account in the
amount of any Cash Collateral applicable to such repurchase
transaction.
(iii) If the Seller fails to cause the transfer of the entire amount
of the deficiency, as required by (ii) above, and Repo Custodian fails
to advance to Seller an amount sufficient to eliminate the entire
deficiency, then Repo Custodian shall debit the Seller Account in the
amount of all immediately available funds designated by Seller as
applicable to the repurchase transaction and credit the Transaction
Account in such amount (such amount being referred to as the "Partial
Payment") and shall transfer Securities from the Participating Funds
to the Seller such that the aggregate Market Value of all remaining
Securities and Cash Collateral in the Transaction Account with respect
to such repurchase transaction shall at least equal the difference
between Margin Percentage of the Repurchase Price and the Partial
Payment.
5. Payments on Securities. Repo Custodian shall credit to the Seller
Account as soon as received, all principal, interest and other sums
paid by or on behalf of the issuer in respect of the Securities and
collected by Repo Custodian, except as otherwise provided in Paragraph
8 of the Master Agreement.
6. Daily Statement. On each Banking Day on which any Participating
Funds have an outstanding repurchase transaction, Repo Custodian shall
deliver by facsimile to Custodian and to the Participating Funds a
statement identifying the Securities held by Repo Custodian with
respect to such repurchase transaction and the cash and Cash
Collateral, if any, held by Repo Custodian in the Transaction Account,
including a statement of the then current Market Value of such
Securities and the amounts, if any, credited to the Transaction
Account as of the close of trading on the previous Banking Day. Repo
Custodian shall also deliver to Custodian and the Participating Funds
such additional statements as the Participating Funds may reasonably
request.
7. Valuation.
(a) Repo Custodian shall confirm the Market Value of Securities and
the amount of Cash Collateral, if any (i) on the Sale Date prior to
transferring the Sale Price out of the Transaction Account to the
Seller Account against the receipt from Seller of the Securities and
Cash Collateral, if any, and (ii) on each Banking Day on which such
repurchase transaction is outstanding. If on any Banking Day the
aggregate Market Value of the Securities and Cash Collateral with
respect to any repurchase transaction is less than the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Banking Day) for such transaction, Repo Custodian shall
promptly, but in any case no later than 10:00 a.m. the following
Banking Day, notify Seller. If on any Banking Day the aggregate
market value of the Securities and Cash Collateral with respect to any
repurchase transaction is less than the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such
Banking Day) for such transaction, and Seller fails to deliver
additional Eligible Securities applicable to such repurchase
transaction or an additional amount of Cash Collateral by the close of
business on such Banking Day such that the aggregate market value of
the Securities and Cash Collateral at least equals the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Banking Day), Repo Custodian shall promptly, but in any
event no later than 10:00 a.m. the following Banking Day, notify the
Participating Funds of such failure. For purposes of determining
Seller's margin maintenance requirements on the Sale Date for
repurchase transactions in which the Repurchase Date is the Banking
Day immediately following the Sale Date, such aggregate market value
shall equal at least the Margin Percentage of the Sale Price.
(b) Repo Custodian shall determine the bid side portion of the Market
Value of the Securities by reference to the independent pricing
services ("Pricing Services") set forth on Schedule B. It is
understood and agreed that Repo Custodian shall use the prices made
available by the Pricing Services on the Banking Day of such
determination unless Seller and the Participating Funds mutually agree
that some other prices shall be used and so notify Repo Custodian by
proper instructions of the sum of the prices of all such Securities
priced in such different manner. In the event that Repo Custodian is
unable to obtain a valuation of any Securities from the Pricing
Services, Repo Custodian shall request a bid quotation from a broker's
broker or a broker dealer, set forth in Schedule B, other than Seller.
In the event Repo Custodian is unable to obtain a bid quotation for
any Securities from such a broker's broker or a broker dealer, Repo
Custodian (i) shall not include any such Securities in the
determination of whether the aggregate Market Value of the Securities
and any Cash Collateral equals at least the Margin Percentage of the
Repurchase Price and (ii) shall redeliver such Securities to Seller if
the Market Value of all other Securities and any Cash Collateral with
respect to such repurchase transaction equals at least the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Banking Day). The Repo Custodian may rely on prices
quoted by Pricing Services, broker's brokers or broker dealers, except
Seller, as set forth in Schedule B.
(c) (i) If, on any Banking Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase
transaction is less than the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Banking Day)
applicable to such repurchase transaction, Repo Custodian shall
deliver to the Participating Funds an amount of additional Eligible
Securities applicable to such repurchase transaction and/or debit the
Seller Account and credit the Transaction Account with an additional
amount of Cash Collateral, such that the aggregate Market Value of all
Securities and any Cash Collateral with respect to such repurchase
transaction shall equal at least the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such
Banking Day) applicable to such repurchase transaction; except that,
for purposes of determining Seller's margin maintenance requirements
on the Sale Date for repurchase transactions in which the Repurchase
Date is the Banking Day immediately following the Sale Date, such
aggregate market value shall equal at least the Margin Percentage of
the Sale Price.
(ii) If, on any Banking Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase
transaction exceeds the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Banking Day)
applicable to such repurchase transaction, Repo Custodian shall return
to the Seller all or a portion of such Securities or Cash Collateral,
if any; provided that the Market Value of the remaining Securities and
any Cash Collateral with respect to the repurchase transaction shall
be at least equal to the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Banking Day)
applicable to such repurchase transaction. At any time and from time
to time with respect to any repurchase transaction, if authorized by
the Participating Funds, or the Custodian on behalf of the
Participating Funds, the Repo Custodian shall debit the Transaction
Account by an amount of Cash Collateral and credit the Seller Account
by the same amount of Cash Collateral against simultaneous delivery
from Seller to the Participating Funds of Eligible Securities
applicable to such repurchase transaction with a Market Value at least
equal to the amount of Cash Collateral credited and debited.
8. Authorized Persons. Schedule C hereto sets forth those persons
who are authorized to act for Repo Custodian, Custodian, Seller and
the Funds, respectively, under this Agreement.
9. Proper Instructions. Proper instructions shall mean a tested
telex, facsimile, a written request, direction, instruction or
certification signed or initialed by or on behalf of the party giving
the instructions by one or more authorized persons (as provided in
Paragraph 8); provided, however, that no instructions directing the
delivery of Securities or the payment of funds to any individual who
is an authorized signatory of Custodian or Repo Custodian shall be
signed by that individual. Telephonic, other oral or
electro-mechanical or electronic instructions (including the code
which may be assigned by Repo Custodian to Custodian from time to
time) given by one of the above authorized persons shall also be
considered proper instructions if the party receiving such
instructions reasonably believes them to have been given by an
authorized person with respect to the transaction involved. Oral
instructions will be confirmed by tested telex, facsimile or in
writing in the manner set forth above. The Funds authorize Repo
Custodian to tape record any and all telephonic or other oral
instructions given to Repo Custodian. Proper instructions may relate
to specific transactions or to types or classes of transactions, and
may be in the form of standing instructions.
10. Standard of Care.
(a) Repo Custodian shall be obligated to exercise reasonable care and
diligence in carrying out the provisions of this Agreement and the
Master Agreement and shall be liable to each of the Funds and Seller
for any expenses or damages to the Funds or Seller for breach of Repo
Custodian's standard of care in this Agreement, as further provided in
this Paragraph. Repo Custodian assumes responsibility for loss to any
property held by it pursuant to the provisions of this Agreement which
is occasioned by the negligence of, or conversion, misappropriation or
theft by, Repo Custodian's officers, employees and agents. Repo
Custodian, at its option, may insure itself against loss from any
cause but shall be under no obligation to obtain insurance directly
for the benefit of the Funds. So long as and to the extent that Repo
Custodian exercises reasonable care and diligence and acts without
negligence, misfeasance or misconduct, Repo Custodian shall not be
liable to Seller or the Funds for (i) any action taken or omitted in
good faith in reliance upon proper instructions, (ii) any action taken
or omitted in good faith upon any notice, request, certificate or
other instrument reasonably believed by it to be genuine and to be
signed by the proper party or parties, (iii) any delay or failure to
act as may be required under this Agreement or under the Master
Agreement when such delay or failure is due to any act of God or war,
(iv) the actions or omissions of a Securities System, (v) the title,
validity or genuineness of any security received, delivered or held by
it pursuant to this Agreement or the Master Agreement, (vi) the
legality of the purchase or sale of any Securities by or to the
Participating Funds or Seller or the propriety of the amount for which
the same are purchased or sold (except to the extent of Repo
Custodian's obligations hereunder to determine whether securities are
Eligible Securities and to calculate the Market Value of Securities
and any Cash Collateral), (vii) the due authority of any person listed
on Schedule C to act on behalf of Custodian, Seller or the Funds, as
the case may be, with respect to this Agreement or (viii) the errors
of the Pricing Services, broker's brokers or broker dealers set forth
in Schedule B.
(b) Repo Custodian shall not be liable to Seller or the Funds for, or
considered to be the custodian of, any Eligible Securities or any
money to be used in a repurchase transaction, whether or not such
money is represented by any check, draft, or other instrument for the
payment of money, until the Eligible Securities have been delivered in
accordance with Paragraph 3 or until Repo Custodian actually receives
and collects such money on behalf of Seller or the Funds directly or
by the final crediting of the Seller Account or a Transaction Account
through the Securities System, except that this Paragraph 10(b) shall
not be deemed to limit the liability of Repo Custodian to Seller or
the Funds if the non-delivery of such Eligible Securities or the
failure to receive and collect such money results from the breach by
Repo Custodian of its obligations under this Agreement or the Master
Agreement.
(c) Repo Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by
it are such as properly may be held by the Participating Funds;
provided that notwithstanding anything to the contrary herein, Repo
Custodian shall be obligated to act in accordance with the guidelines
and proper instructions of the Participating Funds, or the Custodian
on behalf of the Participating Funds, with respect to the types of
Eligible Securities and the issuers of such Eligible Securities that
may be used in specific repurchase transactions.
(d) Repo Custodian promptly shall notify the Fund Agent and the
Custodian if Securities held by Repo Custodian are in default or if
payment on any Securities has been refused after due demand and
presentation and Repo Custodian shall take action to effect collection
of any such amounts upon the proper instructions of the Participating
Funds, or the Custodian on behalf of the Participating Funds, and
assurances satisfactory to it that it will be reimbursed for its costs
and expenses in connection with any such action.
(e) Repo Custodian shall have no duties, other than such duties as
are necessary to effectuate repurchase transactions in accordance with
this Agreement and the Master Agreement within the standard of care
set forth in Paragraph 10(a) above and in a commercially reasonable
manner.
11. Representations and Additional Covenants of Repo Custodian.
(a) Repo Custodian represents and warrants that (i) it is duly
authorized to execute and deliver this Agreement and to perform its
obligations hereunder and has taken all necessary action to authorize
such execution, delivery and performance, (ii) the execution, delivery
and performance of this Agreement do not and will not violate any
ordinance, declaration of trust, partnership agreement, articles of
incorporation, charter, rule or statute applicable to it or any
agreement by which it is bound or by which any of its assets are
affected, (iii) the person executing this Agreement on its behalf is
duly and properly authorized to do so, (iv) it has (and will maintain)
a copy of this Agreement and evidence of its authorization in its
official books and records, and (v) this Agreement has been executed
by one of its duly authorized officers at the level of Vice President
or higher.
(b) Repo Custodian further represents and warrants that (i) it has
not pledged, encumbered, hypothecated, transferred, disposed of, or
otherwise granted, any third party an interest in any Securities, (ii)
it does not have any security interest, lien or right of setoff in the
Securities, and (iii) it has not been notified by any third party, in
its capacity as Repo Custodian, custodian bank or clearing bank, of
the existence of any lien, claim, charge or encumbrance with respect
to any Securities that are the subject of such repurchase transaction.
Repo Custodian agrees that (i) it will not pledge, encumber,
hypothecate, transfer, dispose of, or otherwise grant, any third party
an interest in any Securities, (ii) it will not acquire any security
interest, lien or right of setoff in the Securities, and (iii) it will
promptly notify the Fund Agent, if, during the term of any outstanding
repurchase transaction, it is notified by any third party, in its
capacity as Repo Custodian, custodian bank or clearing bank, of the
Participating Funds or Seller, of the existence of any lien, claim,
charge or encumbrance with respect to any Securities that are the
subject of such repurchase transaction.
12. Indemnification.
(a) Notwithstanding the Participating Fund's obligation to the Repo
Custodian under Paragraph 12(b) below, so long as and to the extent
that Repo Custodian is in the exercise of reasonable care and
diligence and acts without negligence, misfeasance or misconduct,
Seller will indemnify Repo Custodian and hold it harmless against any
and all losses, claims, damages, liabilities or actions to which it
may become subject, and reimburse it for any expenses (including
attorneys' fees and expenses) incurred by it in connection therewith,
insofar as such losses, claims, damages, liabilities or actions arise
out of or are based upon or in any way related to this Agreement, the
Master Agreement or those arrangements. Without limiting the
generality of the foregoing indemnification, Repo Custodian shall be
indemnified by Seller for all costs and expenses, including attorneys'
fees, for its successful defense against claims that Repo Custodian
breached its standard of care and was negligent or engaged in
misfeasance or misconduct.
(b) So long as and to the extent that Repo Custodian is in the
exercise of reasonable care and diligence and acts without negligence,
misconduct or misfeasance, the Participating Funds will indemnify Repo
Custodian and hold it harmless against any and all losses, claims,
damages, liabilities or actions to which it may become subject, and
reimburse it for any expenses (including attorneys' fees and expenses)
incurred by it in connection therewith, insofar as such losses,
claims, damages, liabilities or actions result from the negligence,
misconduct or misfeasance of the Participating Funds under this
Agreement.
13. Rights and Remedies. The rights and remedies conferred upon the
parties hereto shall be cumulative, and the exercise or waiver of any
thereof shall not preclude or inhibit the exercise of any additional
rights and remedies.
14. Modification or Amendment. Except as otherwise provided in this
Paragraph 14, no modification, waiver or amendment of this Agreement
shall be binding unless in writing and executed by the parties hereto.
Schedule A, listing the Funds, may be amended from time to time to add
or delete Funds by the Funds (i) delivering an executed copy of an
addendum to Schedule A to Seller and Repo Custodian, and (ii)
amending Schedule A to the Master Agreement in accordance with the
provisions therein. The amendment of Schedule A as provided above
shall constitute appointment of Repo Custodian as a custodian for such
Fund. Schedule B may be amended from time to time by an instrument in
writing, or counterpart thereof, executed by Repo Custodian, Seller
and the Funds. Schedule C may be amended from time to time to change
an authorized person of: (i) the Funds, by written notice to Repo
Custodian and Seller by Ms. Sarah Zenoble or the Treasurer of the
Funds (or such persons who may be authorized from time to time in
writing by Ms. Zenoble or the President or Treasurer of Fidelity
Management and Research Company to trade on behalf of Fidelity's
taxable money market funds); (ii) Seller, by written notice to Repo
Custodian and the Funds by any Vice President of Seller; (iii) Repo
Custodian, by written notice to Seller, Custodian and the Funds by any
Vice President of Repo Custodian; and (iv) Custodian, by written
notice to Repo Custodian by any Vice President of Custodian. Schedule
D may be amended from time to time by any party hereto by delivery of
written notice to the other parties hereto. Repo Custodian shall
receive notice of any amendment to the Master Agreement at the address
set forth in Schedule D hereto; and, if such amendment would have a
material adverse effect on the rights of, or would materially increase
the obligations of Repo Custodian under this Agreement, any such
amendment shall also require the consent of Repo Custodian. Any such
amendment shall be deemed not to be material if Repo Custodian fails
to object in writing within 21 days after receipt of notice thereof.
No amendment to this Agreement shall affect the rights or obligations
of any Fund with respect to any outstanding repurchase transaction
entered into under this Agreement and the Master Agreement prior to
such amendment or with respect to any actions or omissions by any
party hereto prior to such amendment. In the event of conflict
between this Agreement and the Master Agreement, the Master Agreement
shall control.
15. Termination. This Agreement shall terminate forthwith upon
termination of the Master Agreement or may be terminated by any party
hereto on ten Banking Days' written notice to the other parties;
provided, however, that any such termination shall not affect any
repurchase transaction then outstanding or any rights or obligations
under this Agreement or the Master Agreement with respect to any
actions or omissions of any party hereto prior to termination. In the
event of termination, Repo Custodian will deliver any Securities, Cash
Collateral or cash held by it or any agent to Custodian or to such
successor custodian or custodian or subcustodian as the Participating
Funds shall instruct.
16. Compensation. Seller agrees to pay Repo Custodian compensation
for the services to be rendered hereunder, based upon rates which
shall be agreed upon from time to time.
17. Notices. Except with respect to communications between Custodian
and the Funds which shall be governed by the custodian agreement or
subcustodian agreement between such parties, as the case may be, and
except as otherwise provided herein or as the parties to the Agreement
shall from time to time otherwise agree, all instructions, notices,
reports and other communications contemplated by this Agreement shall
be given to the party entitled to receive such notice at the telephone
number and address listed on Schedule D hereto.
18. Severability. If any provision of this Agreement is held to be
unenforceable as a matter of law, the other terms and provisions
hereof shall not be affected thereby and shall remain in full force
and effect.
19. Binding Nature. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their successors and
assignees; provided that, no party hereto may assign this Agreement or
any of the rights or obligations hereunder without the prior written
consent of the other parties.
20. Headings. Section headings are for reference purposes only and
shall not be construed as a part of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one
instrument.
22. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
23. Limitation of Liability. Seller is hereby expressly put on
notice that the Declarations of Trust or the Certificates and
Agreements of Limited Partnership, as the case may be, of each
Participating Fund contain a limitation of liability provision
pursuant to which the obligations assumed by such Participating Fund
hereunder shall be limited in all cases to such Participating Fund and
its assets or, in the case of a series Fund, to the assets of that
series only, and neither Seller nor its respective agents or assigns
shall seek satisfaction of any such obligation from the officers,
employees, agents, directors, trustees, shareholders or partners of
any such Participating Fund or series.
24. Rights and Obligations of Each Fund. The rights and obligations
set forth in this Agreement with respect to each repurchase
transaction shall accrue only to the Participating Funds in accordance
with their respective interests therein. No other Fund shall receive
any rights or have any liabilities arising from any action or inaction
of any Participating Fund under this Agreement with respect to such
repurchase transaction.
25. General Provisions. This Agreement supersedes any other
custodian agreement by and among Seller, the Funds, and Repo Custodian
concerning repurchase transactions effected through the Joint Trading
Account. It is understood and agreed that time is of the essence with
respect to the performance of each party's respective obligations
hereunder.
26. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) In the case of transactions in which one of the parties is a
broker or dealer registered with the SEC under Section 15 of the
Exchange Act, the Securities Investor Protection Corporation has taken
the position that the provisions of the Securities Investor Protection
Act of 1970 (the "SIPA") do not protect the other party with respect
to any transaction hereunder; and
(b) In the case of transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the Exchange Act, SIPA
will not provide protection to the other party with respect to any
transaction hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
[Signature Lines Omitted]
SCHEDULE B
PRICING SOURCES
PRICING SERVICES
U.S. Government Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller
and the Funds)
GNMA - The Bond Buyer
FHLMC - The Bond Buyer
All other U.S. Government
and Agency Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller
and the Funds)
BROKERS' BROKERS AND BROKER DEALERS
U.S. Government Securities - Any Primary Dealer
GNMA - Any Primary Broker-Dealer's bid rate for such security
FHLMC - Any Primary Broker-Dealer's bid rate for such security
All other U.S. Government and Agency Securities - Any Primary
Broker-Dealer's bid rate for such security
Prices shall be as of the business day of the date of determination
or the last quote available. The pricing services, Brokers' Brokers
and Broker Dealers may be changed from time to time by agreement of
all the parties.
SCHEDULE C
AUTHORIZED PERSONS
Repo Custodian
Ken Rindos
Kurt Woetzel
Custodian
Ken Rindos
Kurt Woetzel
Seller
Joseph P. Blauvelt
Michael B. Boyer
Robert E. Curry
Patrick Doyle
Frank Forgione
Edward J. Frederick
Christopher Juliano
Joseph Marrone
Thomas T. McGee
John S. Mehrtens
John A. Michielini
Allen Smith, II
The Funds
Barron, Leland C. Harlow, Katharyn M. Stehman, Burnell R.
Carbone, John M. Henning, Frederick L. Jr. Todd, Deborah
Curtis, Fritz Huyck, Timothy Todd, John J.
Duby, Robert K. Jamen, Jon Torres, Joseph E.
Egan, Dorothy T. Litterst, Robert Williams, Richard
Glocke, David Silver, Samuel Zenoble, Sarah
SCHEDULE D
NOTICES
If to Custodian: The Bank of New York
One Wall Street, 4th Floor
New York, NY 10286
Telephone: (212) 635-7947
Attention: Sherman Yu, Esq.
With a copy to the Fund Agent
If to Repo Custodian: The Bank of New York
One Wall Street, 4th Floor
New York, New York 10286
Telephone: (212) 635-4809
Attention: Ms. Kristin Smith
If to Seller: J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Telephone: (212) 483-2323
Attention: Middle Office Traders Support
If to any of the Funds: FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah R. Todd or
Mr. Samuel Silver
If to the Fund Agent: Fidelity Investments
[Name of Fund]
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 584-4071
Attention: Mr. Mark Mufler
277282.c1
Exhibit 8(o)
SCHEDULE 1
The following lists the additional counterparties to the Repo
Custodian Agreement for Joint Trading Account between The Bank of New
York and the Fidelity Funds:
BZW Government Securities, Inc.
CS First Boston Corp.
Daiwa Securities America, Inc.
Deutsche Bank Securities Corp.
Donaldson, Lufkin & Jenerette Securities Corp.
Fuji Securities, Inc.
Goldman Sachs & Co
Morgan Stanley & Co., Inc.
NationsBanc Capital Markets
Nikko Securities Co. International, Inc.
Nomura Securities International, Inc.
Prudential Securities, Inc.
Salomon Brothers, Inc.
Sanwa BJK Securities Co., LP
SBC Capital Markets, Inc.
Smith Barney, Inc.
Exhibit 8(p)
Form of
FIDELITY GROUP
REPO CUSTODIAN AGREEMENT
FOR JOINT TRADING ACCOUNT
AGREEMENT dated as of ________, among CHEMICAL BANK, a banking
corporation organized under the laws of the State of New York ("Repo
Custodian"), GREENWICH CAPITAL MARKETS, INC. ("Seller") and each of
the entities listed on Schedule A-1, A-2, A-3 and A-4 hereto acting on
behalf of itself or (i) in the case of a series company, on behalf of
one or more of its portfolios or series listed on Schedule A-1 or A-2
hereto, (ii) in the case of the accounts listed on Schedule A-3
hereto, acting through Fidelity Management & Research Company, and
(iii) in the case of the commingled or individual accounts listed on
Schedule A-4 hereto, acting through Fidelity Management Trust Company
(collectively, the "Funds" and each, a "Fund").
WITNESSETH
WHEREAS, each of the Funds has entered into a master repurchase
agreement dated as of _____________, (the "Master Agreement") with
Seller pursuant to which from time to time one or more of the Funds,
as buyers, and Seller, as seller, may enter into repurchase
transactions effected through one or more joint trading accounts
(collectively, the "Joint Trading Account") established and
administered by one or more custodians of the Funds identified on
Schedule C hereto (each a "Custodian"); and,
WHEREAS, in each such repurchase transaction Seller will sell to such
Funds certain Securities (as hereinafter defined) selected from
Eligible Securities (as hereinafter defined) held by Repo Custodian ,
subject to an agreement by Seller to repurchase such Securities; and
WHEREAS, Repo Custodian currently maintains a cash and securities
account (the "Seller Account") for Seller for the purpose of, among
other things, effecting repurchase transactions hereunder; and
WHEREAS, the Funds desire that the Repo Custodian serve as the
custodian for each of the Funds in connection with the repurchase
transactions effected hereunder, and that the Repo Custodian hold
cash, Cash Collateral (as hereinafter defined) and Securities for each
of the Funds for the purpose of effecting repurchase transactions
hereunder.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Definitions.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "Banking Day" shall mean any day on which the Funds, Seller
Custodian, Repo Custodian, and the Federal Reserve Banks where the
Custodian and the Repo Custodian are located, are each open for
business.
(b) "Cash Collateral" shall mean all cash, denominated in U.S.
Dollars, credited by Repo Custodian to a Transaction Account pursuant
to Paragraphs 3, 6, 8 or 9 of the Master Agreement.
(c) "Custodian" shall have the meaning set forth in the preamble of
this Agreement.
(d) "Eligible Securities" shall mean those securities which are
identified as permissible securities for a particular Transaction
Category.
(e) "FICASH I Transaction" and "FICASH III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is the Banking Day
next following the Sale Date and for which securities issued by the
government of the United States of America that are direct obligations
of the government of the United States of America shall constitute
Eligible Securities.
(f) "FICASH II Transaction" shall mean a repurchase transaction in
which the Repurchase Date is the Banking Day next following the Sale
Date and for which one or more of the following two categories of
securities, as specified by the Funds, shall constitute Eligible
Securities: (x) securities issued by the government of the United
States of America that are direct obligations of the government of the
United States of America, or (y) securities issued by or guaranteed as
to principal and interest by the government of the United States of
America, or by its agencies and/or instrumentalities, including, but
not limited to, the Federal Home Loan Bank, Federal Home Loan Mortgage
Corp., Government National Mortgage Association, Federal National
Mortgage Association, Federal Farm Credit Bank, Federal Intermediate
Credit Bank, Banks for Cooperatives, and Federal Land Banks.
(g) "FITERM I Transaction" and "FITERM III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is a date fixed by
agreement between Seller and the Participating Funds which is not the
Banking Day next following the Sale Date, or if applicable, the date
fixed upon exercise of an Unconditional Resale Right (as hereinafter
defined) by the Participating Funds and for which securities issued by
the government of the United States of America that are direct
obligations of the government of the United States of America shall
constitute Eligible Securities.
(h) "FITERM II Transaction" shall mean a repurchase transaction in
which the Repurchase Date is a date fixed by agreement between Seller
and the Participating Funds which is not the Banking Day next
following the Sale Date, or, if applicable, the date fixed upon
exercise of an Unconditional Resale Right (as hereinafter defined) by
the Participating Funds and for which one or more of the following two
categories of securities, as specified by the Funds, shall constitute
Eligible Securities: (x) securities issued by the government of the
United States of America that are direct obligations of the government
of the United States of America, or (y) securities issued by or
guaranteed as to principal and interest by the government of the
United States of America, or by its agencies and/or instrumentalities,
including, but not limited to, the Federal Home Loan Bank, Federal
Home Loan Mortgage Corp., Government National Mortgage Association,
Federal National Mortgage Association, Federal Farm Credit Bank,
Federal Intermediate Credit Bank, Banks for Cooperatives, and Federal
Land Banks.
(i) "Fund" shall have the meaning set forth in the preamble of this
Agreement.
(j) "Fund Agent" shall mean the agent for the Participating Funds
designated in Paragraph 18 of the Master Agreement.
(k) "Joint Trading Account" shall have the meaning set forth in the
preamble of this Agreement.
(l) "Margin Percentage" with respect to any repurchase transaction
shall be 102% or such other percentage as is agreed to by Seller and
the Participating Funds (except that in no event shall the Margin
Percentage be less than 100%).
(m) "Market Value" shall have the meaning set forth in Paragraph 4 of
the Master Agreement.
(n) "Master Agreement" shall have the meaning set forth in the
preamble of this Agreement.
(o) "1940 Act" shall mean have the meaning set forth in Paragraph
3(c) of this Agreement.
(p) "Partial Payment" shall have the meaning set forth in Section
4(g) of this Agreement.
(q) "Participating Funds" shall mean those Funds that are parties to
a particular repurchase transaction effected through the Joint Trading
Account.
(r) "Pricing Rate" shall mean the per annum percentage rate agreed to
by Seller and the Participating Funds for a particular repurchase
transaction.
(s) "Pricing Services" shall have the meaning set forth in Paragraph
7 of this Agreement.
(t) "Repo Custodian" shall have the meaning set forth in the preamble
of this Agreement.
(u) "Repurchase Date" shall mean the date fixed by agreement between
Seller and the Participating Funds on which the Seller is to
repurchase Securities and Cash Collateral, if any, from the
Participating Funds and the Participating Funds are to resell the
Securities and Cash Collateral, if any, including any date determined
by application of the provisions of Paragraphs 7(a) and 15 of the
Master Agreement.
(v) "Repurchase Price" for each repurchase transaction shall mean the
Sale Price, plus an incremental amount determined by applying the
Pricing Rate to the Sale Price, calculated on the basis of a 360-day
year and the number of actual days elapsed from (and including) the
Sale Date to (but excluding) the Repurchase Date.
(w) "Sale Date" shall mean the Banking Day on which Securities and
Cash Collateral, if any, are to be sold to the Participating Funds by
Seller pursuant to a repurchase transaction hereunder.
(x) "Sale Price" shall mean the price agreed upon by the
Participating Funds and Seller at which the Securities and Cash
Collateral, if any, are to be sold to the Participating Funds by
Seller.
(y) "Securities" shall mean all Eligible Securities delivered by
Seller or to be delivered by Seller to the Participating Funds
pursuant to a particular repurchase transaction and not yet
repurchased hereunder, together with all rights related thereto and
all proceeds thereof.
(z) "Securities System" shall have the meaning set forth in Paragraph
3(c) of this Agreement.
(aa) "Seller" shall have the meaning set forth in the preamble to
this Agreement.
(bb) "Seller Account" shall have the meaning set forth in the
preamble of this Agreement.
(cc) "Transaction Account" shall mean a cash account established and
maintained by Repo Custodian for the Funds to effect repurchase
transactions pursuant to the Master Agreement.
(dd) "Transaction Category" shall mean the particular type of
repurchase transaction effected hereunder, as determined with
reference to the term of the transaction and the categories of
Securities that constitute Eligible Securities therefor, which term
shall include FICASH I Transactions, FICASH II Transactions, FICASH
III Transactions, FITERM I Transactions, FITERM II Transactions,
FITERM III Transactions, and such other transaction categories as may
from time to time be designated by the Funds by notice to Seller,
Custodian and Repo Custodian.
(ee) "Unconditional Resale Right" shall have the meaning set forth
in Paragraph 7(b) of the Master Agreement.
(ff) "Valuation Day" shall mean any day on which Repo Custodian is
open for business.
2. Appointment of Repo Custodian. Upon the terms and conditions set
forth in this Agreement, Repo Custodian is hereby appointed by the
Funds to act as the custodian for the Participating Funds to hold
cash, Cash Collateral and Securities for the purpose of effecting
repurchase transactions for the Participating Funds through the Joint
Trading Account pursuant to the Master Agreement. Repo Custodian
hereby acknowledges the terms of the Master Agreement between the
Funds and Seller (attached as an Exhibit hereto), as amended from time
to time, and agrees to abide by the provisions thereof to the extent
such provisions relate to the responsibilities and operations of Repo
Custodian hereunder.
3. Maintenance of Transaction Accounts.
(a) Repo Custodian shall establish and maintain one or more
Transaction Accounts for the purpose of effecting repurchase
transactions hereunder for the Funds, in each case pursuant to the
Master Agreement. From time to time the Funds may cause Custodian, on
behalf of the Funds, to deposit Securities and cash with Repo
Custodian in the designated Transaction Account, in each case in
accordance with Paragraph 3 of the Master Agreement.
(b) Repo Custodian shall keep all Securities, cash and Cash
Collateral received for the Participating Funds segregated at all
times from those of any other person, firm or corporation in its
possession and shall identify all such Securities, cash and Cash
Collateral as subject to this Agreement and the Master Agreement.
Segregation may be accomplished by physical segregation with respect
to certificated securities held by the Repo Custodian and, in
addition, by appropriate identification on the books and records of
Repo Custodian in the case of all other Securities, cash and Cash
Collateral. Title to all Securities and Cash Collateral under a
repurchase transaction shall pass to the Participating Funds that are
parties to such repurchase transaction. All such Securities and Cash
Collateral shall be held by Repo Custodian for the Participating
Funds, and shall be subject at all times to the proper instructions of
the Participating Funds, or the Custodian on behalf of the
Participating Funds, with respect to the holding, transfer or
disposition of such Securities and Cash Collateral. Repo Custodian
shall include in its records for each Transaction Account all
instructions received by it which evidence an interest of the
Participating Funds in the Securities and Cash Collateral and shall
hold physically segregated any written agreement, receipt or other
writing received by it which evidences an interest of the
Participating Funds in the Securities and Cash Collateral.
(c) Any requirement to "deliver" or "transfer" cash or Cash
Collateral to the Participating Funds or to "credit" a Transaction
Account under this or any other paragraph of this Agreement shall be
made in immediately available funds. If Repo Custodian is required to
"deliver" or "transfer" Securities to the Participating Funds under
this or any other paragraph of this Agreement, Repo Custodian shall
take, or cause to be taken, the following actions to perfect the
Participating Funds' interest in such Securities as an outright
purchaser: (i) in the case of certificated securities and instruments
held by Seller, by physical delivery of the share certificates or
other instruments representing the Securities and by physical
segregation of such certificates or instruments from the Repo
Custodian's other assets in a manner indicating that the Securities
are being held for the Participating Funds (such securities and
instruments to be delivered in form suitable for transfer or
accompanied by duly executed instruments of transfer or assignment in
blank and accompanied by such other documentation as the Participating
Funds may request), (ii) in the case of Securities held in a customer
only account in a clearing agency or federal book-entry system
authorized for use by the Funds and meeting the requirements of Rule
17f-4 under the Investment Company Act of 1940, as amended (the "1940
Act") (such authorized agency or system being referred to herein as a
"Securities System"), by appropriate entry on the books and records of
Repo Custodian identifying the Securities as belonging to the
Participating Funds, or (iii) in the case of Securities held in Repo
Custodian's own account in a Securities System, by transfer to a
customer only account in the Securities System and by appropriate
entry on the books and records of Repo Custodian identifying such
Securities as belonging to the Participating Funds; provided, further,
that Repo Custodian shall confirm to the Participating Funds the
identity of the Securities transferred or delivered. Acceptance of a
"due bill", "trust receipt" or similar receipt or notification of
segregation issued by a third party with respect to Securities held by
such third party shall not constitute good delivery of Securities to
Repo Custodian for purposes of this Agreement or the Master Agreement
and shall expressly violate the terms of this Agreement and the Master
Agreement. The Funds shall identify by notice to Repo Custodian and
Seller those agencies or systems which have been approved by the Funds
for use under this Agreement and the Master Agreement. The Funds
hereby notify Repo Custodian and Seller that the following agencies
and systems have been approved by the Funds for use under this
Agreement and the Master Agreement, until such time as Repo Custodian
and Seller shall have been notified by the Funds to the contrary: (i)
Participants Trust Company; (ii) The Depository Trust Company; and
(iii) any book-entry system as provided in (A) Subpart O of Treasury
Circular No. 300, 31 CFR 306.115, (B) Subpart B of Treasury Circular
Public Debt Series No. 27-76, 31 CFR 350.2, or (C) the book-entry
regulations of federal agencies substantially in the form of 31 CFR
306.115.
4. Repurchase Transactions.
(a) Repo Custodian shall make all credits and debits to the
Transaction Account and effect the transfer of Securities to or from
the Participating Funds upon proper instructions received from the
Participating Funds, or the Custodian on behalf of the Participating
Funds, and shall make all credits and debits to the Seller Account and
effect the transfer of Securities to or from the Seller upon proper
instructions received from Seller. In the event that Repo Custodian
receives conflicting proper instructions from Seller and the
Participating Funds, or the Custodian on behalf of the Participating
Funds, Repo Custodian shall follow the Participating Funds' or the
Custodian's proper instructions. The Participating Funds shall give
Repo Custodian only such instructions as shall be permitted by the
Master Agreement. Notwithstanding the preceding sentence, the
Participating Funds, or the Custodian on behalf of the Participating
Funds, may from time to time instruct Repo Custodian to transfer cash
from the Transaction Account to Custodian so long as such transfer is
not in contravention of the Master Agreement.
(b) (i) Whenever on any Banking Day one or more Funds and Seller agree
to enter into a repurchase transaction, Seller and the Participating
Funds, or the Custodian on behalf of the Participating Funds, will
give Repo Custodian proper instructions by telephone or otherwise by
5:00 p.m. New York time on the Sale Date, specifying the Transaction
Category, Repurchase Date, Sale Price, Repurchase Price or the
applicable Pricing Rate and the Margin Percentage for each such
repurchase transaction.
(ii) In the case of repurchase transactions in which the Repurchase
Date is the Banking Day next following the Sale Date (x) the
Participating Funds may increase or decrease the Sale Price for any
such repurchase transaction by no more than 10% of the initial Sale
Price by causing to be delivered further proper instructions by
telephone or otherwise to Repo Custodian by 5:15 p.m. New York time
(or at such later time as may be agreed upon by the parties) on the
Sale Date and (y) Seller and the Participating Funds may by mutual
consent agree to increase or decrease the Sale Price by more than 10%
of the initial Sale Price by causing to be provided further proper
instructions to Repo Custodian by the close of business on the Sale
Date. In any event, Repo Custodian shall not be responsible for
determining whether any such increase or decrease of the Sale Price
exceeds the 10% limitation.
(c) Seller will take such actions as are necessary to ensure that on
the Sale Date the aggregate Market Value of all Securities held by
Repo Custodian for Seller and cash in the Seller Account equals or
exceeds the Margin Percentage of the Sale Price. Seller shall give
Repo Custodian proper instructions specifying with respect to each of
the Securities which is to be the subject of a repurchase transaction
(a) the name of the issuer and the title of the Securities, and (b)
the Market Value of such Securities. Such instructions shall
constitute Seller's instructions to Repo Custodian to transfer the
Securities to the Participating Funds and/or Cash Collateral from the
Seller Account to the Transaction Account.
(d) By 5:00 p.m. New York Time on the Sale Date, the Participating
Funds shall transfer to, or maintain on deposit with, Repo Custodian
in the Transaction Account immediately available funds in an amount
equal to the Sale Price with respect to a particular repurchase
transaction.
(e) Prior to the close of business on the Sale Date, Repo Custodian
shall transfer Securities from Seller to the Participating Funds
and/or cash held in the Seller Account to the Transaction Account and
shall transfer to the Seller Account immediately available funds from
the Transaction Account in accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be
transferred by Seller to the Participating Funds are Eligible
Securities. Any securities which are not Eligible Securities for a
particular repurchase transaction hereunder shall not be included in
the calculations set forth below and shall not be transferred to the
Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value
of the Securities and cash, if any, to be so transferred.
(iii) Repo Custodian shall notify Seller in the event that the
aggregate Market Value of Securities and cash, if any, applicable to
the repurchase transaction is less than the Margin Percentage of the
Sale Price and Seller shall transfer, by the close of business on the
Sale Date, to Repo Custodian additional Securities and/or cash in the
amount of such deficiency. If Seller does not, by the close of
business on the Sale Date, transfer additional Securities and/or cash,
the Market Value of which equals or exceeds such deficiency, Repo
Custodian may, at its option, without notice to Seller, advance the
amount of such deficiency to Seller in order to effectuate the
repurchase transaction. It is expressly agreed that Repo Custodian is
not obligated to make an advance to Seller to enable it to complete
any repurchase transaction.
(iv) Subject to the provisions of Subparagraph (v) below, Repo
Custodian shall cause the Securities applicable to the repurchase
transaction received from Seller to be transferred to the
Participating Funds and shall cause any cash received from Seller to
be transferred to the Transaction Account, against transfer of the
Sale Price from the Transaction Account to the Seller Account, such
transfers of Securities and/or cash and funds to be deemed to occur
simultaneously.
(v) Notwithstanding anything to the contrary, if, for any repurchase
transaction, the amount of immediately available funds in the
Transaction Account is less than the agreed upon Sale Price in
connection with the repurchase transaction immediately prior to
effectuating such repurchase transaction, or if the aggregate Market
Value of the Securities and cash, if any, applicable to such
repurchase transaction is less than the Sale Price multiplied by the
Margin Percentage immediately prior to effectuating such repurchase
transaction, Repo Custodian shall effect the repurchase transaction to
the best of its ability by transferring Securities from Seller to the
Participating Funds and/or cash from the Seller Account to the
Transaction Account with an aggregate Market Value equal to the lesser
of (x) the amount of immediately available funds in the Transaction
Account multiplied by the Margin Percentage and (y) the aggregate
Market Value of the Securities available for transfer from Seller to
the Participating Funds and cash, if any, in the Seller Account,
against the transfer of immediately available funds from the
Transaction Account to the Seller Account in an amount equal to the
aggregate Market Value of the Securities and/or cash to be transferred
divided by the Margin Percentage; provided, however, that in either
such event Repo Custodian shall have the right not to transfer to the
Participating Funds such Securities and not to transfer such cash, if
any, to the Transaction Account and not to transfer from the
designated Transaction Account such funds as Repo Custodian
determines, in its sole discretion, will not be the subject of a
repurchase transaction. The actions of Repo Custodian pursuant to
this subparagraph (e)(v) shall not affect the obligations and
liabilities of the parties to each other pursuant to the Master
Agreement with regard to such repurchase transaction.
(f) In the event that on a Banking Day Seller desires to substitute
Securities applicable to such repurchase transaction with Eligible
Securities and/or Cash Collateral (to the extent provided in the
Master Agreement), Repo Custodian shall perform such substitution in
accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be
transferred to the Participating Funds are Eligible Securities. Any
securities which are not eligible for repurchase transactions
hereunder shall not be included in the calculations set forth below
and shall not be transferred to the Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value
of the Eligible Securities and/or Cash Collateral to be transferred.
Repo Custodian shall not make any substitution if, at the time of
substitution, the aggregate Market Value of all Securities and any
Cash Collateral applicable to such repurchase transaction immediately
after such substitution would be less than the Margin Percentage of
the Repurchase Price (calculated as if the Repurchase Date were the
date of substitution).
(iii) Repo Custodian shall then deliver to the Seller, subject to the
qualifications set forth above, the Securities to be substituted
against the delivery by Repo Custodian of substitute Eligible
Securities to the Participating Funds and/or the crediting of the
Transaction Account with Cash Collateral.
(iv) In the event Seller has caused Repo Custodian to credit the
Transaction Account with Cash Collateral in lieu of substitute
Eligible Securities, and has failed to deliver Eligible Securities
against such Cash Collateral not later than the close of business on
such Banking Day in accordance with the terms of the Master Agreement,
Repo Custodian shall promptly, but in no event later than 10:00 a.m.
the following Banking Day, notify the Participating Funds and Seller
of such failure.
(g) With respect to each repurchase transaction, at 9:00 a.m. New
York time, or at such other time as specified in proper instructions
of the Participating Funds (or the Custodian on behalf of the
Participating Funds) on the Repurchase Date, Repo Custodian shall
debit the Seller Account and credit the Transaction Account in the
amount of the Repurchase Price and shall transfer Securities from the
Participating Funds to the Seller and Cash Collateral, if any, from
the Transaction Account to the Seller Account in accordance with the
following provisions:
(i) If the amount of available funds in the Seller Account equals or
exceeds the Repurchase Price, Repo Custodian shall debit the Seller
Account and credit the Transaction Account in the amount of the
Repurchase Price and shall transfer all Securities applicable to such
repurchase transaction from the Participating Funds to the Seller and
debit the Transaction Account and credit the Seller Account in the
amount of any Cash Collateral applicable to such repurchase
transaction.
(ii) If the amount of available funds in the Seller Account is less
than the Repurchase Price, then Repo Custodian shall notify the Seller
of the amount of the deficiency and Seller shall promptly cause such
amount to be transferred to the Seller Account. If Seller fails to
cause the transfer of the entire amount of the deficiency to the
Seller Account, then Repo Custodian may, at its option and without
notice to Seller, advance to Seller the amount of such remaining
deficiency. It is expressly agreed that Repo Custodian is not
obligated to make any advance to Seller. If, following such transfer
and/or advance, the amount of available funds in the Seller Account
equals or exceeds the Repurchase Price then Repo Custodian shall debit
the Seller Account and credit the Transaction Account in the amount of
the Repurchase Price and shall transfer from the Participating Funds
to the Seller all Securities applicable to such repurchase transaction
and debit the Transaction Account and credit the Seller Account in the
amount of any Cash Collateral applicable to such repurchase
transaction.
(iii) If the Seller fails to cause the transfer of the entire amount
of the deficiency, as required by (ii) above, and Repo Custodian fails
to advance to Seller an amount sufficient to eliminate the entire
deficiency, then Repo Custodian shall debit the Seller Account in the
amount of all immediately available funds designated by Seller as
applicable to the repurchase transaction and credit the Transaction
Account in such amount (such amount being referred to as the "Partial
Payment") and shall transfer Securities from the Participating Funds
to the Seller such that the aggregate Market Value of all remaining
Securities and Cash Collateral in the Transaction Account with respect
to such repurchase transaction shall at least equal the difference
between Margin Percentage of the Repurchase Price and the Partial
Payment.
5. Payments on Securities. Repo Custodian shall credit to the Seller
Account as soon as received, all principal, interest and other sums
paid by or on behalf of the issuer in respect of the Securities and
collected by Repo Custodian, except as otherwise provided in Paragraph
8 of the Master Agreement.
6. Daily Statement. On each Banking Day on which any Participating
Funds have an outstanding repurchase transaction, Repo Custodian shall
deliver by facsimile, or other electronic means acceptable to the
Participating Funds, the Custodian and the Repo Custodian, to
Custodian and to the Participating Funds a statement identifying the
Securities held by Repo Custodian with respect to such repurchase
transaction and the cash and Cash Collateral, if any, held by Repo
Custodian in the Transaction Account, including a statement of the
then current Market Value of such Securities and the amounts, if any,
credited to the Transaction Account as of the close of trading on the
previous Banking Day. Repo Custodian shall also deliver to Custodian
and the Participating Funds such additional statements as the Repo
Custodian and the Participating Funds may agree upon from time to
time.
7. Valuation.
(a) Repo Custodian shall confirm the Market Value of Securities and
the amount of Cash Collateral, if any (i) on the Sale Date prior to
transferring the Sale Price out of the Transaction Account to the
Seller Account against the receipt from Seller of the Securities and
Cash Collateral, if any, and (ii) on each Valuation Day on which such
repurchase transaction is outstanding. If on any Valuation Day the
aggregate Market Value of the Securities and Cash Collateral with
respect to any repurchase transaction is less than the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Valuation Day) for such transaction, Repo Custodian
shall promptly, but in any case no later than 10:00 a.m. the following
Valuation Day, notify Seller. If on any Valuation Day the aggregate
market value of the Securities and Cash Collateral with respect to any
repurchase transaction is less than the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such
Valuation Day) for such transaction, and Seller fails to deliver
additional Eligible Securities applicable to such repurchase
transaction or an additional amount of Cash Collateral by the close of
business on such Valuation Day such that the aggregate market value of
the Securities and Cash Collateral at least equals the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Valuation Day), Repo Custodian shall promptly, but in
any event no later than 10:00 a.m. the following Valuation Day, notify
the Participating Funds of such failure.
(b) Repo Custodian shall determine the bid side portion of the Market
Value of the Securities by reference to the independent pricing
services ("Pricing Services") set forth on Schedule B. It is
understood and agreed that Repo Custodian shall use the prices made
available by the Pricing Services at the close of business of the
preceding Valuation Day. In the event that Repo Custodian is unable
to obtain a valuation of any Securities from the Pricing Services,
Repo Custodian shall request a bid quotation from a broker's broker or
a broker dealer, set forth in Schedule B, other than Seller. In the
event Repo Custodian is unable to obtain a bid quotation for any
Securities from such a broker's broker or a broker dealer, Repo
Custodian (i) shall not include any such Securities in the
determination of whether the aggregate Market Value of the Securities
and any Cash Collateral equals at least the Margin Percentage of the
Repurchase Price and (ii) shall redeliver such Securities to Seller if
the Market Value of all other Securities and any Cash Collateral with
respect to such repurchase transaction equals at least the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Valuation Day). The Repo Custodian may rely on prices
quoted by Pricing Services, broker's brokers or broker dealers, except
Seller, as set forth in Schedule B.
(c) (i) If, on any Valuation Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase
transaction is less than the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Valuation Day)
applicable to such repurchase transaction, Repo Custodian shall
deliver to the Participating Funds an amount of additional Eligible
Securities applicable to such repurchase transaction and/or debit the
Seller Account and credit the Transaction Account with an additional
amount of Cash Collateral, such that the aggregate Market Value of all
Securities and any Cash Collateral with respect to such repurchase
transaction shall equal at least the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such
Valuation Day) applicable to such repurchase transaction.
(ii) If, on any Valuation Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase
transaction exceeds the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Valuation Day)
applicable to such repurchase transaction, Repo Custodian shall return
to the Seller all or a portion of such Securities or Cash Collateral,
if any; provided that the Market Value of the remaining Securities and
any Cash Collateral with respect to the repurchase transaction shall
be at least equal to the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Valuation Day)
applicable to such repurchase transaction. At any time and from time
to time with respect to any repurchase transaction, if authorized by
the Participating Funds, or the Custodian on behalf of the
Participating Funds, the Repo Custodian shall debit the Transaction
Account by an amount of Cash Collateral and credit the Seller Account
by the same amount of Cash Collateral against simultaneous delivery
from Seller to the Participating Funds of Eligible Securities
applicable to such repurchase transaction with a Market Value at least
equal to the amount of Cash Collateral credited and debited.
8. Authorized Persons. Schedule C hereto sets forth those persons
who are authorized to act for Repo Custodian, Custodian, Seller and
the Funds, respectively, under this Agreement.
9. Proper Instructions. Proper instructions shall mean a tested
telex, facsimile, a written request, direction, instruction or
certification signed or initialed by or on behalf of the party giving
the instructions by one or more authorized persons (as provided in
Paragraph 8); provided, however, that no instructions directing the
delivery of Securities or the payment of funds to any individual who
is an authorized signatory of Custodian or Repo Custodian shall be
signed by that individual. Telephonic, other oral or
electro-mechanical or electronic instructions (including the code
which may be assigned by Repo Custodian to Custodian from time to
time) given by one of the above authorized persons shall also be
considered proper instructions if the party receiving such
instructions reasonably believes them to have been given by an
authorized person with respect to the transaction involved. Oral
instructions will be confirmed by tested telex, facsimile or in
writing in the manner set forth above. The Funds and Seller authorize
Repo Custodian to tape record any and all telephonic or other oral
instructions given to Repo Custodian. Proper instructions may relate
to specific transactions or to types or classes of transactions, and
may be in the form of standing instructions.
10. Standard of Care.
(a) Repo Custodian shall be obligated to use reasonable care and
diligence in carrying out the provisions of this Agreement and the
Master Agreement and shall be liable to the Funds and/or Seller only
for direct damages resulting from the negligence or willful misconduct
of the Repo Custodian or its officers, employees or agents. The
parties hereby agree that Repo Custodian shall not be liable for
consequential, special or indirect damages, even if Repo Custodians
has been advised as to the possibility thereof. So long as and to the
extent that Repo Custodian exercises reasonable care and diligence and
acts without negligence, misfeasance or misconduct, Repo Custodian
shall not be liable to Seller or the Funds for (i) any action taken or
omitted in good faith in reliance upon proper instructions, (ii) any
action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be
genuine and to be signed by the proper party or parties, (iii) any
delay or failure to act as may be required under this Agreement or
under the Master Agreement when such delay or failure is due to any
act of God or war, (iv) the actions or omissions of a Securities
System, (v) the title, validity or genuineness of any security
received, delivered or held by it pursuant to this Agreement or the
Master Agreement, (vi) the legality of the purchase or sale of any
Securities by or to the Participating Funds or Seller or the propriety
of the amount for which the same are purchased or sold (except to the
extent of Repo Custodian's obligations hereunder to determine whether
securities are Eligible Securities and to calculate the Market Value
of Securities and any Cash Collateral), (vii) the due authority of any
person listed on Schedule C to act on behalf of Custodian, Seller or
the Funds, as the case may be, with respect to this Agreement or
(viii) the errors of the Pricing Services, broker's brokers or broker
dealers set forth in Schedule B.
(b) Repo Custodian shall not be liable to Seller or the Funds for, or
considered to be the custodian of, any Eligible Securities or any
money to be used in a repurchase transaction, whether or not such
money is represented by any check, draft, or other instrument for the
payment of money, until the Eligible Securities have been delivered in
accordance with Paragraph 3 or until Repo Custodian actually receives
and collects such money on behalf of Seller or the Funds directly or
by the final crediting of the Seller Account or a Transaction Account
through the Securities System, except that this Paragraph 10(b) shall
not be deemed to limit the liability of Repo Custodian to Seller or
the Funds if the non-delivery of such Eligible Securities or the
failure to receive and collect such money results from the breach by
Repo Custodian of its obligations under this Agreement or the Master
Agreement.
(c) Repo Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by
it are such as properly may be held by the Participating Funds;
provided that notwithstanding anything to the contrary herein, Repo
Custodian shall be obligated to act in accordance with the guidelines
and proper instructions of the Participating Funds, or the Custodian
on behalf of the Participating Funds, with respect to the types of
Eligible Securities and the issuers of such Eligible Securities that
may be used in specific repurchase transactions.
(d) Repo Custodian promptly shall notify the Fund Agent and the
Custodian if Securities held by Repo Custodian are in default or if
payment on any Securities has been refused after due demand and
presentation and Repo Custodian shall take action to effect collection
of any such amounts upon the proper instructions of the Participating
Funds, or the Custodian on behalf of the Participating Funds, and
assurances satisfactory to it that it will be reimbursed for its costs
and expenses in connection with any such action.
(e) Repo Custodian shall have no duties, other than such duties as
are necessary to effectuate repurchase transactions in accordance with
this Agreement and the Master Agreement within the standard of care
set forth in Paragraph 10(a) above and in a commercially reasonable
manner.
11. Representations and Additional Covenants of Repo Custodian.
(a) Repo Custodian represents and warrants that (i) it is duly
authorized to execute and deliver this Agreement and to perform its
obligations hereunder and has taken all necessary action to authorize
such execution, delivery and performance, (ii) the execution, delivery
and performance of this Agreement do not and will not violate any
ordinance, declaration of trust, partnership agreement, articles of
incorporation, charter, rule or statute applicable to it or any
agreement by which it is bound or by which any of its assets are
affected, (iii) the person executing this Agreement on its behalf is
duly and properly authorized to do so, (iv) it has (and will maintain)
a copy of this Agreement and evidence of its authorization in its
official books and records, and (v) this Agreement has been executed
by one of its duly authorized officers at the level of Vice President
or higher.
(b) Repo Custodian further represents and warrants that (i) it has
not pledged, encumbered, hypothecated, transferred, disposed of, or
otherwise granted, any third party an interest in any Securities, (ii)
it does not have any security interest, lien or right of setoff in the
Securities, and (iii) it has not received notification from any third
party, in its capacity as Repo Custodian, custodian bank or clearing
bank, of any lien, claim, charge or encumbrance with respect to any
Securities that are the subject of such repurchase transaction. Repo
Custodian agrees that (i) it will not pledge, encumber, hypothecate,
transfer, dispose of, or otherwise grant, any third party an interest
in any Securities, (ii) it will not acquire any security interest,
lien or right of setoff in the Securities, and (iii) it will promptly
notify the Fund Agent, if, during the term of any outstanding
repurchase transaction, it is notified by any third party, in its
capacity as Repo Custodian, custodian bank or clearing bank, of the
Participating Funds or Seller, of the existence of any lien, claim,
charge or encumbrance with respect to any Securities that are the
subject of such repurchase transaction.
12. Indemnification.
(a) Notwithstanding the Participating Fund's obligation to the Repo
Custodian under Paragraph 12(b) below, so long as and to the extent
that Repo Custodian is in the exercise of reasonable care and
diligence and acts without negligence, misfeasance or misconduct,
Seller will indemnify Repo Custodian and hold it harmless against any
and all losses, claims, damages, liabilities or actions to which it
may become subject, and reimburse it for any expenses (including
attorneys' fees and expenses) incurred by it in connection therewith,
insofar as such losses, claims, damages, liabilities or actions arise
out of or are based upon or in any way related to this Agreement, the
Master Agreement or any transactions contemplated hereby or thereby or
effected hereunder or thereunder. Without limiting the generality of
the foregoing indemnification, Repo Custodian shall be indemnified by
Seller for all costs and expenses, including attorneys' fees, for its
successful defense against claims that Repo Custodian breached its
standard of care and was negligent or engaged in misfeasance or
misconduct.
(b) So long as and to the extent that Repo Custodian is in the
exercise of reasonable care and diligence and acts without negligence,
misconduct or misfeasance, the Participating Funds will indemnify Repo
Custodian and hold it harmless against any and all losses, claims,
damages, liabilities or actions to which it may become subject, and
reimburse it for any expenses (including attorneys' fees and expenses)
incurred by it in connection therewith, insofar as such losses,
claims, damages, liabilities or actions result from the negligence,
misconduct or misfeasance of the Participating Funds under this
Agreement.
13. Rights and Remedies. The rights and remedies conferred upon the
parties hereto shall be cumulative, and the exercise or waiver of any
thereof shall not preclude or inhibit the exercise of any additional
rights and remedies.
14. Modification or Amendment. Except as otherwise provided in this
Paragraph 14, no modification, waiver or amendment of this Agreement
shall be binding unless in writing and executed by the parties hereto.
Schedule A, listing the Funds, may be amended from time to time to add
or delete Funds by the Funds (i) delivering an executed copy of an
addendum to Schedule A to Seller and Repo Custodian, and (ii)
amending Schedule A to the Master Agreement in accordance with the
provisions therein. The amendment of Schedule A as provided above
shall constitute appointment of Repo Custodian as a custodian for such
Fund. Schedule B may be amended from time to time by an instrument in
writing, or counterpart thereof, executed by Repo Custodian, Seller
and the Funds. Schedule C may be amended from time to time to change
an authorized person of: (i) the Funds, by written notice to Repo
Custodian and Seller by Ms. Sarah Zenoble or the Treasurer of the
Funds (or such persons who may be authorized from time to time in
writing by Ms. Zenoble or the President or Treasurer of Fidelity
Management and Research Company to trade on behalf of Fidelity's
taxable money market funds); (ii) Seller, by written notice to Repo
Custodian and the Funds by any Vice President of Seller; (iii) Repo
Custodian, by written notice to Seller, Custodian and the Funds by any
Vice President of Repo Custodian; and (iv) Custodian, by written
notice to Repo Custodian by any Vice President of Custodian. Schedule
D may be amended from time to time by any party hereto by delivery of
written notice to the other parties hereto. Repo Custodian shall
receive notice of any amendment to the Master Agreement at the address
set forth in Schedule D hereto; and, if such amendment would have a
material adverse effect on the rights of, or would materially increase
the obligations of Repo Custodian under this Agreement, any such
amendment shall also require the consent of Repo Custodian. Any such
amendment shall be deemed not to be material if Repo Custodian fails
to object in writing within 21 days after receipt of notice thereof.
No amendment to this Agreement shall affect the rights or obligations
of any Fund with respect to any outstanding repurchase transaction
entered into under this Agreement and the Master Agreement prior to
such amendment or with respect to any actions or omissions by any
party hereto prior to such amendment. In the event of conflict
between this Agreement and the Master Agreement, the Master Agreement
shall control.
15. Termination. This Agreement shall terminate forthwith upon
termination of the Master Agreement or may be terminated by any party
hereto on ten Valuation Days' written notice to the other parties;
provided, however, that any such termination shall not affect any
repurchase transaction then outstanding or any rights or obligations
under this Agreement or the Master Agreement with respect to any
actions or omissions of any party hereto prior to termination. In the
event of termination, Repo Custodian will deliver any Securities, Cash
Collateral or cash held by it or any agent to Custodian or to such
successor custodian or custodian or subcustodian as the Participating
Funds shall instruct.
16. Compensation. Seller agrees to pay Repo Custodian compensation
for the services to be rendered hereunder, based upon rates which
shall be agreed upon from time to time.
17. Notices. Except with respect to communications between Custodian
and the Funds which shall be governed by the custodian agreement or
subcustodian agreement between such parties, as the case may be, and
except as otherwise provided herein or as the parties to the Agreement
shall from time to time otherwise agree, all instructions, notices,
reports and other communications contemplated by this Agreement shall
be given to the party entitled to receive such notice at the telephone
number and address listed on Schedule D hereto.
18. Severability. If any provision of this Agreement is held to be
unenforceable as a matter of law, the other terms and provisions
hereof shall not be affected thereby and shall remain in full force
and effect.
19. Binding Nature. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their successors and
assignees; provided that, no party hereto may assign this Agreement or
any of the rights or obligations hereunder without the prior written
consent of the other parties.
20. Headings. Section headings are for reference purposes only and
shall not be construed as a part of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one
instrument.
22. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
23. Limitation of Liability. Repo Custodian and Seller are hereby
expressly put on notice of the limitation of liability set forth in
the Declarations of Trust and in the Certificates and Agreements of
Limited Partnership of the Funds and agree that the obligations
assumed by any Fund hereunder shall be limited in all cases to a Fund
and its assets or, in the case of a series Fund, to the assets of that
series only, and neither Seller, Repo Custodian nor their respective
agents or assigns shall seek satisfaction of any such obligation from
the officers, agents, employees, directors, trustees, shareholders or
partners of any such Fund or series.
24. Rights and Obligations of Each Fund. The rights and obligations
set forth in this Agreement with respect to each repurchase
transaction shall accrue only to the Participating Funds in accordance
with their respective interests therein. No other Fund shall receive
any rights or have any liabilities arising from any action or inaction
of any Participating Fund under this Agreement with respect to such
repurchase transaction.
25. General Provisions. This Agreement supersedes any other
custodian agreement by and among Seller, the Funds, and Repo Custodian
concerning repurchase transactions effected through the Joint Trading
Account. It is understood and agreed that time is of the essence with
respect to the performance of each party's respective obligations
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
[Signature Lines Omitted]
SCHEDULE B
PRICING SOURCES
PRICING SERVICES
U.S. Government Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller
and the Funds)
GNMA - The Bond Buyer
FHLMC - The Bond Buyer
All other U.S. Government
and Agency Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller
and the Funds)
BROKERS' BROKERS AND BROKER DEALERS
U.S. Government Securities - Any Primary Dealer
GNMA - Any Primary Broker-Dealer's bid rate for such security
FHLMC - Any Primary Broker-Dealer's bid rate for such security
All other U.S. Government and Agency Securities - Any Primary
Broker-Dealer's bid rate for such security
Prices shall be as of the business day immediately preceding the date
of determination or the last quote available. The pricing services,
Brokers' Brokers and Broker Dealers may be changed from time to time
by agreement of all the parties.
SCHEDULE C
AUTHORIZED PERSONS
Repo Custodian
Anthony Isola
Raymond Stancil
William Mosca
Leonardo Nichols
Alan Mann
Allen B. Clark
Custodian
Ken Rindos
Kurt Woetzel
Seller
Gary F. Holloway
Konrad R. Kruger
Stephen M. Peet
Raymond E. Humiston
P. Michael Florio
Ben Carpenter
Blake S. Drexler
Derick B. Burgher
Lyn Kratovil
The Funds
Leland Barron
Wickliffe Curtis
Dorothy Egan
David Glocke
Katharyn Harlow
Timothy Huyck
Jon Jamen
Robert Litterst
Sam Silver
Burnell Stehman
Jeffrey St. Peters
Deborah Todd
John Todd
Joseph Torres
Richard Williams
SCHEDULE D
NOTICES
If to Custodian: Morgan Guaranty Trust Co. of New York
15 Broad Street, 16th Floor
New York, New York 10015
Telephone: (212) 483-4150
Attention: Ms. Kimberly Smith
or
The Bank of New York
One Wall Street, 4th Floor
New York, NY 10286
Telephone: (312) 635-4808
Attention: Claire Meskovic
With a copy to the Fund Agent
If to Repo Custodian: Chemical Bank
4 New York Plaza
21st Floor
New York, NY 10004-2477
Telephone: (212) 623-6446
Attention: Anthony Isola
If to Seller: Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Telephone: (203) 625-7909
Attention: Peter Sanchez
If to any of the Funds: FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah R. Todd or
Mr. Samuel Silver
If to the Fund Agent: Fidelity Investments
[Name of Fund]
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 584-4071
Attention: Mr. Mark Mufler
277262.c1
Exhibit 8(p)
SCHEDULE 1
The following lists the additional counterparties to the Repo
Custodian Agreement for Joint Trading Account between Chemical Bank
and the Fidelity Funds:
Chase Securities, Inc.
CS First Boston Corp.
Dresdner Securities (U.S.A.), Inc.
HSBC Securities, Inc.
Lehman Government Securities, Inc.
Merrill Lynch Government Securities, Inc.
Paine Webber, Inc.
Salomon Brothers, Inc.
UBS Securities, Inc.
Exhibit 8(q)
Form of
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
Between
THE BANK OF NEW YORK
and
FIDELITY FUNDS
Dated as of: _________
Exhibit 8(q)
TABLE OF CONTENTS
Page
ARTICLE I - APPOINTMENT OF CUSTODIAN 2
ARTICLE II - POWERS AND DUTIES OF CUSTODIAN 2
Section 2.01. Establishment of Accounts 2
Section 2.02. Receipt of Funds 2
Section 2.03. Repurchase Transactions 2
Section 2.04. Other Transfers 4
Section 2.05. Custodian's Books and Records 5
Section 2.06. Reports by Independent Certified Public Accountants 5
Section 2.07. Securities System 6
Section 2.08. Collections 6
Section 2.09. Notices, Consents, Etc. 6
Section 2.10. Notice of Custodian's Inability to Perform 7
ARTICLE III - PROPER INSTRUCTIONS AND RELATED MATTERS 7
Section 3.01. Proper Instructions; Special Instruction 7
Section 3.02. Authorized Persons 8
Section 3.03. Investment Limitations 8
Section 3.04. Persons Having Access to Assets of the Funds 8
Section 3.05. Actions of Custodian Based on Proper Instructions and
Special
Instructions 9
ARTICLE IV - STANDARD OF CARE; INDEMNIFICATION 9
Section 4.02. Liability of Custodian for Actions of Securities Systems
9
Section 4.03. Indemnification 9
Section 4.04. Funds, Right to Proceed 10
ARTICLE V - COMPENSATION 11
Section 5.01. Compensation 11
Section 5.02. Waiver of Right of Set-Off 11
ARTICLE VI - TERMINATION 11
Section 6.01. Events of Termination 11
Section 6.02. Successor Custodian; Payment of Compensation 11
ARTICLE VII - MISCELLANEOUS 12
Section 7.01. Representative Capacity and Binding Obligation 12
Section 7.02. Entire Agreement 12
Section 7.03. Amendments 12
Section 7.04. Interpretation 12
Section 7.05. Captions 13
Section 7.06. Governing Law 13
Section 7.07. Notice and Confirmations 13
Section 7.08. Assignment 14
Section 7.09. Counterparts 14
Section 7.10. Confidentiality; Survival of Obligations 14
Exhibit 8(q)
Form of
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
AGREEMENT dated as of ___________ by and between The Bank of New York
(hereinafter referred to as the "Custodian") and each of the entities
listed on Schedules A-1, A-2, A-3 and A-4 hereto, acting on behalf of
itself or, (i) in the case of a series company, on behalf of one or
more of its portfolios or series listed on Schedule A-1 or A-2 hereto,
(ii) in the case of the accounts listed on Schedule A-3 hereto, acting
through Fidelity Management & Research Company, and (iii) in the case
of the commingled or individual accounts listed on Schedule A-4
hereto, acting through Fidelity Management Trust Company
(collectively, the "Funds" and each, a "Fund").
W I T N E S S E T H
WHEREAS, each of the Funds desire to appoint the Custodian as its
custodian for the purpose of establishing and administering one or
more joint trading accounts or subaccounts thereof (individually, an
"Account" and collectively, the "Accounts") and holding cash and
securities for the Funds in connection with repurchase transactions
effected through the Accounts; and
WHEREAS, one or more of the Funds may, from time to time, enter into
one or more written repurchase agreements pursuant to which one or
more of the Funds agrees to purchase and resell, and the sellers named
in such agreements agree to sell and repurchase through the Accounts,
certain securities (collectively, the "Securities") (such repurchase
agreements being hereinafter referred to, collectively, as the
"Repurchase Agreements"); and
WHEREAS, each of the custodians identified in ScheduleB hereto (each,
a "Fund Custodian") serves as the primary custodian for one or more of
the Funds; and
WHEREAS, from time to time one or more of the Funds may arrange to
transfer cash or Securities from one or more Fund Custodians to the
Custodian or transfer cash or Securities from the Custodian to one or
more Fund Custodians, or in the case of Funds in which Custodian is
also Fund Custodian, such Fund may arrange for transfer of cash or
Securities between an Account and an account maintained by Custodian
in its capacity as Fund Custodian for such Fund, in each event in
connection with Repurchase Agreement transactions; and
WHEREAS, from time to time, such Funds may arrange to transfer cash
or securities from the Custodian to the seller in such Repurchase
Agreement transactions, or in the case in which Custodian is also the
clearing bank for such seller, such Funds may arrange for transfer of
cash or securities between an Account and an account maintained by
Custodian for such seller in its capacity as clearing bank, in each
event in connection with two-party Repurchase Agreement transactions;
and
WHEREAS, each of the custodians identified in Schedule C hereto
(each, a "Repo Custodian") serves as a third-party custodian of the
Funds for purposes of effecting third-party Repurchase Agreement
transactions; and
WHEREAS, from time to time one or more of the Funds may arrange to
transfer cash or Securities from the Custodian to one or more Repo
Custodians or transfer cash or Securities from one or more Repo
Custodians to the Custodian, or in the case in which Custodian is also
Repo Custodian, such Funds may arrange for transfer of cash or
securities between an Account and an account maintained for such Funds
in its capacity as Repo Custodian, in each event in connection with
third-party Repurchase Agreement transactions;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I - APPOINTMENT OF CUSTODIAN
Each of the Funds hereby employs and appoints the Custodian as its
custodian, subject to the terms and provisions of this Agreement.
ARTICLE II - POWERS AND DUTIES OF CUSTODIAN
As custodian, the Custodian shall have and perform the powers and
duties, and only such powers and duties, as are set forth in this
Agreement.
Section 2.01. Establishment of Accounts. The Custodian shall
establish one or more Accounts as segregated joint trading accounts
for the Funds through which the Funds shall, from time to time, effect
Repurchase Agreement transactions.
Section 2.02. Receipt of Funds. The Custodian shall, from time to
time, receive funds for or on behalf of the Funds and shall hold such
funds in safekeeping. Upon receipt of Proper Instructions, the
Custodian shall credit funds so received to one or more Accounts
designated in such Proper Instructions. Promptly after receipt of
such funds from the Fund Custodian or a Repo Custodian or promptly
following the transfer to an Account from any account maintained by
Custodian in its capacity as Fund Custodian, or as Repo Custodian, the
Custodian shall provide written confirmation of such receipt to the
Fund Custodian or Repo Custodian, when and as applicable, and of such
receipt or transfer to the Fund Agent designated in Section 7.07(b)
hereof (the "Fund Agent"). The Custodian shall designate on its books
and records the funds allocable to each Account and the identity of
each Fund participating in such Account.
Section 2.03. Repurchase Transactions. The Funds may, from time to
time, enter into Repurchase Agreement transactions. In connection
with each such Repurchase Agreement transaction, unless otherwise
specifically directed by Special Instructions, the Custodian shall
take the following actions:
(a) Purchase of Securities. Upon receipt of Proper Instructions, the
Custodian shall pay for and receive Securities and any cash
denominated in U.S. Dollars which is serving as collateral ("Cash
Collateral"), provided that payment therefor shall be made by the
Custodian only against prior or simultaneous receipt of the Securities
and any Cash Collateral in the manner prescribed in subsection 2.03(b)
below. Except as provided in Section2.04 hereof, in no event shall
the Custodian deliver funds from an Account for the purchase of
Securities and any Cash Collateral prior to receipt of the Securities
and any Cash Collateral by the Custodian or a Securities System (as
hereinafter defined). The Custodian is not under any obligation to
make credit available to the Funds to complete transactions hereunder.
Promptly after the transfer of funds and receipt of Securities and any
Cash Collateral, the Custodian shall provide a confirmation to the
Fund Agent, setting forth (i) the Securities and any Cash Collateral
which the Custodian has received pursuant to the Repurchase Agreement
transaction, (ii) the amount of funds transferred from the applicable
Account, and (iii) any security or transaction identification numbers
reasonably requested by the Fund Agent.
(b) Receipt and Holding of Securities. In connection with each
Repurchase Agreement transaction, the Custodian shall receive and hold
the Securities as follows: (i) in the case of certificated securities,
by physical receipt of the certificates or other instruments
representing such Securities and by physical segregation of such
certificates or instruments from other assets of the Custodian in a
manner indicating that such Securities belong to specified Funds; and
(ii) in the case of Securities held in book-entry form by a Securities
System (as hereinafter defined), by appropriate transfer and
registration of such Securities to a customer only account of the
Custodian on the book-entry records of the Securities System, and by
appropriate entry on the books and records of the Custodian
identifying such Securities as belonging to specified Funds.
(c) Sale of Securities. Upon receipt of Proper Instructions, the
Custodian shall make delivery of Securities and any Cash Collateral
held in or credited to an Account against prior or simultaneous
payment for such Securities in immediately available funds in the form
of: (i) cash, bank credit, or bank wire transfer received by the
Custodian; or (ii) credit to the customer only account of the
Custodian with a Securities System. Notwithstanding the foregoing,
the Custodian shall make delivery of Securities held in physical form
in accordance with "street delivery custom" to a broker or its
clearing agent, against delivery to the Custodian of a receipt for
such Securities; provided that the Custodian shall have taken all
actions possible to ensure prompt collection of the payment for, or
the return of such Securities by the broker or its clearing agent.
Promptly after the transfer of Securities and any Cash Collateral and
the receipt of funds, the Custodian shall provide a confirmation to
the Fund Agent, setting forth the amount of funds received by the
Custodian or a Securities System for credit to the applicable Account.
(d) Additional Functions. Upon receipt of Proper Instructions, the
Custodian shall take all such other actions as specified in such
Proper Instructions and as shall be reasonable or necessary with
respect to Repurchase Agreement transactions and the Securities and
funds transferred and received pursuant to such transactions,
including, without limitation, all such actions as shall be prescribed
in the event of a default under a Repurchase Agreement.
(e) Nondiscretionary Functions. The Custodian shall attend to all
non-discretionary details in connection with the purchase, sale,
transfer or other dealings with Securities or other assets of the
Funds held by the Custodian.
(f) In the event that the Custodian is directed by Proper
Instructions to make any payment or transfer of funds on behalf of a
Fund for which there would be, at the close of business on the date of
such payment or transfer, insufficient funds held by the Custodian on
behalf of such Fund, the Custodian may, in its discretion, provide an
overdraft ("Overdraft") to the Fund, in an amount sufficient to allow
the completion of such payment or transfer. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the Fund and the Custodian; and (b) shall accrue
interest form the date of the Overdraft to the date of payment in full
by the Fund at a rate agreed upon in writing, from time to time, by
the Custodian and the Fund. The Custodian and the Funds acknowledge
that the purpose of such Overdrafts is to temporarily finance the
purchase or sale of securities for prompt delivery in accordance with
the terms hereof, or to meet emergency expenses not reasonably
foreseeable by a particular Fund. The Funds hereby agree that the
Custodian shall have a continuing lien and security interest in and to
all Securities whose purchase is financed by Custodian and which are
in Custodian's possession or in the possession or control of any third
party acting on Custodian's behalf and the proceeds thereof. In this
regard, Custodian shall be entitled to all the rights and remedies of
a pledgee under common law and a secured party under the New York
Uniform Commercial Code and any other applicable laws or regulations
as then in effect.
Section 2.04. Other Transfers.
(a) In addition to transfers of funds and Securities referred to in
Section 2.03, the Custodian shall transfer funds and Securities held
in an Account: (a) upon receipt of Proper Instructions, to (i)any
Fund Custodian, or (ii)any other account maintained for any Fund by
the Custodian in its capacity as a Fund Custodian, (iii)any Repo
Custodian or (iv) any other account maintained for any Fund by the
Custodian in its capacity as a Repo Custodian; or (b) upon receipt of
Special Instructions, and subject to Section 3.04 hereof, to any other
person or entity designated in such Special Instructions.
(b) Determination of Fund Custodian Daily Net Amount. On each
banking day, based upon daily transaction information provided to the
Custodian by the Funds, Custodian shall determine: (i) the amount of
cash due to be transferred on such day by each Fund Custodian to the
Custodian in connection with all Repurchase Agreement transactions in
which the date fixed for the repurchase and resale of Securities is
the banking day next following the date on which the sale and purchase
of such Securities takes place (each, an "Overnight Repo Transaction")
to be effected through the Accounts in such day; and (ii) the amount
of cash due to be transferred on such day by Custodian to such Fund
Custodian in connection with all outstanding Overnight Repo
Transactions previously effected through the Accounts (the difference
between (i) and (ii) with respect to each Fund Custodian being
referred to as the "Fund Custodian Daily Net Amount"). On each
banking day, Custodian shall notify each Fund Custodian of the
foregoing determination and, unless otherwise directed in accordance
with Proper Instructions, Custodian shall (i) instruct such Fund
Custodian to transfer cash to the Custodian equal to the Fund
Custodian Daily Net Amount (if the Fund Custodian Daily Net Amount is
positive) or (ii) transfer to such Fund Custodian cash equal to the
Fund Custodian Daily Net Amount (if the Fund Custodian Daily Net
Amount is negative).
(c) Determination of Repo Custodian Daily Net Amount. On each
banking day, based upon daily transaction information provided to the
Custodian by the Funds and each Repo Custodian, Custodian shall
determine: (i) the amount of cash due to be transferred on such day
by each Repo Custodian on behalf of the Funds to all counterparties in
connection with all third-party Overnight Repo Transactions to be
effected through the Accounts on such day; and (ii) the amount of cash
due to be transferred on such day by each Repo Custodian on behalf of
all counterparties to the Funds in connection with all outstanding
third-party Overnight Repo Transactions previously effected through
the Accounts (the difference between (i) and (ii) with respect to each
Repo Custodian being referred to as the "Repo Custodian Daily Net
Amount"). On each banking day, Custodian shall notify the Funds of
the foregoing determinations and, unless otherwise directed in
accordance with Proper Instructions, Custodian shall (i) transfer to
each Repo Custodian cash equal to the Repo Custodian Daily Net Amount
(if the Repo Custodian Daily Net Amount is positive) or (ii) instruct
each Repo Custodian to transfer to the Custodian cash equal to the
Repo Custodian Daily Net Amount (if the Repo Custodian Daily Net
Amount is negative).
Section 2.05. Custodian's Books and Records. The Custodian shall
provide any assistance reasonably requested by the Funds in the
preparation of reports to shareholders of the Funds and others, audits
of accounts, and other ministerial matters of like nature. The
Custodian shall maintain complete and accurate records with respect to
cash and Securities held for the benefit of the Funds as required by
the rules and regulations of the Securities and Exchange Commission
applicable to investment companies registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"),
including: (a) journals or other records of original entry containing
a detailed and itemized daily record of all receipts and deliveries of
securities (including certificate and transaction identification
numbers, if any), and all receipts and disbursements of cash; (b)
ledgers or other records reflecting Securities in transfer, and
Securities in physical possession; and (c) cancelled checks and bank
records related thereto. The Custodian shall keep such other books
and records of the Funds relating to repurchase transactions effected
through the Accounts as the Funds shall reasonably request. Such
books and records maintained by the Custodian shall reflect at all
times the identity of each Fund participating in each Account and the
aggregate amount of the Securities and any Cash Collateral held by the
Custodian on behalf of the Funds in such Account pursuant to this
Agreement. All such books and records maintained by the Custodian
shall be maintained in a form acceptable to the Funds and in
compliance with the rules and regulations of the Securities and
Exchange Commission, including, but not limited to, books and records
required to be maintained by Section 31(a) of the Investment Company
Act and the rules from time to time adopted thereunder. All books and
records maintained by the Custodian relating to the Accounts shall at
all times be the property of the Funds and shall be available during
normal business hours for inspection and use by the Funds and their
agents, including, without limitation, their independent certified
public accountants. Notwithstanding the preceding sentence, the Funds
shall not take any actions or cause Custodian to take any actions
which would cause, either directly or indirectly, the Custodian to
violate any applicable laws, regulations, rules or orders.
Section 2.06. Reports by Independent Certified Public Accountants.
At the request of the Funds, the Custodian shall deliver to the Funds
such annual reports and other interim reports prepared by the
independent certified public accountants of the Custodian with respect
to the services provided by the Custodian under this Agreement,
including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding
Securities, including Securities deposited and/or maintained in a
Securities System. Such reports, which shall be of sufficient scope
and in sufficient detail as may reasonably be required by the Funds
and as may reasonably by obtained by the Custodian, shall provide
reasonable assurance to the Funds that the procedures employed by the
independent certified public accountants are reasonably designed to
detect any material inadequacies with respect to the matters discussed
in the report, shall state in detail the material inadequacies
disclosed by such examination, and, if no such inadequacies exist,
shall so state.
Section 2.07. Securities System. As used herein the term "Securities
System" shall mean each of the following: (a) the Depository Trust
Company; (b) the Participants Trust Company; (c) any book-entry system
as provided in (i) Subpart0 of Treasury Circular No. 300, 31CFR
306.115, (ii) SubpartB of Treasury Circular Public Debt Series No.
27-76, 31CFR 350.2, or (iii) the book-entry regulations of federal
agencies substantially in the form of 31CFR 306.115; or (d) any
domestic clearing agency registered with the Securities and Exchange
Commission under Section17A of the Securities Exchange Act of 1934, as
amended (or as may otherwise be authorized by the Securities and
Exchange Commission to serve in the capacity of depository or clearing
agent for the securities or other assets of investment companies)
which acts as a securities depository and the use of which has been
approved in Special Instructions. Use of a Securities System by the
Custodian shall be in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any,
and subject to the following provisions:
(A) The Custodian may deposit and/or maintain Securities held
hereunder in a Securities System, provided that such Securities are
represented in an account of the Custodian in the Securities System
which account shall not contain any assets of the Custodian other than
assets held as a fiduciary, custodian, or otherwise for customers.
(B) The Custodian shall, if requested by the Funds, provide the Funds
with all reports obtained by the Custodian with respect to the
Securities System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities
System.
(C) Upon receipt of Special Instructions, the Custodian shall
terminate the use hereunder of any Securities System (except for the
federal book-entry system) as promptly as practicable and shall take
all actions reasonably practicable to safeguard the Securities and
other assets of the Funds maintained with such Securities System.
Section 2.08. Collections. The Custodian shall (a) collect, receive
and deposit in the applicable Account all income and other payments
with respect to Securities held by the Custodian hereunder; (b)
endorse and deliver any instruments required to effect such
collection; and (c) execute ownership and other certificates and
affidavits for all federal, state and foreign tax purposes in
connection with receipt of income or other payments with respect to
Securities, or in connection with the transfer of Securities.
Section 2.09. Notices, Consents, Etc. The Custodian shall deliver to
the Funds, in the most expeditious manner practicable, all notices,
consents or announcements affecting or relating to Securities held by
the Custodian on behalf of the Funds that are received by the
Custodian, and, upon receipt of Proper Instructions, the Custodian
shall execute and deliver such consents or other authorizations as may
be required.
Section 2.10. Notice of Custodian's Inability to Perform. The
Custodian shall promptly notify the Funds in writing by facsimile
transmission or such other manner as the Funds may designate, if, for
any reason: (a) the Custodian determines that it is unable to perform
any of its duties or obligations hereunder or its duties or
obligations with respect to any repurchase transaction; or (b) the
Custodian reasonably foresees that it will be unable to perform any
such duties or obligations.
ARTICLE III - PROPER INSTRUCTIONS AND RELATED MATTERS
Section 3.01. Proper Instructions; Special Instruction.
(a) Proper Instructions. As used herein, the term "Proper
Instructions" shall mean: (i) a tested telex, a written (including,
without limitation, facsimile transmission) request, direction,
instruction or certification signed or initialed by one or more
Authorized Persons (as hereinafter defined); (ii) a telephonic or
other oral communication by one or more Authorized Persons; or (iii) a
communication effected directly between electromechanical or
electronic devices or systems (including, without limitation,
computers) by one or more Authorized Persons; provided, however, that
communications of the types described in clauses (ii) and (iii) above
purporting to be given by an Authorized Person shall be considered
Proper Instructions only if the Custodian reasonably believes such
communications to have been given by an Authorized Person with respect
to the transaction involved. Proper Instructions in the form of oral
communications shall be confirmed by the Funds by tested telex or in
writing in the manner set forth in clause(i) above, but the lack of
such confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructions prior to the
Custodian's receipt of such confirmation. Each of the Funds and the
Custodian is hereby authorized to record any and all telephonic or
other oral instructions communicated to the Custodian. Proper
Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing
instructions.
(b) Special Instructions. As used herein, the term "Special
Instructions" shall mean Proper Instructions countersigned or
confirmed in writing by, in the case of the entities listed in
Schedules A-1 or A-2 hereto, the Treasurer or any Assistant Treasurer
of the Funds or any other person designated in writing by the
Treasurer of the Funds, and in the case of each of the entities listed
on Schedules A-3 or A-4, by the officer who is a signatory to this
Agreement on behalf of such entity or any other person designated in
writing by such officer or an officer of such entity of higher
authority, which countersignature or written confirmation shall be (i)
included on the same instrument containing the Proper Instructions or
on a separate instrument relating thereto, and (ii) delivered by hand,
by facsimile transmission, or in such other manner as the parties
hereto may agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, telecopy or telex number
agreed upon from time to time by the Custodian and the Funds.
Section 3.02. Authorized Persons. Concurrently with the execution of
this Agreement and from time to time thereafter, as appropriate, the
Funds shall deliver to the Custodian, duly certified as appropriate by
the Treasurer or any Assistant Treasurer of the Funds or by a
Secretary or Assistant Secretary of the Funds, and in the case of each
of the entities listed on Schedules A-3 or A-4, by the officer who is
a signatory to this Agreement on behalf of such entity or any other
person designated in writing by such officer or an officer of higher
authority, a certificate setting forth (a) the names, signatures and
scope of authority of all persons authorized to give Proper
Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of the Funds (collectively, the
"Authorized Persons," and individually, an "Authorized Person"), and
(b) the names and signatures of those persons authorized to issue
Special Instructions. Such certificate may be accepted and relied
upon by the Custodian as conclusive evidence of the facts set forth
therein and shall be considered to be in full force and effect until
delivery to the Custodian of a similar certificate to the contrary.
Upon delivery of a certificate which deletes the name of a person
previously authorized to give Proper Instructions or to issue Special
Instructions, such person shall no longer be considered an Authorized
Person or authorized to issue Special Instructions, as applicable.
Section 3.03. Investment Limitations. In performing its duties
hereunder the Custodian may assume, unless and until it receives
special Instructions to the contrary (a "Contrary Notice"), that
Proper Instructions received by it are not in conflict with or in any
way contrary to any investment or other limitation applicable to any
of the Funds. The Custodian shall in no event be liable to the Funds
and shall be indemnified by the Funds for any loss, damage or expense
to the Custodian arising out of any violation of any investment or
other limitation to which any Fund is subject, except to the extent
that such loss, damage or expense: (i) relates to a violation of any
investment or other limitation of a Fund occurring after receipt by
the Custodian of a Contrary Notice; or (ii) arises from a breach of
this Agreement by the Custodian.
Section 3.04. Persons Having Access to Assets of the Funds. No
Authorized Person, Trustee, officer, employee or agent of the Funds
(other than the Custodian) shall have physical access to the assets of
the Funds held by the Custodian, or shall be authorized or permitted
to withdraw any such assets for delivery to an account of such person,
nor shall the Custodian deliver any such assets to any such person;
provided, however, that nothing in this Section 3.04 shall prohibit:
(a) any Authorized Person from giving Proper Instructions, or the
persons described in Section 3.01(b) from issuing Special
Instructions, so long as such action does not result in delivery of or
access to assets of the Funds prohibited by this Section 3.04; or (b)
the Funds' independent certified public accountants from examining or
reviewing the assets of the Funds held by the Custodian.
Section 3.05. Actions of Custodian Based on Proper Instructions and
Special Instructions. Subject to the provisions of Section 4.01
hereof, the Custodian shall not be responsible for the title, validity
or genuineness of any property, or evidence of title thereof, received
by it or delivered by it pursuant to this Agreement.
ARTICLE IV - STANDARD OF CARE; INDEMNIFICATION
Section 4.01. Standard of Care.
(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and
obligations under this Agreement, and shall be liable to the Funds for
all loss, damage and expense incurred or suffered by the Funds,
resulting from the failure of the Custodian to exercise such
reasonable care and diligence or from any other breach by the
Custodian of the terms of this Agreement.
(b) Acts of God, Etc. In no event shall the Custodian incur
liability hereunder if the Custodian is prevented, forbidden or
delayed from performing, or omits to perform, any act or thing which
this Agreement provides shall be performed or omitted to be performed
by reason of: (i) any provision of any present or future law or
regulation or order of the United States of America, or any state
thereof, or of any foreign country, or political subdivision thereof
or of any court of competent jurisdiction; or (ii) any act of God or
war; unless, in each case, such delay or nonperformance is caused by
(A) the negligence, misfeasance or misconduct of the Custodian, or (B)
a malfunction or failure of equipment maintained or operated by the
Custodian other than a malfunction or failure caused by events beyond
the Custodian's control and which could not reasonably be anticipated
and/or prevented by the Custodian.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to the Funds, the
Custodian shall use all commercially reasonable efforts and shall take
all reasonable steps under the circumstances to mitigate the effects
of such event and to avoid continuing harm to the Funds.
Section 4.02. Liability of Custodian for Actions of Securities
Systems. Notwithstanding the provisions of Section4.01 to the
contrary, the Custodian shall not be liable to the Funds for any loss,
damage or expense resulting from the use by the Custodian of a
Securities System, unless such loss, damage or expense is caused by,
or results from, negligence, misfeasance or misconduct of the
Custodian. In the case of loss, damage or expense resulting from use
of a Securities System by the Custodian, the Custodian shall take all
reasonable steps to enforce such rights as it may have against the
Securities System to protect the interest of the Funds.
Section 4.03. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, the Funds severally agree to indemnify and
hold harmless the Custodian from all claims and liabilities (including
reasonable attorneys' fees) incurred or assessed against the Custodian
for actions taken in reliance upon Proper Instructions or Special
Instructions; provided, however, that such indemnity shall not apply
to claims and liabilities occasioned by or resulting from the
negligence, misfeasance or misconduct of the Custodian, or any other
breach of this Agreement by the Custodian. In addition, the Funds
severally agree to indemnify the Custodian against any liability
incurred by the Custodian by reason of taxes assessed to the
Custodian, or other costs, liability or expenses incurred by the
Custodian, resulting directly or indirectly solely from the fact that
securities and other property of the Funds is registered in the name
of the Custodian; provided, however, in no event shall such
indemnification be applicable to income, franchise or similar taxes
which may be imposed or applied against the Custodian or charges
imposed by a Federal Reserve Bank with respect to intra-day overdrafts
unless separately agreed to by the Funds.
(b) Extent of Liability. Notwithstanding anything to the contrary
contained herein, with respect to the indemnification obligations of
the Funds provided in this Section4.03, each Fund shall be: (i)
severally, and not jointly and severally, liable with each of the
other Funds; and (ii) liable only for its pro rata share of such
liabilities, determined with reference to such Fund's proportionate
interest in the aggregate of assets held by the Custodian in the
Account with respect to which such liability relates at the time such
liability was incurred, as reflected on the books and records of the
Funds.
(c) Notice of Litigation, Right to Prosecute, Etc. The Custodian
shall promptly notify the Funds in writing of the commencement of any
litigation or proceeding brought against the Custodian in respect of
which indemnity may be sought against the Funds pursuant to this
Section4.03. The Funds shall be entitled to participate in any such
litigation or proceeding and, after written notice from the Funds to
the Custodian, the Funds may assume the defense of such litigation or
proceeding with counsel of their choice at their own expense. The
Custodian shall not consent to the entry of any judgment or enter into
any settlement in any such litigation or proceeding without providing
the Funds with adequate notice of any such settlement or judgment, and
without the Funds' prior written consent. The Custodian shall submit
written evidence to the Funds with respect to any cost or expense for
which it seeks indemnification in such form and detail as the Funds
may reasonably request.
Section 4.04. Funds, Right to Proceed. Notwithstanding anything to
the contrary contained herein, the Funds shall have, at their election
upon reasonable notice to the Custodian, the right to enforce, to the
extent permitted by any applicable agreement and applicable law, the
Custodian's rights against any Securities System or other person for
loss, damage or expense caused the Custodian or the Funds by such
Securities System or other person, and shall be entitled to enforce
the rights of the Custodian with respect to.any claim against such
Securities System or other person which the Custodian may have as a
consequence of any such loss, damage or expense if and to the extent
that the Custodian or any Fund has not been made whole for any such
loss, damage or expense.
ARTICLE V - COMPENSATION
Section 5.01. Compensation. The Custodian shall be compensated for
its services hereunder in an amount, and at such times, as may be
agreed upon, from time to time, by the Custodian and the Funds. Each
Fund shall be severally, and not jointly, liable with the other Funds
only for its pro rata share of such compensation, determined with
reference to such Fund's proportionate interest in each Repurchase
Agreement transaction to which such compensation relates.
Section 5.02. Waiver of Right of Set-Off. The Custodian hereby
waives and relinquishes all contractual and common law rights of
set-off to which it may now or hereafter be or become entitled with
respect to any obligations of the Funds to the Custodian arising under
this Agreement.
ARTICLE VI - TERMINATION
Section 6.01. Events of Termination. This Agreement shall continue
in full force and effect until the first to occur of: (a) termination
by the Custodian or the Funds by an instrument in writing delivered to
the other party, such termination to take effect not sooner than
ninety (90) days after the date of such delivery; or (b) termination
by the Funds by written notice delivered to the Custodian, based upon
the Funds' determination that there is a reasonable basis to conclude
that the Custodian is insolvent or that the financial condition of the
Custodian is deteriorating in any material respect, in which case
termination shall take effect upon the Custodians receipt of such
notice or at such later time as the Funds shall designate; provided,
however, that this Agreement may be terminated as to one or more Funds
(but less than all Funds) by delivery of an amended Schedule A-1, A-2,
A-3 or A-4 pursuant to Section7.03 hereof. The execution and delivery
of an amended Schedule A-1, A-2, A-3 or A-4 which deletes one or more
Funds shall constitute a termination of this Agreement only with
respect to such deleted Fund(s).
Section 6.02. Successor Custodian; Payment of Compensation. Each of
the Funds may identify a successor custodian to which the cash,
Securities and other assets of such Fund shall, upon termination of
this Agreement, be delivered; provided that in the case of the
termination of this Agreement with respect to any of the Funds, such
Fund or Funds shall direct the Custodian to transfer the assets of
such Fund or Funds held by the Custodian pursuant to Proper
Instructions. The Custodian agrees to cooperate with the Funds in the
execution of documents and performance or all other actions necessary
or desirable in order to substitute the successor custodian for the
Custodian under this Agreement. In the event of termination, each
Fund shall make payment of such Fund's applicable share of unpaid
compensation within a reasonable time following termination and
delivery of a statement to the Funds setting forth such fees. The
termination of this Agreement with respect to any of the Funds shall
be governed by the provisions of this ArticleVI as to notice, payments
and delivery of securities and other assets, and shall not affect the
obligations of the parties hereunder with respect to the other Funds
set forth in Schedule A-1, A-2, A-3 or A-4 as amended from time to
time.
ARTICLE VII - MISCELLANEOUS
Section 7.01. Representative Capacity and Binding Obligation. A COPY
OF THE DECLARATION OF TRUST OR OTHER ORGANIZATIONAL DOCUMENTS OF EACH
FUND IS ON FILE WITH THE SECRETARY OF THE STATE OF EACH FUND'S
FORMATION, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT
EXECUTED ON BEHALF OF THE TRUSTEES OF ANY FUND AS INDIVIDUALS, AND THE
OBLIGATIONS OF THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE
SHAREHOLDERS, TRUSTEES, DIRECTORS, PARTNERS, OFFICERS, EMPLOYEES OR
AGENTS OF ANY FUND INDIVIDUALLY, BUT ARE BINDING ONLY UPON THE ASSETS
AND PROPERTY OF THE FUNDS, AND IN THE CASE OF SERIES COMPANIES, SUCH
FUNDS' RESPECTIVE PORTFOLIOS OR SERIES.
THE CUSTODIAN AGREES THAT NO SHAREHOLDER, TRUSTEE, DIRECTOR, PARTNER,
OFFICER, EMPLOYEE OR AGENT OF ANY FUND MAY BE HELD PERSONALLY LIABLE
OR RESPONSIBLE FOR ANY OBLIGATIONS OF THE FUNDS ARISING OUT OF THIS
AGREEMENT. WITH RESPECT TO OBLIGATIONS OF EACH FUND ARISING OUT OF
THIS AGREEMENT, THE CUSTODIAN SHALL LOOK FOR PAYMENT OR SATISFACTION
OF ANY CLAIM SOLELY TO THE ASSETS AND PROPERTY OF THE FUND TO WHICH
SUCH OBLIGATION RELATES AS THOUGH EACH FUND HAD SEPARATELY CONTRACTED
WITH THE CUSTODIAN BY SEPARATE WRITTEN INSTRUMENT."
Section 7.02. Entire Agreement. This Agreement constitutes the
entire understanding and agreement of the parties hereto with respect
to the subject matter hereof.
Section 7.03. Amendments. No provision of this Agreement may be
amended except by a statement in writing signed by the party against
which enforcement of the amendment is sought; provided, however,
Schedule A-1, A-2, A-3 or A-4 listing the Funds which are parties
hereto, Schedule B listing the Fund Custodians and Schedule C listing
the Repo Custodians may be amended from time to time to add or delete
one or more Funds, Fund Custodians or Repo Custodians, as the case may
be, by the Funds' delivery of an amended Schedule A-1, A-2, A-3 or
A-4, Schedule B or Schedule C to the Custodian. The deletion of one
or more Funds from Schedule A-1, A-2, A-3 or A-4 shall have the effect
of terminating this Agreement as to such Fund(s), but shall not affect
this Agreement with respect to any other Fund.
Section 7.04. Interpretation. In connection with the operation of
this Agreement, the Custodian, and the Funds may agree in writing from
time to time on such provisions interpretative of or in addition to
the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No
interpretative or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
Section 7.05. Captions. Headings contained in this Agreement, which
are included as convenient references only, shall have no bearing upon
the interpretation of the terms of the Agreement or the obligations of
the parties hereto.
Section 7.06. Governing Law. THE PROVISIONS OF THIS AGREEMENT SHALL
BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 7.07. Notice and Confirmations.
(a) Except as provided in Section 7.07(b) below and except in the
case of Proper Instructions or Special Instructions, notices and other
writings contemplated by this Agreement shall be delivered by hand or
by facsimile transmission (provided that in the case of delivery by
facsimile transmission, notice shall also be mailed postage prepaid)
to the parties at the following addresses:
(i) If to the Funds:
FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah Todd or
Mr. Samuel Silver
(ii) If to the Custodian:
The Bank of New York
One Wall Street
Fourth Floor
New York, NY 10286
Attn: Claire Meskovic
Telephone: (212) 635-4808
Telefax: (212) 635-4828
(b) The Custodian may provide the confirmations required by Sections
2.02 and 2.03 of this Agreement by making the information available in
the form of a communication directly between electromechanical or
electrical devices or systems (including, without limitation,
computers) (or in such other manner as the parties hereto may agree in
writing) to the following Fund Agent:
Fidelity Accounting and Custody
Domestic Securities Operations
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 506-4071
Attention: Mr. Mark Mufler
The address and telephone number of the Funds, the Fund Agent and the
Custodian and the identity of the Fund Agent specified in this Section
7.07 may be changed by written notice of the Funds to Custodian or
Custodian to the Funds, as the case may be. All written notices which
are required or provided to be given hereunder shall be effective upon
actual receipt by the entity to which such notice is given.
Section 7.08. Assignment. This Agreement shall be binding on and
shall inure to the benefit of the parties hereto and their respective
successors and assigns, provided that, no party hereto may assign this
Agreement or any of its rights or obligations hereunder without the
prior written consent of each of the other parties.
Section 7.09. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
This Agreement shall become effective when one or more counterparts
have been signed and delivered by each of the parties.
Section 7.10. Confidentiality; Survival of Obligations. The parties
hereto agree that they shall each shall treat confidentially the terms
and conditions of this Agreement and all information provided by each
party to the others regarding its business and operations. All
confidential information provided by a party hereto shall be used by
any other party hereto solely for the purpose of rendering services
pursuant to this Agreement and, except as may be required in carrying
out this Agreement, shall not be disclosed to any third party without
the prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when provided
or thereafter becomes publicly available other than through a breach
of this Agreement, or that is required to be disclosed by any bank
examiner of the Custodian, any auditor of the parties hereto or by
judicial or administrative process or otherwise by applicable law or
regulation. The provisions of this Section 7.10 and Sections3.03,
4.01, 4.02, 4.03, 4.04, 4.05, 7.01 and 7.06 shall survive any
termination of this Agreement, provided that in the event of
termination the Custodian agrees that it shall transfer and return
Securities and other assets held by the Custodian for the benefit of
the Funds as the Funds direct pursuant to Proper Instructions.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in its name and behalf on the day and year first above
written.
[Signature Lines Omitted]
SCHEDULES A-1, A-2, A-3 AND A-4
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT BETWEEN
THE BANK OF NEW YORK AND FIDELITY FUNDS DATED AS OF __________
The following is a list of the Funds to which this Agreement applies:
SCHEDULE B
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN THE BANK OF NEW YORK AND
FIDELITY FUNDS DATED AS OF MAY 11, 1995
The following is a list of the Fund Custodians of the Funds:
The Bank of New York
Morgan Guaranty Trust Company
Brown Brothers Harriman & Co.
First Union National Bank Charlotte
Chase Manhattan Bank, N.A.
State Street Bank and Trust Company
SCHEDULE C
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN THE BANK OF NEW YORK AND
FIDELITY FUNDS DATED AS OF MAY 11, 1995
The following is a list of Repo Custodians of the Funds:
The Bank of New York
Chemical Bank
Morgan Guaranty Trust Company
Exhibit 8(q)
Form of
FIRST AMENDMENT TO
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN
THE BANK OF NEW YORK
AND
FIDELITY FUNDS
FIRST AMENDMENT TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT BETWEEN
THE BANK OF NEW YORK AND FIDELITY FUNDS, dated as of _______, by and
between THE BANK OF NEW YORK ("Custodian") and each of the entities
listed on SchedulesA-1, A-2, A-3 and A-4 hereto on behalf of itself
or, (i) in the case of a series company, on behalf of one or more of
its portfolios or series listed on SchedulesA-1 or A-2 hereto, (ii) in
the case of the accounts listed on Schedule A-3 hereto, acting through
Fidelity Management & Research Company, and (iii)in the case of the
commingled or individual accounts listed on Schedule A-4 hereto,
acting through Fidelity Management Trust Company (collectively, the
"Funds" and each, a "Fund").
WITNESSETH
WHEREAS, Custodian and certain of the Funds have entered into that
certain Joint Trading Account Custody Agreement between The Bank of
New York and Fidelity Funds, dated as of ______ (the "Agreement"),
pursuant to which the Funds have appointed the Custodian as its
custodian for the purpose of establishing and administering one or
more joint trading accounts or subaccounts thereof (individually, an
"Account" and collectively, the "Accounts") and holding cash and
securities for the Funds in connection with repurchase transactions
effected through the Accounts; and
WHEREAS, Seller and the Funds desire to amend the Agreement as set
forth below.
NOW, THEREFORE, in consideration of the premises and mutual promises
and covenants contained herein, the parties hereto agree as follows.
Unless otherwise defined herein or the context otherwise requires,
terms used in this Amendment, including the preamble and recitals,
have the meanings provided in the Agreement.
The Agreement is hereby amended by deleting Paragraph2.03(f) in its
entirety and substituting the following in lieu thereof:
Exhibit 8(q)
"(f) Overdraft. In the event that the Custodian is directed by
Proper Instructions to make any payment or transfer of funds on behalf
of a Fund for which there would be, at the close of business on the
date of such payment or transfer, insufficient funds held by the
Custodian on behalf of such Fund, the Custodian may, in its
discretion, provide an overdraft ("Overdraft") to the Fund (such Fund
being referred to herein as an "Overdraft Fund"), in an amount
sufficient to allow the completion of such payment or transfer. Any
Overdraft provided hereunder: (a) shall be payable on the next
Business Day, unless otherwise agreed by the Overdraft Fund and the
Custodian; and (b) shall accrue interest from the date of the
Overdraft to the date of payment in full by the Overdraft Fund at a
rate agreed upon in writing, from time to time, by the Custodian and
the Overdraft Fund. The Custodian and the Funds acknowledge that the
purpose of such Overdrafts is to temporarily finance the purchase or
sale of securities for prompt delivery in accordance with the terms
hereof. The Custodian hereby agrees to notify each Overdraft Fund by
3:00 p.m., New York time, of the amount of any Overdraft. Provided
that Custodian has given the notice required by this subparagraph (f),
the Funds hereby agree that, as security for the Overdraft of an
Overdraft Fund, the Custodian shall have a continuing lien and
security interest in and to all interest of such Overdraft Fund in
Securities whose purchase is financed by Custodian and which are in
Custodian's possession or in the possession or control of any third
party acting on Custodian's behalf and the proceeds thereof. In this
regard, Custodian shall be entitled to all the rights and remedies of
a pledgee under common law and a secured party under the New York
Uniform Commercial Code and any other applicable laws or regulations
as then in effect."
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed and delivered under seal by their duly authorized officers.
BANK OF NEW YORK
[Signature Lines Omitted]
FIDELITY INVESTMENT COMPANIES LISTED
ON SCHEDULE A-1 HERETO AND ACCOUNTS
LISTED ON SCHEDULE A-3 HERETO
Dated:
[Signature Lines Omitted]
FIDELITY INVESTMENT COMPANIES LISTED
ON SCHEDULE A-2 HERETO
Dated:
[Signature Lines Omitted]
ACCOUNTS LISTED ON SCHEDULE A-4 HERETO
By: FIDELITY MANAGEMENT TRUST COMPANY
Dated:
[Signature Lines Omitted]
EXHIBIT 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectuses and Statement of Additional Information in Post-Effective
Amendment No. 43 to the Registration Statement on Form N-1A of
Fidelity Advisor Series I: Fidelity Advisor Equity Growth Fund,
Fidelity Advisor Mid Cap Fund, and Fidelity Advisor Large Cap Fund, of
our reports dated January 13, 1998 on the financial statements and
financial highlights included in the November 30, 1997 Annual Reports
to Shareholders of Fidelity Advisor Equity Growth Fund, Fidelity
Advisor Mid Cap Fund, and Fidelity Advisor Large Cap Fund.
We further consent to the incorporation by reference, into the
Prospectuses and Statement of Additional Information in Post-Effective
Amendment No. 43 to the Registration Statement on Form N-1A of
Fidelity Advisor Series VIII: Fidelity Advisor Strategic Opportunities
Fund (currently Fidelity Advisor Series I: Fidelity Advisor Strategic
Opportunities Fund), of our report dated January 15, 1998 on the
financial statements and financial highlights included in the November
30, 1997 Annual Report to Shareholders of Fidelity Advisor Strategic
Opportunities Fund.
We further consent to the incorporation by reference, into the
Prospectuses and Statement of Additional Information in Post-Effective
Amendment No. 43 to the Registration Statement on Form N-1A of
Fidelity Advisor Series II: Fidelity Advisor Growth Opportunities Fund
(currently Fidelity Advisor Series I: Fidelity Advisor Growth
Opportunities Fund), of our report dated January 5, 1998 on the
financial statements and financial highlights included in the November
30, 1997 Annual Report to Shareholders of Fidelity Advisor Growth
Opportunities Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the
Statement of Additional Information.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 23, 1998
EXHIBIT 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectuses and Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 43 to the Registration
Statement on Form N-1A of Fidelity Advisor Series I: Fidelity Advisor
TechnoQuant Growth Fund and Fidelity Advisor Growth & Income Fund, of
our reports dated January 14, 1998 on the financial statements and
financial highlights included in the November 30, 1997 Annual Reports
to Shareholders of Fidelity Advisor TechnoQuant Growth Fund and
Fidelity Advisor Growth & Income Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the
Statement of Additional Information.
/s/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
February 23, 1998
TO BE USED IN A POST-EFFECTIVE AMENDMENT WHERE THERE ARE TWO OR MORE
PROSPECTUSES COVERING FUNDS IN THE SAME TRUST (E.G., PURITAN TRUST).
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectuses and Statements of Additional Information in
Post-Effective Amendment No. [ ] to the Registration Statement on
Form N-1A of [TRUST NAME: FUND NAMES] of our reports dated [DATE OF
OPINION] on the financial statements and financial highlights included
in the [FISCAL YEAR END] Annual Reports to Shareholders of [FUND
NAMES].
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the
Statements of Additional Information.
PRICE WATERHOUSE LLP
Boston, Massachusetts
[DATE HANDING OFF 485(b) FOR FILING]
Exhibit 15(z)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
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 Class A shares of
Fidelity Advisor Growth Opportunities Fund ("Class A") a class of
shares of Fidelity Advisor Growth Opportunities Fund, (the "Fund"), a
portfolio of Fidelity Advisor Series I (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; 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 and paragraph 2 hereof, all with respect to Class A Shares,
Class A shall pay to the Distributor a 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 A 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 the Fund's Class A Shares.
The Distributor may use all or any portion of the fee received
pursuant to this Plan to compensate securities dealers or other
persons who have engaged in the sale of Class A Shares or in
shareholder support services pursuant to agreements with the
Distributor, or to pay any of the expenses associated with other
activities authorized under paragraph 2 hereof.
4. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the 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 make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
A Shares, including the activities referred to in paragraph 2 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 A 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" (as defined in the Act) of Class A,
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 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 April 30, 1998, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the 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 Fund thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities
of Class A, in the case of this Plan, or upon approval by a vote of a
majority of the outstanding voting securities of the Fund, in the case
of the Management Contract, and (b) any material amendment of this
Plan shall be effective only upon approval in the manner provided in
the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class A.
8. 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 shares of Class A
(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 Class A Shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class A pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class A 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.
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 15(aa)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
CLASS T SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act") for Class T shares of
Fidelity Advisor Growth Opportunities Fund ("Class T"), a class of
shares of Fidelity Advisor Growth Opportunities Fund (the "Fund"), a
series of Fidelity Advisor Series I (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 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 consideration for the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraph 2 hereof, all with respect to Class T Shares:
Class T shall pay to the Distributor a monthly fee at the annual rate
of 0.65% (or such lesser amount as the Trustees may, from time to
time, determine) of the average daily net assets of Class T throughout
the month. The determination of daily net assets shall be made at the
close of business each day throughout the month and computed in the
manner specified in the Fund's then current Prospectus for the
determination of the net asset value of Class T Shares, but shall
exclude assets attributable to any other class of Shares of the Fund.
The Distributor may, but shall not be required to, use all or any
portion of the fee received pursuant to the Plan to compensate
Investment Professionals who have engaged in the sale of Class T
Shares or in shareholder support services with respect to Class T
shares pursuant to agreements with the Distributor, or to pay any of
the expenses associated with other activities authorized under
paragraph 2 hereof.
4. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the 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 make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
T Shares, including the activities referred to in paragraph 2 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 T Shares within the
meaning of Rule 12b-1, then such payment shall be deemed to be
authorized by this Plan.
5. This Plan shall become effective upon the first business day of
the month following approval by a vote of at least a "majority of the
outstanding voting securities" (as defined in the Act) of Class T,
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.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect until April 30, 1998 and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the 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 Fund thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities
of Class T, 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 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 Class T.
8. 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 T Shares
(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 Class T shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class T pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class T and its assets and shall not
constitute an obligation of any shareholder of the Trust or any other
class of the Fund, series of the Trust or class of such series.
11. If any provision of the Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(bb)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR GROWTH OPPORTUNITIES 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 Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Act") for Class B Shares of Fidelity Advisor Growth
Opportunities Fund ("Class B"), a class of shares of Fidelity Advisor
Growth Opportunities Fund (the "Fund"), a series of Fidelity Advisor
Series I (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 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 Class B Shares, the Distributor
is hereby expressly authorized to make payments to Investment
Professionals in connection with the sale of 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 of 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 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 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 with
respect to Class B Shares 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 & 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 make payment to the Distributor with respect
to any 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 April 30, 1998, and from year to year
thereafter; provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the
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 this paragraph 8.
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 15(cc)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
CLASS C SHARES
1. This Distribution and Service Plan (the "Plan"), when effective
in accordance with its terms, shall be the written plan contemplated
by Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Act"), for Class C Shares of Fidelity Advisor Growth
Opportunities Fund ("Class C"), a class of shares of Fidelity Advisor
Growth Opportunities Fund (the "Fund"), a series of Fidelity Advisor
Series I (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 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 Class C Shares, the Distributor
is hereby expressly authorized to make payments to Investment
Professionals in connection with the sale of Class C Shares. Such
payments may be paid as a percentage of the dollar amount of purchases
of Class C Shares attributable to a particular Investment
Professional, or may take such other form as may be approved by the
Trustees.
4. In consideration of 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 Class C
Shares:
(a) Class C 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 C 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 C
Shares, but shall exclude assets attributable to 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 C Shares or in shareholder support services with
respect to Class C Shares 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 C Shares.
5. Separate from any payments made as described in paragraph 4
hereof, Class C 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 C
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 C 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 & 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 make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
C 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 C 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 approval 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 April 30, 1998, and from year to year
thereafter; provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the
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 C, in the case
of the 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 this paragraph 8.
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 C.
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 C 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 C Shares.
12. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class C pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class C 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 15(dd)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
INSTITUTIONAL CLASS
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act") for Institutional Class Shares of Fidelity Advisor Growth
Opportunities Fund ("Institutional Class"), a class of shares of
Fidelity Advisor Growth Opportunities Fund (the "Fund"), a series of
Fidelity Advisor Series I (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 for
the Fund's shares of beneficial interest ("Shares"). Under the
agreement, the Distributor pays the expenses of printing and
distributing any prospectuses, reports and other literature used by
the Distributor, advertising, and other promotional activities in
connection with the offering of Shares of the Fund for sale to the
public. It is recognized that Fidelity Management & Research Company
(the "Adviser") may use its management fee revenues, as well as
past profits or its resources from any other source, to make payment
to the Distributor with respect to any expenses incurred in connection
with the distribution of Institutional Class Shares, including the
activities referred to above.
3. The Adviser directly, or through the Distributor, may, subject to
the approval of the Trustees, make payments to securities dealers and
other third parties who engage in the sale of Shares or who render
shareholder support services, including but not limited to providing
office space, equipment and telephone facilities, answering routine
inquiries regarding the Fund, processing shareholder transactions and
providing such other shareholder services as the Trust may reasonably
request.
4. The Fund will not make separate payments as a result of this Plan
to the Adviser, Distributor or any other party, it being recognized
that the Fund presently pays, and will continue to pay, a management
fee to the Adviser. To the extent that any payments made by the Fund
to the Adviser, including payment of management fees, should be deemed
to be indirect financing of any activity primarily intended to result
in the sale of Shares of the Fund within the context of Rule 12b-1
under the Act, then such payments 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),
the 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 this Plan or in any
agreements related to this 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 from the date specified above until April 30, 1998, and from
year to year thereafter, provided, however, that such continuance is
subject to approval annually by a vote of a majority of the Trustees
of the 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 authorize direct payments by the
Fund to finance any activity primarily intended to result in the sale
of Shares of the Fund, to increase materially the amount spent by the
Fund for distribution, 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 the Fund, and (b) any material
amendments of this Plan shall be effective only upon approval in the
manner provided in the first sentence in this paragraph.
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 Fund.
8. During the existence of this Plan, the Trust shall require the
Adviser and/or Distributor to provide the Trust, for review by the
Trust's Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended in connection with
financing any activity primarily intended to result in the sale of
Shares of the 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 Fund.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Institutional Class pursuant to this Plan and any agreement related to
this Plan shall be limited in all cases to Institutional Class 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.
11. 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 15(ee)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
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 Class A shares of
Fidelity Advisor Strategic Opportunities Fund ("Class A") a class of
shares of Fidelity Advisor Strategic Opportunities Fund, (the "Fund"),
a portfolio of Fidelity Advisor Series I (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; 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 and paragraph 2 hereof, all with respect to Class A Shares,
Class A shall pay to the Distributor a 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 A 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 the Fund's Class A Shares.
The Distributor may use all or any portion of the fee received
pursuant to this Plan to compensate securities dealers or other
persons who have engaged in the sale of Class A Shares or in
shareholder support services pursuant to agreements with the
Distributor, or to pay any of the expenses associated with other
activities authorized under paragraph 2 hereof.
4. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the 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 make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
A Shares, including the activities referred to in paragraph 2 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 A 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" (as defined in the Act) of Class A,
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 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 April 30, 1998, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the 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 Fund thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities
of Class A, in the case of this Plan, or upon approval by a vote of a
majority of the outstanding voting securities of the Fund, in the case
of the Management Contract, and (b) any material amendment of this
Plan shall be effective only upon approval in the manner provided in
the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class A.
8. 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 shares of Class A
(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 Class A Shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class A pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class A 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.
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 15(ff)
DISTRIBUTION AND SERVICE PLAN
Fidelity Advisor Strategic Opportunities Fund
Class T Shares
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act") for the Class T shares of
Fidelity Advisor Strategic Opportunities Fund ("Class T"), a class of
shares of Fidelity Advisor Strategic Opportunities Fund (the "Fund"),
a portfolio of Fidelity Advisor Series I (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 the 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; and (6) providing training, marketing and support to
such dealers 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 and paragraph 2 hereof, all with respect to Class T Shares,
Class T shall pay to the Distributor a fee at the annual rate of .65%
(or such lesser amount as the Trustees may, from time to time,
determine) of the average daily net assets of Class T throughout the
month. The determination of daily net assets shall be made at the
close of business each day throughout the month and computed in the
manner specified in the Fund's then current Prospectus for the
determination of the net asset value of the Fund's Class T Shares. The
Distributor may use all or any portion of the fee received pursuant to
this Plan to compensate securities dealers or other persons who have
engaged in the sale of Class T Shares or in shareholder support
services pursuant to agreements with the Distributor, or to pay any of
the expenses associated with other activities authorized under
paragraph 2 hereof.
4. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company ("the Adviser") pursuant
to a management agreement between the 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 make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
T Shares, including the activities referred to in paragraph 2 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 T Shares within the
meaning of Rule 12b-1, then such payment shall be deemed to be
authorized by this Plan.
5. This Plan shall become effective upon the first business day of
the month following approval by a vote of at least a "majority of the
outstanding voting securities" (as defined in the Act) of Class T,
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 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 April 30, 1998, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the 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 Fund thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities
of Class T, in the case of this Plan, or upon approval by a vote of a
majority of the outstanding voting securities of the Fund in the case
of the Management Contract, and (b) any material amendment of this
Plan shall be effective only upon approval in the manner provided in
the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class T.
8. 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 shares of Class T
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class T Shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, obligation assumed by Class
T pursuant to this Plan and any agreement related to this Plan shall
be limited in all cases to Class T 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.
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 15(gg)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR STRATEGIC OPPORTUNITES 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
Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act") for Class B shares of Fidelity Advisor Strategic Opportunities
Fund ("Class B"), a class of shares of Fidelity Advisor Strategic
Opportunities Fund (the "Fund"), a series of Fidelity Advisor Series I
(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 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 Class B Shares, the Distributor
is hereby expressly authorized to make payments to Investment
Professionals in connection with the sale of 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 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 with
respect to Class B Shares 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 the 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 make payments to the Distributor
with respect to any 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 April 30, 1998, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the 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 this paragraph 8.
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 15(hh)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
INSTITUTIONAL CLASS SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act") for Institutional Class Shares of Fidelity Advisor Strategic
Opportunities ("Institutional Class"), a class of shares of Fidelity
Advisor Strategic Opportunities (the "Fund"), a series of Fidelity
Advisor Series I (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 for
the Fund's shares of beneficial interest ("Shares"). Under the
agreement, the Distributor pays the expenses of printing and
distributing any prospectuses, reports and other literature used by
the Distributor, advertising, and other promotional activities in
connection with the offering of Shares of the Fund for sale to the
public. It is recognized that Fidelity Management & Research Company
(the "Adviser") may use its management fee revenues, as well as past
profits or its resources from any other source, to make payments to
the Distributor with respect to any expenses incurred in connection
with the distribution of Institutional Class Shares, including the
activities referred to above.
3. The Adviser directly, or through the Distributor, may, subject to
the approval of the Trustees, make payments to securities dealers and
other third parties who engage in the sale of Shares or who render
shareholder support services, including but not limited to providing
office space, equipment and telephone facilities, answering routine
inquiries regarding the Fund, processing shareholder transactions and
providing such other shareholder services as the Trust may reasonably
request.
4. The Fund will not make separate payments as a result of this Plan
to the Adviser, Distributor or any other party, it being recognized
that the Fund presently pays, and will continue to pay, a management
fee to the Adviser. To the extent that any payments made by the Fund
to the Adviser, including payment of management fees, should be deemed
to be indirect financing of any activity primarily intended to result
in the sale of Shares of the Fund within the context of Rule 12b-1
under the Act, then such payments 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),
the 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 this Plan or in any
agreements related to this 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 from the date specified above until April 30, 1998, and from
year to year thereafter, provided, however, that such continuance is
subject to approval annually by a vote of a majority of the Trustees
of the 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 authorize direct payments by the
Fund to finance any activity primarily intended to result in the sale
of Shares of the Fund, to increase materially the amount spent by the
Fund for distribution, 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 the Fund, and (b) any material
amendments of this Plan shall be effective only upon approval in the
manner provided in the first sentence in this paragraph.
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 Fund.
8. During the existence of this Plan, the Trust shall require the
Adviser and/or Distributor to provide the Trust, for review by the
Trust's Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended in connection with
financing any activity primarily intended to result in the sale of
Shares of the 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 Fund.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Institutional Class pursuant to this Plan and any agreement related to
this Plan shall be limited in all cases to Institutional Class 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.
11. 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.
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