SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
(Name of Registrant as Specified In Its Charter)
Fidelity Advisor Series I
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
<PAGE>
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
CLASS A
CLASS T
CLASS B
INSTITUTIONAL CLASS
INITIAL CLASS
A FUND OF FIDELITY ADVISOR SERIES I
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-522-7297
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the shareholders of Fidelity Advisor Strategic Opportunities Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Advisor Strategic Opportunities Fund (the fund) will be
held at the office of Fidelity Advisor Series I (the trust), 82 Devonshire
Street, Boston, Massachusetts 02109 on June 16, 1999, at 9:00 a.m. The purpose
of the Meeting is to consider and act upon the following proposals, and to
transact such other business as may properly come before the Meeting or any
adjournments thereof.
1(a). To eliminate certain fundamental investment policies of the fund.
1(b). To approve an amended management contract for the fund.
The Board of Trustees has fixed the close of business on April 19, 1999 as
the record date for the determination of the shareholders of the fund and each
class entitled to notice of, and to vote at, such Meeting and any adjournments
thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
April 19, 1999
<PAGE>
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN THE
ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN
ORDER TO AVOID UNNECESSARY EXPENSE, WE ASK YOUR COOPERATION IN MAILING YOUR
PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and help avoid the time and expense involved in validating your vote if
you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account registration
itself or by the individual executing the proxy card. For example:
REGISTRATION VALID SIGNATURE
A. 1) ABC Corp. John Smith, Treasurer
2) ABC Corp. John Smith, Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins, Trustee
2) ABC Trust Ann B. Collins, Trustee
3) Ann B. Collins, Trustee Ann B. Collins, Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
<PAGE>
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY ADVISOR SERIES I:
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
CLASS A
CLASS T
CLASS B
INSTITUTIONAL CLASS
INITIAL CLASS
TO BE HELD ON JUNE 16, 1999
This Proxy Statement is furnished in connection with a solicitation of
proxies made by, and on behalf of, the Board of Trustees of Fidelity Advisor
Series I (the trust) to be used at the Special Meeting of Shareholders of
Fidelity Advisor Strategic Opportunities Fund (the fund) and at any adjournments
thereof (the Meeting), to be held on June 16, 1999 at 9:00 a.m. at 82 Devonshire
Street, Boston, Massachusetts 02109, the principal executive office of the trust
and Fidelity Management & Research Company (FMR), the fund's investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice. The
solicitation is being made primarily by the mailing of this Proxy Statement and
the accompanying proxy card on or about April 19, 1999. Supplementary
solicitations may be made by mail, telephone, telegraph, facsimile, electronic
means or by personal interview by representatives of the trust. In addition,
Management Information Services Corp. (MIS) and D.F. King & Co., Inc. may be
paid on a per-call basis to solicit shareholders on behalf of the fund at an
anticipated cost of approximately $____. The expenses in connection with
preparing this Proxy Statement and its enclosures and of all solicitations will
be paid by the fund, provided the expenses do not exceed the existing class
expense caps listed on page __. Expenses exceeding a class's expense cap will be
paid by FMR. The fund will reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to the beneficial owners
of shares. The principal business address of Fidelity Distributors Corporation
(FDC), the fund's principal underwriter and distribution agent, and Fidelity
Management & Research (U.K.) Inc. (FMR U.K.) and Fidelity Management & Research
(Far East) Inc. (FMR Far East), subadvisers to the fund, is 82 Devonshire
Street, Boston, Massachusetts 02109.
If the enclosed proxy card is executed and returned, it may nevertheless
be revoked at any time prior to its use by written notification received by the
trust, by the execution of a later-dated proxy card, by the trust's receipt of a
subsequent valid telephonic vote or by attending the Meeting and voting in
person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and are not
revoked, will be voted at the Meeting. Shares represented by such proxies will
be voted in accordance with the instructions thereon. If no specification is
made on a proxy card, it will be voted FOR the matters specified on the proxy
card. Only proxies that are voted will be counted towards establishing a quorum.
<PAGE>
Broker non-votes are not considered voted for this purpose. Shareholders should
note that while votes to ABSTAIN will count toward establishing a quorum,
passage of any proposal being considered at the Meeting will occur only if a
sufficient number of votes are cast FOR the proposal. Accordingly, votes to
ABSTAIN and votes AGAINST will have the same effect in determining whether the
proposal is approved.
The fund may also arrange to have votes recorded by telephone. The
expenses in connection with telephone voting will be paid by the fund, provided
the expenses do not exceed the existing class expense caps listed on page __.
Expenses exceeding a class's expense cap will be paid by FMR. If the fund
records votes by telephone, it will use procedures designed to authenticate
shareholder's identities, to allow shareholders to authorize the voting of their
shares in accordance with their instructions, and to confirm that their
instructions have been properly recorded. Proxies voted by telephone may be
revoked at any time before they are voted in the same manner that proxies voted
by mail may be revoked. D.F. King & Co., Inc. may be paid on a per-call basis
for vote-by-phone solicitations on behalf of the fund at an anticipated cost of
approximately $____.
If a quorum is not present at the Meeting, or if a quorum is present at
the Meeting but sufficient votes to approve one or more of the proposed items
are not received, or if other matters arise requiring shareholder attention, the
persons named as proxy agents may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares present at the
Meeting or represented by proxy. When voting on a proposed adjournment, the
persons named as proxy agents will vote FOR the proposed adjournment all shares
that they are entitled to vote with respect to each item, unless directed to
vote AGAINST the item, in which case such shares will be voted AGAINST the
proposed adjournment with respect to that item. A shareholder vote may be taken
on one or more of the items in this Proxy Statement prior to such adjournment if
sufficient votes have been received and it is otherwise appropriate.
Shares of each class issued and outstanding as of February 28, 1999 are
indicated in the following table:
Class A
Class T
Class B
Institutional Class
Initial Class
As of February 28, 1999, the Trustees and officers of the trust owned, in
the aggregate, [less than 1%] of the fund's outstanding shares.
To the knowledge of the trust, substantial (5% or more) record or
beneficial ownership of each class of the fund on February 28, 1999 was as
follows:
2
<PAGE>
[FMR has advised the trust that for Proposal(s) ___ contained in this
Proxy Statement, it will vote its shares at the Meeting FOR each Proposal.]
To the knowledge of the trust, no [other] shareholder owned of record or
beneficially more than 5% of the outstanding shares of each class of the fund on
that date.
Shareholders of record at the close of business on April 19, 1999 will be
entitled to vote at the Meeting. Each such shareholder will be entitled to one
vote for each dollar of net asset value held on that date.
FOR A FREE COPY OF THE FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
NOVEMBER 30, 1998 CALL 1-800-___-____ OR WRITE TO FIDELITY DISTRIBUTORS
CORPORATION AT 82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109.
VOTE REQUIRED: APPROVAL OF PROPOSALS 1(A) AND 1(B) REQUIRES THE
AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF THE
FUND. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT), THE VOTE OF A
"MAJORITY OF THE OUTSTANDING VOTING SECURITIES" MEANS THE AFFIRMATIVE VOTE OF
THE LESSER OF (A) 67% OR MORE OF THE VOTING SECURITIES PRESENT AT THE MEETING OR
REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING VOTING
SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR (B) MORE THAN 50% OF THE
OUTSTANDING VOTING SECURITIES. BROKER NON-VOTES ARE NOT CONSIDERED "PRESENT" FOR
THIS PURPOSE.
Proposals 1(a) and 1(b) are contingent upon each other; neither proposal
will be implemented unless both proposals are approved.
1(A). TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF THE FUND.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal to eliminate certain of the fund's fundamental
investment policies. Eliminating these fundamental investment policies would
provide the fund with greater flexibility when choosing investments and would
enable the fund to react to changing market and regulatory conditions, subject
to the supervision of the Board of Trustees, without seeking further shareholder
approval. Eliminating these fundamental investment policies also would allow the
fund to more clearly communicate its investment objective and strategy in
conformity with revised Form N-1A (the form used by open-end investment
companies like the fund to register under the Investment Company Act of 1940 and
the Securities Act of 1933). If the proposal is approved, the Trustees intend to
change the fund's name to "Fidelity Advisor Value Strategies Fund" to better
reflect the fund's revised investment policies. This name change does not
require shareholder approval, however, and is not part of the proposal.
FUNDAMENTAL INVESTMENT OBJECTIVE AND RELATED INVESTMENT POLICIES. The
fund's investment objective and certain investment policies describing its
principal investment strategy currently read as follows:
3
<PAGE>
"The 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."
Because the foregoing investment objective and policies are fundamental,
they cannot be modified or eliminated without shareholder approval.
If the proposal is approved, the fund's fundamental investment objective
would read as follows (deleted language is [bracketed]):
"The 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]."
As indicated above, if the proposal is approved, the fund's fundamental
investment objective of seeking capital appreciation would not change.
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. FMR has found that investment opportunities for the
fund that represent special situations also tend to constitute value
investments. If the proposal is approved, the fund could continue to search for
investments representing special situations if FMR deems such investments
appropriate, but the fund's fundamental investment objective and policies would
no longer require the fund to do so. As a result, the fund would have more
flexibility to seek a broader range of investment opportunities and to react to
changing market conditions. FMR currently anticipates that it would use this new
flexibility to generally follow a strategy of investing in all types of stocks,
including those involving special situations, to achieve the fund's objective of
capital appreciation.
If the proposal is approved, FMR would focus the fund's investments on
securities of companies that FMR believes are undervalued in the marketplace in
relation to factors such as the company's assets, earnings, or growth potential.
Although FMR would focus the fund's investments on securities of medium-sized
companies, FMR also would be able to make substantial investments in securities
of larger or smaller companies. "Value" stocks can react differently to issuer,
political, market and economic developments than the market as a whole and other
types of stocks. "Value" stocks tend to be inexpensive relative to their
earnings or assets compared to other types of stocks. However, "value" stocks
can continue to be inexpensive for long periods of time and may not ever realize
their full value. In addition, the value of securities of smaller issuers can be
more volatile than the value of securities of larger issuers.
The Board of Trustees believes that it is in the best interests of the
fund and its shareholders to eliminate the fundamental investment policies
regarding investments in special situations. If the proposal is approved, the
Trustees intend to change the fund's name to "Fidelity Advisor Value Strategies
4
<PAGE>
Fund" to better reflect the fund's revised investment policies. This name change
does not require shareholder approval, however, and is not part of the proposal.
OTHER FUNDAMENTAL INVESTMENT POLICIES. Certain of the fund's other
investment policies currently read as follows:
"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."
Because the foregoing investment policies are fundamental, they cannot be
modified or eliminated without shareholder approval.
If the proposal is approved, the fundamental investment policies stated
above would be eliminated. The fund currently has a non-fundamental investment
policy of investing its assets primarily in common stocks and an investment
strategy of investing its assets in securities of foreign issuers in addition to
securities of domestic issuers.
Eliminating the fundamental policy stating that "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" would clarify that FMR normally invests the fund's assets
primarily in common stocks. If the proposal is approved, the fund could continue
to invest in securities that are convertible into common stocks and in debt
securities, however, if FMR deems such investments appropriate and consistent
with the fund's investment objective and strategies. If the proposal is
approved, the Board of Trustees could change the fund's current non-fundamental
policy of investing its assets primarily in common stocks without shareholder
approval.
Eliminating the fundamental policy stating that "the fund may invest up to
30% of its assets in foreign investments" would permit the fund to invest in
securities of foreign issuers without limitation, if FMR deems such investments
appropriate and consistent with the fund's investment objective and strategies.
The fund potentially could be subject to increased exposure to foreign
investments. Foreign securities, foreign currencies, and securities issued by
U.S. entities with substantial foreign operations can involve additional risks
relating to political, economic, or regulatory conditions in foreign countries.
These risks include fluctuations in foreign currencies; withholding or other
taxes; trading, settlement, custodial and other operational risks; and the less
stringent investor protection and disclosure standards of some foreign markets.
All of these factors can make foreign investments, especially those in emerging
markets, more volatile and potentially less liquid than U.S. investments. In
addition, foreign markets can perform differently than the U.S. market.
Eliminating the foregoing fundamental investment policies would provide
the fund with greater flexibility when choosing investments. If the proposal is
approved, the fund would be able to react to changing market and regulatory
5
<PAGE>
conditions, subject to the supervision of the Board of Trustees, without seeking
further shareholder approval. Thus, the fund would have greater flexibility to
react to changing market conditions without the delay and potential costs of a
proxy solicitation.
Eliminating the foregoing fundamental investment policies also would allow
the fund to more clearly communicate its investment objective and strategy in
conformity with revised Form N-1A, which requires concise, understandable
descriptions of a fund's investment objective and principal investment
strategies. The fund's current investment policies are lengthier than the
policies currently disclosed for other Fidelity funds that already conform with
revised Form N-1A. Eliminating the foregoing fundamental investment policies
also would allow the fund to more clearly communicate its investment objective
and strategy to shareholders.
CONCLUSION. The Board of Trustees has concluded that it is in the best
interests of the fund and its shareholders to eliminate the fundamental
investment policies set forth above, and recommends that shareholders vote FOR
the proposal.
Approval of this proposal is contingent upon shareholder approval of
Proposal 1(b). If both this proposal and Proposal 1(b) are approved, the
elimination of the fundamental investment policies will take effect when the
disclosure is revised to reflect the changes. If both this proposal and Proposal
1(b) are not approved, the fund's current fundamental investment policies will
remain unchanged.
1(B). TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR THE FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has approved, and
recommends that shareholders of the fund approve, a proposal to adopt an amended
management contract with FMR (the Amended Contract). The Amended Contract
eliminates the performance adjustment component of the management fee that FMR
receives from the fund for managing its investments and business affairs under
the fund's existing management contract with FMR (the Present Contract). In
addition, the Amended Contract allows FMR and the trust, on behalf of the fund,
to modify the Management Contract subject to the requirements of the 1940 Act.
The Present Contract currently requires the vote of a majority of the fund's
outstanding voting securities to authorize all amendments. See "Modification of
Management Contract Amendment Provisions" on page __ for more details. (For
information on FMR, see the section entitled "Activities and Management of FMR"
on page __.)
CURRENT MANAGEMENT FEE. The management fee is calculated and paid monthly,
and is normally expressed as an annual percentage of the fund's average net
assets. The fee has two components: a Basic Fee and a Performance Adjustment.
The Basic Fee is an annual percentage of the fund's average net assets for the
current month. The Basic Fee rate is the sum of a Group Fee rate, which declines
as FMR's fund assets under management increase, and a fixed individual fund fee
rate of 0.30%. The Basic Fee rate for the fund's fiscal year ended November 30,
1998 was 0.5905%.
6
<PAGE>
The Performance Adjustment is a positive or negative dollar amount based
on the fund's performance and assets for the most recent 36 months. If the fund
outperforms the Standard & Poor's 500 Index (S&P 500) over 36 months, FMR
receives a positive Performance Adjustment, and if the fund underperforms the
S&P 500, the management fee is reduced by a negative Performance Adjustment. The
Performance Adjustment is an annual percentage of the fund's average net assets
over the 36-month performance period. The Performance Adjustment rate is 0.02%
for each percentage point of outperformance or underperformance, subject to a
maximum of 0.20% of the average net assets over the 36-month performance period.
PROPOSED MANAGEMENT FEE AMENDMENTS. A copy of the form of Amended
Contract, marked to indicate the proposed amendments, is attached as Exhibit 1
on page __. The Amended Contract would (1) eliminate the Performance Adjustment
component of the management fee effective 18 months after the date that the
Amended Contract takes effect, and (2) allow FMR and the trust, on behalf of the
fund, to modify the Management Contract subject to the requirements of the 1940
Act. For a detailed discussion of the fund's Present Contract, refer to the
section entitled "Present Management Contract" beginning on page __.
Except for the modifications discussed above, the Amended Contract is
substantially identical to the fund's Present Contract with FMR. If approved by
shareholders, the Amended Contract will take effect on the first day of the
first month following approval, with the performance adjustment being eliminated
over 18 months, as discussed below. The Amended Contract, if approved, will
remain in effect through July 31, 2000 and thereafter, but only as long as its
continuance is approved at least annually by (i) the vote, cast in person at a
meeting called for the purpose, of a majority of the Independent Trustees and
(ii) the vote of either a majority of the Trustees or a majority of the
outstanding shares of the fund. If the Amended Contract and Proposal 1(a) are
not approved, the Present Contract will continue in effect through July 31,
1999, and thereafter only as long as its continuance is approved at least
annually as described above.
IMPACT OF ELIMINATING THE PERFORMANCE ADJUSTMENT. If the proposal is
approved, after an 18-month "phase-out" period (described in detail below)
during which the Performance Adjustment will be eliminated, the fund's aggregate
management fee rate will equal the Basic Fee rate - the Basic Fee rate will no
longer be increased or decreased based on the fund's performance relative to the
S&P 500. It would be impossible to predict the impact of eliminating the
Performance Adjustment, if approved, beyond the 18-month phase-out period. The
future impact of eliminating the Performance Adjustment will depend on many
different factors and may represent an increase or a decrease from the fund's
aggregate management fee under the Present Contract, depending on the fund's
performance relative to the S&P 500.
During the fiscal year ended November 30, 1998, the fund's aggregate
management fee rate was 0.3772%, composed of a Basic Fee rate of 0.5905% reduced
by a negative Performance Adjustment of 0.2133%. Thus, the Performance
Adjustment resulted in a lower aggregate management fee under the Present
Contract than would have resulted under the Amended Contract, assuming the
Performance Adjustment had been eliminated.
7
<PAGE>
ELIMINATION OF PERFORMANCE ADJUSTMENT. Performance adjustments are
intended to reward a fund's investment adviser for good investment performance
and penalize a fund's investment adviser for bad investment performance. The
Securities and Exchange Commission (SEC) rules for calculating performance
adjustments are intended to ensure that positive or negative adjustments result
from the investment adviser's management skill and not from random or irrelevant
factors. To this end, the SEC rules require that an appropriate benchmark index
be used for purposes of calculating a performance adjustment and also provide
significant guidance on the specifics of the calculation.
If Proposal 1(a) is approved, FMR intends to focus the fund's investments
on value stocks of medium-sized companies. The S&P 500 - the index used to
calculate the fund's Performance Adjustment - is a broad measure of the
performance of the overall U.S. stock market and includes both "growth" stocks
and "value" stocks. Because (if Proposal 1(a) is approved) the fund will have a
narrower focus than the S&P 500, there can be no assurance that future
differences between the performance of the fund and that of the S&P 500 will be
attributable to FMR's skill as an investment adviser. Thus, if Proposal 1(a) is
approved, FMR believes that the S&P 500 will no longer be an appropriate
benchmark for purposes of calculating the Performance Adjustment.
Furthermore, the Performance Adjustment is based on the asset-weighted
performance of all classes of the fund. Differences in performance among the
classes generally are attributable mainly to differences in 12b-1 fees, which
range from 0% to 1.00%, depending on the class. The SEC rules for calculating
performance adjustments provide for the exclusion of sales loads from the
calculation because sales loads are irrelevant in measuring an investment
adviser's performance. The rules do not, however, provide for the exclusion of
12b-1 fees, which lower performance and generally represent alternatives to
sales loads or other commission-based compensation. FMR believes that 12b-1
fees, like sales loads, are dictated by sales and servicing characteristics
unrelated to investment performance and should not be included in a performance
adjustment calculation. Rather than recommend that the Performance Adjustment
index be changed from the S&P 500 to a more narrowly-based index appropriate for
a fund with a value-oriented strategy, FMR recommended, and the Board of
Trustees approved, a proposal to eliminate the Performance Adjustment
altogether.
PHASE-OUT PERIOD. If the proposal is approved, to prevent unfairness to
the fund, the Performance Adjustment will be phased out over a period equal to
one-half the period used to calculate the Performance Adjustment. Because the
Performance Adjustment is based on a 36-month performance period, FMR will
continue to calculate the Performance Adjustment on the fund for an 18-month
period beginning on the first day of the first month following shareholder
approval of the proposal. During this period, FMR will not receive any positive
Performance Adjustments but instead will receive the lower of the Basic Fee or
the Basic Fee less the Performance Adjustment. Thus, during this phase-out
period, the Performance Adjustment can decrease, but not increase, the
management fee owed by the fund. During this phase-out period, FMR will continue
to use the S&P 500 for performance fee calculations. Given the fund's
significant underperformance versus the S&P 500 over the previous 36-month
8
<PAGE>
period, FMR anticipates that the performance differential will remain greater
than 10%, thus resulting in a maximum negative Performance Adjustment over the
phase-out period.
COMPARISON OF MANAGEMENT FEES. The following table compares the fund's
management fee as calculated under the terms of the Present Contract for the
fiscal year ended November 30, 1998, to the management fee that the fund would
have incurred under the Amended Contract if the Amended Contract (but not the
Performance Adjustment) had been in effect during that same period. Management
fees are expressed in dollars and as percentages of the fund's average net
assets for the period.
PRESENT CONTRACT AMENDED CONTRACT DIFFERENCE
$ % $ % $ %
Basic Fee 3,718,524 0.5905 3,718,524 0.5905 0 0
Performance (1,343,174) (0.2133) 0 0 1,343,174 0.2133
Adjustment ----- ---- ---- ---- ---- ----
Total 2,375,350 0.3772 3,718,524 0.5905 1,343,174 0.2133
Manage-
ment Fee
The following tables provide data concerning each class's management fees
and expenses as a percentage of average net assets for the fiscal year ended
November 30, 1998 under the Present Contract and if the Amended Contract (but
not the Performance Adjustment) had been in effect during that same period.
COMPARATIVE FEE TABLE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
The following figures are based on historical expenses adjusted to reflect
current fees of Class A, Class T, Class B, Institutional Class, and Initial
Class of the fund and are calculated as a percentage of average net assets of
each class.
Class A:
PRESENT AMENDED
CONTRACT CONTRACT
Management Fee 0.38% 0.59%
12b-1 Fee 0.25% 0.25%
Other Expenses 0.43% 0.43%
------------- ---------
Total Fund Operating 1.06% 1.27%
Expenses*
9
<PAGE>
Class T:
PRESENT AMENDED
CONTRACT CONTRACT
Management Fee 0.38% 0.59%
12b-1 Fee 0.50% 0.50%
Other Expenses 0.29% 0.29%
------------- ---------
Total Fund Operating 1.17% 1.38%
Expenses*
Class B:
PRESENT AMENDED
CONTRACT CONTRACT
Management Fee 0.38% 0.59%
12b-1 Fee 1.00% 1.00%
Other Expenses 0.33% 0.33%
------------- ---------
Total Fund Operating 1.71% 1.92%
Expenses*
Institutional Class:
PRESENT AMENDED
CONTRACT CONTRACT
Management Fee 0.38% 0.59%
12b-1 Fee None None
Other Expenses 0.30% 0.30%
------------- ---------
Total Fund Operating 0.68% 0.89%
Expenses*
Initial Class:
PRESENT AMENDED
CONTRACT CONTRACT
Management Fee 0.38% 0.59%
12b-1 Fee None None
Other Expenses 0.27% 0.27%
------------- ---------
Total Fund Operating 0.65% 0.86%
Expenses*
10
<PAGE>
*Effective February 27, 1999, FMR has voluntarily agreed to reimburse each
class of the fund to the extent that total operating expenses (excluding
interest, taxes, securities lending fees, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets, exceed
1.30%, Class A; 1.55%, Class T; 2.05%, Class B; 1.05%, Institutional Class; and
1.05%, Initial Class.
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 operating expenses presented in
the table would have been 1.05% for Class A, 1.16% for Class T, 1.70% for Class
B, 0.67% for Institutional Class, and 0.64% for Initial Class under the Present
Contract; and 1.26% for Class A, 1.37% for Class T, 1.91% for Class B, 0.89% for
Institutional Class, and 0.86% for Initial Class under the Amended Contract.
EXAMPLE: The following illustrates the expenses on a $10,000 investment
under the fees and expenses stated above, assuming (1) 5% annual return and (2)
redemption at the end of each time period:
Class A:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Present $677 $893 $1,126 $1,795
Contract
Amended $697 $955 $1,232 $2,021
Contract
Class T:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Present $465 $709 $971 $1,721
Contract
Amended $486 $772 $1,079 $1,949
Contract
Class B:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Present $674 $839 $1,128 $1,767*
Contract
Amended $695 $903 $1,237 $1,914*
Contract
*Reflects conversion to Class A shares after seven years.
11
<PAGE>
Institutional Class:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Present $69 $218 $379 $847
Contract
Amended $91 $284 $493 $1,096
Contract
Initial Class:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Present $66 $206 $362 $810
Contract
Amended $88 $274 $477 $1,061
Contract
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of the fund.
The example above should not be considered a representation of past or future
expenses of the fund. Actual expenses may vary from year to year and may be
higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the 1940 Act, as
modified or interpreted by the Securities and Exchange Commission. In contrast,
the Present Contract explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
Generally, the proposed modification to the Present Contract's amendment
provisions will allow FMR and the trust, on behalf of the fund, to amend the
Management Contract without shareholder vote IF THE 1940 ACT PERMITS THEM TO DO
SO. For example, under current interpretations of Section 15 of the 1940 Act,
the Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease without the
delay of having to first conduct a proxy solicitation. In short, the proposed
modification gives FMR and the trust added flexibility to amend the Management
Contract subject to 1940 Act constraints. Of course, any future amendments to
the Management Contract would require the approval of the fund's Board of
Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve as
Trustees are referred to herein as the "Fidelity funds." The Board of Trustees
meets eleven times a year. The Board of Trustees, including the Independent
Trustees, believe that matters bearing on the appropriateness of the fund's
12
<PAGE>
management fees are considered at most, if not all, of their meetings. While the
full Board of Trustees or the Independent Trustees, as appropriate, act on all
major matters, a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through committees.
The Independent Trustees meet frequently in executive session and are advised by
independent legal counsel selected by the Independent Trustees.
The proposal to present the Amended Contract to shareholders was approved
by the Board of Trustees of the fund, including all of the Independent Trustees,
on October 16, 1997 and January 14, 1999. The Board of Trustees received
materials relating to the Amended Contract in advance of the meeting at which
the Amended Contract was considered, and had the opportunity to ask questions
and request further information in connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with their
monthly meetings, the Trustees received materials specifically relating to the
Amended Contract. These materials included: (i) information on the investment
performance of the fund, a peer group of funds and an appropriate index or
combination of indices, (ii) sales and redemption data in respect of the fund,
and (iii) the economic outlook and the general investment outlook in the markets
in which the fund invests. The Board of Trustees and the Independent Trustees
also consider periodically other material facts such as (1) FMR's results and
financial condition, (2) arrangements in respect of the distribution of the
fund's shares, (3) the procedures employed to determine the value of the fund's
assets, (4) the allocation of the fund's brokerage, if any, including
allocations to brokers affiliated with FMR and the use of "soft" commission
dollars to pay fund expenses and to pay for research and other similar services,
(5) FMR's management of the relationships with the fund's custodian and
subcustodians, (6) the resources devoted to and the record of compliance with
the fund's investment policies and restrictions and with policies on personal
securities transactions, and (7) the nature, cost, and character of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees, additional
information was furnished by FMR including, among other items, information on
and analysis of (a) the overall organization of FMR, (b) the impact of
performance adjustments to management fees, (c) the choice of performance
indices and benchmarks, (d) the composition of peer groups of funds, (e)
transfer agency and bookkeeping fees paid to affiliates of FMR, (f) investment
performance, (g) investment management staffing, (h) the potential for achieving
further economies of scale, (i) operating expenses paid to third parties, and
(j) the information furnished to investors, including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as all-important or
controlling, and the following summary does not detail all of the matters
considered. Matters considered by the Board of Trustees and the Independent
Trustees in connection with their approval of the Amended Contract include the
following:
13
<PAGE>
BENEFITS TO SHAREHOLDERS. The Board of Trustees and the Independent
Trustees considered the benefit to shareholders of investing in a fund that is
part of a large family of funds offering a variety of investment disciplines and
providing for a large variety of fund and shareholder services. With regard to
the proposed elimination of the Performance Adjustment, the Board of Trustees
and the Independent Trustees considered the management fee formulas of other
comparable funds, the performance of the fund and mutual funds generally
relative to the index, both before and after expenses, including 12b-1 fees, and
the advantages to investors, including the fund's shareholders, of distributing
fund shares through distribution channels that require payment of 12b-1 fees.
With regard to the proposed modification to the Present Contract's amendment
provisions, the Board of Trustees and the Independent Trustees considered the
benefit to shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the delays and
potential costs of a proxy solicitation.
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within its
investment objective and its record of compliance with its investment
restrictions. They also reviewed monthly the fund's investment performance as
well as the performance of a peer group of mutual funds, and the performance of
an appropriate index or combination of indices. In particular, the Board of
Trustees and the Independent Trustees reviewed the performance of the fund as
compared to the Index on a monthly and rolling 36-month performance basis for
the three years ended November 30, 1998 and as compared to a Lipper peer group
of mutual funds. The Board of Trustees and the Independent Trustees also
considered the impact of eliminating the fund's Performance Adjustment on the
fund's management fee for the year ended November 30, 1998 and considered how
rolling 36-month returns would be affected during an 18-month wind-down period,
assuming the fund's performance matched the Index during that period.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees review at least annually the background of the fund's portfolio
manager, and the fund's investment objective and discipline. The Independent
Trustees have also had discussions with senior management of FMR responsible for
investment operations, and the senior management of Fidelity's equity group.
Among other things they considered the size, education and experience of FMR's
investment staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory and
management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent of
administrative and shareholder services performed by FMR and affiliated
companies, both under the Present Contract and the Amended Contract and under
separate agreements covering transfer agency functions and pricing, bookkeeping
and securities lending services, if any. The Board of Trustees and the
Independent Trustees have also considered the nature and extent of FMR's
supervision of third party service providers, principally custodians and
subcustodians.
14
<PAGE>
EXPENSES. The Board of Trustees and the Independent Trustees considered
the fund's expense ratio and expense ratios of a peer group of funds. They also
considered the amount and nature of fees paid by shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of the
Fidelity funds, including the fund. This consideration included an extensive
review of FMR's methodology in allocating its costs to the management of the
fund. The Board of Trustees and the Independent Trustees have concluded that the
cost allocation methodology employed by FMR has a reasonable basis and is
appropriate in light of all of the circumstances. They considered the profits
realized by FMR in connection with the operation of the fund and whether the
amount of profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund businesses which
may benefit from or be related to the fund's business. The Board of Trustees and
the Independent Trustees also considered FMR's profit margins in comparison with
available industry data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent Trustees
considered whether there have been economies of scale in respect of the
management of the Fidelity funds, whether the Fidelity funds (including the
fund) have appropriately benefited from any economies of scale, and whether
there is potential for realization of any further economies of scale. The Board
of Trustees and the Independent Trustees have concluded that FMR's mutual fund
business presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and FMR in an
appropriate manner. The Independent Trustees have also concluded that the
existing group fee structure should be continued.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent Trustees
also considered the character and amount of fees paid by the fund and the fund's
shareholders for services provided by FMR and its affiliates, including fees for
services like transfer agency, fund accounting and direct shareholder services.
They also considered the allocation of fund brokerage to brokers affiliated with
FMR and the receipt of sales loads and payments under Rule 12b-1 plans in
respect of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of FMR
businesses other than its mutual fund business, including FMR's retail
brokerage, correspondent brokerage, capital markets, trust, investment advisory,
pension record keeping, insurance, publishing, real estate, international
research and investment funds, and others. The Board of Trustees and the
Independent Trustees considered the intangible benefits that accrue to FMR and
its affiliates by virtue of their relationship with the fund.
CONCLUSION. Based on their evaluation of all material factors and assisted
by the advice of independent counsel, the Trustees concluded (i) that the
existing management fee structure is fair and reasonable and (ii) that the
proposed modification to the management fee rate, that is, the elimination of
the Performance Adjustment, and the proposed modification to the Present
Contract's amendment provisions are in the best interest of the fund's
shareholders The Board of Trustees, including the Independent Trustees, voted to
15
<PAGE>
approve the submission of the Amended Contract to shareholders of the fund and
recommends that shareholders of the fund vote FOR the Amended Contract.
Approval of this proposal is contingent upon shareholder approval of
Proposal 1(a). If this proposal and Proposal 1(a) are approved, the Amended
Contract will take effect on the first day of the first month following
shareholder approval. If this proposal and Proposal 1(a) are not approved, the
Present Contract will remain unchanged.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matters in accordance with the judgment of the persons
therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to a
number of investment companies. Information concerning the advisory fees, net
assets, and total expenses of funds with investment objectives similar to
Fidelity Advisor Strategic Opportunities Fund and advised by FMR is contained in
the Table of Average Net Assets and Expense Ratios in Exhibit 2 beginning on
page __.
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks, including the
custodian banks for certain of the funds advised by FMR. Those transactions that
have occurred to date have included mortgages and personal and general business
loans. In the judgment of FMR, the terms and conditions of those transactions
were not influenced by existing or potential custodial or other fund
relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board and
of the Executive Committee; Robert C. Pozen, President; and Peter S. Lynch, Vice
Chairman. Each of the Directors is also a Trustee of the trust. Messrs. Johnson
3d, Pozen, J. Gary Burkhead, John H. Costello, Eric D. Roiter, Richard A.
Silver, Leonard M. Rush, and Harris Leviton, and Ms. Abigail Johnson are
currently officers of the trust and officers or employees of FMR or FMR Corp.
With the exception of Mr. Costello, [Mr. Silver, and Mr. Leviton,] all of these
persons hold or have options to acquire stock of FMR Corp. The principal
business address of each of the Directors of FMR is 82 Devonshire Street,
Boston, Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on October
31, 1972. Members of Mr. Edward C. Johnson 3d's family are the predominant
owners of a class of shares of common stock, representing approximately 49% of
the voting power of FMR Corp., and, therefore, under the 1940 Act may be deemed
to form a controlling group with respect to FMR Corp.
16
<PAGE>
During the period December 1, 1997 through February 28, 1999, [the
following]/[no] transactions were entered into by Trustees of the trust
involving more than 1% of the voting common, non-voting common and equivalent
stock, or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed in
1986 to provide research and investment advice with respect to companies based
outside the United States for certain funds for which FMR acts as investment
adviser. FMR may also grant the sub-advisers investment management authority as
well as authority to buy and sell securities for certain of the funds for which
it acts as investment adviser, if FMR believes it would be beneficial to a fund.
Funds with investment objectives similar to Fidelity Advisor Strategic
Opportunities Fund managed by FMR with respect to which FMR currently has
sub-advisory agreements with either FMR U.K. or FMR Far East, and the net assets
of each of these funds, are indicated in the Table of Average Net Assets and
Expense Ratios in Exhibit 2 beginning on page __.
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen, President. Mr. Johnson 3d also is President and a
Trustee of the trust and other funds advised by FMR; Chairman and a Director of
Fidelity Investments Money Management, Inc. (FIMM); Chairman, Chief Executive
Officer, President, and a Director of FMR Corp., and a Director and Chairman of
the Board and of the Executive Committee of FMR. In addition, Mr. Pozen is
Senior Vice President and a Trustee of the trust and of other funds advised by
FMR; President and a Director of FMR; and President and a Director of FIMM. Each
of the Directors is a stock holder of FMR Corp. The principal business address
of the Directors is 82 Devonshire Street, Boston, Massachusetts 02109.
PRESENT MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser and,
subject to the supervision of the Board of Trustees, directs the investments of
the fund in accordance with its investment objective, policies, and limitations.
FMR also provides the fund with all necessary office facilities and personnel
for servicing the fund's investments, compensates all officers of the fund and
all Trustees who are "interested persons" of the trust or of FMR, and all
personnel of the fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services necessary
for the operation of the fund. These services include providing facilities for
maintaining the fund's organization; supervising relations with custodians,
transfer and pricing agents, accountants, underwriters, and other persons
dealing with the fund; preparing all general shareholder communications and
conducting shareholder relations; maintaining the fund's records and the
registration of the fund's shares under federal and state laws; developing
management and shareholder services for the fund; and furnishing reports,
evaluations, and analyses on a variety of subjects to the Trustees. Services
17
<PAGE>
provided by affiliates of FMR will continue under the proposed management
contract described in Proposal 1(b).
In addition to the management fee payable to FMR, Class A, Class T, Class
B and Institutional Class shares pay transfer agent fees to Fidelity Investments
Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR. Initial
Class shares pay transfer agent fees to Fidelity Service Company, Inc. (FSC), an
affiliate of FMR. The fund pays pricing and bookkeeping fees to FSC on behalf of
each class of the fund. Although the fund's current management contract provides
that the fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices and reports to shareholders, the
trust, on behalf of the fund, has entered into a revised transfer agent
agreement with FIIOC or FSC, as applicable, pursuant to which FIIOC or FSC, as
applicable, bears the costs of providing these services to existing shareholders
of the applicable classes. Other expenses paid by the fund include interest,
taxes, brokerage commissions, and the fund's proportionate share of insurance
premiums and Investment Company Institute dues. The fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation to which
the fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
Transfer agent fees, including reimbursement for out-of-pocket expenses,
paid to FIIOC or FSC by the applicable class for the fiscal year ended November
30, 1998 amounted to $12,836 for Class A, $990,228 for Class T, $267,239 for
Class B, $10,021 for Institutional Class, and $36,157 for Initial Class,
respectively. Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid to FSC by the fund for the fiscal year ended
November 30, 1998 amounted to $341,818.
The fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered under
the Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. The distribution agreement calls for FDC to use all
reasonable efforts, consistent with its other business, to secure purchasers for
shares of the fund, which are continuously offered. Promotional and
administrative expenses in connection with the offer and sale of shares are paid
by FMR.
Sales charge revenues paid to, and retained by, FDC for the fiscal year
ended November 30, 1998, amounted to the following:
PAID TO FDC RETAINED BY FDC
INITIAL INITIAL
CLASS A CLASS T CLASS CLASS A CLASS T CLASS
$70,878 $243,044 $11 $17,322 $72,427 $0
FDC collected deferred sale charge revenue on Class B shares during the
fiscal year ended November 30, 1998 of $232,999. When shares subject to a
deferred sale charge are sold, FDC pays commissions from its own resources to
dealers through which the sales are made.
18
<PAGE>
In addition, during the fiscal year ended November 30, 1998, FDC received
from the fund fees pursuant to Distribution and Service Plans under Rule 12b-1
as follows:
12B-1 FEES PAID TO FDC
Class A $8,709
Class T $2,460,259
Class B $1,095,801
Currently, up to the full amount of distribution fees paid by Class A and
Class T under their respective Distribution and Service Plans may be reallowed
to investment professionals 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 under its
Distribution and Service Plan is retained by FDC as compensation for its
services and expenses in connection with the distribution of Class B shares, and
up to the full amount of service fees paid by Class B under its Distribution and
Service Plan may be reallowed to investment professionals for providing personal
service to and/or maintenance of Class B shareholder accounts.
FMR is the fund's manager pursuant to a management contract dated February
28, 1998, which was approved by Fidelity Advisor Series VIII, as sole
shareholder of the fund on February 26, 1999, pursuant to an Agreement and Plan
of Reorganization approved by shareholders of the fund on June 18, 1997. The
terms of the fund's current management contract duplicate those of the contract
approved by shareholders of the fund on June 18, 1997. At that time, shareholder
approval had been requested to modify the group fee portion of the management
fee to provide for lower fee rates if FMR's assets under management remain above
$138 billion; to modify the performance adjustment calculation to round the
performance of the fund and the S&P 500 to the nearest 0.01%, rather than the
nearest 1.00%; and to modify the performance adjustment calculation to base the
fund's performance on the asset-weighted average return of all classes, rather
than on the return of the worst-performing class.
For the services of FMR under the management contract, the fund 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 fund's performance to that of the S&P
500.
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 $643 billion of group net assets - the approximate
level for November 1998 - was 0.2878%, which is the weighted average of the
respective fee rates for each level of group net assets up to $643 billion.
19
<PAGE>
The fund's current management contract reflects the revised group fee rate
schedule below.
GROUP FEE RATE EFFECTIVE ANNUAL FEE
SCHEDULE RATES
Average Group Annualized Group Net Effective
ASSETS RATE ASSETS Annual
FEE RATE
0 - $3 billion .5200% $0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .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 .2942
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
The fund's individual fund fee rate is 0.30%. Based on the average group
net assets of the funds advised by FMR for November 1998, the fund's annual
basic fee rate would be calculated as follows:
GROUP FEE RATE Individual Basic Fee
Fund FEE RATE RATE
0.2878% 0.30% = 0.5878%
20
<PAGE>
One-twelfth of this annual basic fee rate is applied to the 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 the fund is
subject to upward or downward adjustment, depending upon whether, and to what
extent, the fund's investment performance for the performance period exceeds, or
is exceeded by, the record of the S&P 500 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% (up to a maximum
difference of +/-10.00 ) is multiplied by a performance adjustment rate of
0.02%. Thus, the maximum annualized adjustment rate is +/-0.20%. For 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. This performance comparison is made at the end of each month.
One-twelfth (1/12) of this rate is then applied to the fund's average net assets
for the entire performance period, giving a dollar amount which will be added to
(or subtracted from) the basic fee.
The fund's performance is calculated based on change in net asset value
(NAV). For purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if reinvested in fund
shares at the NAV as of the record date for payment. The record of the Index is
based on change in value and is adjusted for any cash distributions from the
companies whose securities compose the Index.
Because the adjustment to the basic fee is based on the fund's performance
compared to the investment record of the Index, the controlling factor is not
whether the fund's performance is up or down per se, but whether it is up or
down more or less than the record of the Index. Moreover, the comparative
investment performance of the fund is based solely on the relevant performance
period without regard to the cumulative performance over a longer or shorter
period of time.
During the fiscal year ended November 30, 1998, FMR received $2,375,350
for its services as investment adviser to the fund. This fee, which includes
both the basic fee and the performance adjustment, was equivalent to 0.38% of
the average net assets of the fund. For the fiscal year ended November 30, 1998,
the downward performance adjustment amounted to $1,343,174 for the fund.
FMR may, from time to time, agree to reimburse all or a portion of a
class's total operating expenses (exclusive of interest, taxes, securities
lending fees, 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.
21
<PAGE>
FMR has voluntarily agreed, subject to revision or termination, to
reimburse each class of the fund to the extent that its total operating
expenses, as a percentage of its respective average net assets, exceed the
following rates:
Class A Class T Class B Institutional Initial
Class Class
1.30% 1.55% 2.05% 1.05% 1.05%
SUB-ADVISORY AGREEMENTS
FMR has entered into sub-advisory agreements with FMR U.K. and FMR Far
East. Pursuant to the sub-advisory agreements, FMR may receive investment advice
and research services outside the United States from the sub-advisers. FMR may
also grant the sub-advisers investment management authority as well as the
authority to buy and sell securities if FMR believes it would be beneficial to
the fund. The fund's sub-advisory agreements, dated February 28, 1998, were
approved by Fidelity Advisor Series VIII, as sole shareholder of the fund on
February 26, 1999, pursuant to an Agreement and Plan of Reorganization approved
by shareholders of the fund on June 18, 1997. The terms of the fund's current
sub-advisory agreements duplicate those of the agreements approved by
shareholders of the fund on June 18, 1997. At that time, shareholder approval
had been requested to amend the fund's sub-advisory agreements to permit FMR to
grant the sub-advisers investment management authority if FMR believes it would
be beneficial to the fund and its shareholders.
Currently, FMR U.K. and FMR Far East 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. Under the sub-advisory agreements FMR pays the fees of FMR
U.K. and FMR Far East. For providing non-discretionary investment advice and
research services, 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.
For providing discretionary investment management and executing portfolio
transactions, FMR pays FMR U.K. and FMR Far East a fee equal to 50% of its
monthly management fee rate (including any performance adjustment) with respect
to the fund's average net assets managed by the sub-adviser on a discretionary
basis.
For providing investment advice and research services, the fees paid to
the sub-advisers for the fiscal year ended November 30, 1998 were $11,125 and
$10,563 for FMR U.K and FMR Far East, respectively.
For providing discretionary investment management and executing portfolio
transactions, no fees were paid to FMR U.K or FMR Far East for the fiscal year
ended November 30, 1998.
22
<PAGE>
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR pursuant to authority contained in the fund's
management contract.
FMR may 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.
During the fiscal year ended November 30, 1998, the fund paid brokerage
commissions of $189,248 to NFSC. During the fiscal year ended November 30, 1998,
this amounted to approximately 18.29% of the aggregate brokerage commissions
paid by the fund.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written proposals to the Secretary of the
Trust, 82 Devonshire Street, Boston, Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES
AND THEIR NOMINEES
Please advise the trust, in care of ________, whether other persons are
beneficial owners of shares for which proxies are being solicited and, if so,
the number of copies of the Proxy Statement and Annual Reports you wish to
receive in order to supply copies to the beneficial owners of the respective
shares.
23
<PAGE>
EXHIBIT 1
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY ADVISOR SERIES I:
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AMENDMENT made ((AS OF)) this [28th] ((__)) day of [February] ((_______))
[1998] ((1999)), 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.
((REQUIRED AUTHORIZATION AND APPROVAL BY SHAREHOLDERS AND TRUSTEES HAVING
BEEN OBTAINED, THE FUND, ON BEHALF OF THE PORTFOLIO, AND THE ADVISER HEREBY
CONSENT, PURSUANT TO PARAGRAPH 6 OF THE EXISTING MANAGEMENT CONTRACT DATED
FEBRUARY 28, 1998, TO A MODIFICATION OF SAID CONTRACT IN THE MANNER SET FORTH
BELOW. THE AMENDED MANAGEMENT CONTRACT SHALL, WHEN EXECUTED BY DULY AUTHORIZED
OFFICERS OF THE FUND AND THE ADVISER, TAKE EFFECT ON _______, 1999.))
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
<PAGE>
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. 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((, WHILE IN EFFECT,)) a
Performance Adjustment. ((THE PERFORMANCE ADJUSTMENT WILL BE IN EFFECT ONLY
THROUGH THE LAST CALENDAR DAY OF THE 18 CALENDAR MONTH PERIOD BEGINNING ON THE
DATE THAT THIS AMENDED CONTRACT TAKES EFFECT. AFTER THAT DATE, THE MANAGEMENT
FEE WILL BE COMPOSED OF A BASIC FEE ONLY.)) The Performance Adjustment is [added
to or] subtracted from the Basic Fee [depending on whether] ((IF)) the Portfolio
experiences [better or] worse performance than the Standard and Poor's Daily
Stock Price Index of 500 Common Stocks (the "Index"). The Performance Adjustment
is not cumulative. A[n 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((, WHILE IN EFFECT,)) 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 ((F))[f]und'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((0))%
<PAGE>
3 -6 .490((0))
6 -9 .460((0))
9 -12 .430((0))
12 -15 .400((0))
15 -18 .385((0))
18 -21 .370((0))
21 -24 .360((0))
24 -30 .350((0))
30 -36 .345((0))
36 -42 .340((0))
42 -48 .335((0))
48 -66 .325((0))
66 -84 .320((0))
84 -102 .315((0))
102 -138 .310((0))
138 -174 .305((0))
174 -210 .300((0))
210 -246 .295((0))
246 -282 .290((0))
282 -318 .285((0))
318 -354 .280((0))
354 -390 .275((0))
390 -426 .270((0))
426 -462 .265((0))
462 -498 .260((0))
498 -534 .255((0))
Over 534 .250((0))
(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: ((THIS SUB-PARAGRAPH (C) WILL BE IN EFFECT
ONLY THROUGH THE LAST CALENDAR DAY OF THE 18 CALENDAR MONTH PERIOD BEGINNING ON
THE DATE THAT THIS AMENDED CONTRACT TAKES EFFECT, AND WILL HAVE NO FORCE OR
EFFECT THEREAFTER.)) The Performance Adjustment Rate is 0.02% for each
<PAGE>
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 ((NEGATIVE)) 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. ((NO PERFORMANCE ADJUSTMENT
WILL BE MADE AFTER THE LAST CALENDAR DAY OF THE 18 CALENDAR MONTH PERIOD
BEGINNING ON THE DATE THAT THIS AMENDED CONTRACT TAKES EFFECT.))
(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.
((WHILE THE PERFORMANCE ADJUSTMENT IS IN EFFECT,)) [T]((T))he amount of [this]
((THE)) 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;
<PAGE>
(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]
((2000)) 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] ((SUBJECT TO THE PROVISIONS OF SECTION 15 OF
THE 1940 ACT, AS MODIFIED BY OR INTERPRETED BY ANY APPLICABLE ORDER OR ORDERS OF
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY RULES OR
REGULATIONS ADOPTED BY, OR INTERPRETATIVE RELEASES OF, THE COMMISSION)).
(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.
<PAGE>
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.
[SIGNATURE LINES OMITTED]
<PAGE>
EXHIBIT 2
TABLE WILL BE UPDATED IN A SUBSEQUENT FILING
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS (A)
<TABLE>
<CAPTION>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) (B) TO FMR (C)
- ------------------ ------------ -------------- ----------
<S> <C> <C> <C>
GROWTH
Contrafund ((pound)) 12/31/97 $27,817.1 0.48%
Trend ((pound)) 12/31/97 1,442.4 0.42
Variable Insurance Products:
Growth
Initial Class 12/31/97 6,937.2 0.60
Service Class 12/31/97 0.6 0.60
Overseas ((SIGMA))
Initial Class 12/31/97 1,917.4 0.75
Service Class 12/31/97 0.3 0.75
Variable Insurance Products II:
Asset Manager: Growth ((pound))
Initial Class 12/31/97 389.5 .60
Service Class (#) 12/31/97 0.0 .60
Contrafund ((pound))
Initial Class 12/31/97 3,294.9 0.60
Service Class 12/31/97 1.4 0.60
Variable Insurance Products III:
Growth Opportunity ((pound))
Initial Class 12/31/97 703.1 0.60
Service Class 12/31/97 0.7 0.60
Select Portfolios:
Air Transportation ((pound)) 2/28/98 62.7 0.60
American Gold 2/28/98 279.5 0.60
Automotive ((pound)) 2/28/98 62.2 0.59
Biotechnology ((pound)) 2/28/98 577.4 0.60
Brokerage and Investment
Management ((pound)) 2/28/98 416.4 0.60
Business Services and
Outsourcing ((pound))** 2/28/98 53.8 0.60((beta))
Chemical ((pound)) 2/28/98 83.4 0.60
Computers ((pound)) 2/28/98 658.0 0.60
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) (B) TO FMR (C)
- ------------------ ------------ -------------- ----------
<S> <C> <C> <C>
Construction and
Housing ((pound)) 2/28/98 26.0 0.60
Consumer Industries ((pound)) 2/28/98 26.5 0.61
Cyclical Industries ((pound)) 2/28/98 3.6 0.00*
Defense and Aerospace 2/28/98 63.9 0.60
Select Portfolios (continued)
Developing
Communications ((pound)) 2/28/98 $ 238.7 0.60%
Electronics ((pound)) 2/28/98 2,374.6 0.60
Energy ((pound)) 2/28/98 191.3 0.59
Energy Service ((pound)) 2/28/98 964.1 0.59
Environmental Services ((pound)) 2/28/98 27.8 0.60
Financial Services ((pound)) 2/28/98 468.5 0.60
Food and Agriculture ((pound)) 2/28/98 247.0 0.60
Health Care ((pound)) 2/28/98 1,590.8 0.60
Home Finance ((pound)) 2/28/98 1,334.7 0.60
Industrial Equipment ((pound)) 2/28/98 60.1 0.60
Industrial Materials ((pound)) 2/28/98 29.9 0.60
Insurance ((pound)) 2/28/98 110.4 0.60
Leisure ((pound)) 2/28/98 142.1 0.60
Medical Delivery ((pound)) 2/28/98 159.1 0.60
Medical Equipment and
Systems ((pound))** 2/28/98 11.9 0.60((beta))
Multimedia ((pound)) 2/28/98 59.1 0.60
Natural Gas ((pound)) 2/28/98 82.3 0.59
Natural Resources ((pound)) 2/28/98 6.4 0.00*
Paper and Forest
Products ((pound)) 2/28/98 24.2 0.60
Precious Metals and
Minerals ((pound)) 2/28/98 194.7 0.60
Regional Banks ((pound)) 2/28/98 1,035.6 0.60
Retailing 2/28/98 152.9 0.60
Software and Computer
Services ((pound)) 2/28/98 434.9 0.60
Technology ((pound)) 2/28/98 552.2 0.60
Telecommunications ((pound)) 2/28/98 413.4 0.60
Transportation ((pound)) 2/28/98 57.4 0.59
Utilities Growth ((pound)) 2/28/98 273.5 0.60
Magellan ((pound)) 3/31/98 61,521.2 0.43
2
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) (B) TO FMR (C)
- ------------------ ------------ -------------- ----------
Large Cap Stock ((pound)) 4/30/98 133.9 0.45
Mid Cap Stock ((pound)) 4/30/98 1,579.2 0.60
Small Cap Selector ((pound)) 4/30/98 727.3 0.67
Small Cap Stock ((pound))** 4/30/98 383.2 0.69*((beta))
ContraFund II ((pound)) 6/30/98 226.3 0.59
Fidelity Fifty ((pound)) 6/30/98 180.5 0.43
Advisor Focus Funds:
Consumer Industries: ((pound))
Class A 7/31/98 $ 1.3 0.59%
Class T 7/31/98 10.7 0.59
Class B 7/31/98 2.2 0.59
Class C 7/31/98 0.5 0.59
Institutional Class 7/31/98 2.7 0.59
Cyclical Industries: ((pound))
Class A 7/31/98 0.4 0.59
Class T 7/31/98 2.7 0.59
Class B 7/31/98 0.5 0.59
Class C 7/31/98 0.1 0.59
Institutional Class 7/31/98 1.5 0.59
Financial Services: ((pound))
Class A 7/31/98 12.6 0.59
Class T 7/31/98 82.7 0.59
Class B 7/31/98 30.1 0.59
Class C 7/31/98 8.3 0.59
Institutional Class 7/31/98 3.9 0.59
Health Care: ((pound))
Class A 7/31/98 10.5 0.59
Class T 7/31/98 79.2 0.59
Class B 7/31/98 22.1 0.59
Class C 7/31/98 6.5 0.59
Institutional Class 7/31/98 7.1 0.59
Natural Resources: ((pound))
Class A 7/31/98 6.9 0.59
Class T 7/31/98 499.5 0.59
Class B 7/31/98 54.7 0.59
Class C 7/31/98 1.6 0.59
Institutional Class 7/31/98 6.2 0.59
Technology: ((pound))
3
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) (B) TO FMR (C)
- ------------------ ------------ -------------- ----------
Class A 7/31/98 11.7 0.59
Class T 7/31/98 76.3 0.59
Class B 7/31/98 17.6 0.59
Class C 7/31/98 3.0 0.59
Institutional Class 7/31/98 5.2 0.59
Advisor Focus Funds
(continued)
Utilities Growth: ((pound))
Class A 7/31/98 $ 1.7 0.59%
Class T 7/31/98 13.9 0.59
Class B 7/31/98 5.9 0.59
Class C 7/31/98 1.6 0.59
Institutional Class 7/31/98 3.7 0.59
Blue Chip Growth ((pound)) 7/31/98 14,487.5 0.47
Dividend Growth ((pound)) 7/31/98 5,316.4 0.65
Low-Priced Stock ((pound)) 7/31/98 10,834.5 0.74
OTC Portfolio ((pound)) 7/31/98 4,213.9 0.50
Export and Multinational
Fund ((pound)) 8/31/98 468.9 0.59
Destiny I ((pound)) 9/30/98 6,399.7 0.31
Destiny II((pound)) 9/30/98 4,058.8 0.45
Advisor International Capital
Appreciation: (Z)**
Class A 10/31/98 0.6 0.73(D)
Class T 10/31/98 6.9 0.73(D)
Class B 10/31/98 2.3 0.73(D)
Class C 10/31/98 1.3 0.73(D)
Institutional Class 10/31/98 5.0 0.73(D)
Advisor Overseas ((SIGMA))
Class A 10/31/98 8.5 0.89
Class T 10/31/98 1,159.5 0.89
Class B 10/31/98 51.9 0.89
Class C 10/31/98 6.1 0.89
Institutional Class 10/31/98 47.3 0.89
Canada ((SIGMA)) 10/31/98 71.9 0.30
Capital Appreciation ((pound)) 10/31/98 2,379.7 0.44
Disciplined Equity ((pound)) 10/31/98 2,857.4 0.43
4
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) (B) TO FMR (C)
- ------------------ ------------ -------------- ----------
Diversified International 10/31/98 1,849.8 0.83
((SIGMA))
Emerging Markets ((SIGMA)) 10/31/98 390.9 0.74
Europe ((SIGMA)) 10/31/98 1,399.6 0.73%
Europe Capital Appreciation 10/31/98 594.4 0.72
((SIGMA))
France ((SIGMA)) 10/31/98 12.5 0.73
Germany ((SIGMA)) 10/31/98 23.7 0.73
Hong Kong and China (Z) 10/31/98 154.3 0.74
International Value (Z) 10/31/98 454.5 0.82
Japan (Z) 10/31/98 238.4 1.01
Japan Small Companies (Z) 10/31/98 95.1 0.74
Latin America ((SIGMA)) 10/31/98 594.2 0.75
Nordic ((SIGMA)) 10/31/98 104.3 0.74
Overseas ((SIGMA)) 10/31/98 3,862.7 0.90
Pacific Basin (Z) 10/31/98 206.8 1.11
Southeast Asia (Z) 10/31/98 235.6 1.16
Stock Selector ((pound)) 10/31/98 1,885.4 0.43
TechnoQuant Growth 10/31/98 67.4 0.39
United Kingdom ((SIGMA)) 10/31/98 7.5 0.74
Value 10/31/98 7,451.9 0.41
Worldwide ((SIGMA)) 10/31/98 1,169.1 0.74
Advisor Equity Growth: ((pound))
Class A 11/30/98 56.8 0.59
Class T 11/30/98 4,568.3 0.59
Class B 11/30/98 166.9 0.59
Class C 11/30/98 26.0 0.59
Institutional Class 11/30/98 1,004.7 0.59
Advisor Growth Opportunities: ((pound))
Class A 11/30/98 255.0 0.46
Class T 11/30/98 22,748.7 0.46
Class B 11/30/98 925.6 0.46
Class C 11/30/98 146.1 0.46
Institutional Class 11/30/98 493.0 0.46
Advisor Large Cap: ((pound))
Class A 11/30/98 3.1 0.59
Class T 11/30/98 59.5 0.59
Class B 11/30/98 27.5 0.59
Class C 11/30/98 1.5 0.59
Institutional Class 11/30/98 7.7 0.59
5
<PAGE>
RATIO OF NET
ADVISORY FEES
TO AVERAGE
AVERAGE NET ASSETS
INVESTMENT FISCAL NET ASSETS PAID
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) (B) TO FMR (C)
- ------------------ ------------ -------------- ----------
Advisor Mid Cap: ((pound))
Class A 11/30/98 8.2 0.59
Class T 11/30/98 357.3 0.59
Class B 11/30/98 73.2 0.59
Class C 11/30/98 6.5 0.59
Institutional Class 11/30/98 35.4 0.59
Advisor Small Cap: ((pound))**
Class A 11/30/98 $ 4.2 0.74((beta))
Class T 11/30/98 30.2 0.74((beta))
Class B 11/30/98 9.5 0.74((beta))
Class C 11/30/98 9.4 0.74((beta))
Institutional Class 11/30/98 8.2 0.74((beta))
Advisor Strategic
Opportunity: ((pound))
Class A 11/30/98 3.5 0.38
Class T 11/30/98 491.8 0.38
Class B 11/30/98 109.5 0.38
Initial Class 11/30/98 20.2 0.38
Institutional Class 11/30/98 4.7 0.38
Advisor TechnoQuant
Growth: ((pound))
Class A 11/30/98 3.8 0.59
Class T 11/30/98 18.3 0.59
Class B 11/30/98 11.6 0.59
Class C 11/30/98 .3 0.59
Institutional Class 11/30/98 1.3 0.59
Emerging Growth ((pound)) 11/30/98 2,172.0 0.79
Growth Company ((pound)) 11/30/98 10,377.6 0.42
New Millennium ((pound)) 11/30/98 1,525.9 0.62
Retirement Growth ((pound)) 11/30/98 4,376.5 0.40
</TABLE>
(a) All fund data are as of the fiscal year end noted in the chart or as of
November 30, 1998, if fiscal year end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets of each
fund at the close of business on each business day throughout its fiscal
period.
(c) Reflects reductions for any expense reimbursement paid by or due form FMR
pursuant to voluntary or state expenses limitations. Funds so affected are
indicated by an (*). The ratio for certain multi-class funds is presented
gross of expense reductions.
6
<PAGE>
(D) Annualized.
# Average net assets for the period shown were less than $100,000.
** Less than a complete fiscal year.
(beta) Based on estimated expenses for the first year.
(Z) Fidelity Management & Research Company has entered into
sub-advisory agreements with the following affiliates: Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), Fidelity Management &
Research (Far East) Inc. (FMR Far East), Fidelity Investments Japan
Ltd. (RJ), Fidelity International Investment Advisors (FIIA), and
Fidelity International Investment Advisors (U.K.) Limited (FIIA
(U.K.)L), with respect to the fund.
(SIGMA)Fidelity Management & Research Company has entered into sub-advisory
agreements with the following affiliates: FMR U.K., FMR Far East,
FILA, and FIIA (U.K.) L, with respect to the fund.
(pound)Fidelity Management & Research Company has entered into sub-advisory
agreements with FMR U.K. and FMR Far East, with respect to the fund.
7
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
Fidelity Investments
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
FIDELITY ADVISOR SERIES I: FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, Thomas R. Williams, and Eric D. Roiter, or any one or more of them,
attorneys, with full power of substitution, to vote all shares of FIDELITY
ADVISOR SERIES I: FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
fund to be held at the office of the trust at 82 Devonshire St., Boston,
MA 02109, on June 16, 1999 at 9:00 a.m. Eastern time and at any adjournments
thereof. All powers may be exercised by a majority of said proxy holders or
substitutes voting or acting or, if only one votes and acts, then by that one.
This Proxy shall be voted on the proposals described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears
on this Proxy. When signing in a fiduciary
capacity, such as executor, administrator,
trustee, attorney, guardian, etc., please so
indicate. Corporate and partnership proxies
should be signed by an authorized person
indicating the person's title.
Date_____________________________, 1999
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 315920686/fund #266
<PAGE>
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance
with their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------------
________________________________________________________________________________
1(a).To eliminate certain FOR[ ] AGAINST[ ] ABSTAIN[ ] 1(a).
fundamental investment policies
of the fund.
1(b).To approve an amended FOR[ ] AGAINST[ ] ABSTAIN[ ] 1(b).
management contract for the
fund.
ADVI-pxc-0499 cusip # 315920686/fund #266
