SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-86711) UNDER THE
SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 24 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. [ ]
Fidelity Advisor Series VIII
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Office)
Registrant's Telephone Number: (617) 570-7000
Arthur S. Loring, Esq.
82 Devonshire Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b) of Rule 485
(X) On (January 29, 1994) pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) On ( ) pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the notice required by
such Rule by January 29, 1994.
FIDELITY ADVISOR FUNDS
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C>
Form N-1A Item Number
Part A Prospectus Caption
1 Cover Page
2 Prospectus Summary
3 a,b Condensed Financial Information
c Performance
4 a(i) The Funds and the Fidelity Organization
a(ii),b,c Investment Objectives; Investment Policies; Investment
Limitations; Appendix
5 a The Trusts and the Fidelity Organization
b,c,d,e Fees
f Portfolio Transactions
6 a The Funds and the Fidelity Organization; How to Buy Shares;
How to Exchange; How to Sell Shares; Shareholder Services
b *
c Investment Objectives; The Funds and the Fidelity Organization
d The Funds and the Fidelity Organization
e How to Buy; How to Sell; How to Exchange
f,g Distribution Options; Distributions and Taxes
7 a Fees
b Valuation; How to Buy
c Investor Services
d How to Buy
e,f Fees
8 How to Sell Shares
9 *
</TABLE>
- --------------------------------------
* Not Applicable
FIDELITY ADVISOR SERIES VIII
FIDELITY STRATEGIC OPPORTUNITIES FUND
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C>
Form N-1A Item Number
Part A Prospectus Caption
1 Cover Page
2 Summary of Fund Expenses
3 a,b *
c *
4 a(i) The Fund and the Fidelity Organization
a(ii),b,c How the Fund Works, Matching the Fund to Your Investment
Needs, Limiting Investment Risks, Appendix
5 a The Fund and the Fidelity Organization
b,c,d,e Management and Service Fees, The Fund and the Fidelity
Organization
f Portfolio Transactions
5A Performance
6 a The Fund and the Fidelity Organization; How to Buy Additional
Shares; Shareholder Services; How to Redeem Shares;
Shareholder Services
b *
c How the Fund Works ; The Fund and the Fidelity Organization
d The Fund and the Fidelity Organization
e How to Buy Additional Shares; How to Redeem Shares;
Shareholder Services
f,g Shareholder Services; Distributions and Taxes
7 a Management and Service Fees
b Management and Service Fees; How to Buy Additional Shares
c Shareholder Services
d How to Buy Additional Shares
e,f Management and Service Fees
8 How to Redeem Shares
9 Financial Statements for the Fiscal Year ended September 30,
1993 are filed in the Statement of Additional Information.
</TABLE>
- --------------------------------------
* Not Applicable
FIDELITY ADVISOR SERIES VIII
FIDELITY STRATEGIC OPPORTUNITIES FUND
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C>
Form N-1A Item Number
Part B Statement of Additional Information
10 Cover Page
11 Table of Contents
12 FMR; Description of the Trust
13 a,b,c Investment Policies and Limitations
d Portfolio Transactions
14 a,b Trustees and Officers
c *
15 a *
b Description of the Trust
c *
16 a(i, ii) FMR, Management and Other Services, Trustees and Officers;
Distribution and Service Plan
a(iii),b,c,d Management and Other Services
e Portfolio Transactions
f Distribution and Service Plan
g *
h Description of the Trust
i Management and Other Services
17 a,b,c,d Portfolio Transactions
e *
18 a Description of the Trust
b *
19 a Additional Purchase, Exchange and Redemption Information
b Valuation of Portfolio Securities
20 Distributions and Taxes
21 Distribution and Service Plan
22 a *
b Performance
23 Financial Statements for the fiscal year ended September 30,
1993 are filed herein.
</TABLE>
- --------------------------------------
* Not Applicable
FIDELITY ADVISOR FUNDS
PROSPECTUS
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
JANUARY 29, 1994
The Fidelity Advisor Funds (Funds) offer investors a broad selection of
diversified portfolios.
EQUITY FUNDS:
FIDELITY ADVISOR OVERSEAS FUND
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
FIDELITY ADVISOR GLOBAL RESOURCES FUND
(formerly Fidelity Advisor Global Natural Resources Portfolio)
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
(formerly Fidelity Special Situations Fund: Advisor Class)
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME
FIDELITY ADVISOR INCOME & GROWTH FUND
FIXED-INCOME FUNDS:
FIDELITY ADVISOR HIGH YIELD FUND
FIDELITY ADVISOR LIMITED TERM BOND FUND
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND
FIDELITY ADVISOR SHORT FIXED-INCOME FUND
MUNICIPAL/TAX-EXEMPT FUNDS:
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND
Fidelity Advisor Equity Portfolio Growth is a portfolio of Fidelity Advisor
Series I. Fidelity Advisor Growth Opportunities Fund, Fidelity Advisor
Income & Growth Fund, Fidelity Advisor High Yield Fund, Fidelity
Advisor Government Investment Fund and Fidelity Advisor Short Fixed-Income
Fund are portfolios of Fidelity Advisor Series II. Fidelity Advisor Equity
Portfolio Income is a portfolio of Fidelity Advisor Series III. Fidelity
Advisor Limited Term Bond Fund is a portfolio of Fidelity Advisor Series
IV. Fidelity Advisor Global Resources Fund and Fidelity Advisor High Income
Municipal Fund are portfolios of Fidelity Advisor Series V. Fidelity
Advisor Limited Term Tax-Exempt Fund is a portfolio of Fidelity Advisor
Series VI. Fidelity Advisor Overseas Fund is a portfolio of Fidelity
Advisor Series VII. Fidelity Advisor Strategic Opportunities Fund is a
portfolio of Fidelity Advisor Series VIII.
FIDELITY ADVISOR HIGH YIELD FUND INVESTS IN LOWER-RATED DEBT SECURITIES,
WHICH PRESENT HIGHER RISKS OF UNTIMELY INTEREST AND PRINCIPAL PAYMENTS,
DEFAULT, AND PRICE VOLATILITY THAN HIGHER-RATED SECURITIES, AND MAY PRESENT
PROBLEMS OF LIQUIDITY AND VALUATION.
Please read this Prospectus before investing. It is designed to provide you
with information and help you decide if a Fund's goals match your own.
RETAIN THIS DOCUMENT FOR FUTURE REFERENCE.
A Statement of Additional Information (SAI) dated January 29, 1994 for
each Fund has been filed with the Securities and Exchange Commission
(SEC) and each is incorporated herein by reference. SAIs and each Fund's
Annual Report are available free upon request from Fidelity Distributors
Corporation (Distributors), 82 Devonshire Street, Boston, MA 02109, or from
your investment professional.
MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR ENDORSED OR
GUARANTEED BY ANY BANK OR SAVINGS ASSOCIATION, NOR ARE THEY FEDERALLY
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
(FDIC), THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. INVESTMENT IN THE
FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE
VALUE OF THE INVESTMENT AND ITS RETURN WILL FLUCTUATE AND ARE NOT
GUARANTEED. WHEN SOLD, THE VALUE OF SHARES OF THE INVESTMENT MAY BE HIGHER
OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(Registered trademark)
TABLE OF CONTENTS Page
FINANCIAL HISTORY
Shareholder Transaction Expenses
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVES
HOW TO BUY SHARES
Sales Charges and Investment Professional Concessions
Minimum Account Balance
Sales Charge Waivers
INVESTOR SERVICES
Quantity Discounts
Combined Purchases
Rights of Accumulation
Letter of Intent
Fidelity Advisor Systematic Investment Program
SHAREHOLDER COMMUNICATIONS
HOW TO EXCHANGE
Fidelity Advisor Systematic Exchange Program
HOW TO SELL SHARES
Redemption Requests by Telephone
Redemption Requests in Writing
Reinstatement Privilege
Fidelity Advisor Systematic Withdrawal Program
Checkwriting Service
DISTRIBUTION OPTIONS
DISTRIBUTIONS AND TAXES
Distributions
Capital Gains
"Buying a Dividend"
Federal Taxes
State and Local Taxes
Other Tax Information
INVESTMENT POLICIES
INVESTMENT LIMITATIONS
FEES
Management and Other Services
Distribution and Service Plans
VALUATION
PERFORMANCE
PORTFOLIO TRANSACTIONS
THE TRUSTS AND THE FIDELITY ORGANIZATION
APPENDIX
FINANCIAL HISTORY
The purpose of the table below is to assist you in understanding the
various costs and expenses that an investor in each Fund would bear
directly or indirectly. This standard format was developed for use by all
mutual funds to help investors make their investment decisions. This
expense information should be considered along with other important
information such as each Fund's investment objective and past performance.
1.SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge (as a percentage of the offering price)
- -Short Fixed-Income Fund 1.50%
- -Other Fidelity Advisor Funds 4.75%
Sales Charge on Reinvested Dividends None
Deferred Sales Charge on Redemptions None
Redemption Fees None
Exchange Fees None
SHAREHOLDER TRANSACTION EXPENSES represent charges paid when you purchase,
sell or exchange shares of a Fund. If you exchange shares or direct
dividends of Short Fixed-Income Fund into other Fidelity Advisor Funds, a
differential sales charge may apply. Lower sales charges may be available
with purchases over $50,000 or in conjunction with various programs. See
"How To Buy Shares," page 11.
ANNUAL OPERATING EXPENSES are based on historical expenses for the most
recent fiscal year ended. Management fees are paid by each Fund to Fidelity
Management & Research Company (FMR) for managing its investments and
business affairs. Management fees for Overseas, Growth Opportunities and
Strategic Opportunities will vary based on performance. 12b-1 fees are paid
by the Funds to Distributors for services and expenses in connection with
the distribution of Fund shares. Long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers (NASD) due to 12b-1
payments. The Funds incur other expenses for maintaining shareholder
records, furnishing shareholder statements and reports, and for other
services. A portion of the brokerage commissions that Equity Portfolio
Growth, Growth Opportunities, Global Resources and Income & Growth paid
were used to reduce Fund expenses. Without this reduction, their operating
expenses would have been 1.85%, 1.65%, 2.63% and 1.52%, respectively. FMR
has voluntarily agreed to reimburse Government Investment and Limited Term
Tax-Exempt to the extent that total operating expenses (exclusive of taxes,
interest, brokerage commissions, and extraordinary expenses) are in excess
of an annual rate of 0.60% and 0.90%, respectively, of average net assets.
If reimbursements were not in effect, the management fees, other expenses
(including 12b-1 fees) and total fund operating expenses would have been:
.46%, .86%, and 1.32%, (Government Investment); and .42%, .94%, and 1.36%,
(Limited Term Tax-Exempt). Please refer to the section "Fees," page .
The HYPOTHETICAL EXAMPLE illustrates the expenses, including the maximum
sales charge, associated with a $1,000 investment in each Fund over periods
of one, three, five and ten years, based on the expenses (after
reimbursements, if any) in the table and an assumed annual return of 5%.
THE RETURN OF 5% AND EXPENSES SHOULD NOT BE CONSIDERED INDICATIONS OF
ACTUAL OR EXPECTED FUND PERFORMANCE OR EXPENSES, BOTH OF WHICH MAY VARY.
2.ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
EXPENSE TABLE EXAMPLE:
You would pay the following expenses, including
the maximum sales charge, on a $1,000 investment
in a Fund assuming (1) a 5% annual return
and (2) full redemption at the end of each time period:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MANAGEMENT 12B-1 OTHER TOTAL
FEE FEE EXPENSES OPERATING 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES
EQUITY FUNDS:
Overseas .77% .65% .96% 2.38% $ 70 $ 118 $ 169 $ 306
Equity Portfolio Growth .66% .65% .53%* 1.84% 65 103 142 265
Growth Opportunities .68% .65% .31%* 1.64% 63 97 132 233
Global Resources .77% .65% 1.20%* 2.62% 73 125 180 329
Strategic Opportunities .54% .65% .38% 1.57% 63 95 129 225
Equity Portfolio Income .50% .65% .62% 1.77% 65 101 139 246
Income & Growth .53% .65% .33%* 1.51% 62 93 126 219
FIXED-INCOME FUNDS:
High Yield .51% .25% .35% 1.11% 58 81 106 176
Limited Term Bond .42% .25% .56% 1.23% 59 85 112 189
Government Investment .00%* .25% .35%* .60% 53 66 79 119
Short Fixed-Income .47% .15% .33% .95% 25 45 67 130
MUNICIPAL/TAX-EXEMPT
FUNDS:
High Income Municipal .42% .25% .25% .92% 56 75 96 155
Limited Term .12%* .25% .53%* .90% 56 75 95 153
Tax-Exempt
</TABLE>
* AFTER EXPENSE REDUCTIONS
FINANCIAL HIGHLIGHTS
The following tables give information about each Fund's financial history
and use its fiscal year. They have been audited by each Fund's independent
accountant whose unqualified report is included in each Fund's Annual
Report. The Annual Report for each Fund is incorporated by reference
into its SAI.
FIDELITY ADVISOR OVERSEAS FUND
April 23, 1990
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 October 31, 1990
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.07 $ 9.78 $ 9.55 $ 10.00
Income from Investment Operations
Net investment income .03 .05 .14 .05
Net realized and unrealized gain (loss) on investments 3.93 (.62) .17 (.50)
Total from investment operations 3.96 (.57) .31 (.45)
Less Distributions
From net investment income (.07) (.14) (.07) -
From net realized gain on investments (.03)(clear diamond)- (.01)(clear diamond)-
Total distributions (.10) (.14) (.08) -
Net asset value, end of period $ 12.93 $ 9.07 $ 9.78 $ 9.55
TOTAL RETURN (dagger)(double dagger) 44.13% (5.88)% 3.25% (4.50)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 221,370 $ 18,652 $ 19,091 $ 18,161
Ratio of expenses to average net assets 2.38% 2.64% 2.85% 3.07%*+
Ratio of net investment income to average net assets (.18)% .48% 1.48% 1.45%*
Portfolio turnover rate 42% 168% 226% 137%*
</TABLE>
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH
Effective September 10, 1992, the Fund commenced sale of two classes of
shares entitled "Fidelity Advisor Institutional Equity Portfolio Growth"
(representing the Fund's original shares) and "Fidelity Advisor Equity
Portfolio Growth" (representing the new shares). With the exception of the
Equity Portfolio Growth columns, the information below does not reflect
Equity Portfolio Growth's 12b-1 fee and revised transfer agent fee
arrangement.
Equity Portfolio Growth Institutional Equity Portfolio Growth
Year Period
Ended Ended
Nov. 30, Nov. 30 Years Ended November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987 1986
1985 1984
Net asset value, beginning of period $ 26.33 $ 23.78 $ 26.37 $ 24.28 $
15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18 $ 11.09 $ 8.03 $ 10.05
Income from Investment Operations
Net investment income (.07)(dagger)(dagger) .01(dagger)(dagger)
.19(dagger)(dagger) .17(dagger)(dagger) .04 .01 .06 .28#
.00(dagger)(dagger) .03 .01 .02
Net realized and unrealized gain
(loss) on investments 3.82 2.54 3.78 4.55 8.69 .34 5.50 2.59
(2.03) 2.41 3.05 (2.04)
Total from investment operations 3.75 2.55 3.97 4.72 8.73 .35
5.56 2.87 (2.03) 2.44 3.06 (2.02)
Less Distributions
From net investment income (.08) - (.10) (.03) - (.08) (.26)
(.01) (.01) (.02) - -
From net realized gain on investments (.50) - (.50) (2.60) -
(2.04) - (.76) (1.22) (.33) - -
Total distributions (.58) - (.60) (2.63) - (2.12) (.26) (.77)
(1.23) (.35) - -
Net asset value, end of period $ 29.50 $ 26.33 $ 29.74 $ 26.37 $ 24.28 $
15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18 $ 11.09 $ 8.03
TOTAL RETURN (dagger)(double dagger) 14.52% 10.72% 15.36% 21.14%
56.14% 2.75% 47.18% 29.77% (17.12)% 22.55% 38.11% (20.10)%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 377,984 $ 22,655 $ 296,466 $
179,325 $ 68,766 $ 27,473 $ 24,523 $ 20,182 $ 43,537 $ 63,607 $ 23,447 $
4,117
Ratio of expenses to average net assets 1.84%## 1.47%* .94%## .98%
1.13% 1.74% 1.60% 1.47% 1.11% 1.07% 1.50%+ 1.50%+
Ratio of expenses to average net assets
before expense reductions 1.85%## 1.47%* .95% ## .98% 1.13% 1.74%
1.60% 1.47% 1.11% 1.07% 1.50%+ 1.50%+
Ratio of net investment income to
average net assets (.24)% .25%* .66% .73% .25% .07% .38% 1.20%
.00% .29% .43% .33%
Portfolio turnover rate 160% 240% 160% 240% 254% 262% 269% 331%
226% 115% 108% 453%
* ANNUALIZED.
** FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF EQUITY
PORTFOLIO GROWTH) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED
ON AVERAGE SHARES OUTSTANDING.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
+ EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION.
(clear diamond) INCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON
FOREIGN CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
# DURING THE PERIOD A SHAREHOLDER REDEEMED A SIGNIFICANT PORTION OF THE
ASSETS OF THE FUND. DUE TO THE TIMING OF THIS TRANSACTION, THE FUND
EXPERIENCED AN UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
## FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
November 18, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 October 31, 1988
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27 $ 10.00
Income from Investment Operations
Net investment income .08 .14 .06 .18# .02 .05
Net realized and unrealized gain (loss) on investments5.56 2.04 7.70 (2.50) 3.03 4.22
Total from investment operations 5.64 2.18 7.76 (2.32) 3.05 4.27
Less Distributions
From net investment income (.13) (.09) (.17) (.05) (.03) -
From net realized gain on investments (1.26) (1.53) - (1.17) (.76) -
Total distributions (1.39) (1.62) (.17) (1.22) (.79) -
Net asset value, end of period $ 25.39 $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27
TOTAL RETURN (dagger) (double dagger) 28.11% 12.09% 60.25% (15.05)% 22.69% 42.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 2,054,988 $ 580,595 $ 213,095 $ 51,122 $ 34,351 $ 8,097
Ratio of expenses to average net assets 1.64%* 1.60% 1.73% 2.00% 2.45% 2.52%*(dagger)
* (dagger)
Ratio of expenses to average net assets before
expense reductions 1.65%* 1.60% 1.73% 2.00% 2.45% 2.52%*
*
Ratio of net investment income to average net assets.43% .80% .47% 1.49% .31% .82%*
Portfolio turnover rate 69% 94% 142% 136% 163% 143%*
</TABLE>
FIDELITY ADVISOR GLOBAL RESOURCES FUND
December 29, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 October 31, 1988
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 13.88 $ 14.11 $ 12.30 $ 12.60 $ 11.47 $ 10.00
Income from Investment Operations
Net investment income
.22 (.10) (.15) (.10) .10(clear diamond) (.05)
Net realized and unrealized gain (loss) on investments
4.91 .79 2.45 .93 1.96 1.52
Total from investment operations
5.13 .69 2.30 .83 2.06 1.47
Less Distributions
From net investment income
- - - (.08) - -
From net realized gain on investments
(1.42) (.92) (.49) (1.05) (.93) -
Total distributions
(1.42) (.92) (.49) (1.13) (.93) -
Net asset value, end of period
$ 17.59 $ 13.88 $ 14.11 $ 12.30 $ 12.60 $ 11.47
TOTAL RETURN (dagger)(double dagger)
41.05% 5.97% 19.50% 6.37% 19.63% 14.70%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end
of period (000
omitted)
$ 40,309 $ 7,087 $ 5,940 $ 4,615 $ 2,049 $ 916
Ratio of expenses
to average net assets 2.62%** 3.27%(dagger)(dagger) 3.35%(dagger)(dagger) 3.34%(dagger)(dagger)3.23%(dagger)(dagger) 2.85%*(dagger)
(dagger)
Ratio of expenses to average net assets before expense
2.63% 3.94% 3.35% 3.34% 3.23% 2.85%*
reductions
Ratio of net investment income to average net assets
(1.18)% (1.22)% (1.28)% (1.13)% .83% (.64)%*
Portfolio turnover rate
208% 248% 256% 229% 249% 220%*
* ANNUALIZED.
** FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE WITH A STATE EXPENSE LIMITATION
REGULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REIMBURSED CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
# NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.09 PER SHARE.
(clear diamond) NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.17 PER SHARE.
</TABLE>
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
August 20,1986
(Commencement
of Operations) to
Years Ended September 30, September 30,
1993 1992(dagger)(dagger) 1991 1990 1989 1988 1987 1986
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.53 $ 21.38 $ 17.21 $ 19.55 $
15.53 $ 19.06 $ 16.71 $ 17.81
Income from Investment Operations
Net investment income .33 .61 .66 .70 .50 .42 .46 .08(clear
diamond)
Net realized and unrealized gain (loss) on investments 4.44 .58 4.26
(2.49) 4.08 (1.80) 2.95 (1.18)
Total from investment operations 4.77 1.19 4.92 (1.79) 4.58 (1.38)
3.41 (1.10)
Less Distributions
From net investment income (.57) (.62) (.75) (.55) (.56) (.24)
(.09) --
From net realized gain on investments (1.21) (2.42) - -- --
(1.91) (.97) --
Total distributions (1.78) (3.04) (.75) (.55) (.56) (2.15) (1.06)
- -
Net asset value, end of period $ 22.52 $ 19.53 $ 21.38 $ 17.21 $ 19.55
$ 15.53 $ 19.06 $ 16.71
TOTAL RETURN (dagger)(double dagger) 26.33% 7.26% 29.51% (9.49)%
30.45% (4.98)% 21.28% (6.23)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 269,833 $ 194,694 $ 199,604 $
172,083 $ 198,198 $ 191,454 $ 283,117 $ 22,141
Ratio of expenses to average net assets 1.57%++ 1.46% 1.56% 1.59%
1.51% 1.71% 1.67%+ 1.50%*+
Ratio of net investment income to average net assets 2.06% 3.22% 3.61%
3.70% 3.23% 3.10% 2.36% 2.77%*
Portfolio turnover rate 183% 211% 223% 114% 89% 160% 225% --
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME
Effective September 10, 1992, the Fund commenced sale of two classes of
shares, entitled "Fidelity Advisor Institutional Equity Portfolio Income"
(representing the Fund's original shares) and "Fidelity Advisor Equity
Portfolio Income" (representing the new shares). With the exception of the
Equity Portfolio Income columns, the information below does not reflect
Equity Portfolio Income's 12b-1 fee and revised transfer agent fee
arrangement.
Equity Portfolio Income Institutional Equity Portfolio Income
Year Period
Ended Ended
Nov. 30 Nov. 30 Years Ended November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987 1986
1985 1984
Net asset value, beginning of period $ 12.86 $ 12.37 $ 12.88 $ 11.08 $
9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54 $ 11.95 $ 10.24 $ 10.49
Income from Investment Operations
Net investment income .33 .13 .39 .49 .63 # .69 .75 .75 .76
.78 .79 .72
Net realized and unrealized gain
(loss) on investments 1.97 .47 2.02 1.79 1.52 (2.42) 1.17
1.81 (1.53) 1.92 1.69 (.14)
Total from investment operations 2.30 .60 2.41 2.28 2.15 (1.73)
1.92 2.56 (.77) 2.70 2.48 .58
Less Distributions
From net investment income (.30) (.11) (.36) (.48) (.59) (.72)
(.75) (.74) (.70) (.77) (.77) (.74)
From net realized gain on investments - - - - - (.30) -
(1.65) (1.14) (.34) - (.09)
Total distributions (.30) (.11) (.36) (.48) (.59) (1.02) (.75)
(2.39) (1.84) (1.11) (.77) (.83)
Net asset value, end of period $ 14.86 $ 12.86 $ 14.93 $ 12.88 $ 11.08 $
9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54 $ 11.95 $ 10.24
TOTAL RETURN (dagger)(double dagger) 18.03% 4.88% 18.90% 20.91%
22.97% (14.90)% 17.58% 26.99% (7.28)% 23.48% 24.86% 6.20%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, end of period (000 omitted) $ 42,326 $ 1,462 $ 191,138 $
139,391 $ 168,590 $ 253,049 $ 463,696 $ 436,753 $ 443,603 $ 544,269 $
349,262 $ 89,364
Ratio of expenses to average net assets 1.77% 1.55%* .79%##
.71%(clear diamond) .67%(clear diamond) .61%(clear diamond) .55%(clear
diamond) .55%(clear diamond) .54%(clear diamond) .61% .63% .77%
Ratio of expenses to average net assets
before expense reductions 1.77% 1.55%* .80%## .79%(clear diamond)
.77%(clear diamond) .71%(clear diamond) .65%(clear diamond) .65%(clear
diamond) .61%(clear diamond) .61% .63% .77%
Ratio of net investment income
to average net assets 2.02% 3.39%* 3.00% 3.77% 5.66% 6.11% 6.09%
6.86% 5.58% 6.06% 7.36% 7.86%
Portfolio turnover rate 120% 51% 120% 51% 91% 103% 93% 78% 137%
107% 110%(dagger)(dagger)(dagger) 121%
* ANNUALIZED.
** FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF EQUITY
PORTFOLIO INCOME) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(dagger)(dagger) AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
+ EXPENSES WERE LIMITED TO A PERCENTAGE OF AVERAGE NET ASSETS IN ACCORDANCE
WITH A STATE EXPENSE LIMITATION. IN ADDITION, DURING THE PERIOD JULY 1,
1986 THROUGH OCTOBER 31, 1987 THE INVESTMENT ADVISER WAIVED .05% OF THE
ANNUAL INDIVIDUAL FUND FEE OF .35%.
++ INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FIDELITY MANAGEMENT &
RESEARCH COMPANY FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THIS
REIMBURSEMENT HAD NOT EXISTED THE RATIO OF EXPENSES TO AVERAGE NET ASSETS
WOULD HAVE BEEN 1.73%.
(clear diamond) EFFECTIVE APRIL 1, 1987 TO SEPTEMBER 10, 1992 THE ADVISER
REDUCED .10% OF THE ANNUAL MANAGEMENT FEE OF .50%.
(clear diamond) NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED
ON UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE AT THE END OF THE PERIOD
LESS THE AMOUNT OF UNDISTRIBUTED NET INVESTMENT INCOME PER SHARE OF THE
FUND AT AUGUST 20, 1986.
# INCLUDES $.04 PER-SHARE FROM FOREIGN TAXES RECOVERED.
## FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A PORTION
OF THE FUND'S EXPENSES.
FIDELITY ADVISOR INCOME & GROWTH FUND
January 6, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44 $ 10.00
Income from Investment Operations
Net investment income .48 .50 .51 .56 1.01# .62 .27
Net realized and unrealized gain (loss) on 2.18 .85 3.74 (1.34) 1.27 1.56 (.63)
investments
Total from investment operations 2.66 1.35 4.25 (.78) 2.28 2.18 (.36)
Less Distributions
From net investment income (.56) (.46) (.53) (1.06) (.58) (.55) (.20)
From net realized gain on investments (.60) (.61) - (.52) - - -
Total distributions (1.16) (1.07) (.53) (1.58) (.58) (.55) (.20)
Net asset value, end of period $ 15.91 $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44
TOTAL RETURN (dagger)(double dagger) 19.66% 10.27% 41.73% (7.15)% 21.15% 23.66% (3.90)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 1,654,124 $ 397,672 $ 135,533 $ 60,934 $ 46,139 $ 36,224 $ 34,376
Ratio of expenses to average net assets 1.51%** 1.60% 1.71% 1.85% 1.91% 2.06% 2.06%*
Ratio of expenses to average net assets before 1.52%** 1.60% 1.71% 1.85% 1.91% 2.06% 2.06%*
expense reductions
Ratio of net investment income to average net 3.24% 3.97% 4.19% 5.29% 8.80% 5.83% 3.95%*
assets
Portfolio turnover rate 200% 389% 220% 297% 151% 204% 206%*
</TABLE>
FIDELITY ADVISOR HIGH YIELD FUND
January 5, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period
$ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090 $ 10.000
Income from Investment Operations
Net investment income
.980 1.146 1.115 1.144 1.237 1.165 .878
Net realized and unrealized gain (loss) on
1.153 .975 1.948 (.820) (.890) .770 (.910)
investments
Total from investment operations
2.133 2.121 3.063 .324 .347 1.935 (.032)
Less Distributions
From net investment income
(.963) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)
From net realized gain on investments
(.230) - - - - - -
Total distributions
(1.193) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)
Net asset value, end of period
$ 12.010 $ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090
TOTAL RETURN (dagger)(double dagger)
20.47% 21.96% 39.67% 3.58% 3.34% 22.14% (.81)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$ 485,559 $ 136,316 $ 38,681 $ 15,134 $ 13,315 $ 11,900 $ 9,077
Ratio of expenses to average net assets
1.11% 1.10% 1.10% 1.10% 1.10% 1.10% 1.24%*
Ratio of expenses to average net assets before
1.11% 1.16% 1.76% 2.04% 2.17% 2.22% 2.25%*
voluntary
(clear diamond)
expense limitation
Ratio of net investment income to average net
8.09% 9.95% 12.20% 12.72% 12.98% 11.86% 10.74%*
assets
Portfolio turnover rate
79% 100% 103% 90% 131% 135% 166%*
* ANNUALIZED.
** FMR HAS DIRECTED CERTAIN TRADES TO BROKERS WHO PAID A PORTION OF THE FUND'S EXPENSES.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
# NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.26 PER SHARE.
(clear diamond) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
</TABLE>
FIDELITY ADVISOR LIMITED TERM BOND FUND
Effective September 10, 1992, the Fund commenced sale of two classes of
shares entitled "Fidelity Advisor Institutional Limited Term Bond Fund"
(representing the Fund's original shares) and "Fidelity Advisor Limited
Term Bond Fund" (representing the new shares). With the exception of the
Limited Term Bond Fund columns, the information below does not reflect
Limited Term Bond Fund's 12b-1 fee and revised transfer agent fee
arrangement.
Limited Term
Bond Fund Institutional Limited Term Bond Fund
Year Period February 2, 1984
Ended Ended (Commencement
Nov. 30, Nov. 30 Years Ended November 30, of Operations) to
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987 1986
1985 November 30, 1984
Net asset value, beginning
of period $ 10.640 $ 10.960 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180
$ 10.250 $ 11.240 $ 10.550 $ 9.960 $ 10.000
Income from Investment Operations
Net investment income .785 .170 .832 .840 .884 .901 .937 .944
.953 1.026 1.053 .897
Net realized and unrealized gain (loss)
on investments .511 (.320)# .531 .102 .411 (.270) .230 (.070)
(.770) .710 .590 (.040)
Total from investment operations 1.296 (.150) 1.363 .942 1.295 .631
1.167 .874 .183 1.736 1.643 .857
Less Distributions
From net investment income (.796) (.170) (.843) (.852) (.885)
(.901) (.937) (.944) (.953) (1.026) (1.053) (.897)
From net realized gain on investments - -- -- -- -- -- -- --
(.220) (.020) -- --
Total distributions (.796) (.170) (.843) (.852) (.885) (.901)
(.937) (.944) (1.173) (1.046) (1.053) (.897)
Net asset value, end of period $ 11.140 $ 10.640 $ 11.160 $ 10.640 $
10.550 $ 10.140 $ 10.410 $ 10.180 $ 10.250 $ 11.240 $ 10.550 $ 9.960
TOTAL RETURN (dagger)(double dagger) 12.50% (1.37)% 13.17% 9.21%
13.35% 6.46% 12.03% 8.81% 1.78% 17.04% 17.40% 9.33%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 59,184 $ 2,583 $ 183,790 $
160,156 $ 327,756 $ 356,564 $ 426,832 $ 418,929 $ 407,228 $ 418,632 $
253,913 $ 15,192
Ratio of expenses to average net assets 1.23% .82%* .64% .57% .57%
.58% .54% .54% .53% .53% .65% 1.50%*(dagger)(dagger)
Ratio of net investment income to
average net assets 6.81% 7.67%* 7.41% 7.96% 8.59% 8.90% 9.16%
9.16% 9.03% 9.22% 10.29% 11.01%*
Portfolio turnover rate 59% 7% 59% 7% 60% 59% 87% 48% 92% 59%
88%(dagger)(dagger)(dagger) 12%*
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND
January 7, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200 $ 10.000
Income from Investment Operations
Net investment income .567 .666 .700 .735 .773 .769 .614
Net realized and unrealized gain (loss) on .601 .125 .419 (.160) .050 .060 (.800)
investments
Total from investment operations 1.168 .791 1.119 .575 .823 .829 (.186)
Less Distributions
From net investment income (.558) (.651) (.679) (.735) (.773) (.769) (.614)
From net realized gain on investments (.200) - - - - - -
Total distributions (.758) (.651) (.679) (.735) (.773) (.769) (.614)
Net asset value, end of period $ 10.140 $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200
TOTAL RETURN (dagger)(double dagger) 12.53% 8.49% 12.65% 6.48% 9.37% 9.34% (1.84)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 69,876 $ 23,281 $ 13,058 $ 9,822 $ 8,203 $ 6,590 $ 4,584
Ratio of expenses to average net assets .68% 1.10% 1.10% 1.10% 1.10% 1.10% 1.29%*
Ratio of expenses to average net assets before 1.32% 1.79% 2.46% 2.74% 2.75% 2.25% 2.36%*
voluntary
expense limitation
Ratio of net investment income to average net 6.11% 6.98% 7.47% 8.04% 8.45% 8.30% 8.12%*
assets
Portfolio turnover rate 333% 315% 54% 31% 42% 44% 32%*
</TABLE>
* ANNUALIZED.
** FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF LIMITED TERM
BOND FUND) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(dagger)(dagger) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
(dagger)(dagger)(dagger) IN JULY 1985, THE SEC ADOPTED REVISIONS TO
EXISTING RULES WITH RESPECT TO THE CALCULATION OF THE PORTFOLIO TURNOVER
RATE. THE REVISED RULES REQUIRE THE INCLUSION IN THE CALCULATION OF
LONG-TERM U.S. GOVERNMENT SECURITIES WHICH, PRIOR TO THESE REVISIONS, WERE
EXCLUDED FROM THE CALCULATION.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
# THE AMOUNT SHOWN IN THIS CAPTION, WHILE DETERMINABLE BY THE SUMMATION OF
AMOUNTS COMPUTED DAILY AS SHARES WERE SOLD OR REPURCHASED, IS ALSO THE
BALANCING FIGURE DERIVED FROM THE OTHER FIGURES IN THE STATEMENT AND HAS
BEEN SO COMPUTED. THE AMOUNT SHOWN FROM THE PERIOD ENDED NOVEMBER 30, 1992
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD DOES NOT ACCORD WITH THE NET
REALIZED AND UNREALIZED GAIN ON INVESTMENTS FOR THE PERIOD BECAUSE OF THE
TIMING OF SALES AND REPURCHASES OF THE LIMITED TERM BOND FUND SHARES IN
RELATION TO FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND
September 16, 1987
(Commencement of
Years Ended October 31, Operations) to
1993 1992 1991 1990 1989 1988 October 31, 1987
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.950 $ 9.870 $ 9.620 $ 9.950 $ 9.940 $ 10.060 $ 10.000
Income from Investment Operations
Net investment income .732 .830 .848 .868 .832 .852 .101
Net realized and unrealized gain (loss) on .146 .071 .270 (.330) .010 (.120) .060
investments
Total from investment operations .878 .901 1.118 .538 .842 .732 .161
Less Distributions
From net investment income (.738) (.821) (.868) (.868) (.832) (.852) (.101)
Net asset value, end of period $ 10.090 $ 9.950 $ 9.870 $ 9.620 $ 9.950 $ 9.940 $ 10.060
TOTAL RETURN (dagger)(double dagger) 9.13% 9.44% 12.19% 5.59% 8.89% 7.56% 1.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 654,202 $ 170,558 $ 25,244 $ 13,062 $ 12,394 $ 13,433 $ 3,252
Ratio of expenses to average net assets .95% .90% .90% .90% .90% .90% .90%*
Ratio of expenses to average net assets before .95% 1.03% 1.74% 1.90% 2.22% 1.84% 2.15%*
voluntary (clear
diamond)
expense limitation
Ratio of net investment income to average net 6.77% 7.59% 8.50% 8.86% 8.45% 8.39% 7.65%*
assets
Portfolio turnover rate 58% 57% 127% 144% 157% 178% 119%*
</TABLE>
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND
September 16, 1987
(Commencement of
Years Ended October 31, Operations) to
SELECTED PER-SHARE DATA 1993 1992 1991 1990 1989 1988 October
31, 1987
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850 $ 10.000
Income from Investment Operations
Net interest income .710 .774 .803 .811 .800 .750 .092
Net realized and unrealized gain (loss) on 1.100 .250 .660 .150 .410 .610 (.150)
investments
Total from investment operations 1.810 1.024 1.463 .961 1.210 1.360 (.058)
Less Distributions
From net interest income (.710) (.774) (.803) (.811) (.800) (.750) (.092)
From net realized gain on investments (.030) (.010) (.120) (.100) (.050) - -
Total distributions (.740) (.784) (.923) (.911) (.850) (.750) (.092)
Net asset value, end of period $ 12.720 $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850
TOTAL RETURN (dagger)(double dagger) 15.95% 9.21% 14.02% 9.28% 12.05% 14.22% (.58)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 497,575 $ 156,659 $ 67,135 $ 22,702 $ 6,669 $ 3,290 $ 1,275
Ratio of expenses to average net assets .92% .90% .90% .90% .90% .89% .80%*
Ratio of expenses to average net assets before .92% .96% 1.24% 2.09% 2.75% 2.25% 2.25%*
voluntary (clear diamond) (clear diamond)
(clear diamond)
expense limitation
Ratio of net interest income to average net assets 5.59% 6.59% 7.08% 7.37% 7.60% 7.33% 7.24%*
Portfolio turnover rate 27% 13% 10% 11% 27% 19% -%
</TABLE>
* ANNUALIZED.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(double dagger) THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(clear diamond) LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND
Effective September 10, 1992, the Fund commenced sale to two classes of
shares entitled "Fidelity Advisor Institutional Limited Term Tax-Exempt
Fund" (representing the Fund's original shares) and "Fidelity Advisor
Limited Term Tax-Exempt Fund" (representing the new shares). With the
exception of the Limited Term Tax-Exempt Fund columns, the information
below does not reflect Limited Term Tax-Exempt Fund's 12b-1 fee and revised
transfer agent fee arrangement.
Limited Term
Tax-Exempt Fund Institutional Limited Term Tax-Exempt Fund
September 19, 1985
Year Period (Commencement
Ended Ended of Operations) to
Nov. 30 Nov. 30 Years Ended November 30, November 30,
SELECTED PER-SHARE DATA 1993 1992** 1993 1992 1991 1990 1989 1988 1987
1986 1985
Net asset value, beginning of period $ 11.080 $ 11.010 $ 11.080 $ 10.800 $
10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280 $ 10.000
Income from Investment Operations
Net interest income .508 .131 .536 .666 .682 .689 .674 .650 .641
.671 .130
Net realized and unrealized gain (loss) on investments .260 .070 .260
.280 .160 .030 .090 .140 (.540) .760 .280
Total from investment operations .768 .201 .796 .946 .842 .719
.764 .790 .101 1.431 .410
Less Distributions
From net interest income (.508) (.131) (.536) (.666) (.682) (.689)
(.674) (.650) (.641) (.671) (.130)
From net realized gain on investments (.880) -- (.880) -- -- --
- -- -- (.070) (.050) --
Total distributions (1.388) (.131) (1.416) (.666) (.682) (.689)
(.674) (.650) (.711) (.721) (.130)
Net asset value, end of period $ 10.460 $ 11.080 $ 10.460 $ 11.080 $
10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990 $ 10.280
TOTAL RETURN (dagger)(double dagger) 7.72% 1.37% 8.01% 9.01% 8.15%
7.04% 7.50% 7.77% .97% 14.39% 4.12%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 39,800 $ 1,752 $ 15,076 $ 28,428
$ 100,294 $ 111,506 $ 121,418 $ 132,443 $ 162,857 $ 161,045 $ 94,391
Ratio of expenses to average net assets .90% 1.04%* .65% .66% .61%
.62% .65% .63% .59% .58% .69%*
Ratio of expenses to average net assets before voluntary
expense limitation 1.36% 1.06%* .83% .67% .61% .62% .65% .63%
.59% .58% .69%*
Ratio of net investment income to average net assets 4.76% 5.65%* 5.01%
6.05% 6.40% 6.53% 6.45% 6.20% 6.01% 6.29% 6.33%*
Portfolio turnover rate 46% 36% 46% 36% 20% 32% 31% 24% 43% 34%
103%*
* ANNUALIZED.
** FOR THE PERIOD SEPTEMBER 15, 1992 (COMMENCEMENT OF OPERATIONS OF LIMITED
TERM TAX-EXEMPT FUND) TO NOVEMBER 30, 1992.
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(double dagger) TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
INVESTMENT OBJECTIVES
EQUITY FUNDS:
FIDELITY ADVISOR OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities.
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH seeks to achieve capital
appreciation by investing primarily in the common and preferred stock and
securities convertible into the common stock, of companies with above
average growth characteristics.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND seeks to provide capital growth
by investing primarily in common stocks and securities convertible into
common stocks.
FIDELITY ADVISOR GLOBAL RESOURCES FUND seeks long-term growth of capital
and protection of the purchasing power of shareholders' capital by
investing primarily in securities of foreign and domestic companies that
own or develop natural resources, or that supply goods and services to such
companies, or in physical commodities.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND seeks capital appreciation
by investing primarily in securities of companies believed by FMR to
involve a "special situation."
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME seeks a yield from dividend and
interest income which exceeds the composite dividend yield on securities
comprising the Standard & Poor's 500 Composite Stock Price Index
(S&P 500).
FIDELITY ADVISOR INCOME & GROWTH FUND seeks both income and growth of
capital by investing in a diversified portfolio of equity and fixed-income
securities with income, growth of income and capital appreciation
potential.
FIXED-INCOME FUNDS:
FIDELITY ADVISOR HIGH YIELD FUND seeks a combination of a high level of
income and the potential for capital gains by investing in a diversified
portfolio consisting primarily of high-yielding, fixed-income and zero
coupon securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
FIDELITY ADVISOR LIMITED TERM BOND FUND seeks to provide a high rate of
income through investment in high and upper-medium grade fixed-income
obligations.
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND seeks a high level of current
income by investing primarily in obligations issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND seeks to obtain a high level of
current income, consistent with preservation of capital, by investing
primarily in a broad range of investment grade fixed-income securities.
MUNICIPAL/TAX-EXEMPT FUNDS:
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND seeks to provide a high current
yield by investing in a diversified portfolio of municipal obligations
whose interest is not included in gross income for purposes of calculating
federal income tax. The Fund reserves the right to invest up to 100% of its
assets in municipal obligations subject to the federal alternative minimum
tax.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND seeks the highest level of
income exempt from federal income taxes that can be obtained consistent
with the preservation of capital, from a diversified portfolio of high
quality or upper-medium quality municipal obligations.
The investment objective of each Fund is fundamental and can only be
changed by vote of a majority of the outstanding shares of the Fund. Except
as otherwise noted, the investment limitations and policies of Equity
Portfolio Growth, Strategic Opportunities, Income & Growth, Limited
Term Bond, Government Investment, High Income Municipal, and Limited Term
Tax-Exempt are fundamental and may not be changed without shareholder
approval. Except for the investment limitations and policies identified as
fundamental, the limitations and policies of Overseas, Growth
Opportunities, Global Resources, Equity Portfolio Income, High Yield, and
Short Fixed-Income are not fundamental. Non-fundamental investment
limitations and policies may be changed without shareholder approval.
The yield, return and potential price changes of each Fund depend on the
quality and maturity of the obligations in its portfolio, as well as on
market conditions. Risks vary based on the type of fund in which you are
investing. As is the case with any investment in securities, investment in
the Funds involve certain risks and therefore a Fund may not always achieve
its investment objective. See "Investment Policies" beginning on page 15.
HOW TO BUY SHARES
Shares of each Fund are offered continuously to investors who engage an
investment professional for investment advice and may be purchased at the
public offering price (the offering price) next determined after the
transfer agent receives your order to purchase. State Street Bank and
Trust Company (the Transfer Agent), P.O. Box 8302, Boston, Massachusetts
02266-8302, provides transfer and dividend paying services for each Fund.
The offering price is equal to the net asset value per share (NAV) plus
a sales charge, which is a variable percentage of the offering price
depending upon the amount of the purchase. The table below shows total
sales charges and concessions to securities dealers and banks (investment
professionals) having Agreements with Distributors.
You can open an account with a minimum initial investment of $2,500 or more
by completing and returning an account application. You can make additional
investments of $250 or more. For tax-deferred retirement plans, including
IRA accounts, there is a $500 minimum initial investment and a $100
subsequent investment minimum. For accounts established under the
Fidelity Advisor Systematic Investment Program or the Fidelity Advisor
Systematic Exchange Program, there is a $1,000 initial and $100 monthly
subsequent investment minimum requirement. FOR FURTHER INFORMATION ON
OPENING AN ACCOUNT, PLEASE CONSULT YOUR INVESTMENT PROFESSIONAL OR REFER TO
THE ACCOUNT APPLICATION.
It is the responsibility of your investment professional to transmit your
order to purchase shares to the Transfer Agent before 4:00 p.m. Eastern
time in order for you to receive that day's share price. The Transfer Agent
must receive payment within five business days after an order is placed,
otherwise, the purchase order may be canceled and you could be held liable
for resulting fees and/or losses.
All of your purchases must be made in U.S. dollars and checks must be drawn
on U.S. banks. Each Fund reserves the right to limit the number of your
checks processed at one time. If your check does not clear, the Fund may
cancel your purchase and you could be held liable for any fees and/or
losses incurred. When you purchase directly by check, the Fund can hold the
proceeds of redemptions until the Transfer Agent is reasonably satisfied
that the purchase payment has been collected (which can take up to seven
calendar days). You may avoid a delay in receiving redemption proceeds by
purchasing shares with a certified check. Shares of the fixed-income
funds purchased through investment professionals utilizing an automated
order placement and settlement system that guarantees payment for orders on
a specified date, begin to earn income dividends on that date. Direct
purchases and all other orders begin to earn dividends on the business day
after the Fund receives payment.
2.SALES CHARGES AND INVESTMENT PROFESSIONAL CONCESSIONS
SALES CHARGES AS % OF INVESTMENT PROFESSIONAL
AMOUNT OF PURCHASE OFFERING NET AMOUNT CONCESSION AS %
IN SINGLE TRANSACTIONS PRICE INVESTED OF OFFERING PRICE
FIDELITY ADVISOR FUNDS:
Less than $50,000 4.75% 4.99% 4.00%
$50,000 to less than $100,000 4.50% 4.71% 4.00%
$100,000 to less than $250,000 3.50% 3.63% 3.00%
$250,000 to less than $500,000 2.50% 2.56% 2.00%
$500,000 to less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None See Below*
SHORT FIXED-INCOME FUND:
Less than $1,000,000 1.50% 1.52% 1.20%
$1,000,000 or more None None See Below*
* INVESTMENT PROFESSIONALS WILL BE COMPENSATED WITH A FEE OF .25% FOR
PURCHASES OF $1 MILLION OR MORE, IF THE ASSETS ON WHICH THE .25% IS PAID
REMAIN WITHIN THE FIDELITY ADVISOR FUNDS FOR ONE YEAR, EXCEPT FOR
PURCHASES THROUGH A BANK OR BANK-AFFILIATED BROKER-DEALER THAT QUALIFY FOR
A SALES CHARGE WAIVER DESCRIBED ON PAGE 12. ALL ASSETS ON WHICH THE .25%
FEE IS PAID MUST REMAIN WITHIN THE FIDELITY ADVISOR FUNDS (INCLUDING SHARES
EXCHANGED INTO DAILY MONEY FUND AND DAILY TAX-EXEMPT MONEY FUND) FOR A
PERIOD OF ONE UNINTERRUPTED YEAR OR THE INVESTMENT PROFESSIONAL WILL BE
REQUIRED TO REFUND THIS FEE TO DISTRIBUTORS.
Each Fund and Distributors reserve the right to suspend the offering of
shares for a period of time and to reject any order for the purchase of
shares, including certain purchases by exchange (see "How to Exchange,''
page ).
3.MINIMUM ACCOUNT BALANCE. You must maintain an account balance of $1,000.
If your account falls below $1,000 due to redemption, the Transfer Agent
may close it at the NAV next determined on the day your account is closed
and mail you the proceeds at the address shown on the Transfer Agent's
records. The Transfer Agent will give you 30 days' notice that your account
will be closed unless you make an investment to increase your account
balance to the $1,000 minimum. The minimum account balance does not apply
to IRA accounts.
4.SALES CHARGE WAIVERS. Sales charges do not apply to shares of a Fund
purchased:
(1) by registered representatives, bank trust officers and other employees
(and their immediate families) of investment professionals having
Agreements with Distributors;
(2) by a current or former Trustee or officer of a Fidelity fund or a
current or retired officer, director or full-time employee of FMR Corp. or
its direct or indirect subsidiaries (a "Fidelity Trustee or employee"), the
spouse of a Fidelity Trustee or employee, a Fidelity Trustee or employee
acting as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity Trustee or
employee;
(3) by a charitable organization (as defined in Section 501(c)(3) of the
Internal Revenue Code) investing $100,000 or more;
(4) by a charitable remainder trust or life income pool established for the
benefit of a charitable organization (as defined in Section 501(c)(3) of
the Internal Revenue Code);
(5) by trust institutions (including bank trust departments) investing
on their own behalf or on behalf of their clients;
(6) in accounts as to which a bank or broker-dealer charges an account
management fee, provided the bank or broker-dealer has an Agreement with
Distributors;
(7) as part of an employee benefit plan having more than 200 eligible
employees or a minimum of $1,000,000 invested in Fidelity Advisor Funds;
(8) in a Fidelity or Fidelity Advisor IRA account purchased with the
proceeds of a distribution from (i) an employee benefit plan having more
than 200 eligible employees or a minimum of $3,000,000 in plan assets
invested in Fidelity mutual funds or $1,000,000 invested in Fidelity
Advisor mutual funds, or (ii) an insurance company separate account
qualifying under (9) below, or funding annuity contracts purchased by
employee benefit plans which in the aggregate have at least $3,000,000 in
plan assets invested in Fidelity mutual funds;
(9) by an insurance company separate account used to fund annuity contracts
purchased by employee benefit plans which in the aggregate have more than
200 eligible employees or $1,000,000 invested in Fidelity Advisor mutual
funds;
(10) by any state, county, city, or any governmental instrumentality,
department, authority or agency; or
(11) with redemption proceeds from other mutual fund complexes on which the
investor has paid a front-end sales charge only. (A Sales Charge Waiver
Form must accompany these transactions.)
Sales charge waivers must be qualified through Distributors in advance, and
employee benefit plan investors must meet additional requirements specified
in the SAIs. Your investment professional should call Fidelity for more
information.
INVESTOR SERVICES
You may initiate many transactions by telephone. Note that the Transfer
Agent will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the
identity of the caller. The Transfer Agent will request personalized
security codes or other information, and may also record calls. You should
verify the accuracy of your confirmation statements immediately after you
receive them. If you do not want the ability to redeem and exchange by
telephone, call the Transfer Agent for instructions.
5.QUANTITY DISCOUNTS. Reduced sales charges are applicable to purchases of
$50,000 or more ($1,000,000 or more for Short Fixed-Income) alone or in
combination with purchases of shares of other Fidelity Advisor Funds made
at any one time (including Daily Money Fund and Daily Tax-Exempt Money Fund
shares acquired by exchange from certain other Fidelity Advisor Funds). To
obtain the reduction of the sales charge, you or your investment
professional must notify the Transfer Agent at the time of purchase
whenever a quantity discount is applicable to your purchase. Upon such
notification, you will receive the lowest applicable sales charge.
For purposes of qualifying for a reduction in sales charges under the
Combined Purchase, Rights of Accumulation or Letter of Intent provisions,
the following may qualify as an individual, or a "company" as defined in
Section 2(a)(8) of the Investment Company Act of 1940 (1940 Act): an
individual, spouse, and their children under age 21 purchasing for his,
her, or their own account; a trustee, administrator or other fiduciary
purchasing for a single trust estate or single fiduciary account or for a
single or a parent-subsidiary group of "employee benefit plans" (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974);
and tax-exempt organizations as defined under Section 501(c)(3) of the
Internal Revenue Code.
6.COMBINED PURCHASES. When you invest in a Fund for several accounts at the
same time, you may combine these investments into a single transaction to
qualify for the quantity discount if purchased through one investment
professional, and if the total is at least $50,000 (at least $1,000,000 for
Short Fixed-Income).
7.RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on any future purchases after you have reached a new
breakpoint in a Fund's sales charge schedule. You can add the value of
existing Fidelity Advisor Fund shares (including Daily Money Fund and Daily
Tax-Exempt Money Fund shares ACQUIRED BY EXCHANGE FROM ANY FIDELITY ADVISOR
FUND), determined at the current day's NAV at the close of business, to the
amount of your new purchase valued at the current offering price to
determine your reduced sales charge.
8.LETTER OF INTENT. If you anticipate purchasing $50,000 or more
($1,000,000 for Short Fixed-Income) of a Fund's shares alone or in
combination with shares of other Fidelity Advisor Funds (excluding Daily
Money Fund and Daily Tax-Exempt Money Fund) within a 13-month period, you
may obtain shares at the same reduced sales charge as though the total
quantity were invested in one lump sum, by filing a non-binding Letter of
Intent (the Letter) within 90 days of the start of the purchases. Each
investment you make after signing the Letter will be entitled to the sales
charge applicable to the total investment indicated in the Letter. For
example, a $2,500 purchase toward a $50,000 Letter would receive the same
reduced sales charge as if the $50,000 ($1,000,000 for Short Fixed-Income)
had been invested at one time. To ensure that the reduced price will be
received on future purchases, you or your investment professional must
inform the Transfer Agent that the Letter is in effect each time shares are
purchased. Neither income dividends nor capital gain distributions taken in
additional shares will apply toward the completion of the Letter.
Your initial investment must be at least 5% of the total amount you plan to
invest. Out of the initial purchase, 5% of the dollar amount specified in
the Letter will be registered in your name and held in escrow. The shares
held in escrow cannot be redeemed or exchanged until the Letter is
satisfied or the additional sales charges have been paid. You will earn
income dividends and capital gain distributions on escrowed shares. The
escrow will be released when your purchase of the total amount has been
completed. You are not obligated to complete the Letter.
If you purchase more than the amount specified in the Letter and qualify
for a further sales charge reduction, the sales charge will be adjusted to
reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering
price applicable to the total purchase.
If you do not complete your purchase under the Letter within the 13-month
period, 30 days' written notice will be provided for you to pay the
increased sales charges due. Otherwise, sufficient escrowed shares will be
redeemed to pay such charges.
9.FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM. You can make
regular investments in a Fidelity Advisor Fund with the Systematic
Investment Program by completing the appropriate section of the account
application and attaching a voided personal check. Investments may be made
monthly by automatically deducting $100 or more from your bank checking
account. You may change the amount of your monthly purchase at any time.
There is a $1,000 minimum initial investment requirement for the Systematic
Investment Program. Shares will be purchased at the offering price next
determined following receipt of the investment by the Transfer Agent. You
may cancel the Systematic Investment Program at any time without payment of
a cancellation fee. You will receive a confirmation from the Transfer Agent
for every transaction, and a debit entry will appear on your bank
statement.
SHAREHOLDER COMMUNICATIONS
The Transfer Agent will send you a confirmation after every transaction
that affects the share balance or the account registration. In addition, a
consolidated statement will be provided quarterly. At least twice a year
each shareholder will receive the Fund's financial statements, with a
summary of its portfolio composition and performance. To reduce expenses,
only one copy of most shareholder reports (such as a Fund's Annual Report)
will be mailed to each shareholder address. Please write to the Transfer
Agent or contact your investment professional if you need to have
additional reports sent each time.
A Fund pays for these shareholder communications, but not for special
services that are required by a few shareholders, such as a request for a
historical transcript of an account. You may be required to pay a fee for
such special services. If you are purchasing shares of a Fund through a
program of administrative services offered by an investment professional,
you should read the additional materials pertaining to that program in
conjunction with this Prospectus. Certain features of a Fund, such as the
minimum initial or subsequent investment, may be modified in these
programs, and administrative charges may be imposed for the services
rendered.
HOW TO EXCHANGE
An exchange is the redemption of shares of one Fund and the purchase of
shares of another Fund, each at the next determined NAV. The exchange
privilege is a convenient way to sell and buy shares of other Fidelity
Advisor Funds and certain Fidelity money market funds registered in
your state.
To protect each Fund's performance and shareholders, FMR discourages
frequent trading in response to short-term market fluctuations. The Funds
reserve the right to refuse exchange purchases by any person or group if,
in FMR's opinion, a Fund would be unable to invest effectively in
accordance with its investment objective and policies, or would otherwise
be affected adversely. Your exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant
portions of a Fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to a Fund.
Exchange restrictions may be imposed at any time. The Funds may modify or
terminate the exchange privilege. The exchange limit may be modified for
certain institutional retirement plans.
Exchange instructions may be given by you in writing or by telephone
directly to the Transfer Agent or through your investment professional. FOR
MORE INFORMATION ON ENTERING AN EXCHANGE TRANSACTION, PLEASE CONSULT YOUR
INVESTMENT PROFESSIONAL.
Before you make an exchange:
1. Read the prospectus of the Fund into which you want to exchange.
2. Shares may be exchanged into other Fidelity Advisor Funds seven calendar
days after purchase at NAV. If you have held shares of Short Fixed-Income
Fund for less than six months, you will pay a sales charge equal to the
difference between the sales charge on the Fund you are exchanging into and
the sales charge applicable to shares of Short Fixed-Income being
exchanged. For example, if you paid the full 1.5% sales charge when you
purchased your Short Fixed-Income shares, you will have to pay a sales
charge of up to 3.25% when you exchange these shares into another Fidelity
Advisor Fund having a maximum sales charge of 4.75%. After six months,
shares may be exchanged at NAV. Exchanges into a Fidelity Advisor Fund
from eligible Fidelity money market funds will be processed at the next
determined offering price (unless the shares were acquired by exchange from
another Fidelity Advisor Fund).
3. You may only exchange between accounts that are registered in the same
name, address, and taxpayer identification number.
4. You may make four exchanges out of a Fund per calendar year. If you
exceed this limit, your future purchases of (including exchanges into)
Fidelity Advisor Funds may be permanently refused. For purposes of the four
exchange limit, accounts under common ownership or control, including
accounts having the same taxpayer identification number, will be
aggregated. Systematic exchanges are not subject to this four exchange
limit (see following section).
5. TAXES: The shares exchanged represent a sale and are taxable. The
Transfer Agent will send you a confirmation of each exchange transaction.
10.FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM. You can exchange a
specific dollar amount of shares from a Fund into another Fidelity Advisor
Fund on a monthly, quarterly or semiannual basis under the following
conditions:
1. The account from which the exchanges are to be processed must have a
minimum balance of $10,000.
2. The account into which the exchanges are to be processed must be an
existing account with a minimum balance of $1,000.
3. Both accounts must have identical registrations and taxpayer
identification numbers. The minimum amount that can be exchanged
systematically into a Fund is $100.
4. Systematic Exchanges will be processed at the NAV determined on the
transaction date, except that Systematic Exchanges into a Fidelity Advisor
Fund from eligible money market funds will be processed at the offering
price next determined on the transaction date (unless the shares were
acquired by exchange from another Fidelity Advisor Fund).
HOW TO SELL SHARES
You may sell (redeem) all or a portion of your shares on any day the New
York Stock Exchange (NYSE) is open, at the NAV next determined after the
Transfer Agent receives your request to sell. Orders to sell may be placed
by you in writing or by telephone or through your investment professional.
Orders to sell received by the Transfer Agent before 4:00 p.m. Eastern time
will receive that day's share price. For orders to sell placed through your
investment professional, it is the investment professional's responsibility
to transmit such orders to the Transfer Agent by 4:00 p.m. Eastern time for
you to receive that day's share price.
Once your shares are redeemed, a Fund normally will send the proceeds on
the next business day to the address of record. If making immediate payment
could adversely affect the Fund, the Fund may take up to seven days to pay
you. A Fund may withhold redemption proceeds until it is reasonably
satisfied that it has collected investments that were made by check (which
can take up to seven calendar days).
When the NYSE is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any
emergency circumstances as determined by the SEC to merit such action, a
Fund may suspend redemption or postpone payment dates for more than seven
days. The Transfer Agent requires additional documentation to sell shares
registered in the name of a corporation, agent or fiduciary or a surviving
joint owner. Call 1-800-221-5207 for specific requirements.
11.REDEMPTION REQUESTS BY TELEPHONE:
TO RECEIVE A CHECK. You may sell shares of a Fund having a value of
$100,000 or less from your account by calling the Transfer Agent.
Redemption proceeds must be sent to the address of record listed on the
account, and a change of address must not have occurred within the
preceding 60 days.
TO RECEIVE A WIRE. You may sell shares of a Fund and have the proceeds
wired to a pre-designated bank account. Wires will generally be sent
the next business day following the redemption of shares from your
account.
Telephone redemptions cannot be processed for Fidelity Advisor Fund
prototype retirement accounts where State Street Bank and Trust Company is
the custodian.
12.REDEMPTION REQUESTS IN WRITING. For your protection, if you sell shares
of a Fund having a value of more than $100,000, or if you are sending the
proceeds of a redemption of any amount to an address other than the address
of record listed on the account, or if you have requested a change of
address within the preceding 60 days, or if you wish to have the proceeds
wired to a non predesignated bank account, you must send a letter of
instruction signed by all registered owners with signature(s) guaranteed to
the Transfer Agent. A signature guarantee is a widely recognized way to
protect you by guaranteeing the signature on your request; it may not be
provided by a notary public. Signature guarantee(s) will be accepted from
banks, brokers, dealers, municipal securities dealers, municipal securities
brokers, government securities dealers, government securities brokers,
credit unions (if authorized under state law), national securities
exchanges, registered securities associations, clearing agencies and
savings associations.
13.REINSTATEMENT PRIVILEGE. If you have sold all or part of your Fund
shares you may reinvest an amount equal to all or a portion of the
redemption proceeds in the Fund, or in any of the other Fidelity Advisor
Funds, at the NAV next determined after receipt of your investment order,
provided that such reinvestment is made within 30 days of redemption. You
must reinstate your shares into an account with the same registration. This
privilege may be exercised only once by a shareholder with respect to a
Fund and certain restrictions may apply.
14.FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM. If you own shares
of a Fund worth $10,000 or more, you may periodically have proceeds sent
automatically from your account to you, to a person named by you, or to
your bank checking account. Your Systematic Withdrawal Program payments are
drawn from share redemptions. If Systematic Withdrawal Program redemptions
exceed distributions earned on your shares, your account eventually may be
exhausted. Since a sales charge is applied on new shares you buy, it is to
your disadvantage to buy shares while also making systematic redemptions.
You may obtain information about the Systematic Withdrawal Program by
contacting your investment professional.
15.CHECKWRITING SERVICE. Short Fixed-Income Fund offers a check-writing
service ($500 minimum) to allow the redemption of shares from your account.
Refer to the account application or the SAI and complete the attached
signature card. Upon receipt of the properly completed account application
and signature card, the Fund will provide checks. If you redeem by check
from the Fund and the amount of the check is greater than the value of your
account, your check will be returned to you and you may be subject to
additional charges.
DISTRIBUTION OPTIONS
When you fill out your account application, you can choose from four
Distribution Options:
1. REINVESTMENT OPTION. Dividends and capital gain distributions will be
automatically reinvested in additional shares of a Fund. If you do not
indicate a choice on your account application, you will be assigned this
option.
2. INCOME-EARNED OPTION. Capital gain distributions will be automatically
reinvested, but a check will be sent for each dividend distribution.
3. CASH OPTION. A check will be sent for each dividend and capital gain
distribution.
4. DIRECTED DIVIDENDS PROGRAM. Dividends and capital gain distributions
will be automatically invested in another identically registered Fidelity
Advisor Fund.
You may change your Distribution Option at any time by notifying the
Transfer Agent in writing. Distribution checks for fixed-income funds will
be mailed no later than seven days after the last day of the month. On the
day a Fund goes ex-dividend, the amount of the distribution is deducted
from its share price. Reinvestment of distributions will be made at that
day's NAV. If you select option 2 or 3 and the U.S. Postal Service
cannot deliver your checks, or if your checks remain uncashed for six
months, distribution checks will be reinvested in your account at the
current NAV and your election may be converted to the Reinvestment
Option.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. The Funds distribute substantially all of their net
investment income and capital gains, if any, to shareholders each year
pursuant to the following schedule. Each Fund may pay capital gains in
December. In addition, Equity Portfolio Growth, Equity Portfolio Income,
Limited Term Bond and Limited Term Tax-Exempt may pay capital gains in
January as well.
Equity Portfolio Growth pays net investment income in January and December;
Overseas, Growth Opportunities, Global Resources, and Strategic
Opportunities pay in December; High Yield, Limited Term Bond, Government
Investment, Short Fixed-Income, High Income Municipal, and Limited Term
Tax-Exempt declare dividends daily and pay monthly; and Equity Portfolio
Income and Income & Growth declare dividends in March, June,
September, and December and pay the following month .
16.CAPITAL GAINS. You may realize a gain or loss when you sell (redeem) or
exchange shares. For most types of accounts, a Fund will report the
proceeds of your redemptions to you and the IRS annually. However, because
the tax treatment also depends on your purchase price and your personal tax
position, YOU SHOULD KEEP YOUR REGULAR ACCOUNT STATEMENTS to use in
determining your tax.
17."BUYING A DIVIDEND." On the record date for a distribution from a Fund,
the Fund's share price is reduced by the amount of the distribution. If you
buy shares just before the record date (buying a dividend), you will pay
the full offering price for the shares, and then receive a portion of the
price back as a taxable distribution.
18.FEDERAL TAXES. Distributions from each Fund's income and short-term
capital gains are taxed as dividends, and long-term capital gain
distributions are taxed as long-term capital gains. Gains on the
sale of tax-free bonds results in a taxable distribution. Short-term
capital gains and a portion of the gain on bonds purchased at a
discount are taxed as dividends. Distributions are taxable when they
are paid, whether you take them in cash or reinvest them in additional
shares, except that distributions declared in December and paid in January
are taxable as if paid on December 31. Each Fund will send you a tax
statement by January 31 showing the tax status of the distributions you
received in the past year. A copy will be filed with the Internal Revenue
Service (IRS).
High Income Municipal and Limited Term Tax-Exempt may invest in municipal
obligations whose interest is subject to the federal alternative minimum
tax for individuals (AMT bonds). To the extent that the Funds invest in AMT
bonds, individuals who are subject to the AMT will be required to report a
portion of the Fund's dividends as a "tax-preference item" in determining
their federal tax. Federally tax-free interest earned by the Funds is
federally tax-free when distributed as income dividends. During the most
recent fiscal year ended, 100% of the income dividends for High Income
Municipal and Limited Term Tax-Exempt were free from federal tax. If the
Funds earn taxable income from any of their investments, it will be
distributed as a taxable dividend. Some of the Funds may be eligible
for the dividends-received deduction for corporations.
If a Fund has paid withholding or other taxes to foreign governments during
the year, the taxes will reduce the Fund's dividends but will be included
in the taxable income reported on your tax statement. You may be able to
claim an offsetting tax credit or itemized deduction for foreign taxes paid
by a Fund. Your tax statement will show the amount of foreign tax for which
a credit or deduction may be available.
STATE AND LOCAL TAXES. Mutual fund dividends from most U.S. government
securities generally are free from state and local income taxes. However,
certain types of securities, such as repurchase agreements and certain
agency backed securities, may not qualify for the government interest
exemption on a state-by-state basis. GNMA and other mortgage backed
securities are other notable exceptions in many states. Some states may
impose intangible property taxes. You should consult your own tax advisor
for details and up-to-date information on the tax laws in your state.
19.OTHER TAX INFORMATION. In addition to federal taxes, you may be subject
to state or local taxes on your investment, depending on the laws in your
area. Because some states exempt their own municipal obligations from tax,
you will receive tax information each year showing how High Income
Municipal and Limited Term Tax-Exempt allocated its investments by state.
When you sign your account application, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a Fund to
withhold 31% of your taxable distributions and redemptions.
INVESTMENT POLICIES
Further information relating to the types of securities in which each Fund
may invest and the investment policies of each Fund in general are set
forth in the Appendix to this Prospectus and in each Fund's SAI.
FMR will use its extensive research facilities in addition to
considering the ratings of Nationally Recognized Statistical Rating
Organizations (NRSROs) in selecting investments for the Funds.
Unrated securities are not necessarily of lower quality than rated
securities, but they may not be attractive to as many buyers. This credit
analysis includes consideration of the economic feasibility, the financial
condition of the issuer with respect to liquidity, cash flow and political
developments that may affect credit quality. Since the risk of default is
higher for lower-quality obligations, FMR's research and analysis are an
integral part of choosing a Fund's securities. Through portfolio
diversification and careful credit analysis, FMR can reduce risk, although
there can be no assurance that losses will not occur. FMR also considers
trends in the economy, in geographic areas, in various industries, and in
the financial markets.
EQUITY FUNDS. Equity Funds invest mainly in common stock and other equity
securities in search of growth or a combination of growth and
income. Their performance depends heavily on stock market conditions
in the U.S. and abroad, and can also be affected by changes in
interest rates or other economic conditions. Investments in Equity
Funds are more suitable for investors who take a long-term approach
to investing.
FIDELITY ADVISOR OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities. The Fund defines foreign securities as
securities of issuers whose principal activities are outside of the United
States. Normally, at least 65% of the Fund's total assets will be invested
in securities of issuers from at least three different countries outside of
North America (the U.S., Canada, Mexico, and Central America). The Fund
expects to invest most of its assets in securities of issuers located in
developed countries in these general geographic areas: The Americas (other
than the U.S.), the Far East and the Pacific Basin, and Western Europe. In
determining whether a company's or organization's principal activities are
in a particular region, FMR will look at such factors as the location of
assets, personnel, sales, and earnings.
FMR expects that opportunities for capital growth will come most often from
common stock and other equity securities, and therefore, expects that
equity securities will account for the majority of the Fund's investments.
However, the Fund also may find opportunities for capital growth from debt
securities of any quality or maturity by reason of anticipated changes in
such factors as interest rates, currency relationships, or the credit
standing of individual issuers. The Fund will not consider dividend income
as a primary factor in choosing securities, unless FMR believes the income
will contribute to the securities' growth potential.
When allocating the investments of the Fund among geographic regions and
individual countries, and among assets denominated in U.S. and foreign
currencies, FMR considers various factors, such as prospects for relative
economic growth among countries, regions or geographic areas; expected
levels of inflation; government policies influencing business conditions;
and the outlook for currency relationships. Although the Fund has the
ability under normal conditions to invest up to 35% of its total assets in
the U.S., FMR currently intends to manage the Fund to be as fully invested
outside the U.S. as is practicable in light of the Fund's cash flow and
cash needs.
The equity securities in which the Fund may invest include common stocks of
companies or closed-end investment companies, securities such as warrants
or rights that are convertible into common stock, preferred stocks, and
depositary receipts for those securities.
The Fund may invest in debt securities of any type of issuer, including
governments and governmental entities (including supranational
organizations such as the World Bank) as well as corporations and other
business organizations. The Fund has no limitation on the quality of debt
securities in which it may invest. The Fund may invest in lower-quality,
high-yielding debt securities (commonly referred to as "junk bonds"),
although it intends to limit its investments in these securities to 5% of
its assets. FMR may invest a portion of the Fund's assets in high-quality,
short-term debt securities, bank deposits and money market instruments
(including repurchase agreements) denominated in U.S. dollars or foreign
currencies. When market conditions warrant, FMR can make substantial
temporary defensive investments in U.S. government securities or
investment-grade obligations of companies incorporated in, and having
principal business activities in, the U.S.
The Fund may purchase or engage in indexed securities, illiquid
investments, loans and other direct debt instruments, options and futures
contracts, repurchase agreements and securities loans, restricted
securities, and swap agreements.
CONSIDERATIONS IN INVESTING IN SHARES OF OVERSEAS FUND:
Investing outside the U.S. involves different opportunities and different
risks from U.S. investments. FMR believes that it may be possible to obtain
significant returns from a portfolio of foreign investments, or a
combination of foreign investments and U.S. investments, and to achieve
increased diversification in comparison to a portfolio invested solely in
U.S. securities. By including international investments in your investment
portfolio, you may gain increased diversification by combining securities
from various countries and geographic areas that offer different investment
opportunities and are affected by different economic trends. At the same
time, these opportunities and trends involve risks that may not be
encountered with U.S. investments.
International investing in general may involve greater risks than U.S.
investments. There is generally less publicly available information about
foreign issuers, and there may be less government regulation and
supervision of foreign stock exchanges, brokers, and listed companies.
There may be difficulty in enforcing legal rights outside the U.S. Foreign
companies generally are not subject to uniform accounting, auditing, and
financial reporting standards, practices, and requirements comparable to
those that apply to U.S. companies. Security trading practices abroad may
offer less protection to investors such as the Fund. Settlement of
transactions in some foreign markets may be delayed or may be less frequent
than in the U.S., which could affect the liquidity of the Fund.
Additionally, in some foreign countries, there is the possibility of
expropriation or confiscatory taxation; limitations on the removal of
securities, property, or other assets of the Fund; political or social
instability; or diplomatic developments which could affect U.S. investments
in foreign countries. FMR will take these factors into consideration in
managing the Fund's investments.
The Fund may invest a portion of its assets in developing countries, or in
countries with a new or developing capital market. The considerations noted
above are generally intensified for these investments. These countries may
have relatively unstable governments, economies based on only a few
industries, and securities markets that trade a small number of securities.
Securities of issuers located in these countries tend to have volatile
prices and may offer significant potential for loss as well as gain.
FOREIGN CURRENCIES. The value of the Fund's investments, and the value of
dividends and interest earned by the Fund, may be significantly affected by
changes in currency exchange rates. Some foreign currency values may be
volatile, and there is the possibility of governmental controls on currency
exchange or governmental intervention in currency markets, which could
adversely affect the Fund. Although FMR may attempt to manage currency
exchange rate risks, there is no assurance that FMR will do so at an
appropriate time or that FMR will be able to predict exchange rates
accurately. For example, if FMR increases the Fund's exposure to a foreign
currency, and that currency's value subsequently falls, FMR's currency
management may result in increased losses to the Fund. Similarly, if FMR
hedges the Fund's exposure to a foreign currency, and that currency's value
rises, the Fund will lose the opportunity to participate in the currency's
appreciation.
CURRENCY MANAGEMENT. The relative performance of foreign currencies is an
important factor in the Fund's performance. FMR may manage the Fund's
exposure to various currencies to take advantage of different yield, risk,
and return characteristics that different currencies can provide for U.S.
investors.
To manage exposure to currency fluctuations, the Fund may enter into
currency exchange contracts (agreements to exchange one currency for
another at a future date) or currency swap agreements, buy and sell options
and futures contracts relating to foreign currencies, and purchase
securities indexed to foreign currencies. The Fund will use currency
exchange contracts in the normal course of business to lock in an exchange
rate in connection with purchases and sales of securities denominated in
foreign currencies. Other currency management strategies allow FMR to hedge
portfolio securities, to shift investment exposure from one currency to
another, or to attempt to profit from anticipated declines in the value of
a foreign currency relative to the U.S. dollar. There is no limitation on
the amount of the Fund's assets that may be committed to currency
management strategies.
FIDELITY ADVISOR EQUITY PORTFOLIO GROWTH seeks to achieve capital
appreciation by investing primarily in the common and preferred stock, and
securities convertible into the common stock, of companies with above
average growth characteristics.
As a general rule, the Fund will invest in the securities of companies
whose growth in the areas of earnings or gross sales measured either in
dollars or in unit volume (either on an absolute or percentage basis) may
exceed that of the average of the companies whose securities are included
in the S&P 500. These securities generally command high multiples
(price/earnings ratios) in the stock markets over time. Above average
growth characteristics are most often associated with companies in new and
emerging areas of the economy but occasionally can be found in the stronger
companies of more mature and even declining industries. The Fund will,
therefore, be invested in the securities of smaller, less well-known
companies except when FMR believes that opportunities for above-average
growth are presented by larger, more mature companies which have undergone
reformation and revitalization or possess a strong position in relation to
the market as a whole.
The market price of securities with above average growth characteristics
often can experience a more sudden and more dramatic downward reaction to
negative news than is the case with securities carrying a lower market
multiple. This can be particularly true for companies with a narrow product
line or whose securities are relatively thinly-traded, characteristics
which are common to smaller, less well-known companies.
As a non-fundamental policy, at least 65% of the total assets of the Fund
normally will be invested in common and preferred stock. As a
non-fundamental policy, the Fund may invest up to 35% of its total assets
in debt obligations of all types and quality, a high percentage of which
are expected to be convertible into common stocks. The Fund may invest in
lower-quality, high yielding debt securities (commonly referred to as "junk
bonds" although as a non-fundamental policy it intends to limit its
investments in these securities to 35% of its assets.). The Fund also may
purchase or engage in foreign investments, indexed securities, illiquid
investments, loans and other direct debt instruments, options and futures
contracts, repurchase agreements and securities loans restricted
securities, swap agreements, and warrants.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND seeks to provide capital growth
by investing primarily in common stocks and securities convertible into
common stocks. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in securities of companies that FMR believes have
long-term growth potential. Growth can be considered either appreciation of
the security itself or growth of the company's earnings or gross sales.
Accordingly, these securities will often pay little, if any, income, which
will be entirely incidental to the objective of capital growth.
The Fund also has the ability to purchase other securities, such as
preferred stock and bonds that may produce capital growth. Securities may
be of all types or quality. The Fund may invest in lower-quality,
high-yielding debt securities (commonly referred to as "junk bonds"),
although the Fund currently intends to limit its investments in these
securities to 10% of its assets.
The Fund may purchase foreign investments of all types without limitation
and may enter into foreign forward currency exchange contracts for the
purpose of managing exchange rate risks. The Fund may purchase or engage in
indexed securities, illiquid investments, loans and other direct debt
instruments, options and futures contracts, repurchase agreements and
securities loans, restricted securities, reverse repurchase agreements,
swap agreements, and warrants.
The Fund may make substantial temporary investments in high-quality debt
securities and money market instruments, including commercial paper,
obligations of banks or the U.S. government and repurchase agreements for
defensive purposes when, in FMR's judgment, economic or market conditions
warrant.
FIDELITY ADVISOR GLOBAL RESOURCES FUND seeks long-term growth of capital
and protection of the purchasing power of shareholders' capital by
investing primarily in securities of foreign and domestic companies that
own or develop natural resources, or supply goods and services to such
companies, or in physical commodities. Natural resources include precious
metals, ferrous and nonferrous metals, strategic metals, hydrocarbons,
chemicals, forest products, real estate, food products, and other basic
commodities which, historically, have been produced and marketed profitably
during periods of significant inflation.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in securities of foreign and domestic companies that own or develop
natural resources, or supply goods and services to such companies, or in
physical commodities. The remainder of the Fund may be invested in other
investments including debt securities of any kind including asset-backed
securities, obligations of foreign governments or their political
subdivisions, foreign companies and supranational organizations, and common
and preferred stocks of corporations not necessarily engaged in natural
resources. FMR will seek securities that are priced relative to the
intrinsic value of the relevant natural resource or that are issued by
companies which are positioned to benefit during particular portions of the
economic cycle. Accordingly, the Fund may shift its emphasis from one
natural resource industry to another depending upon prevailing trends or
developments. For example, when FMR anticipates significant economic,
political or financial pressures or major dislocations in the foreign
currency exchange markets, the Fund may, in seeking to protect the
purchasing power of shareholders' capital, invest a substantial portion of
its assets in companies that explore for, extract, process, or deal in
precious metals, and/or invest in precious metals themselves. The Fund
expects to invest a majority of its assets to be invested in securities of
companies that have their principal business activities in at least three
different countries (including the U.S.).
A company will be deemed to have substantial ownership of, or activities
in, natural resources if, at the time of the Fund's acquisition of its
securities, at least 50% of the company's assets are involved in, either
directly or through subsidiaries, exploring, mining, refining, processing,
transporting, fabricating, dealing in, or owning natural resources. Natural
resources include precious metals (such as gold, palladium, platinum and
silver), ferrous and nonferrous metals (such as iron, aluminum and copper),
strategic metals (such as uranium and titanium), hydrocarbons (such as
coal, oil and natural gases), chemicals, forest products, real estate, food
products and other basic commodities which, historically, have been
produced and marketed profitably during periods of rising inflation.
The Fund may purchase foreign securities of all types without limitation
and may enter into forward foreign currency exchange contracts for the
purpose of managing exchange rate risks. The Fund may invest in
lower-quality, high-yielding debt securities (commonly referred to as "junk
bonds''), rated as low as CCC by Standard & Poor's Corporation
(S&P) or Caa by Moody's Investors Service, Inc. (Moody's). The Fund
does not currently intend to invest more than 5% of its net assets in debt
securities rated below BBB or Bbb. Debt securities ordinarily will make up
a relatively small portion of the Fund's assets.
The Fund may purchase ADRs and EDRs. The Fund may purchase indexed
securities, illiquid investments, loans and other direct debt instruments,
repurchase agreements and securities loans, restricted securities, and
warrants. The Fund may also purchase securities on a delayed-delivery
basis.
As a fundamental policy, the Fund is authorized to invest up to 50% of its
assets in physical commodities. In order to permit the sale of the Fund's
shares in certain states, the Fund has adopted a non-fundamental policy of
limiting investments in physical commodities to precious metals (i.e.,
gold, palladium, platinum and silver) and to not more than 25% of the
Fund's total assets. Investments in other types of physical commodities
could present concerns, including practical problems of delivery, storage
and maintenance, possible illiquidity, the unavailability of accurate
market valuations and increased expenses. When a precious metal is
purchased, FMR currently intends that it will be only in a form that is
readily marketable and that it will be delivered to and stored with a
qualified U.S. bank. Investments in bullion earn no investment income and
may involve higher custody and transaction costs than investments in
securities. The Fund may receive no more than 10% of its yearly income from
gains resulting from selling metals or any other physical commodity. The
Fund may be required, therefore, either to hold its metals or sell them at
a loss, or to sell its portfolio securities at a gain, when it would not
otherwise do so for investment reasons. Precious metals, at times, have
been subject to substantial price fluctuations over short periods of time
and may be affected by unpredictable international monetary and political
policies such as currency devaluations or revaluations, economic and social
conditions within a country, trade imbalances, or trade or currency
restrictions between countries.
Since the Fund may invest in physical commodities and utilize investment
techniques which are subject to market fluctuations and/or foreign market
risk, an investment in the Fund may be considered more speculative than an
investment in other funds that seek capital growth. The value of equity
securities of natural resource companies will fluctuate pursuant to market
conditions generally, as well as the market for the particular natural
resource in which the issuer is involved. In addition, the values of
natural resources are subject to numerous factors, including nature and
international politics.
During periods when, in FMR's opinion, a temporary defensive posture in the
market is appropriate, the Fund may invest without limitation in cash or
high-quality money market instruments including, but not limited to,
certificates of deposit, commercial paper and obligations issued by the
U.S. government or any of its agencies or instrumentalities.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND seeks capital appreciation
by investing primarily in securities of companies believed by FMR to
involve a "special situation." The term "special situation" refers to
FMR's identification of an unusual, and possibly non-repetitive,
development taking place in a company or a group of companies in an
industry.
A s a non-fundamental policy, the Fund normally will invest at least
65% of its assets in companies involving a special situation. A special
situation may involve one or more of the following characteristics:
(bullet) A technological advance or discovery, the offering of a new or
unique product or service, or changes in consumer demand or consumption
forecasts.
(bullet) Changes in the competitive outlook or growth potential of an
industry or a company within an industry, including changes in the scope or
nature of foreign competition or the development of an emerging industry.
(bullet) New or changed management, or material changes in management
policies or corporate structure.
(bullet) Significant economic or political occurrences abroad, including
changes in foreign or domestic import and tax laws or other regulations.
(bullet) Other events, including natural disasters, favorable litigation
settlements, or a major change in demographic patterns.
In seeking capital appreciation, the Fund also may invest in securities of
companies not involving a special situation, but which are companies with
valuable fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential.
FMR intends to invest primarily in common stocks and securities that are
convertible into common stocks; however, it also may invest in debt
securities of all types and quality if FMR believes that investing in these
securities will result in capital appreciation. As a non-fundamental
investment policy, the Fund may invest in lower-quality, high-yielding debt
securities (commonly referred to as "junk bonds"). The Fund currently
intends to limit its investments in these securities to 35% of its assets.
The Fund also may invest in unrated securities. The Fund may invest up to
30% of its assets in foreign investments of all types and may enter into
forward foreign currency exchange contracts for the purpose of managing
exchange rate risks. The Fund may purchase or engage in indexed securities,
illiquid instruments, loans and other direct debt instruments, options and
futures contracts, repurchase agreements and securities loans, restricted
securities, swap agreements, warrants, and zero coupon bonds.
The Fund expects to be fully invested under most market conditions. The
Fund may make substantial temporary investments in high-quality debt
securities for defensive purposes when, in FMR's judgment, a more
conservative approach to investment is desirable.
An investment in the Fund may be considered more speculative than an
investment in other funds that seek capital appreciation. There are greater
risks involved in investing in securities of smaller companies rather than
companies operating according to established patterns and having longer
operating histories. The Fund may invest in securities in which other
investors have not shown significant interest or confidence, and which are
subject to stock market fluctuations. Larger well-established companies
experiencing a special situation may involve, to a certain extent, breaks
with past experience, which may pose greater risks. There are also greater
risks involved in investing in securities of companies that are not
currently favored by the public but show potential for capital
appreciation.
FIDELITY ADVISOR EQUITY PORTFOLIO INCOME seeks to obtain reasonable income
from a portfolio consisting primarily of income-producing equity
securities. The Fund seeks a yield from dividend and interest income which
exceeds the composite dividend yield on securities comprising the S&P
500. In addition, consistent with the primary objective of obtaining
reasonable income, in managing its portfolio, the Fund will consider the
potential for achieving capital appreciation.
It is the policy of the Fund that at least 65% of its total assets normally
will be invested in income-producing equity securities. For purposes of
this policy, equity securities are defined as common stocks and preferred
stocks.
The balance of the Fund will tend to be invested in debt obligations, a
high percentage of which are expected to be convertible into common stocks.
As a non-fundamental policy, the Fund may invest in lower-quality
high-yielding debt securities (commonly referred to as "junk bonds"),
although it currently intends to limit its investments in these securities
to 35% of its assets. However, the Fund does not intend to invest in
securities of companies without proven earnings and/or credit histories.
The Fund may purchase and sell stock index futures and options to manage
cash flow and to attempt to remain fully invested instead of, or in
addition to, buying and selling stocks. Additionally, the Fund may purchase
or engage in foreign investments, indexed securities, illiquid investments,
loans and other direct debt instruments, repurchase agreements and
securities loans, restricted securities, short sales, swap agreements, and
warrants.
Because of the income considerations, investors should not expect capital
appreciation comparable to the appreciation which could be achieved by
funds whose primary objective is capital appreciation. While the investment
portfolio will not mirror the stocks in the S&P 500 (such a fund is
commonly referred to as an index fund), the yield on the overall investment
portfolio generally will increase or decrease from year to year in
accordance with market conditions and in relation to the changes in yields
of the stocks included in the S&P 500.
The Fund may make temporary investments in securities such as
investment-grade bonds or short-term notes for defensive purposes.
FIDELITY ADVISOR INCOME & GROWTH FUND seeks both income and growth of
capital by investing in a diversified portfolio of equity and fixed-income
securities with income, growth of income and capital appreciation
potential.
The Fund will invest in equity securities, convertible securities,
preferred and common stocks paying any combination of dividends and capital
gains and in fixed-income securities. The Fund also may buy securities that
are not providing dividends but offer prospects for growth of capital or
future income. The proportion of the Fund's assets invested in each type of
security will vary from time to time in accordance with FMR's assessment of
economic conditions.
In selecting securities for the Fund, FMR will consider such factors as the
company's financial strength, its outlook for increased dividend or
interest payments (defined herein as "growth of income") and capital gains.
In addition, industry factors and overall economic conditions may be
considered. The Fund may invest in equity securities of some smaller, more
rapidly growing companies. Investing in smaller, less well-known companies,
especially those that have a narrow product line or are thinly traded,
often involves greater risk than investing in established companies with
proven track records. In selecting fixed-income securities for the Fund
(such as bonds, notes, mortgage securities, convertible securities, and
short-term obligations such as bankers' acceptances, certificates of
deposit, and commercial paper), FMR will consider several factors,
including maturity, quality and expected yield.
The Fund may invest in lower-quality high-yielding debt securities
(commonly referred to as "junk bonds"). The Fund currently intends to limit
its investments in these securities to 35% of its assets. The Fund also may
invest in foreign investments, currency exchange contracts, indexed
securities, illiquid instruments, loans and other direct debt instruments,
options and futures contracts, repurchase agreements and securities loans,
restricted securities, swap agreements, warrants, and zero coupon bonds.
The Fund may, for temporary defensive purposes, invest without limit in
short-term securities.
FIXED-INCOME FUNDS. Fixed-Income Funds invest primarily in debt
securities (e.g., bonds, debentures, notes and similar obligations).
The share value of fixed-income funds tend to move inversely with
changes in prevailing interest rates. Shorter-term bonds are less
sensitive to interest rate changes, but longer-term bonds generally offer
higher yields. It also is important to note that high-yielding,
lower-quality bonds involve greater risks, because there is a greater
possibility of a financial reversal affecting the issuer's ability to pay
interest and principal on time. Share value and yield are not guaranteed
and will fluctuate based on credit quality and changes in interest
rates.
FIDELITY ADVISOR HIGH YIELD FUND seeks a combination of a high level of
income and the potential for capital gains by investing in a diversified
portfolio consisting primarily of high-yielding, fixed-income and zero
coupon securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
As a non-fundamental policy, the Fund normally will invest at least 65% of
its assets in high-yielding, income producing debt securities and preferred
stocks, including convertible and zero coupon securities. The Fund may
invest all or a substantial portion of its assets in lower-quality debt
securities (commonly referred to as "junk bonds"). Please refer to "The
Risks of Lower-Quality Debt Securities". In addition, the Fund also may
invest in government securities, securities of any state or any of their
subdivisions, agencies or instrumentalities, and securities of foreign
issuers, including securities of foreign governments. The Fund may invest
up to 35% of its assets in equity securities, including common stocks,
warrants and rights.
Debt instruments include securities such as bonds, notes, convertible
bonds, and mortgage-backed or asset-backed securities; commercial paper and
other money market instruments, including repurchase agreements; and loans,
trade claims, and similar instruments representing indebtedness of a
corporate borrower. These instruments may provide for interest payments in
cash or in kind, may pay no interest, or may be in default, and may have
warrants attached or otherwise include rights to purchase common stocks.
The Fund may purchase debt instruments in public offerings or through
private placements. The Fund has no specific limitations on the maturity or
credit ratings of the debt instruments in which it invests.
The Fund may enter into forward foreign currency contracts and may purchase
or engage in foreign investments, indexed securities, illiquid investments,
loans and other direct debt instruments, options and futures contracts,
repurchase agreements and securities loans, restricted securities, reverse
repurchase agreements, and swap agreements.
RISKS OF LOWER-QUALITY TAXABLE DEBT SECURITIES
Lower-quality debt securities usually are defined as securities rated Ba or
lower by Moody's or BB or lower by S&P. Lower-rated debt securities are
considered speculative and involve greater risk of loss than higher-rated
debt securities, and are more sensitive to changes in the issuer's capacity
to pay. This is an aggressive approach to income investing.
The 1980s saw a dramatic increase in the use of lower-rated debt securities
to finance highly leveraged corporate acquisitions and restructurings. Past
experience may not provide an accurate indication of the future performance
of lower-rated debt securities, especially during periods of economic
recession. In fact, from 1989 to 1991, the percentage of lower-rated debt
securities that defaulted rose significantly above prior levels, although
the default rate decreased in 1992.
Lower-rated debt securities may be thinly traded, which can adversely
affect the prices at which these securities can be sold and can result in
high transaction costs. If market quotations are not available, lower-rated
debt securities will be valued in accordance with standards set by the
Board of Trustees, including the use of outside pricing services. Judgment
plays a greater role in valuing lower-rated debt securities than securities
for which more extensive quotations and last sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-rated debt
securities, and the Fund's ability to dispose of these securities.
The market prices of lower-rated debt securities may decline significantly
in periods of general economic difficulty, which may follow periods of
rising interest rates. During an economic downturn or a prolonged period of
rising interest rates, the ability of issuers of lower-rated debt to
service their payment obligations, meet projected goals, or obtain
additional financing may be impaired.
The Fund may choose, at its own expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the interest of Fund shareholders.
The considerations discussed above for lower-rated debt securities also
apply to lower-quality, unrated debt instruments of all types, including
loans and other direct indebtedness of businesses with poor credit
standing. Unrated debt instruments are not necessarily of lower-quality
than rated securities, but they may not be attractive to as many buyers.
The Fund relies more on FMR's credit analysis when investing in debt
instruments that are unrated. Please refer to pages 31 and 32 for a
discussion of Moody's and S&P ratings.
FIDELITY ADVISOR LIMITED TERM BOND FUND seeks to provide a high rate of
income through investment in high- and upper-medium grade fixed-income
obligations, as follows:
(I) Corporate obligations which are rated AAA, AA, or A by S&P, or Aaa,
Aa, or A by Moody's;
(II) Obligations issued or guaranteed as to interest and principal by the
government of the U.S., or any agency or instrumentality thereof;
(III) Obligations (including certificates of deposit and bankers'
acceptances) of U.S. banks which at the date of investment have capital
gains, surplus, and undivided profits (as of the date of their most
recently published annual financial statements) in excess of $100,000,000;
(IV) Commercial paper which at the date of investment is rated A-1 or A-2
by S&P or Prime-1 or Prime-2 by Moody's or, if not rated, is issued by
companies which at the date of investment have an outstanding debt issue
rated AAA, AA, or A by S&P or Aaa, Aa, or A by Moody's; and
(V) Such other fixed-income instruments as the Board of Trustees, in its
judgment, deems to be of comparable quality to those enumerated above.
Instruments in which the Fund may invest include asset-backed securities,
collateralized mortgage obligations, convertible securities, loans and
other direct debt instruments, mortgage-backed securities, and zero coupon
securities.
FMR's standards for determining high- and upper-medium grades are
essentially the same as those described by S&P and Moody's as
characteristic of their ratings of A and above. Such instruments have
strong protection of principal and interest payments. In addition to
reliance on S&P's or Moody's ratings, FMR also performs its own credit
analysis. The Fund also may invest in unrated instruments, and may at times
purchase instruments rated below A if FMR judges them to be of comparable
quality to those rated A or better. Currently, the Fund does not intend to
invest in debt obligations rated below BBB. Investment-grade bonds are
generally of medium to high quality. Those rated in the lower end of the
category (Baa/BBB), however, may possess speculative characteristics and
may be more sensitive to economic changes and changes in the financial
condition of issues.
In addition, the Fund may seek capital appreciation when consistent with
its primary objective. In seeking capital appreciation, FMR will select
securities for the Fund based on its judgment as to economic and market
conditions and the prospects for interest rate changes.
The Fund may purchase or engage in foreign investments, indexed securities,
illiquid investments, loans and other direct debt instruments, options and
futures contracts, repurchase agreements and securities loans, restricted
securities, and swap agreements. The Fund also may engage in reverse
repurchase agreements for temporary or emergency purposes and not for
investment purposes.
The Fund will maintain a dollar-weighted average maturity of 10 years or
less. As of November 30, 1993, its average maturity was 8.12 years. Based
on FMR's assessment of interest rate trends, generally, the average
maturity will be shortened when interest rates are expected to rise and
lengthened up to 10 years when interest rates are expected to decline.
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND seeks a high level of current
income by investing primarily in obligations issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities. Under normal
circumstances, as a non-fundamental policy at least 65% of the Fund's
assets will be invested in government securities.
The Fund invests primarily in obligations issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities (U.S. government
securities), including U.S. Treasury bonds, notes and bills, Government
National Mortgage Association mortgage-backed pass-through certificates
(Ginnie Maes) and mortgage-backed securities issued by the Federal National
Mortgage Association (Fannie Maes) or the Federal Home Loan Mortgage
Corporation (Freddie Macs). The U.S. government securities the Fund invests
in may or may not be fully backed by the U.S. government. The Fund may
enter into repurchase agreements involving any securities in which it may
invest and also may enter into reverse repurchase agreements. The Fund
considers "government securities" to include U.S. government securities
subject to repurchase agreements. The Fund is not restricted as to the
percentage of its assets that may be invested in any one type of U.S.
government security. The Fund may for temporary defensive purposes invest
without limit in U.S. government securities having a maturity of 365 days
or less. The Fund may invest in delayed-delivery transactions, options and
futures contracts, indexed securities, swap agreements and zero coupon
bonds. In seeking current income, the Fund also may consider the potential
for capital gain.
FIDELITY ADVISOR SHORT FIXED-INCOME FUND seeks to obtain a high level of
current income, consistent with preservation of capital, by investing
primarily in a broad range of investment-grade fixed-income securities.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in fixed-income securities. Where consistent with its investment
objective, the Fund will take advantage of opportunities to realize capital
appreciation.
The Fund normally will invest primarily in investment-grade fixed-income
securities of all types. Investment-grade fixed-income securities are
considered to be securities rated Baa or higher by Moody's or BBB or higher
by S&P, and unrated securities that are of equivalent quality in FMR's
opinion. The Fund may invest in lower-quality, high-yielding securities
(commonly referred to as "junk bonds"), as long as they are consistent with
the Fund's objective of obtaining a high level of current income consistent
with the preservation of capital. The Fund currently intends to limit its
investments in these securities to 35% of its assets. As a non-fundamental
policy, the Fund does not currently expect to invest in securities rated
lower than B by S&P or Moody's.
Fixed-income securities may include, in any proportion, bonds, notes, U.S.
government and government agency obligations, mortgage-related and
asset-backed securities, zero coupon securities, foreign securities,
indexed securities and convertible securities, and short-term obligations
such as certificates of deposit, repurchase agreements, bankers'
acceptances and commercial paper. The Fund also may purchase or engage in
illiquid investments, loans and other direct debt instruments, options and
futures contracts, restricted securities, and swap agreements.
In making investment decisions for the Fund, FMR will consider many factors
other than current yield, including the preservation of capital, the
potential for realizing capital appreciation, maturity and yield to
maturity. FMR will adjust the Fund's investments in particular securities
or in types of debt securities in response to its appraisal of changing
economic conditions and trends. FMR may sell securities in anticipation of
a market decline or purchase securities in anticipation of a market rise.
In addition, FMR may sell one security and purchase another security of
comparable quality and maturity to take advantage of what FMR believes to
be short-term differentials in market values or yield disparities. The Fund
may invest a portion of its assets in securities issued by foreign
companies and foreign governments, which may be less liquid or more
volatile than domestic investments. The Fund's investments, other than
those backed by the U.S. government, are subject to the ability of the
issuer to make payment at maturity.
The Fund will maintain a dollar-weighted maturity of three years or less.
The Fund may hold individual securities with remaining maturities of more
than three years, as long as the Fund's average maturity is three years or
less.
MUNICIPAL/TAX-EXEMPT FUNDS. Tax-exempt funds invest primarily in
municipal securities which are issued by state and local governments
and their agencies to raise money for various public purposes,
including general purpose financing for state and local governments
as well as financing for specific projects or public facilities.
Municipal securities may be backed by the full taxing power of a
municipality or by the revenues from a specific project or the credit of a
private organization. Some municipal securities are insured by private
insurance companies, while others may be supported by letters of credit
furnished by domestic or foreign banks. FMR monitors the financial
condition of parties (including insurance companies, banks, and
corporations) whose creditworthiness is relied upon in determining the
credit quality of securities the Funds may purchase.
Yields on municipal bonds, and therefore the yield of High Income Municipal
and Limited Term Tax-Exempt, depend on factors such as general market
conditions, interest rates, the size of a particular offering, the
maturities of the obligations and the quality of the issues. The ability of
the Funds to achieve their investment objectives is also dependent on the
continuing ability of the issuers of the municipal obligations in which the
Funds invest to meet their obligations for the payment of interest and
principal when due.
Bonds generally are considered to be interest rate sensitive, which means
that their values move inversely to interest rates. Long-term municipals
generally are more exposed to market fluctuations resulting from changes in
interest rates than are short-term municipals.
While the market for municipals is considered to be substantial, adverse
publicity and changing investor perceptions may affect the ability of
outside pricing services used by a Fund to value its portfolio securities
and the Fund's ability to dispose of lower-rated bonds. The outside pricing
services are consistently monitored to assure that securities are valued by
a method that the Board believes accurately reflects fair value. The impact
of changing investor perceptions may be especially pronounced in markets
where municipal securities are thinly traded.
The Funds' investments in municipal securities may include fixed, variable,
or floating rate general obligation and revenue bonds (including municipal
lease obligations and resource recovery bonds); zero coupon and
asset-backed securities; inverse floaters; tax, revenue, or bond
anticipation notes; and tax-exempt commercial paper. The Funds may buy or
sell securities on a when-issued or delayed-delivery basis (including
refunding contracts), and may purchase restricted securities. The Funds may
also buy and sell options and futures contracts.
Municipal obligations, including industrial development revenue bonds, are
issued by or on behalf of states, territories, and possessions of the U.S.
and the District of Columbia and their political subdivisions, agencies,
and instrumentalities.
Each Fund may from time to time invest more than 25% of its total assets in
securities whose revenue sources are from similar types of projects (e.g.,
education, electric utilities, health care, housing, transportation, or
water, sewer and gas utilities) or whose issuers share the same geographic
location. As a result, a Fund may be more susceptible to a single economic,
political or regulatory development than would a portfolio of bonds with a
greater variety of issuers. These developments include proposed legislation
or pending court decisions affecting the financing of such projects and
market factors affecting the demand for their services or products.
FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND seeks to provide a high current
yield by investing in a diversified portfolio of municipal obligations. It
is the policy of the Fund that under normal conditions at least 80% of its
net assets will be invested in municipal obligations whose interest is not
included in gross income for purposes of calculating federal income tax.
Interest from all or a portion of the Fund's municipal bonds may be a "tax
preference" item for some shareholders in determining their federal
alternative minimum tax. Stability and growth of principal also will be
considered when choosing securities.
Interest on some "private activity" municipal obligations is subject to the
federal alternative minimum tax AMT bonds. AMT bonds are municipal
obligations that benefit a private or industrial user or finance a private
facility. The Fund reserves the right to invest up to 100% of its assets in
AMT bonds.
The Fund may invest in municipal obligations which are rated in the medium
and lower rating categories of NRSROs (such as obligations rated Caa by
Moody's or CCC by S&P) or which are unrated, but judged by FMR,
pursuant to procedures established by the Board of Trustees, to meet the
quality standards of the Fund. Municipal obligations which are in the
medium and lower rating categories or which are unrated generally offer a
higher current yield than those offered by municipal obligations which are
in the higher rating categories. Since available yields and the yield
differential between higher and lower-rated obligations vary over time, no
specific level of income or yield differential can be assured. Lower-rated
bonds (those rated Ba/BB or lower) involve greater risk, including risk of
default.
The Fund also may purchase tax-exempt instruments that become available in
the future as long as FMR believes that their quality is equivalent to
those rated Caa or CCC or better by Moody's or S&P, respectively.
The Fund's yield depends in part on the quality of its investments.
Obligations rated investment grade or better (Baa/BBB or higher) generally
are of medium to high quality. These securities typically have moderate to
poor protection of principal and interest payments and have speculative
characteristics.
Unrated obligations may be either investment grade or lower quality, but
usually are not attractive to as many buyers. The Fund relies heavily on
FMR's credit analysis when purchasing unrated or lower-rated bonds.
While lower-rated bonds traditionally have been less sensitive to interest
rate changes than higher-rated investments, as with all bonds, the prices
of lower-rated bonds will be affected by interest rate changes. Economic
changes may affect lower-rated securities differently than other
securities. Lower-rated municipal bonds may be more sensitive to adverse
economic changes (including recession) in specific regions or localities or
among specific types of issuers. During an economic downturn or a prolonged
period of rising interest rates, issuers of lower-rated debt may have
problems servicing their debt, meeting projected revenue goals, or
obtaining additional financing. Periods of economic uncertainty and
interest rate changes may cause market price volatility for lower-rated
bonds and corresponding volatility in the Fund's share price.
During periods when, in FMR's opinion, a temporary defensive posture in the
market is appropriate, the Fund may invest without limitation in cash or in
obligations whose interest payments may be federally taxable. Taxable
obligations include, but are not limited to, certificates of deposit,
commercial paper, obligations issued by the U.S. government or any of its
agencies or instrumentalities, and repurchase agreements.
The Fund may purchase long-term municipals with maturities of 20 years or
more, which generally produce higher yields than short-term municipals. The
Fund also may purchase short-term municipal obligations in order to provide
for short-term capital needs. The average maturity of the Fund is currently
expected to be greater than 20 years. Since the Fund's objective is to
provide a high current yield, the Fund will purchase municipals with an
emphasis on income. FMR may vary the Fund's average maturity depending on
anticipated market conditions. Generally, the average maturity will be
shortened when interest rates are expected to rise and lengthened when
rates are expected to decline.
FIDELITY ADVISOR LIMITED TERM TAX-EXEMPT FUND seeks the highest level of
income exempt from federal income taxes that can be obtained consistent
with the preservation of capital, from a diversified portfolio of high
quality or upper-medium quality municipal obligations. Under normal
conditions, at least 80% of the Fund's annual income will be exempt from
federal income taxes and at least 80% of the Fund's net assets will be
invested in obligations having remaining maturities of 15 years or less.
The Fund will maintain a dollar-weighted average maturity of 10 years or
less.
The Fund will invest in municipal obligations which, in the judgment of
FMR, are high quality or at least upper-medium quality. The Fund's
standards for high quality and upper-medium quality obligations are
essentially the same as those described by Moody's in rating municipal
obligations within its three highest ratings of Aaa, Aa, and A and as those
described by S&P in rating such obligations within its three highest
ratings of AAA, AA and A. As a non-fundamental policy, the Fund will not
purchase a security rated by Moody's or S&P unless it has received at
least an A rating from either rating service.
The Fund may invest up to 20% of its total assets in municipal obligations
which are unrated by Moody's or S&P if, in the judgment of FMR, such
municipal obligations meet the standards of quality as set forth above.
Unrated bonds are not necessarily of lower quality and may have higher
yields than rated bonds, but the market for rated bonds is usually broader.
The Fund may engage in delayed delivery transactions and may purchase
restricted securities. The Fund also may purchase and sell futures
contracts and may purchase and write put and call options. The Fund may use
futures contracts and options to hedge a portion of its investments against
changes in value, or as an alternative to purchasing or selling actual
securities.
The Fund may invest up to 25% of its total assets in a single issuer's
securities. The Fund may invest any portion of its assets in industrial
revenue bonds (IRBs) backed by private issuers, and may invest up to 25% of
its total assets in IRBs related to a single industry.
The Fund currently does not intend to invest in taxable obligations;
however, consistent with that portion of its investment objective concerned
with the preservation of capital, from time to time the Fund may invest a
portion (normally not to exceed 20%) of its net assets on a temporary basis
in fixed-income obligations whose interest is subject to federal income
tax. These taxable obligations may include repurchase agreements. The Fund
does not currently intend to invest in AMT bonds.
INVESTMENT LIMITATIONS
Each Fund has adopted the following investment limitations designed to
reduce investment risk. The policies and limitations discussed below, and
in the Appendix beginning on page , are considered at the time of purchase.
With the exception of each Fund's borrowing policy, the sale of portfolio
securities is not required in the event of a subsequent change in
circumstances.
DIVERSIFICATION: These limitations do not apply to U.S. government
securities and are fundamental.
(bullet) Equity Portfolio Growth and Strategic Opportunities each may
not purchase a security if, as a result, more than 5% of its total assets
would be invested in the securities of any issuer;
(bullet) With respect to 75% of its total assets, each other Fund may
not purchase a security if, as a result, more than 5% of its total assets
would be invested in the securities of any issuer.
(bullet) Each Fund may not purchase a security if, as a result, it
would hold more than 10% of the outstanding voting securities of any issuer
(except that Overseas, Growth Opportunities, Equity Portfolio Income,
Income & Growth, High Yield, Government Investment, and Short
Fixed-Income each may invest up to 25% of its total assets without regard
to this limitation).
(bullet) Limited Term Tax-Exempt may not purchase the securities of any
issuer if, as a result, more than 25% of its total assets would be invested
in industrial development bonds whose issuers are in any one industry.
(bullet) Each other Fund may not purchase the securities of any issuer
if, as a result, more than 25% of the Fund's total assets would be invested
in the securities of issuers having their principal business activities in
the same industry.
BORROWING: The following limitations are fundamental.
(bullet) Each fund may borrow money for temporary or emergency
purposes, in an amount not exceeding 33 1/3% of the value of its total
assets;
(bullet) Strategic Opportunities, Limited Term Bond, Income &
Growth and Limited Term Tax-Exempt may not purchase any security while
borrowings representing more than 5% of its total assets are outstanding.
(bullet) Growth Opportunities, Income & Growth, Government
Investment Short Fixed Income and High Income Municipal may not purchase
any security while borrowings representing more than 5% of its net assets
are outstanding.
The following limitations are non-fundamental.
(bullet) Growth Opportunities and Income & Growth, may not purchase
any security while borrowings representing more than 5% of its net assets
are outstanding.
(bullet) Each other fund may not purchase any security while borrowings
representing more than 5% of its total assets are outstanding.
(bullet) Each Fund may borrow money from banks or from other funds
advised by FMR, or by engaging in reverse repurchase agreements.
LENDING: Percentage limitations are fundamental.
(bullet) High Income Municipal and Limited Term Tax-Exempt do not
currently intend to engage in repurchase agreements or make loans (but this
limitation does not apply to purchases of debt securities).
(bullet) Each fund (a) may lend securities to a broker-dealer or
institution when the loan is fully collateralized; and (b) may lend money
to a mutual fund advised by FMR or an affiliate. Each Fund will limit loans
in the aggregate to 33 1/3% of its total assets.
Each Fund has received permission from the SEC to lend money to and
borrow money from other funds advised by FMR or its affiliates, High Income
Municipal and Limited Term Tax-Exempt will participate only as borrowers.
If a Fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. To this extent, purchasing
securities when borrowings are outstanding may involve an element of
leverage.
As a non-fundamental policy, each Fund may not purchase a security, if
as a result, more than 15% (Overseas and High Yield) or 10% (all others) of
its assets would be invested in illiquid investments.
FEES
20.MANAGEMENT AND OTHER SERVICES. For managing its investments and business
affairs, each Fund pays a monthly fee to FMR.
Each Fund (with the exception of Equity Portfolio Income, see below) pays a
monthly fee to FMR based on a basic fee rate, which is the sum of two
components:
1. A group fee rate based on the monthly average net assets of all of the
mutual funds advised by FMR. This rate for Equity Funds cannot rise above
.52% and it drops (to as low as a marginal rate of .31%*) as total assets
in all of these funds rise. The effective Equity Fund group fee rate
for September 1993, October 1993 and November 1993 was .3262%, .3254%
and .3250%, respectively. The group fee rate for Fixed-Income Funds cannot
rise above .37% and it drops (to as low as a marginal rate of .15%*) as
total assets in all of these funds rise. The effective Fixed-Income group
fee rate for October 1993 and November 1993 was .1631% and .1627%,
respectively.
2. An individual fund fee rate, which varies for each Fund.
* FMR VOLUNTARILY AGREED TO ADOPT REVISED GROUP FEE RATE SCHEDULES WHICH
PROVIDE FOR A MARGINAL RATE AS LOW AS .285% (EQUITY FUNDS) AND .1325%
(FIXED-INCOME FUNDS) WHEN AVERAGE GROUP NET ASSETS EXCEED $336 BILLION. A
NEW MANAGEMENT CONTRACT WITH A REVISED GROUP FEE RATE SCHEDULE WILL BE
PRESENTED FOR APPROVAL AT EACH FUND'S NEXT SHAREHOLDER MEETING.
One-twelfth of the annual management fee rate is applied to each Fund's net
assets averaged over the most recent month, giving a dollar amount which is
the management fee for that month.
Equity Portfolio Income pays FMR a monthly management fee at an annual rate
of .50% of its average net assets.
The following are the individual fund fee rates and total management fees
for each Fund's most recent fiscal year end.
TOTAL
MANAGEMENT FEE
INDIVIDUAL (AS A PERCENT OF AVERAGE
FUND FEE RATE NET ASSETS)
(AS A PERCENTAGE OF BEFORE REIMBURSEMENTS,
AVERAGE NET ASSETS) IF ANY
EQUITY FUNDS:
Overseas 0.45% 0.77%(dagger)
Equity Portfolio Growth 0.33% 0.66%
Growth Opportunities 0.30% 0.68%
Global Resources 0.45% 0.77%(dagger)
Strategic Opportunities 0.30% 0.54%
Equity Portfolio Income .NA 0.50%
Income & Growth 0.20% 0.53%
FIXED-INCOME FUNDS:
High Yield 0.45% 0.51%
Limited Term Bond 0.25% 0.42%
Government Investment 0.30% 0.46%
Short Fixed-Income 0.30% 0.47%
MUNICIPAL/TAX-EXEMPT FUNDS:
High Income Municipal Fund 0.25% 0.42%
Limited Term Tax-Exempt Fund 0.25% 0.42%
(dagger) TOTAL MANAGEMENT FEES ARE HIGHER THAN THOSE CHARGED BY MOST MUTUAL
FUNDS, BUT NOT NECESSARILY HIGHER THAN THOSE OF A TYPICAL INTERNATIONAL
FUND, DUE TO THE GREATER COMPLEXITY, EXPENSE AND COMMITMENT OF RESOURCES
INVOLVED IN INTERNATIONAL INVESTING.
In addition to the basic fee, the management fees for Overseas, Growth
Opportunities, and Strategic Opportunities vary based on performance. The
performance adjustment is added to or subtracted from the basic fee and is
calculated monthly. It is based on a comparison of each Fund's performance
to that of an index, over the most recent 36-month period. The difference
is converted into a dollar amount that is added to or subtracted from the
basic fee. This adjustment rewards FMR when the Fund outperforms the index
and reduces FMR's fee when the Fund underperforms the index. The maximum
annualized performance index adjustment rate for each Fund is +/- .20%.
Overseas compares itself to the Morgan Stanley Capital International
Europe, Australia, Far East Index. (Prior to December 1, 1992, Overseas
Fund's performance adjustment was based on a comparison with the Morgan
Stanley Capital International Europe Index.) Growth Opportunities and
Strategic Opportunities compare themselves to the S&P 500. Investment
performance will be measured separately for each class of Strategic
Opportunities, and the lesser of the two results obtained will be used in
calculating the performance adjustment.
FMR may, from time to time, agree to reimburse a Fund for expenses
(excluding interest, taxes, brokerage commissions, and extraordinary
expenses) above a specified percentage of average net assets. FMR retains
the ability to be repaid by a Fund for these expense reimbursements in the
amount that expenses fall below the limit prior to the end of the fiscal
year. Fee reimbursements by FMR will increase a Fund's yield and total
return, and repayment by a Fund will lower its yield and total return. FMR
has voluntarily agreed to reimburse expenses of Government Investment and
Limited Term Tax-Exempt to the extent that total expenses exceed 0.60%, and
0.90%, respectively, of the Fund's average net assets.
FMR has entered into sub-advisory agreements on behalf of certain Funds.
Sub-advisors provide research and investment advice and research services
with respect to companies based outside the U.S. and FMR may grant
sub-advisers investment management authority as well as the authority to
buy and sell securities if FMR believes it would be beneficial to a Fund.
Overseas, Equity Portfolio Growth, Strategic Opportunities, Equity
Portfolio Income, and High Yield each have entered into
sub-advisory agreements with Fidelity Management & Research
(U.K.) Inc. (FMR U.K.) and Fidelity Management & Research (Far East)
Inc. (FMR Far East). FMR U.K. focuses primarily on companies based in
Europe, and FMR Far East focuses primarily on companies based in Asia and
the Pacific Basin. Under the sub-advisory agreements, FMR, and not the
Fund, may pay FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of each sub-advisor's costs incurred in connection with its
sub-advisory agreement.
In addition, Overseas has entered into a sub-advisory agreement with
Fidelity International Investment Advisors (FIIA). FIIA, in turn, has
entered into a sub-advisory agreement with its wholly owned subsidiary
Fidelity International Investment Advisors (U.K.) Limited (FIIAL U.K.).
Currently, FIIAL U.K. focuses on companies other than the U.S., including
countries in Europe, Asia, and the Pacific Basin. Under the sub-advisory
agreement, FMR pays FIIA 30% of its monthly management fee with respect to
the average market value of investments held by the Fund for which FIIA has
provided FMR with investment advice. FIIA, in turn, pays FIIAL U.K. a fee
equal to 110% of FIIAL U.K.'s costs incurred in connection with providing
investment advice and research services.
The Transfer Agent has delegated certain transfer, dividend paying and
shareholder services to Fidelity Investments Institutional Operations
Company (FIIOC), 82 Devonshire Street, Boston, Massachusetts 02109, an
affiliate of FMR. The Transfer Agent reallows to FIIOC a portion of its fee
for accounts for which FIIOC provides limited services, or its full fee for
accounts that FIIOC maintains on its behalf.
The Funds pay transfer agent fees based on the type, size and number of
accounts in a Fund and the number of monetary transactions made by
shareholders.
The fees for pricing and bookkeeping services are based on a Fund's average
net assets, but must fall within a range of $45,000 to $750,000 per year.
Fidelity Service Co. (Service), 82 Devonshire Street, Boston, Massachusetts
02109, an affiliate of FMR, calculates each Fund's daily share price, and
maintains its general accounting records (with the exception of High Income
Municipal and Limited Term Tax-Exempt, see below). For those Funds which
can engage in securities lending, Service also administers its securities
lending program. For the most recent fiscal year ended, each Fund's fees
for pricing and bookkeeping services (including related out-of-pocket
expenses) amounted to: $57,711 (Overseas); $234,813 (Equity Portfolio
Growth); $513,950 (Growth Opportunities); $45,425 (Global
Resources); $145,494 (Strategic Opportunities); $113,026 (Equity
Portfolio Income); $410,561 (Income & Growth); $121,204 (High Yield);
$81,106 (Limited Term Bond); $46,457 (Government Investment); and
$143,813 (Short Fixed-Income).
For High Income Municipal and Limited Term Tax-Exempt, United Missouri
Bank, N.A. (United Missouri), 1010 Grand Avenue, Kansas City, Missouri
64106, acts as the custodian, transfer agent and pricing and bookkeeping
agent. United Missouri has a sub-arrangement with the Transfer Agent for
transfer agent services and a sub-arrangement with Service for pricing and
bookkeeping services. For the most recent fiscal year ended, fees paid to
Service (including related out-of-pocket expenses) amounted to $157,559
(High Income Municipal) and $45,724 (Limited Term Tax-Exempt). All of the
fees are paid to the Transfer Agent and Service by United Missouri, which
is reimbursed by the Funds for such payments.
The Funds' operating expenses include custodial, legal and accounting fees,
charges to register a Trust or Fund with federal and state regulatory
authorities and other miscellaneous expenses. Each Fund's total operating
expenses after reimbursement, if any, as a percent of average net assets,
including the 12b-1 fee (see below), for the most recent fiscal year ended
were as follows: 2.38% (Overseas); 1.84% (Equity Portfolio Growth); 1.64%
(Growth Opportunities); 2.62% (Global Resources); 1.57% (Strategic
Opportunities); 1.77% (Equity Portfolio Income); 1.51% (Income &
Growth); 1.11% (High Yield); 1.23% (Limited Term Bond); .68% (Government
Investment); .95% (Short Fixed-Income); .92% (High Income Municipal); .90%
(Limited Term Tax-Exempt). If FMR had not reimbursed certain Funds, total
operating expenses for the most recent fiscal year ended would have been as
follows: 1.32% (Government Investment) and 1.36% (Limited Term Tax-Exempt).
21.DISTRIBUTION AND SERVICE PLANS. The Board of Trustees of each Trust has
adopted a Distribution and Service Plan (the Plans) on behalf of each
Fund pursuant to Rule 12b-1 under the 1940 Act (the Rule).
The Rule provides in substance that a mutual fund may not engage
directly or indirectly in financing any activity that is intended primarily
to result in the sale of shares of a Fund except pursuant to the plan
adopted by the Fund under the Rule. The Boards of Trustees have adopted the
Plans to allow each Fund and FMR to incur certain expenses that might be
considered to constitute direct or indirect payment by a Fund of
distribution expenses.
Under each Plan, each Fund is authorized to pay Distributors a monthly
distribution fee as compensation for its services and expenses in
connection with the distribution of shares of the Fund. The Equity funds
pay Distributors a distribution fee at an annual rate of each Fund's
average net assets determined as of the close of business on each day
throughout the month. The Board of Trustees for certain Funds has approved
a distribution fee less than the maximum allowed. The fee may be increased
only when, in the opinion of the Trustees, it is in the best interests of
the Fund's shareholders to do so. This distribution fee is paid by each
Fund, not by individual accounts. Overseas, Growth Opportunities, Global
Resources, Strategic Opportunities, and Income & Growth each pay .65%.
Equity Portfolio Growth and Equity Portfolio Income each pay .65% (the
Board can approve a maximum rate of .75%). High Yield, Limited Term Bond,
Government Investment, High Income Municipal and Limited Term Tax-Exempt
each pay .25% (the Board can approve a maximum rate of .40%). Short
Fixed-Income pays .15%.
All or a portion of the distribution fee may be paid by Distributors to
investment professionals as compensation for selling shares of the Funds
and providing ongoing sales support services or for shareholder support
services. The distribution fee is a Fund expense in addition to the
management fee and the Fund's other expenses. Such expenses will reduce the
Fund's net investment income and total return.
The Plan also provides that, through Distributors, FMR may make payments
from its management fee or other resources to investment professionals in
connection with the distribution of Fund shares. Investment professionals
will be compensated with a fee of .25% for if the assets on which the .25%
is paid remain within the Fidelity Advisor Funds for one uninterrupted year
or the investment professional will be required to refund this fee to
Distributors. The fee will not be paid on purchases through a bank or
bank-affiliated broker-dealers that qualify for a Sales Charge Waiver
described on page 12. FMR may terminate the program at any time.
Fees paid pursuant to each Fund's Distribution and Service Plan will be
limited by the restrictions imposed by the NASD rule.
The NASD has approved amendments which subject asset based sales charges
to its maximum sales charge rule.
Distributors may pay all or a portion of the applicable sales charge and
distribution and service fee to investment professionals who sell shares of
the Funds. Investment professionals who provide enhanced inquiry, order
entry and sales facilities in connection with transactions in Fund shares
by their clients may receive an administrative fee up to the maximum
applicable sales charge described in "Sales Charges and Investment
Professional Concessions," on page . In addition, Distributors will, at its
expense, provide promotional incentives such as sales contests and trips to
investment professionals who support the sale of shares of the Funds. In
some instances, these incentives will be offered only to certain types of
investment professionals, such as bank-affiliated or non-bank affiliated
broker-dealers, or to investment professionals whose representatives
provide services in connection with the sale or expected sale of
significant amounts of shares.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been fully defined, in Distributors' opinion it
should not prohibit banks from being paid for shareholder servicing and
recordkeeping. If, because of changes in law or regulation, or because of
new interpretations of existing law, a bank or a Fund were prevented from
continuing these arrangements, it is expected that the Board would make
other arrangements for these services and that shareholders would not
suffer adverse financial consequences. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
VALUATION
A Fund's shares are valued at NAV. NAV is determined for shares of each
Fund by adding the value of all security holdings and other assets of the
Fund, deducting liabilities allocated to each class (when appropriate), and
then dividing the result by the proportional number of shares of the Fund
outstanding in a class.
NAV normally is calculated as of the close of business of the NYSE
(normally 4:00 p.m. Eastern time). The Funds are open for business and NAV
is calculated each day the NYSE is open for trading. Fund securities and
other assets are valued primarily on the basis of market quotations
furnished by pricing services, or if quotations are not available, by a
method that the Board of Trustees believes accurately reflects fair value.
Foreign securities are valued based on quotations from the primary market
in which they are traded and are converted from the local currency into
U.S. dollars using current exchange rates.
PERFORMANCE
Each Fund's performance may be quoted in advertising in terms of total
return. All performance information is historical and is not intended to
indicate future performance. Share price and total return fluctuate in
response to market conditions and other factors, and the value of a Fund's
shares when sold may be worth more or less than their original cost.
Excluding a sales charge from a performance calculation produces a higher
total return figure. TOTAL RETURN is the change in value of an investment
in a Fund over a given period, assuming reinvestment of any dividends and
capital gains. A CUMULATIVE TOTAL RETURN reflects actual performance over
a stated period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical
rate of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the entire
period. Average annual total returns smooth out variations in performance;
they are not the same as actual year-by-year results. Average annual and
cumulative total returns usually will include the effect of paying a Fund's
maximum sales charge.
The Funds also may quote performance in terms of yield. YIELD refers to the
income generated by an investment in a Fund over a given period of time,
expressed as an annual percentage rate. Yields are calculated according to
a standard that is required for all stock and bond funds. High Income
Municipal Fund and Limited Term Tax-Exempt Fund may quote a TAX-EQUIVALENT
YIELD, which shows the taxable yield an investor would have to earn after
taxes to equal the Fund's tax-free yield. A tax-equivalent yield is
calculated by dividing a Fund's yield by the result of one minus a stated
federal or state tax rate. Because yield calculations differ from other
accounting methods, the quoted yield may not equal the income actually paid
to shareholders. This difference may be significant for funds whose
investments are denominated in foreign currencies. In calculating yield,
the Funds may from time to time use a security's coupon rate instead of its
yield to maturity in order to reflect the risk premium on that security.
This practice will have the effect of reducing a Fund's yield.
For additional performance information, please contact your investment
professional or Distributors for a free Annual Report and SAI.
PORTFOLIO TRANSACTIONS
FMR uses various brokerage firms to carry out each Fund's equity
security transactions Fixed-income securities are generally traded
in the over-the-counter market through broker-dealers. A broker-dealer is a
securities firm or bank which makes a market for securities by offering to
buy at one price and sell at a slightly higher price. The difference is
known as a spread. Foreign securities are normally traded in foreign
countries since the best available market for foreign securities is
often on foreign markets. In transactions on foreign stock exchanges,
brokers' commissions are generally fixed and are often higher than in
the U.S., where commissions are negotiated. Since FMR, directly or through
affiliated sub-advisers, places a large number of transactions, including
those of Fidelity's other funds, the Funds pay lower commissions than those
paid by individual investors, and broker-dealers are willing to work with
the Funds on a more favorable spread.
The Funds have authorized FMR to allocate transactions to some
broker-dealers who help distribute the Fund's shares or the shares of
Fidelity's other funds to the extent permitted by law, and on an agency
basis to Fidelity Brokerage Services, Inc. (FBSI) and Fidelity Brokerage
Services Ltd. (FBSL), affiliates of FMR. FMR will make such allocations if
commissions are comparable to those charged by non-affiliated qualified
broker-dealers for similar services.
FMR may also allocate brokerage transactions to a Fund's custodian, acting
as a broker-dealer, or other broker-dealers, so long as transaction quality
is comparable to those of other broker-dealers, where the broker-dealer
will allocate a portion of the commissions paid toward payment of a Fund's
expenses. These expenses currently include transfer agent fees and
custodian fees.
Higher commissions may be paid to those firms that provide research,
valuation and other services to the extent permitted by law. FMR also is
authorized to allocate brokerage transactions to FBSI in order to secure
from FBSI research services produced by third party, independent entities.
FMR may use this research information in managing each Fund's assets, as
well as assets of other clients.
When consistent with its investment objective, each Fixed-Income fund may
engage in short-term trading. Also, a security may be sold and another of
comparable quality simultaneously purchased to take advantage of what FMR
believes to be a temporary disparity in the normal yield relationship of
the two securities.
The frequency of portfolio transactions - the turnover rate - will vary
from year to year depending on market conditions. Each Fund's turnover rate
for the most recent fiscal year ended was: 42% (Overseas); 160% (Equity
Portfolio Growth); 69% (Growth Opportunities); 208% (Global
Resources); 183% (Strategic Opportunities); 120% (Equity Portfolio
Income); 200% (Income & Growth); 79% (High Yield); 59% (Limited
Term Bond); 333% (Government Investment); 58% (Short Fixed Income); 27%
(High Income Municipal); and 46% Limited Term Tax-Exempt. Because a high
turnover rate increases transaction costs and may increase taxable capital
gains, FMR carefully weighs the anticipated benefits of short-term
investing against these consequences.
THE TRUSTS AND THE FIDELITY ORGANIZATION
Each Trust is an open-end diversified management investment company. Each
Trust was established by a separate Declaration of Trust as a Massachusetts
business trust on each date as follows: June 24, 1983, Fidelity Advisor
Series I; April 24, 1986, Fidelity Advisor Series II; May 17, 1982,
Fidelity Advisor Series III; May 6, 1983, Fidelity Advisor Series IV; April
24, 1986, Fidelity Advisor Series V; June 1, 1983, Fidelity Advisor Series
VI; March 21, 1980, Fidelity Advisor Series VII; and September 23, 1983,
Fidelity Advisor Series VIII. Each Trust has its own Board of Trustees that
supervises Fund activities and reviews the Fund's contractual arrangements
with companies that provide the Funds with services. As Massachusetts
business trusts, the Funds are not required to hold annual shareholder
meetings, although special meetings may be called for a class of shares, a
Fund or a Trust as a whole for purposes such as electing or removing
Trustees, changing fundamental investment policies or limitations or
approving a management contract or plan of distribution. As a shareholder,
you receive one vote for each share and fractional votes for fractional
shares of the Fund you own. For shareholders of Equity Portfolio
Income the number of votes you are entitled to is based on the
dollar value of your investment. Separate votes are taken by each
class of shares, or each Fund if a matter affects just that class of shares
or Fund, respectively. There is a remote possibility that one Fund might
become liable for any misstatement in the Prospectus about another Fund.
Each class of shares is offered by separate prospectus.
Fidelity Advisor Equity Portfolio Growth, Fidelity Advisor Equity Portfolio
Income, Fidelity Advisor Limited Term Bond Fund, and Fidelity Advisor
Limited Term Tax-Exempt Fund are each composed of two classes of shares,
one sold to institutional shareholders ("institutional class") and the
other sold to retail shareholders. Both classes of shares of a Fund share a
common investment objective and investment portfolio. Institutional class
shares are offered continuously at NAV to (i) banks and trust institutions
investing for their own accounts or for accounts of their trust customers,
(ii) plan sponsors meeting the ERISA definition of fiduciary, (iii)
government entities or authorities and (iv) corporations with at least $100
million in annual revenues. The initial and subsequent investment minimums
for institutional class are $100,000 and $2,500, respectively. The minimum
account balance is $40,000. Shares may be exchanged for shares of certain
other Fidelity funds, including institutional class shares of other
Fidelity Advisor Funds. Transfer and shareholder servicing is performed by
FIIOC. For the fiscal year ended November 30, 1993, total operating
expenses as a percent of average net assets were: .94% (Fidelity Advisor
Institutional Equity Portfolio Growth); .79% (Fidelity Advisor
Institutional Equity Portfolio Income); 1.23% (Fidelity Advisor
Institutional Limited Term Bond); and .64%, after reimbursement (Fidelity
Advisor Institutional Limited Term Tax-Exempt). Because it has lower total
expenses, institutional class will generally have a higher return than the
class offered by this prospectus. The Distribution and Service Plan of
institutional class does not provide for payment of a separate distribution
fee; rather the Plan recognizes that FMR may use its management fee and
other resources to pay expenses for distribution-related activities and may
make payments to investment professionals that provide shareholder support
services or sell shares. Investment professionals currently do not receive
compensation in connection with distribution and/or shareholder servicing
of shares of institutional class. (Investment professionals receive
compensation for selling, or providing shareholder support services to the
holders of the class offered by this Prospectus, see page 11)
Fidelity Advisor Series VIII is also composed of two classes of shares,
Fidelity Strategic Opportunities Fund and Fidelity Advisor Strategic
Opportunities Fund. Both classes of the Fund share a common investment
objective and investment portfolio. Fidelity Advisor Strategic
Opportunities Fund shares are offered by this Prospectus to investors who
engage an investment professional for investment advice. Fidelity Strategic
Opportunities Fund is available only to existing shareholders of that
class.
Fidelity Investments is one of the largest investment management
organizations in the U.S. and has its principal business address at 82
Devonshire Street, Boston, MA 02109. It includes a number of different
companies that provide a variety of financial services and products. The
Trusts employ various Fidelity companies to perform certain activities
required to operate the Funds.
Fidelity Management & Research Company is the original Fidelity company
founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of December 31, 1993, FMR advised funds
having approximately 15 million shareholder accounts with a total value of
more than $225 billion. Fidelity Distributors Corp. distributes shares for
the Fidelity funds.
FMR Corp. is the parent company for the Fidelity companies. Through
ownership of voting common stock, Edward C. Johnson 3d (President and a
Trustee of the Trust), Johnson family members, and various trusts for the
benefit of Johnson family members form a controlling group with respect to
FMR Corp.
Peter J. Allegrini is manager of Advisor High Income Municipal, which he
has managed since February 1992. Mr. Allegrini also manages Spartan
Connecticut Municipal High Yield, Michigan Tax-Free High Yield and Ohio
Tax-Free High Yield. Mr. Allegrini joined Fidelity in 1982.
Bettina E. Doulton has been manager of Advisor Equity Portfolio Income
since August 1993, and VIP Equity-Income since July 1993. Previously, she
managed Select Automotive Portfolio and assisted on Equity-Income Portfolio
and Magellan(Registered trademark). Ms. Doulton also served as an analyst
following the domestic and European automotive and tire manufacturing
industry as well as the gaming and lodging industry. She joined Fidelity in
1985.
Margaret L. Eagle is vice president and manager of Advisor High Yield,
which she has managed since it began in January 1987. Ms. Eagle also
manages several pension fund accounts. Previously, she managed Spartan High
Income, and High Income (now Capital & Income). She also managed the
bond portion of Puritan(Registered trademark). Ms. Eagle joined Fidelity in
1980.
Daniel R. Frank is vice president and manager of Advisor Strategic
Opportunities which he has managed since December 1983. Previously, he was
an assistant to Peter Lynch on Magellan. Mr. Frank joined Fidelity in 1979.
Michael S. Gray is vice president and manager of Advisor Limited Term Bond,
which he has managed since August 1987. Mr. Gray also manages Investment
Grade Bond, Spartan Investment Grade Bond, and Intermediate Bond. Mr. Gray
joined Fidelity in 1982.
Robert E. Haber is vice president and manager of Advisor Income &
Growth, which he has managed since January 1987. Mr. Haber also manages
Balanced and co-manages Global Balanced. Previously, he managed Convertible
Securities. Mr. Haber joined Fidelity in 1985.
John (Jack) F. Haley Jr. is vice president and manager of Advisor Limited
Term Tax-Exempt, which he has managed since 1985. Mr. Haley also manages
California Tax-Free Insured, California Tax-Free High Yield, and Spartan
California Municipal High Yield. Mr. Haley joined Fidelity in 1981.
John R. Hickling is manager of Advisor Overseas, which he has managed since
February 1993. Mr. Hickling also manages Japan, Overseas, VIP: Overseas and
International Growth & Income. Previously he managed Emerging Markets,
Europe and Pacific Basin. Mr. Hickling joined Fidelity in 1982.
Curtis Hollingsworth is vice president and manager of Advisor Government
Investment, which he has managed since January 1992. Mr. Hollingsworth also
manages Short-Intermediate Government, Government Securities, Institutional
Short-Intermediate Government, Spartan Limited Maturity Government Bond,
Spartan Long-Term Government Bond and Spartan Short-Intermediate
Government. He joined Fidelity in 1983.
Malcolm W. MacNaught is manager and vice president of Advisor Global
Resources, which he has managed since November 1988. Mr. MacNaught also
manages Select Precious Metals and Minerals and Select American Gold. Mr.
MacNaught joined Fidelity in 1968.
Robert E. Stansky is manager and vice president of Advisor Equity Portfolio
Growth, which he has managed since April 1987. Mr. Stansky also manages
Growth Company. Previously, he managed Emerging Growth and Select Defense
and Aerospace. Mr. Stansky joined Fidelity in 1983.
Donald G. Taylor is manager and vice president of Advisor Short
Fixed-Income, which he has managed since September 1989. Mr. Taylor also
manages Short-Term Bond, Spartan Short-Term Bond, and VIP II: Investment
Grade Bond. In addition, he manages Income Plus for Fidelity International
and serves as an assistant on Asset Manager: Income. Previously, he managed
Corporate Trust, Qualified Dividend, VIP: Zero Coupon Bond and Utilities
Income. Mr. Taylor joined Fidelity in 1986.
George A. Vanderheiden is manager and vice president of Advisor Growth
Opportunities, which he has managed since November 1987. Mr. Vanderheiden
also manages Destiny I and Destiny II. He is a managing director of FMR
Corp., Leader of the Growth Group, and joined Fidelity in 1971.
APPENDIX
The following paragraphs provide a brief description of securities in which
the Funds may invest and transactions they may make. Consistent with its
investment objective and policies, each Fund may invest in or
engage in one or more of the following securities transactions.
However, the Funds are not limited by this discussion and may
purchase or engage in one or more of the following securities or
transactions. However, the Funds are not limited by this discussion
and may purchase other types of securities and enter into other
types of transactions if they are consistent with a Fund's
investment objective and policies .
DELAYED-DELIVERY TRANSACTIONS. Securities may be bought and sold on a
when-issued or delayed-delivery basis, with payment and delivery taking
place at a future date. The market value of securities purchased in this
way may change before the delivery date which could increase fluctuations
in a Fund's yield. Ordinarily, a Fund will not earn interest on securities
purchased until they are delivered.
FOREIGN INVESTMENTS involve additional risks. Foreign securities and
securities denominated in or indexed to foreign currencies may be affected
by the strength of foreign currencies relative to the U.S. dollar, or by
political or economic developments in foreign countries. Foreign companies
may not be subject to accounting standards or governmental supervision
comparable to U.S. companies, and there may be less public information
about their operations. In addition, foreign markets may be less liquid or
more volatile than U.S. markets, and may offer less protection to investors
such as a Fund. These risks are typically greater for investments in less
developed countries whose governments and financial markets may be more
susceptible to adverse political and economic developments. FMR considers
these factors in making investments for the Funds.
A Fund may enter into currency exchange contracts (agreements to
exchange one currency for another at a future date) to manage currency
risks and to facilitate transactions in foreign securities. Although
currency forward contracts can be used to protect the Fund from adverse
exchange rate changes, they involve a risk of loss if FMR fails to predict
foreign currency values correctly.
ILLIQUID INVESTMENTS. Under the supervision of the Board of
Trustees, FMR determines the liquidity of each Fund's investments. The
absence of a trading market can make it difficult to ascertain a market
value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it may be
difficult or impossible for a Fund to sell them promptly at an acceptable
price.
INDEXED SECURITIES. Indexed securities values are linked to
currencies, interest rates, commodities, indices, or other financial
indicators. Most indexed securities are short to intermediate term
fixed-income securities whose values at maturity or interest rates rise or
fall according to the change in one or more specified underlying
instruments. Indexed securities may be positively or negatively indexed
(i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct
investments in the underlying instrument or to one or more options on the
underlying instrument. Indexed securities may be more volatile than the
underlying instrument itself.
INTERFUND BORROWING PROGRAM. Interfund loans and borrowings normally
will extend overnight, but can have a maximum duration of seven days. A
Fund will lend through the program only when the returns are higher than
those available at the same time from other short-term instruments (such as
repurchase agreements), and will borrow through the program only when the
costs are equal to or lower than the cost of bank loans. Each Fund will not
lend more than 5% (Equity Funds) or 7.5% (Fixed-Income Funds) of its assets
to other funds, and will not borrow through the program if, after doing so,
total outstanding borrowings would exceed 15% of total assets. Loans may be
called on one day's notice, and a Fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts
owed by a corporate, governmental or other borrower to another party. They
may represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the risk
of loss in case of default or insolvency of the borrower and may offer less
legal protection to a Fund in the event of fraud or misrepresentation. In
addition, loan participations involve a risk of insolvency of the lending
bank or other financial intermediary. Direct debt instruments may also
include standby financing commitments that obligate a Fund to supply
additional cash to the borrower on demand.
LOWER-QUALITY DEBT SECURITIES are those rated Ba or lower by Moody's
or BB or lower by S&P that have poor protection against default in the
payment of principal and interest or may be in default. These securities
are often considered to be speculative and involve greater risk of loss or
price changes due to changes in the issuer's capacity to pay. The market
prices of lower-rated debt securities may fluctuate more than those of
higher-rated debt securities, and may decline significantly in periods of
general economic difficulty, which may follow periods of rising interest
rates. See "Debt Obligations" on page .
MORTGAGE-BACKED SECURITIES are issued by government entities and
non-government entities such as banks, mortgage lenders, or other financial
institutions.
A mortgage-backed security may be an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying pool of
mortgages. Some mortgage-backed securities, such as collateralized mortgage
obligations (CMOs), make payments of both principal and interest at a
variety of intervals; others make semiannual interest payments at a
predetermined rate and repay principal at maturity (like a typical bond).
Mortgage-backed securities are based on different types of mortgages
including those on commercial real estate or residential properties. Other
types of mortgage-backed securities will likely be developed in the future,
and a Fund may invest in them if FMR determines they are consistent with a
Fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S.
government agency or a financial institution separates the interest and
principal components of a mortgage-backed security and sells them as
individual securities. The holder of the "principal-only" security (PO)
receives the principal payments made by the underlying mortgage-backed
security, while the holder of the "interest-only" security (IO) receives
interest payments from the same underlying security. The prices of stripped
mortgage-backed securities may be particularly affected by changes in
interest rates. As interest rates fall, prepayment rates tend to increase,
which tends to reduce prices of IOs and increase prices of POs. Rising
interest rates can have the opposite effect.
ASSET-BACKED SECURITIES represent interests in pools of consumer
loans (generally unrelated to mortgage loans) and most often are structured
as pass-through securities. Interest and principal payments ultimately
depend on payment of the underlying loans by individuals, although the
securities may be supported by letters of credit or other credit
enhancements. The value of asset-backed securities may also depend on the
creditworthiness of the servicing agent for the loan pool, the originator
of the loans, or the financial institution providing the credit
enhancement.
A Fund may purchase units of beneficial interest in pools of
purchase contracts, financing leases, and sales agreements entered into by
municipalities. These municipal obligations may be created when a
municipality enters into an installment purchase contract or lease with a
vendor and may be secured by the assets purchased or leased by the
municipality. However, except in very limited circumstances, there will be
no recourse against the vendor if the municipality stops making payments.
The market for tax-exempt asset-backed securities is still relatively new.
These obligations are likely to involve unscheduled prepayments of
principal.
OPTIONS AND FUTURES CONTRACTS are bought and sold to manage a Fund's
exposure to changing interest rates, security prices, and currency exchange
rates. Some options and futures strategies, including selling futures,
buying puts, and writing calls, tend to hedge a Fund's investment against
price fluctuations. Other strategies, including buying futures, writing
puts, and buying calls, tend to increase market exposure. Options and
futures may be combined with each other or with forward contracts in order
to adjust the risk and return characteristics of the overall strategy. A
Fund may invest in options and futures based on any type of security,
index, or currency, including options and futures traded on foreign
exchanges and options not traded on exchanges.
Options and futures can be volatile investments and involve certain risks.
If FMR applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower a Fund's return. A
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other investments, or if it could
not close out its positions because of an illiquid secondary market.
Options and futures do not pay interest, but may produce taxable capital
gains.
Each Fund will not hedge more than 25% of its total assets by selling
futures, buying puts, and writing calls under normal conditions. In
addition each Fund will not buy futures or write puts whose underlying
value exceeds 25% of its total assets, and will not buy calls with a value
exceeding 5% of its total assets.
REAL ESTATE BACKED SECURITIES. Real estate industry companies may
include among others: real estate investment trusts; brokers or real estate
developers; and companies with substantial real estate holdings, such as
paper and lumber producers and hotel and entertainment companies. Companies
engaged in the real estate industry may be subject to certain risks
including: declines in the value of real estate, risks related to general
and local conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, and variations in rental income.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. In a repurchase
agreement, a Fund buys a security at one price and simultaneously agrees to
sell it back at a higher price. A Fund may also make securities loans to
broker-dealers and institutional investors, including FBSI. In the event of
the bankruptcy of the other party to either a repurchase agreement or a
securities loan, a Fund could experience delays in recovering its cash or
the securities it lent. To the extent that, in the meantime, the value of
the securities purchased had decreased or the value of the securities lent
had increased, a Fund could experience a loss. In all cases, FMR must find
the creditworthiness of the other party to the transaction satisfactory.
RESTRICTED SECURITIES are securities which cannot be sold to the
public without registration under the Securities Act of 1933. Unless
registered for sale, these securities can only be sold in privately
negotiated transactions or pursuant to an exemption from registration.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
Fund temporarily transfers possession of a portfolio instrument to another
party, such as a bank or broker-dealer, in return for cash. At the same
time, the Fund agrees to repurchase the instrument at an agreed-upon price
and time. A Fund expects that it will engage in reverse repurchase
agreements for temporary purposes such as to fund redemptions. Reverse
repurchase agreements may increase the risk of fluctuation in the market
value of a Fund's assets or in its yield.
SHORT SALES. If a Fund enters into short sales with respect to
stocks underlying its convertible security holdings, the transaction may
help to hedge against the effect of stock price declines, but may result in
losses if a convertible security's price does not track the price of its
underlying equity. Under normal conditions convertible securities hedged
with short sales are not currently expected to exceed 15% of a Fund's total
assets.
SWAP AGREEMENTS. As one way of managing its exposure to different
types of investments, a Fund may enter into interest rate swaps, currency
swaps, and other types of swap agreements such as caps, collars, and
floors. In a typical interest rate swap, one party agrees to make regular
payments equal to a floating interest rate times a "notional principal
amount," in return for payments equal to a fixed rate times the same
amount, for a specified period of time. If a swap agreement provides for
payments in different currencies, the parties might agree to exchange the
notional principal amount as well. Swaps may also depend on other prices or
rates, such as the value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of a Fund's investments and its share price and yield.
Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risks
assumed. As a result, swaps can be highly volatile and may have a
considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also
suffer losses if it is unable to terminate outstanding swap agreements or
reduce its exposure through offsetting transactions.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain
participation interests in municipal obligations, have interest rate
adjustment formulas that help to stabilize their market values. Many
variable and floating rate instruments also carry demand features that
permit the fund to sell them at par value plus accrued interest on short
notice.
WARRANTS entitle t he holder to buy equity securities at a specific
price for a specific period of time. Warrants tend to be more volatile than
their underlying securities. Also, the value of the warrant does not
necessarily change with the value of the underlying securities and a
warrant ceases to have value if it is not exercised prior to the expiration
date.
ZERO COUPON BONDS do not make interest payments; instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, a Fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
A broker-dealer creates a DERIVATIVE ZERO by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros. Government Investment Fund has
been advised that the staff of the Division of Investment Management of the
SEC does not consider these instruments U.S. government securities as
defined by the 1940 Act. Therefore, Government Investment Fund will not
treat these obligations as U.S. government securities for purposes of the
65% portfolio composition test mentioned on page 21.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. ORIGINAL ISSUE ZEROS are zero coupon securities
originally issued by the U.S. government or a government agency.
DEBT OBLIGATIONS. The table below provides a summary of ratings assigned to
debt holdings (not including money market instruments) in Funds which have
the ability to invest over 5% in lower-rated debt securities. These figures
are dollar-weighted averages of month-end portfolio holdings during
the thirteen months ended September 30, 1993 (Strategic Opportunities),
October 31, 1993 (Income & Growth, High Yield, Short
Fixed-Income, and High Income Municipal,) and November 30, 1993 (and Equity
Portfolio Income), presented as a percentage of total investments. These
percentages are historical and are not necessarily indicative of the
quality of current or future portfolio holdings, which may vary.
The dollar-weighted average of debt securities not rated by either Moody's
or S&P amounted to 0% (Equity Portfolio Growth), .89% (Strategic
Opportunities), 57% (Equity Portfolio Income), 6.72% (Income &
Growth), 18.74% (High Yield), 5.85% (Short Fixed-Income), and 25.23% (High
Income Municipal) of total investments. This may include securities rated
by other nationally recognized rating organizations, as well as unrated
securities. Unrated securities are not necessarily lower-quality
securities.
As of October 31, 1993, Global Resources had no investments below Baa/BBB.
MOODY'S RATING & PERCENTAGE OF INVESTMENTS
MOOD EQUIT STRAT EQUITY INCOME HIGH SHORT HIGH
Y'S Y EGIC PORTFOLIO & YIELD FIXED- INCOME
RATIN PORTF OPPO INCOME GROWTH INCOME MUNICI
G OLIO RTUNIT PAL
GROW IES
TH
Aaa/A -- 15.99 1.02% 22.75% .02% 25.81% 27.39%
a/A %
Baa -- -- .77% .86% -- 34.74% 20.40%
Ba -- .18% 1.25% 6.09% 6.60% 12.76% 8.10%
B .07% .22% 1.27% 3.89% 34.26% 1.08% .63%
Caa -- 1.63 .06% .66% 9.09% -- --
%
Ca/C -- -- -- -- 4.50% -- --
S&P RATING & PERCENTAGE OF INVESTMENTS
S&AM EQUIT STRAT EQUITY INCO HIGH SHORT HIGH
P;P Y EGIC PORTFOL ME YIELD FIXED- INCOME
RATIN PORTF OPPO IO & INCOM MUNICI
G OLIO RTUNIT INCOM ; E PAL
GROW IES E GROW
TH TH
AAA/A -- 15.99 1.03% 21.98 .97% 27.08 29.05%
A/A % % %
BBB -- -- .84% 2.03% 1.09% 33.92 18.73%
%
BB -- -- .98% 2.22% 6.94% 7.55% 4.37%
B .07% .80% 1.35% 2.51% 33.28 1.13% 1.75%
%
CCC -- -- .15% .69% 7.62% .04%
CC/C -- -- -- --% 1.55%
D -- .89% .03% 5.58%
THE FOLLOWING DESCRIBES MUNICIPAL INSTRUMENTS:
MUNICIPAL SECURITIES include GENERAL OBLIGATION SECURITIES, which are
backed by the full taxing power of a municipality, and REVENUE SECURITIES,
which are backed by the revenues of a specific tax, project, or facility.
INDUSTRIAL REVENUE BONDS are a type of revenue bond backed by the credit
and security of a private issuer and may involve greater risk. PRIVATE
ACTIVITY MUNICIPAL SECURITIES, which may be subject to the federal
alternative minimum tax, include securities issued to finance housing
projects, student loans, and privately-owned solid waste disposal and water
and sewage treatment facilities.
TAX AND REVENUE ANTICIPATION NOTES are issued by municipalities in
expectation of future tax or other revenues, and are payable from those
specific taxes or revenues. BOND ANTICIPATION NOTES normally provide
interim financing in advance of an issue of bonds or notes, the proceeds of
which are used to repay the anticipation notes. TAX-EXEMPT COMMERCIAL PAPER
is issued by municipalities to help finance short-term capital or operating
needs.
MUNICIPAL LEASE OBLIGATIONS are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities.
These obligations typically are not fully backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If
funds are not appropriated for the following year's lease payments, the
lease may terminate, with the possibility of significant loss to a Fund.
CERTIFICATES OF PARTICIPATION in municipal lease obligations or installment
sales contracts entitle the holder to a proportionate interest in the
lease-purchase payments made.
RESOURCE RECOVERY BONDS are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to-energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents
paid by municipalities for use of the facilities. The viability of a
resource recovery project, environmental protection regulations, and
project operator tax incentives may affect the value and credit quality of
resource recovery bonds.
A DEMAND FEATURE is a put that entitles the security holder to repayment of
the principal amount of the underlying security, upon notice at any time or
at specified intervals. A STANDBY COMMITMENT is a put that entitles the
security holder to same-day settlement at amortized cost plus accrued
interest.
Issuers or financial intermediaries who provide demand features or standby
commitments often support their ability to buy securities on demand by
obtaining LETTERS OF CREDIT (LOCS) or other guarantees from domestic or
foreign banks. LOCs also may be used as credit supports for other types of
municipal instruments. FMR may rely upon its evaluation of a bank's credit
in determining whether to purchase an instrument supported by an LOC. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank may be
subject to unfavorable political or economic developments, currency
controls, or other governmental restrictions that might affect the bank's
ability to honor its credit commitment.
INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
REFUNDING CONTRACTS. A Fund may purchase securities on a when-issued basis
in connection with the refinancing of an issuer's outstanding indebtedness.
Refunding contracts require the issuer to sell and the Fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that
may be several months or several years in the future.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through C in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating will
also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to D may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAIs, in connection with
the offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the Fund or Distributors. This Prospectus and the related
SAIs do not constitute an offer by a Fund or by Distributors to sell or to
buy shares of a Fund to any person to whom it is unlawful to make such
offer.
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
A FUND OF FIDELITY ADVISOR SERIES VIII
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 29, 1994
This Statement is not a prospectus but should be read in conjunction with
the current Prospectus (dated January 29, 1994) of Fidelity Advisor
Strategic Opportunities Fund (the Fund). Please retain this document for
future reference. The Fund's Annual Report for the fiscal year ended
September 30, 199 3, a separate report supplied with this Statement of
Additional Information, is incorporated herein by reference.
Additional copies of the Prospectus, Statement of Additional Information
and Annual Report are available without charge upon request from
Fidelity Distributors Corporation, 82 Devonshire Street, Boston,
Massachusetts 02109, or from your investment professional.
NATIONWIDE 800-522-7297
TABLE OF CONTENTS PAGE
<TABLE>
<CAPTION>
<S> <C>
Investment Policies and Limitations 2
Portfolio Transactions 11
Valuation of Portfolio Securities 13
Performance 13
Additional Purchase, Exchange and Redemption Information 17
Distributions and Taxes 20
FMR 21
Trustees and Officers 21
Management and Other Services 23
The Distributor 26
Distribution and Service Plan 26
Description of the Trust 27
Financial Statements 28
</TABLE>
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (Distributors)
TRANSFER AGENT
State Street Bank and Trust Company (State Street)
CUSTODIAN
Brown Brothers Harriman & Co. (Brown Brothers)
I.BDSOSAI-194
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a Fund's assets which may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation shall be
determined immediately after and as a result of the acquisition of such
security or other asset. Accordingly, any subsequent change in values, net
assets or other circumstances will not be considered when determining
whether the investment complies with the Fund's investment policies and
limitations.
The Fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940 Act))
of the Fund. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued
or guaranteed by the government of the United States, its agencies, or
instrumentalities) if, as a result thereof, more than 5% of the Fund's
total assets (taken at current value) would be invested in the securities
of such issuer;
(2) purchase the securities of any issuer, if such purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of
such issuer to be held in the Fund's portfolio;
(3) issue senior securities (except to the extent that issuance of one or
more classes of shares of the Fund in accordance with an Order issued by
the Securities and Exchange Commission (SEC) may be deemed to constitute
issuance of a senior security);
(4) make short sales of securities, (unless it owns, or by virtue of its
ownership of other securities has the right to obtain, at no additional
cost, securities equivalent in kind and amount to the securities sold);
provided, however, that the Fund may enter into forward foreign currency
exchange transactions; and further provided that the Fund may purchase or
sell futures contracts;
(5) purchase any securities or other property on margin, (except for such
short-term credits as are necessary for the clearance of transactions);
provided, however, that the Fund may make initial and variation margin
payments in connection with purchases or sales of futures contracts or
options on futures contracts;
(6) borrow money except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of the Fund's total assets (including the
amount borrowed) less liabilities (not including borrowings). Any
borrowings that come to exceed 33 1/3% of the Fund's total assets by reason
of a decline in net assets, will be reduced within three days (exclusive of
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation. The Fund will not purchase securities for investment while
borrowings equaling 5% or more of its total assets are outstanding;
(7) underwrite any issue of securities (except to the extent that the Fund
may be deemed to be an underwriter within the meaning of the Securities Act
of 1933 in the disposition of "restricted securities");
(8) purchase the securities of any issuer (other than obligations issued
or guaranteed by the government of the United States, its agencies, or
instrumentalities) if, as a result thereof, more than 25% of the Fund's
total assets would be invested in the securities of one or more issuers
having their principal business activities in the same industry;
(9) purchase or sell real estate (but this shall not prevent the Fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein and
participation interests in pools of real estate mortgage loans);
(10) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(11) lend any security or make any other loan if as a result, more than 33
1/3% of the Fund's total assets would be lent to other parties except (i)
through the purchase of a portion of an issue of debt securities in
accordance with its investment objective, policies, and limitations, or
(ii) by engaging in repurchase agreements with respect to portfolio
securities;
(12) purchase securities of other investment companies (except in the open
market where no commission other than the ordinary broker's commission is
paid, or as part of a merger or consolidation, and in no event may
investments in such securities exceed 10% of the value of total assets of
the Fund). The Fund may not purchase or retain securities issued by other
open-end investment companies;
(13) invest more than 5% of the Fund's total assets (taken at market
value) in the securities of companies which, including predecessors, have a
record of less than three years' continuous operation; or
(14) invest in oil, gas, or other mineral exploration or development
programs.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The Fund does not currently intend to sell securities short.
(ii) The Fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (6)). The Fund will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the Fund's total assets.
(iii) The Fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iv) The Fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange (NYSE) or the American Stock Exchange (AMEX) or
traded on the NASDAQ National Market System.
(v) The Fund does not currently intend to lend assets other than
securities to other parties, except by (i) lending money (up to 5% of the
Fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (ii) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vi) The Fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the Fund's net assets.
Included in that amount, but not to exceed 2% of the Fund's net assets, may
be warrants that are not listed on the NYSE or the AMEX. Warrants acquired
by the Fund in units or attached to securities are not subject to these
restrictions.
(vii) The Fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(viii) The Fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the Fund and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
For the Fund's limitations on futures and options transactions, see
"Limitations on Futures and Options Transactions" beginning on page 8.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), and rules under the 1940
Act, the Fund may engage in transactions with banks that are, or may be
considered to be, "affiliated persons" of the Fund under the 1940 Act.
Such transactions may be entered into only pursuant to procedures
established, and periodically reviewed, by the Board of Trustees. These
transactions may include repurchase agreements with custodian banks;
purchases, as principal, of short-term obligations of, and repurchase
agreements with, the 50 largest U.S. banks (measured by deposits);
transactions in municipal securities; and transactions in U.S. government
securities with affiliated banks that are primary dealers in these
securities.
THE FUND'S RIGHTS AS A SHAREHOLDER. The Fund does not intend to
direct or administer the day-to-day operations of any company. The Fund,
however, may exercise its rights as a shareholder and may communicate its
views on important matters of policy to management, the Board of Directors,
and shareholders of a company when FMR determines that such matters could
have a significant effect on the value of the Fund's investment in the
company. The activities that the Fund may engage in, either individually
or in conjunction with others, may include, among others, supporting or
opposing proposed changes in a company's corporate structure or business
activities; seeking changes in a company's directors or management; seeking
changes in company's direction or policies; seeking the sale or
reorganization of the company or a portion of its assets; or supporting or
opposing third party takeover efforts. This area of corporate activity is
increasingly prone to litigation and it is possible that the Fund could be
involved in lawsuits related to such activities. FMR will monitor such
activities with a view to mitigating, to the extent possible, the risk of
litigation against the Fund and the risk of actual liability if the Fund is
involved in litigation. No guarantee can be made, however, that litigation
against the Fund will not be undertaken or liabilities incurred.
DELAYED-DELIVERY TRANSACTIONS. The Fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the Fund to purchase or sell specific securities at a
predetermined price and/or yield, with payment and delivery taking place
after the customary settlement period for that type of security (and more
than seven days in the future). Typically, no interest accrues to the
purchaser until the security is delivered. The Fund may receive fees for
entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, the Fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the Fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the Fund's other investments. If the Fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the Fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When the Fund has sold a security on a
delayed-delivery basis, the Fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the Fund could miss a favorable price or yield opportunity, or could suffer
a loss.
The Fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gai ns or losses.
FORE IGN INVESTMENTS. Foreign investments can involve significant
risks in addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. If may also be
difficult to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments
in developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The Fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject
to transfer restrictions may be marketable abroad, they may be less liquid
than foreign securities of the same class that are not subject to such
restrictions.
The Fund may invest in American Depository Receipts and European
Depository Receipts (ADRs and EDRs), which are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or
similar financial institution. Designed for use in U.S. and European
securities markets, respectively, ADRs and EDRs are alternatives to the
purchase of the underlying securities in their national markets and
currencies.
FOREIGN CURRENCY TRANSACTIONS. The Fund may hold foreign currency
deposits from time to time, and may convert dollars and foreign currencies
in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering
into forward contracts to purchase or sell foreign currencies at a future
date and price. Forward contracts generally are traded in an interbank
market conducted directly between currency traders (usually large
commercial banks) and their customers. The parties to a forward contract
may agree to offset or terminate the contract before its maturity, or may
hold the contract to maturity and complete the contemplated currency
exchange.
The Fund may use currency forward contracts to manage currency risks and
to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the Fund.
In connection with purchases and sales of securities denominated in
foreign currencies, the Fund may enter into currency forward contracts to
fix a definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the Fund's foreign investments. The Fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
The Fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For
example, if the Fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. The Fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling - for example, by entering into a forward
contract to sell Deutschemarks or European Currency Units in return for
U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars. Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the Fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The Fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change the Fund's investment exposure to changes in currency
exchange rates, and could result in losses to the Fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the Fund by selling that currency in exchange for
dollars, the Fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
Fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly,
if FMR increases the Fund's exposure to a foreign currency, and that
currency's value declines, the Fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the Fund or that it will hedge at an appropriate time. The policies
described in this section are non-fundamental policies of the Fund.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the Fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the Fund's investments, FMR may consider various factors
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features) and (5) the nature of the marketplace for
trades (including the ability to assign or offset the Fund's rights and
obligations relating to the investment). Investments currently considered
by the Fund to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days,
over-the-counter options, and non-government stripped fixed-rate
mortgage-backed securities and restricted securities. Also, FMR may
determine some government-stripped fixed-rate mortgage-backed securities,
loans and other direct debt instruments, and swap agreements to be
illiquid. However, with respect to over-the-counter options the Fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the Fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets or
other circumstances, the Fund were in a position where more than 10% of its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the Fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the Fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the
risk of loss in case of default or insolvency of the borrower. Direct debt
instruments may offer less legal protection to the Fund in the event of
fraud or misrepresentation. In addition, loan participations involve a
risk of insolvency of the lending bank or other financial intermediary.
Direct debt instruments also may include standby financing commitments that
obligate the Fund to supply additional cash to the borrower on demand.
LOWER-RATED DEBT SECURITIES. The Fund may purchase lower-rated debt
securities (those rated Ba or lower by Moody's Investors Service, Inc., or
BB by Standard & Poor's Corporation), which have poor protection with
respect to the payment of interest and repayment of principal These
securities are often considered to be speculative and involve greater risk
of loss or price changes due to changes in the issuer's capacity to pay.
The market prices of lower-rated debt securities may fluctuate more than
those of higher-rated debt securities and may decline significantly in
periods of general economic difficulty which may follow periods of rising
interest rates. While the market for high-yield corporate debt
securities has been in existence for many years and has weathered previous
economic downturns, the 1980s brought a dramatic increase in the use of
such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
the future performance of the high-yield bond market, especially during
periods of economic recession. In fact, from 1989 to 1991, the percentage
of lower-rated debt securities that defaulted rose significantly above
prior levels, although the default rate decreased in 1992.
The market for lower-rated debt securities may be thinner and less active
than that for higher-rated debt securities, which can adversely affect the
prices at which the former are sold. If market quotations are not
available, lower-rated debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-rated debt
securities and the Fund's ability to dispose of these securities.
Since the risk of default is higher for lower-rated debt securities, FMR's
research and credit analysis are an especially important part of managing
securities of this type held by the Fund. In considering investments for
the Fund, FMR will attempt to identify those issuers of high-yielding debt
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
The Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the Fund's shareholders.
REPURCHASE AGREEMENTS. In a repurchase agreement the Fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount of interest which is unrelated to the coupon
rate or maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed-upon price, which
obligation is in effect secured by the value (at least equal to the amount
of the agreed upon resale price and marked to market daily) of the
underlying security. The Fund may enter into a repurchase agreement with
respect to any security in which it is authorized to invest. While it does
not presently appear possible to eliminate all risks from these
transactions (particularly the possibility of a decline in the market value
of the underlying securities, as well as delay and costs to the Fund in
connection with bankruptcy proceedings), it is the Fund's current policy to
limit repurchase agreements transactions to those parties whose
creditworthiness has been reviewed and found satisfactory to FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the
Fund sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the Fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The Fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the Fund's
assets and may be viewed as a form of leverage.
SECURITIES LENDING. The Fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the NYSE and a subsidiary of
FMR Corp.
Securities lending allows the Fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that the Fund
may engage in loan transactions only under the following conditions: (1)
the Fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the Fund must be able to terminate
the loan at any time; (4) the Fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the Fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SHORT SALES "AGAINST THE BOX." If the Fund enters into a short sale
against the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities convertible or
exchangeable into such securities) and will be required to hold such
securities while the short sale is outstanding. The Fund will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales against the box.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease the Fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. The Fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the Fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee
by the other party. For example, the buyer of an interest rate cap obtains
the rights to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift the Fund's investment exposure from one
type of investment to another. For example, if the Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of the Fund's investments and its share price and yield.
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the Fund. If a swap
agreement calls for payments by the Fund, the Fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. The Fund expects to be able to
reduce its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
The Fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the
Fund enters into a swap agreement on a net basis, it will segregate assets
with a daily value at least equal to the excess, if any, of the Fund's
accrued obligations under the swap agreement over the accrued amount the
Fund is entitled to receive under the agreement. If the Fund enters into a
swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the Fund's accrued obligations under the
agreement.
INDEXED SECURITIES. The Fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more
volatile than the underlying instruments.
WARRANTS. The Fund may invest in warrants which entitle the holder to buy
equity securities at a specific price for a specific period of time.
Warrants may be considered more speculative then certain other types of
investments in that they do not entitle a holder to dividends or voting
rights with respect to the securities which may be purchased, nor do they
represent any rights in the assets of the issuing company. The value of a
warrant may be more volatile than the value of the securities underlying
the warrants. Also, the value of the warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have
value if it is not exercised prior to the expiration date.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund has
filed a notice of eligibility for exclusion from the definition of the
term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets, before engaging in any purchases or sales
of futures contracts or options on futures contracts. The Fund will
comply with Section 4.5 of the regulations under the Commodity Exchange
Act, which limits the extent to which the Fund can commit assets to initial
margin deposits and option premiums.
In addition to the above limitations, the Fund will not: (a) sell futures
contracts, purchase put options, or write call options if, as a result,
more than 25% of the Fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or write
put options if, as a result, the Fund's total obligations upon settlement
or exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options purchased by
the Fund would exceed 5% of the Fund's total assets. These limitations do
not apply to options attached to or acquired or traded together with their
underlying securities, and do not apply to securities that incorporate
features similar to options.
The above limitations on the Fund's investments in futures contracts and
options, and the Fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When the Fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the Fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's 500 Composite Stock
Price Index (S&P 500). Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the Fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it
had purchased the underlying instrument directly. When the Fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the Fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the Fund, the Fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the Fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The Fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the Fund will lose the entire premium it paid. If the Fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The Fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the Fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the Fund will be required to make margin payments to an FCM as
described above for futures contracts. The Fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the Fund has written, however, the
Fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the Fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The Fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the Fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing
a call option at one strike price and buying a call option at a lower
price, in order to reduce the risk of the written call option in the event
of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be
more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Fund's current or
anticipated investments exactly. The Fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of the Fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the Fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the Fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the Fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the Fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
Fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
Fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The Fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the Fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the Fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the Fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Fund will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the fund's assets
could impede portfolio management or the Fund's ability to meet redemption
requests or other current obligations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Fund by FMR pursuant to authority contained in the Management
Contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment advisor. In selecting broker-dealers subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions; and arrangements for payment of fund
expeenses. Commissions for foreign investments traded on foreign
exchanges will generally be higher than for U.S. investments and may not be
subject to negotiation.
FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer allocates
a portion of the commissions paid by the fund toward payment of the fund's
expenses, such as transfer agent fees of FIIOC or custodian fees. The
transaction quality must, however, be comparable to those of other
qualified broker-dealers.
The Fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the Fund or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers is made
by FMR (to the extent possible consistent with execution considerations) in
accordance with a ranking of broker-dealers determined periodically by
FMR's investment staff based upon the quality of such research and
execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the Fund may be useful to FMR in rendering investment management
services to the Fund or its other clients, and conversely, such information
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the Fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commission charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the Fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers
viewed in terms of a particular transaction or FMR's overall
responsibilities to the Fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Fund or other Fidelity funds to the
extent permitted by law. FMR may use research services provided by and
place agency transactions with Fidelity Brokerage Services, Inc. (FBSI) and
Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. Prior to
September 4, 1992, FBSL operated under the name of Fidelity Portfolio
Services Ltd. (FPSL), as a wholly-owned subsidiary of Fidelity
International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr.
Johnson 3d, Johnson family members, and various trusts for the benefit of
the Johnson family own, directly or indirectly, more than 25% of the voting
common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the SEC. Pursuant to such regulations, the Board of
Trustees has approved a written agreement which permits FBSI to effect the
Portfolio transactions on national securities exchanges and to retain
compensation in connection with such transactions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Fund and review the commissions paid by the Fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the Fund.
For the fiscal years ended September 30, 199 3 and 199 2 , the
Fund's annual portfolio turnover rate amounted to 183 % and
211 %, respectively. The Fund's turnover rate for these periods was
substantially greater due to a higher volume of shareholder purchase
orders, short-term interest rate volatility and other special market
conditions.
For the fiscal years ended September 30, 199 3 , 199 2 and
199 1 , the Fund paid brokerage commissions of $1,068,788,
$1,087,115, and $1,079,734, respectively. During fiscal 1993,
approximately $ 872,596 or 82 % of these commissions were
paid to brokerage firms which provided research services, although the
providing of such services was not necessarily a factor in the placement of
all business with such firms. The Fund pays both commissions and spreads
in connection with the placement of portfolio transactions; FBSI is paid on
a commission basis. During fiscal 199 3 , 199 2 , and
199 1 , the Fund paid brokerage commissions of $103,206,
$126,298, and $165,047, respectively, to FBSI. During fiscal
199 3 this amounted to 9.7 % of the aggregate brokerage
commissions paid by the Fund for transactions involving 21.7% of the
aggregate dollar amount of transactions in which the Fund paid brokerage
commissions . The difference in the percentage of brokerage commissions
paid to, and the percentage of the dollar amount of transactions effected
through FBSI is a result of the lower commission rates charged by FBSI.
From time to time the Trustees will review whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. The Fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine, in the exercise of their business judgment,
whether it would be advisable for the Fund to seek such recapture.
Although the Trustees and officers of the Fund are substantially the same
as those of other funds managed by FMR, investment decisions for the Fund
are made independently from those of other funds advised by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions for the Fund. It is
the current opinion of the Trustees that the desirability of retaining FMR
as investment adviser to the Fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Equity securities for which
the primary market is the U.S. are valued at last sale price or, if no sale
has occurred, at the closing bid price. Equity securities for which the
primary market is outside the U.S. are valued using the official closing
price or the last sale price in the principal market where they are traded.
If the last sale price (on local exchange) is unavailable, the last
evaluated quote or last bid price is normally used. Short-term securities
are valued either at amortized cost or at original cost plus accrued
interest, both of which approximate current value. Fixed-income securities
are valued primarily by a pricing service that uses a vendor security
valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques. This twofold approach is believed to
more accurately reflect fair value because it takes into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted, exchange, or over-the-counter prices. Use of pricing services has
been approved by the Board of Trustees.
Securities and other assets for which there is no readily available
market are valued in good faith by a committee appointed by the Board of
Trustees. The procedures set forth above need not be used to determine the
value of the securities owned by the Fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as
well as corporate bonds, U.S. government securities, money market
instruments, and repurchase agreements, is substantially completed each day
at the close of the NYSE. The values of any such securities held by the
Fund are determined as of such time for the purpose of computing the Fund's
net asset value. Foreign security prices are furnished by independent
brokers or quotation services which express the value of securities in
their local currency. Service gathers all exchange rates daily at the close
of the NYSE using the last quoted price on the local currency and then
translates the value of foreign securities from their local currency into
U.S. dollars. Any changes in the value of forward contracts due to exchange
rate fluctuations and days to maturity are included in the calculation of
NAV. If an extraordinary event that is expected to materially affect the
value of a portfolio security occurs after the close of an exchange on
which that security is traded, then the security will be valued as
determined in good faith by a committee appointed by the Board of
Trustees.
PERFORMANCE
The Fund may quote its performance in various ways. All performance
information supplied by the Fund in advertising is historical and is not
intended to indicate future returns. The Fund's share price and total
returns fluctuate in response to market conditions and other factors, and
the value of Fund shares when redeemed may be worth more or less than their
original cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of the Fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the Fund's NAV
over the period. Average annual total returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in the Fund over a stated period, and then calculating the
annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would
produce an average annual return of 7.18%, which is the steady annual rate
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that the Fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performanc e of the Fund.
In addition to average annual total returns, the Fund may quote unaveraged
or CUMULATIVE TOTAL RETURNS reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a
series of redemptions, over any time period. Total returns may be broken
down into their components of income and capital (including capital gains
and changes in share price) in order to illustrate the relationship of
these factors and their contributions to total return. Total returns may
be quoted with or without taking the Fund's 4.75% maximum sales charge into
account. Excluding the Fund's sales charge from a total return calculation
produces a higher total return figure. Total returns and other performance
information may be quoted numerically or in a table, graph or similar
illustration.
The following chart shows total returns for Fidelity Advisor Strategic
Opportunities Fund for the periods ended September 3 0 , 1993.
Average Annual Total Returns** Cumulative Total Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
One Year Five Year Life of Fund* One Year Five Year Life of Fund*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
20.33% 14.56% 15.96% 26.33% 107.18% 345.24%
</TABLE>
* Life of Fund: December 31, 1983 (Commencement of Operations) to
September 30, 1993
** Average annual returns include the effect of the Fund's maximum 4.75%
sales charge. Cumulative returns do not include the effect of this charge
and would have been lower if it had been taken into account. The Fund's
total return figures are adjusted to show what total return would have been
for the Fidelity Advisor Strategic Opportunities Fund (formally the Advisor
Class) had it been available since the Fund's commencement of operations on
December 31, 1983. The Fidelity Advisor Strategic Opportunities Fund
commenced operations on August 20, 1986, and instituted a Distribution and
Service Plan on January 1, 1987. Total returns for the Fidelity Advisor
Strategic Opportunities Fund include the effect of the distribution and
service fee as if that fee had been in effect for the life of the Fund.
Because it has higher expenses, total returns for the Fidelity Advisor
Strategic Opportunities will be lower than for the Fidelity Strategic
Opportunities Fund (formerly the Initial Class) at any given time.
PERFORMANCE COMPARISONS. The Fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. Ibbotson Associates of Chicago, Illinois
(Ibbotson) provides historical returns of the capital markets in the United
States, including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term government
bonds, Treasury bills, the U.S. rate of inflation (based on the Consumer
Price Index), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the funds. Ibbotson calculates total returns in the same method
as the funds. The funds may also compare performance to that of other
compilations or indices that may be developed and made available in the
future. Performance comparisons could include the value of a hypothetical
investment in common stocks, long-term bonds, or treasuries.
The Fund may compare its performance to that of other compilations or
indices of comparable quality to those listed above and to those which may
be developed and made available in the future.
The Fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey which monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank the funds based on yield. In addition
to the mutual fund rankings, the Fund's performance may be compared to
mutual fund performance indices prepared by Lipper.
Each class of shares may quote its performance in advertising and other
types of literature as compared to certificates of deposit (CDs),
bank-issued money market instruments, and money market mutual funds.
Unlike CDs and bank-issued money market instruments, money market mutual
funds and both classes of shares are not insured by the FDIC.
The Fund also may compare its performance to that of the S&P 500 which
is a registered trademark of Standard & Poor's Corporation, the Dow
Jones Industrial Average (DJIA) and the NASDAQ Composite Index (NASDAQ).
The S&P 500, the DJIA and the NASDAQ are widely recognized, unmanaged
indices of common stock prices. The performance of the S&P 500 and the
DJIA is based on changes in the prices of stocks comprising each index and
assumes the reinvestment of all dividends paid on such stocks. Taxes,
brokerage commissions and other fees are disregarded in computing the level
of the S&P 500, the DJIA, and the NASDAQ. The Fund's performance also
may be compared to the increase in the cost of living as measured by the
CPI.
The Fund also may compare its performance or the performance of securities
in which it may invest to IBC/Donoghue's MONEY FUND AVERAGES/All Taxable,
which monitors the performance of over 200 taxable money market funds.
This index, which assumes reinvestment of distributions, is published by
IBC/Donoghue's MONEY FUND REPORT (registered trademark) of Ashland,
Massachusetts 01721. Investors should consider the relevant differences in
investment objectiv es and policies between the Fund and such money
market funds in evaluating such comparisons. Specifically, money market
funds invest in short-term, high quality instruments and seek to maintain a
stable $1.00 share price, while the Fund invests in longer-term equity
securities instruments and its share price changes daily in response to a
variety of factors.
As of December 31, 1993 FMR managed over $ 130 billion in
equity fund assets. This figure represents the largest amount of equity
fund assets under management by a mutual fund investment advisor in the
United States, making FMR America's leading equity (stock) fund manager.
From time to time, the Fund may use this information in advertising and
sales literature.
The Fund may reference and discuss its fund number, Quotron number, CUSIP
number, and current portfolio manager. From time to time, in reports and
promotional literature, the Fund's performance also may be compared to
other mutual funds tracked by financial or business publications and
periodicals. For example, the Fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual funds rating service
which rates mutual funds on the basis of risk adjusted performance. In
addition, the Fund may quote financial or business publications and
periodicals as they relate to the portfolio manager, the investment
philosophy, and techniques. Rankings that compare the performance of
Fidelity Funds to one another in appropriate categories over specific
periods of time may also be quoted in advertising.
VOLATILITY. Various measures of volatility and benchmark correlation
may be quoted in advertising. The Fund may quote various measures of
volatility and benchmark correlation in advertising. In addition, the Fund
may compare these measures to those of other funds. Measures of volatility
seek to compare the Fund's historical share price fluctuations or total
returns to those of a benchmark. Measures of benchmark correlation
indicate how valid a comparative benchmark may be. All measures of
volatility and correlation are calculated using averages of historical
data.
ADJUSTED NET ASSET VALUE. Charts and graphs using the Fund's net asset
values, adjusted net asset values and benchmark indices may be used to
exhibit performance. An adjusted NAV includes any distributions paid by
the Fund and reflects all elements of its return. Unless otherwise
indicated, the Fund's adjusted NAVs are not adjusted for sales charges, if
any. In addition to adjusted NAVs, unadjusted closing NAVs may be used
to show the closing price of the Fund's shares on a particular day or
series of days.
The Fund's adjusted NAVs are calculated using an adjustment factor that is
calculated for every business day over the time period in question on which
the Fund was priced. The factor for any given day is derived by adding the
Fund's distributions which went ex-distribution on the following day,
dividing by the NAV on the following day, adding one, and multiplying by
the factor of the following day. By convention, the factor on the last day
of the time period is set to equal one so that the Fund's adjusted NAV on
that day is the same as its NAV. On September 30 , 1993, Fidelity
Advisor Strategic Opportunities Fund adjusted NAV was $ 22.52 .
LONG- AND SHORT-TERM MOVING AVERAGES. A long-term moving average is the
average of each week's adjusted closing NAV for the past 39 or 13 weeks. A
short-term moving average is the average of each day's adjusted closing NAV
for the past 39 or 13 weeks. Long-term moving averages use the Fund's
adjusted closing NAV on the last business day of each week while short-term
moving averages use a daily adjusted closing NAV. Moving Average Activity
Indicators combine adjusted closing NAVs from the last business day of each
week with 39 and 13 week moving averages to produce indicators showing when
an NAV has crossed, stayed above, or stayed below its moving average.
MOMENTUM INDICATORS indicate the Fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
Fund's percentage change in price movements over that period. For example,
a five-week momentum indicator is calculated for each week using the
closing adjusted NAV for the last business day of that week and the five
weeks prior to it. In short, the Fund's five-week momentum indicator is
the Fund's five-week cumulative total return for that week. For the fiscal
year ended September 30 , 1993, Fidelity Advisor Strategic
Opportunities Fund latest five-week momentum indicator was - 0.72% .
The Fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar-cost averaging. In such a
program, the investor invests a fixed dollar amount in the Fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares had been purchased
at the same intervals. In evaluating such a plan, investors should
consider their ability to continue purchasing shares through periods of low
price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may
produce superior after-tax returns over time. For example, an initial
investment of $1,000 earning a taxable return of 10% annually would have an
after-tax value of $1,949 after ten years, assuming tax was deducted from
the return each year at a 31% rate. An equivalent tax-deferred investment
would have an after-tax value of $2,100 after ten years, assuming tax was
deducted at a 31% rate from the tax-deferred earnings at the end of the
ten-year period.
TRADITION OF PERFORMANCE. Fidelity's tradition of performance is achieved
through:
(bullet) MONEY MANAGEMENT: a proud tradition of money management
motivated by the expectation of excellence backed by solid analysis and
worldwide resources. Fidelity employs a bottom-up approach to security
selection based upon in-depth analysis of the fundamentals of that
investment opportunity.
(bullet) INNOVATION: constant attention to the changing needs of today's
investors and vigilance to the opportunities that arise from changing
global markets. Research is central to Fidelity's investment
decision-making process. Fidelity's greatest resource--over 200 skilled
investment professionals--is supported with the most sophisticated
technology available.
Fidelity provides:
(bullet) Global research resources: an opportunity to diversify
portfolios and share in the growth of markets outside the United States.
(bullet) In-house, proprietary bond-rating system, constantly updated,
which provides extremely sensitive credit analysis.
(bullet) Comprehensive chart room with over 1500 exhibits to provide
sophisticated charting of worldwide economic, financial, and technical
indicators, as well as to provide tracking of over 800 individual stocks
for portfolio managers.
(bullet) State-of-the-art trading desk, with access to over 200 brokerage
houses, providing real-time information to achieve the best executions and
optimize the value of each transaction.
(bullet) Use of extensive on-line computer-based research services.
(bullet) SERVICE: Timely, accurate and complete reporting. Prompt and
expert attention when an investor or an investment professional needs it.
HISTORICAL FUND RESULTS. The following chart shows the income and capital
elements of the Fund's total return from December 31, 1983 (commencement of
operations) unti l September 30, 1993 The chart compares the Fund's
return to the record of the S&P 500, the DJIA, NASDAQ and the cost of
living (measured by the CPI) over the same period. The comparison to the
S&P 500 shows how the Fund's total return compared to the record of a
broad average of common stock prices, and the comparison to the DJIA shows
how the Fund's total return compared to the record of a narrower set of
stocks of major industrial companies. The NASDAQ comparison shows how the
Fund's total return compared to the record of a broad range of
over-the-counter stocks. The S&P 500 and DJIA comparisons are provided
to show how the Fund's return compared to the return of common stocks over
the same period. The S&P 500 and DJIA are based on the prices of
unmanaged groups of stocks and, unlike the Fund's returns, their returns do
not include the effect of paying brokerage commissions and other costs of
investing. The Fund has the ability to invest in securities not included
in either index, and its investment portfolio may or may not be similar in
composition to the indices.
During the period from December 31, 1983 (commencement of operations) to
September 30 , 1993 a hypothetical investment of $10,000 in the Fund
would have grown to $ 44,683 after deduction of the Fund's 4.75%
maximum sales charge and assuming all distributions were reinvested. This
was a period of widely fluctuating stock prices, and should not be
considered representative of the dividend income or capital gain or loss
that could be realized from an investment in the Fund today.
<TABLE>
<CAPTION>
<S> <C>
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Initial Initial Reinvested Cost
Period $10,000 Income Capital Gain Total of
Ended Investment Distributions Distributions Value NASDAQ S&P DJIA Living**
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/84* $10,465 $ 0 $ 0 $10,465 $ 8,971 $10,432 $ 9,950 $10,365
9/30/85 11,957 64 214 12,236 10,062 11,948 11,490 10,691
9/30/86 15,642 385 1,735 17,76 3 12,587 15,741 15,859 10,879
9/30/87 17,822 550 3,172 21,54 3 15,947 22,580 24,007 11,352
9/30/88 14,521 77 3 5,17 5 20,4 69 13,916 19,789 20,252 11,826
9/30/89 18,280 1,9 07 6,51 5 26,70 2 16,975 26,319 26,782 12,340
9/30/90 16,092 2,3 40 5,73 5 24,16 7 12,366 23,886 25,348 13,100
9/30/91 19,991 4,1 83 7,12 4 31, 298 18,912 31,333 32,299 13,544
9/30/92 18,261 4,837 10,47 3 33,5 71 20,936 34,798 36,071 13,949
9/30/93 21,057 6,762 14,590 42,409 27,379 39,326 40,364 14,324
</TABLE>
* From Commencement of Operations, December 31, 1983 to September 30,
1984.
** From the month-end closest to the initial investment date.
EXPLANATORY NOTES: With an initial investment of $10,000 made on December
31, 1983, the net amount invested in Fund shares was $ 9,525 ,
assuming the current 4.75% maximum sales charge was deducted as if it had
been in effect at that time. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (that is, their cash value at the time
they were reinvested), amounted to $ 25,191 . If distributions had
not been reinvested, the amount of distributions earned from the Fund over
time would have been smaller, and the cash payments for the period would
have come to $ 3,441 for income dividends and $ 7,359 for
capital gain distributions. Tax consequences have not been factored into
the above figures.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
The Fund is open for business and its NAV is calculated each day that the
NYSE is open for trading. The NYSE has designated the following holiday
closings for 199 4 : Presidents' Day , Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed) . Although FMR expects the same holiday schedule , with
the addition of New Year's Day, to be observed in the future, the NYSE
may modify its holiday schedule at any time. On any day that the NYSE
closes early, or as permitted by the SEC, the right is reserved to advance
the time on that day by which purchase and redemption orders must be
received. To the extent that portfolio securities are traded in other
markets on days when the NYSE is closed, the Fund's NAV may be affected on
days when investors do not have access to the Fund to purchase or redeem
shares. Certain Fidelity funds may follow different holiday closing
schedules.
If the Trustees determine that existing conditions make cash payment
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the Fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the
Rule), the Fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administration fee,
redemption fee or deferred sales charge ordinarily payable at the time of
exchange, or (ii) the Fund temporarily suspends the offering of shares as
permitted under the 1940 Act or the rules and regulations thereunder, or
the fund to be acquired suspends the sale of its shares because it is
unable to invest amounts effectively in accordance with its investment
objective and policies, or would otherwise be adversely affected.
In the Prospectus, the Fund has notified shareholders that it reserves
the right, at any time without prior notice, to refuse exchange purchases
by any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
PURCHASE INFORMATION
As provided for in Rule 22d-1 under the 1940 Act, Distributors exercises
its right to waive the maximum 4.75% sales charge in connection with the
Fund's merger with or acquisition of any investment company or trust.
NET ASSET VALUE PURCHASES. Sales charges do not apply to shares of the
Fund purchased: (1) by registered representatives, bank trust officers and
other employees (and their immediate families) of investment professionals
having agreements with Fidelity Distributors Corporation; (2) by a current
or former Trustee or officer of a Fidelity fund or a current or retired
officer, director or full-time employee of FMR Corp. or its direct or
indirect subsidiaries (a "Fidelity Trustee or employee"), the spouse of a
Fidelity Trustee or employee, a Fidelity Trustee or employee acting as
custodian for a minor child, or a person acting as trustee of a trust for
the sole benefit of the minor child of a Fidelity Trustee or employee; (3)
by a charitable organization (as defined in Section 501(c)(3) of the
Internal Revenue Code) investing $100,000 or more; (4) by a charitable
remainder trust or life income pool established for the benefit of a
charitable organization (as defined in Section 501(c)(3) of the Internal
Revenue Code); (5) by trust institutions (departments) investing
on their own behalf or on behalf of their clients; (6) in accounts
as to which a bank or broker-dealer charges an investment management fee,
provided the bank or broker-dealer has an agreement with Fidelity
Distributors Corporation; (7) as part of an employee benefit plan
(including Fidelity-Sponsored 403(b) and Corporate IRA programs, but
otherwise as defined in the Employee Retirement Income Security Act (ERISA)
maintained by a U.S. Employer having more than 200 eligible employees or a
minimum of $3,000,000 in plan assets invested in Fidelity mutual funds, or
as part of an employee benefit plan maintained by a U.S. Employer that is a
member of a parent-subsidiary group of corporations (within the meaning of
Section 1563(a)(1) of the Internal Revenue Code, with "50%" substituted for
"80%") any member of which maintains an employee benefit plan having more
than 200 eligible employees, or a minimum of $3,000,000 in plan assets
invested in Fidelity mutual funds, and the assets of which are held in a
bona fide trust for the exclusive benefit of employees participating
therein; ( 8 ) in a Fidelity or a Fidelity Advisor IRA account
purchase with the proceeds of a distribution from an employee benefit plan
that is part of an employee benefit plan having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in Fidelity
mutual funds or $1,000,000 invested in Fidelity Advisor mutual funds;
(9) by an insurance company separate account used to fund annuity
contracts purchased by employee benefit plans (including 403(b) programs,
but otherwise as defined in ERISA), which, in the aggregate, have either
more than 200 eligible employees or a minimum of $3,000,000 in assets
invested in Fidelity mutual funds or a minimum of $1,000,000 invested in
Fidelity Advisor mutual funds; (10) by any state, county, or city, or any
governmental instrumentality, department, authority or agency; and
(1 1 ) with redemption proceeds from other mutual fund complexes
on which the investor has paid a front-end sales charge only .
Distributors compensates securities dealers and banks having agreements
with Distributors (investment professionals), who sell shares according
to the schedule in the Prospectus . Distributors will , at its
expense, provide promotional incentives to investment professionals who
support the sale of shares of the Fund without reimbursement from
the Fund. In some instances, these incentives will be offered only
to certain investment professionals such as bank-affiliated or
non-bank-affiliated broker-dealers whose representatives provide services
in connection with the sale or expected sale of significant amounts of
shares.
Distributors compensates investment professionals with a fee of .25% on
purchases of $1 million or more, except for purchases made through a bank
or bank-affiliated broker-dealer that qualify for a Sales Charge Waiver
described in the Fund's prospectus. All assets on which the .25% fee is
paid must remain within the Fidelity Advisor Funds (including shares
exchanged into Daily Money Fund and Daily Tax-Exempt Money Fund) for a
period of one uninterrupted year or the investment professional will be
required to refund this fee to Distributors. Purchases by insurance
company separate accounts will qualify for the .25% fee only if an
insurance company's client relationship underlying the separate account
exceeds $1 million. It is the responsibility of the insurance company to
maintain records of purchases by any such client relationship.
Distributors may request records evidencing any fees payable through this
program.
QUANTITY DISCOUNTS. Reduced sales charges are applicable to purchases of
$50,000 or more of the Fund alone or in combination with purchases of
shares of other Fidelity Advisor Funds made at any one time (including
Daily Money Fund and Daily Tax-Exempt Money Fund shares acquired by
exchange from any Fidelity Advisor Fund with a sales charge). To obtain
the reduction of the sales charge, you or your investment professional must
notify the Transfer Agent at the time of purchase whenever a quantity
discount is applicable to your purchase. Upon such notification, you will
receive the lowest applicable sales charge.
In addition to investing at one time in any combination of funds
(excluding Fidelity Capital Appreciation Fund) in an amount entitling you
to reduced sales charge, you may qualify for a reduction in the sales
charge under the following programs:
COMBINED PURCHASES. When you invest in the Fund for several accounts at
the same time, you may combine these investments into a single transaction
to qualify for the quantity discount if purchased through one
investment professional, and if the total is at least $50,000. The
following may qualify for this privilege: an individual or
" company" as defined in Section 2(a)(8) of the 1940 Act; an
individual, spouse, and their children under 21 purchasing for his, her or
their own account; a trustee, administrator or other fiduciary purchasing
for a single trust estate or single fiduciary account or for a single or a
parent-subsidiary group of "employee benefit plans" (as defined in section
3(3) of ERISA); and tax-exempt organizations under Section 501(c)(3) of the
Internal Revenue Code.
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on future purchases after you have reached a new breakpoint
in the sales charge schedule (see the Prospectus for the sales charge
schedule). You can add the value of your existing Fidelity Advisor Fund
shares (including Daily Money Fund and Daily Tax-Exempt Money Fund
shares acquired by exchange from any Fidelity Advisor Fund), held by
you, your spouse, and your children under age 21, determined at the
previous days' NAV at the close of business, to the amount of your new
purchase, valued at the current public offering price, to determine your
reduced sales charge.
LETTER OF INTENT. Y ou may obtain shares at the same reduced sales
charge as though the total quantity were invested in one lump sum, by
filing a nonbinding Letter of Intent (the Letter) within 90 days of the
start of the purchases. Each investment you make after signing the Letter
will be entitled to the sales charge applicable to the total investment
indicated in the Letter. For example, a $2,500 purchase toward a $50,000
Letter would receive the same reduced sales charge as if the $50,000 had
been invested at one time. To ensure that the reduced price will be
received on future purchases, you or your investment professional must
inform Service that the Letter is in effect each time shares are purchased.
Neither income dividends nor capital gain distributions taken in additional
shares will apply toward the completion of the Letter.
Your initial investment must be at least 5% of the total amount you plan
to invest. Out of the initial purchase, 5% of the dollar amount specified
in the Letter will be registered in your name and held in escrow. The
shares held in escrow cannot be redeemed or exchanged until the Letter is
satisfied or the additional sales charges have been paid. All income
dividends and capital gain distributions on escrowed shares will be paid to
you. The escrow will be released when your purchase of the total amount
has been completed. You are not obligated to complete the Letter.
If you purchase more than the amount specified in the Letter and qualify
for a further sales charge reduction, the sales charge will be adjusted to
reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering
price applicable to the total purchase.
If you do not complete your purchase under the Letter within the 13-month
period, 30 days' written notice will be provided for you to pay the
increased sales charge due, otherwise sufficient escrowed shares will
be redeemed to pay such charge s .
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PLAN. You can make regular
investments in the Fund or other Fidelity Advisor Funds with
the Systematic Investment Plan by completing the appropriate section of the
account application and attaching a voided personal check with your bank's
magnetic ink coding number across the front. If your bank account is
jointly owned, be sure that all owners sign. Investments may be made
monthly by automatically deducting $ 10 0 or more from your bank
checking account. You may change the amount of your monthly purchase at
any time. There is a $1,000 minimum initial investment requirement for
the Systematic Investment Program.
Your account will be drafted on or about the first business day of
every month. Shares will be purchased at the offering price next
determined following receipt of the order by the Transfer Agent. You may
cancel the Systematic Investment option at any time without payment of a
cancellation fee. You will receive a confirmation from the Transfer Agent
for every transaction, and a debit entry will appear on your bank
statement.
EXCHANGE INFORMATION
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PLAN. With the Systematic
Exchange Plan, you can exchange a specific dollar amount from the Fund
shares into certain other Fidelity Advisor Funds on a monthly,
quarterly or semiannual basis under the following conditions:
(bullet) The account from which the exchanges are to be processed must
have a minimum value of $10,000 before you may elect to begin exchanging
systematically. The account into which the exchanges are to be processed
must be an existing account with a minimum balance of $1,000.
(bullet) Both accounts must have identical registrations and taxpayer
identification numbers. The minimum amount to be exchanged systematically
varies by fund. The minimum amount to be exchanged systematically into
Fidelity Advisor Strategic Opportunities Fund is $100. Please check the
Fidelity Advisor Funds P rospectus for details.
(bullet) Systematic Exchanges will be processed at the NAV determined on
the transaction date, except that Systematic Exchanges into a Fidelity
Advisor Fund from any money market fund will be processed at the offering
price next determined on the transaction date, unless the shares were
acquired by exchange from another Fidelity Advisor Fund.
REDEMPTION INFORMATION
REINSTATEMENT PRIVILEGE. If you have sold all or part of your shares you
may reinvest an amount equal to all or a portion of the redemption proceeds
in the Fund or in any of the other Fidelity Advisor Funds, at the NAV next
determined after receipt of your investment order, without a sales charge,
provided that such reinvestment is made within 30 days of redemption. No
charge currently is made for reinvestment in shares of the Fund.
You must reinstate your shares into an account with the same
registration. This privilege may be exercised only once by a shareholder
with respect to the Fund.
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PLAN. If you own shares
worth $10,000 or more, you can have monthly, quarterly or semiannual checks
sent from your account to you, to a person named by you, or to your bank
checking account. Your Systematic Withdrawal Plan payments are
drawn from share redemptions. If Systematic Withdrawal Plan redemptions
exceed distributions earned on your shares, your account eventually
may be exhausted. Since a sales charge is applied on new shares you buy,
it is to your disadvantage to buy shares while also making systematic
redemptions.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your check, or if your checks remain
uncashed for six months, the Transfer Agent may reinvest your distributions
at the then-current NAV. All subsequent distributions will then be
reinvested until you provide the Transfer Agent with alternate
instructions.
DIVIDENDS. A portion of the Fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that the Fund's income is derived from qualifying dividends.
Because the Fund may also earn other types of income, such as interest,
income from securities loans, non-qualifying dividends and short-term
capital gains, the percentage of dividends from the equity portfolios that
qualify for the deduction will generally be less than 100%. The Fund will
notify corporate shareholders annually of the percentage of Fund dividends
which qualify for the dividends received deduction. A portion of the
Fund's dividends derived from certain U.S. Government obligations may be
exempt from state and local taxation. Gains (losses) attributable to
foreign currency fluctuations are generally taxable as ordinary income and
therefore will increase (decrease) dividend distributions. The Fund will
send each shareholder a notice in January describing the tax status of
dividends and capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains realized by the Fund
on the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the Fund, and such shares are held
less than six months and are sold at a loss, the portion of the loss equal
to the amount of the long-term capital gain distribution will be considered
a long-term loss for tax purposes.
Short-term capital gains distributed by the Fund are taxable to
shareholders as dividends, not as capital gains. Distributions from the
short-term capital gains do not qualify for the dividends received
deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the fund does
not currently anticipate that securities of foreign corporations will
constitute more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUND. The Fund has qualified and intends to continue to
qualify as a "regulated investment company" for tax purposes, so that it
will not be liable for federal tax on income and capital gains distributed
to shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes, the Fund intends to
distribute substantially all of its net investment income and realized
capital gains within each calendar year as well as on a fiscal year basis.
The Fund also intends to comply with other tax rules applicable to
regulated investment companies, including a requirement that capital gains
from the sale of securities held for less than three months must constitute
less than 30% of the Fund's gross income for each fiscal year. Gains from
some forward currency contracts, futures contracts, and options are
included in this 30% calculation, which may limit the Fund's investments in
such instruments.
If the Fund purchases shares in certain foreign investment entities,
called passive foreign investment companies (PFICs), it may be subject to
U.S. federal income tax on a portion of any excess distribution or gain
from the disposition of such shares. Interest charges may also be imposed
on the Fund with respect to deferred taxes arising from such distributions
or gains.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders of a Fund may be subject to
state and local taxes on distributions received from the Fund. Investors
should consult their tax advisors to determine whether the Fund is suitable
to their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a company organized in
1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: Fidelity Service Co.
(Service), which is the transfer and shareholder servicing agent for
certain of the funds advised by FMR; Fidelity Investments Institutional
Operations Company (FIIOC), which performs shareholder servicing functions
for certain institutional customers; and Fidelity Investments Retail
Marketing Company, which provides marketing services to various companies
within the Fidelity organization.
Several affiliates of FMR also are engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research and may
supply portfolio management services to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc . , a wholly owned subsidiary of FMR formed in 1989,
supplies portfolio management and research services in connection
with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Board of Trustees and executive officers of the Fund are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. All persons named as
Trustees also serve in similar capacities for other funds advised by FMR.
Unless otherwise noted, the business address of each Trustee and officer is
82 Devonshire Street, Boston, Massachusetts 02109, which is also the
address of FMR. Those Trustees who are "interested persons" (as defined in
the 1940 Act) by virtue of their affiliation with either the Fund or FMR,
are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; a Director of FMR, Chairman and a
Director of FMR Texas (1989), FMR U.K. and FMR Far East.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President
of FMR; and President and a Director of FMR Texas (1989), Fidelity
Management & Research ( U.K. ) Inc. and F idelity Management
& Research ( Far East ) .
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee (1992).
Prior to her retirement in September of 1991, Mrs. Davis was the Senior
Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of the University of
Vermont School of Business Administration .
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, O H, Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. Prior to May 1990, he was Director
of National City Corporation (a bank holding company) and National City
Bank of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation , Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments; Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), the National Arts Stabilization Fund, Greenwich
Hospital Association (1989), and Valuation Research Corp. (appraisals and
valuations, 1993) . In addition, he serves as Vice Chairman of the Board
of Directors of the National Arts Stabilization Fund and Vice Chairman of
the Board of Trustees of the Greenwich Hospital Association (1989).
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction, 1988). In addition, he serves as a Trustee
of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), and Commercial Intertech Corp. (water treatment equipment, 1992 (,
and Associated Estates Realty Corporation (a real-estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #1204, Naples, FL, Trustee .
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Portfolios and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee , is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He
is currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992 )
G ARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of
the Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Vice President
and Clerk of Distributors.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR.
DANIEL R. FRANK, Vice President of the Fund (1986), and an employee of FMR.
Under a retirement program, which became effective on November 1, 1989, a
Trustee, upon reaching age 72, becomes eligible to participate in a defined
benefit retirement program under which he receives payments during his
lifetime based on his final year's basic trustees fees and length of
service. Currently Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham and David L. Yunich are participating in this program.
Effective September 1, 1993, Mr. Witham will retire as Trustee of the Trust
and will become eligible for participation in the program.
As of December 31 , 1993, the Trustees and officers of the Fund
owned in the aggregate less than 1% of the outstanding shares of the Fund.
MANAGEMENT AND OTHER SERVICES
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, and
compensates all officers of the Trust, all Trustees who are "interested
persons" of theTrust or of FMR, and all personnel of the Trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the Fund. These services include providing
facilities for maintaining the Fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the Fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the Fund's
records and the registration of the Fund's shares under federal and state
law; developing management and shareholder services for the Fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
Fidelity Service Co. ( Service ) and State Street, the Fund
pays all of its expenses, without limitation, that are not assumed by those
parties. The Fund pays for typesetting, printing, and mailing proxy
material to shareholders, legal expenses, and the fees of the custodian,
auditor, and non-interested Trustees . O ther expenses paid by the
Fund include interest, taxes, brokerage commissions, the Fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. The Fund is also liable for such nonrecurring expenses as
may arise, including costs of any litigation to which the Fund may be a
party and any obligation it may have to indemnify its officers and Trustees
with respect to litigation.
FMR is the Fund's manager pursuant to a Management Contract dated
November 29, 1990, which was approved by shareholders on September 19,
1990. For the services of FMR under the Contract, FMR is paid a
monthly management fee composed of the sum of two elements: a basic fee and
a performance adjustment based on a comparison of the Fund's performance to
that of the S&P 500.
COMPUTING THE BASIC FEE. The Fund's basic fee rate is composed of two
elements: a group fee rate and an individual fund fee rate. T he 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 schedule
shown on the left . On the right the effective annual fee rate
schedules are the results of cumulatively applying the annualized rates
at varying asset levels. For example, the effective annual group fee rate
at $216.7 billion of average group net assets - their approximate level for
September 30, 1993 was .3262%, which is the weighted average of the
respective fee rates for each level of group net assets up to that
level.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
Average Group Effective
Group Annualized Net Annual
Assets Rate Assets Fee Rate
0 - $ 3 billion .520% $ 0.5 billion .5200%
3 - 6 .490 10 .4840
6 - 9 .460 20 .4398
9 - 12 .430 30 .4115
12 - 15 .400 40 .3944
15 - 18 .385 50 .3823
18 - 21 .370 60 .3728
21 - 24 .360 70 .3656
24 - 30 .350 80 .3599
30 - 36 .345 90 .3552
36 - 42 .340 100 .3512
42 - 48 .335 110 .3475
48 - 66 .325 120 .3444
66 - 84 .320 130 .3417
84 - 102 .315 140 .3394
102 - 138 .310 150 .3371
138 - 174 .305 160 .3351
174 - 228 .300 170 .3333
228 - 336 .295 180 .3316
282 - 336 .290 190 .3299
Over 336 .285 200 .3284
*The rates shown for average group assets in excess of $138 billion were
adopted by FMR on a voluntary basis on January 1, 1992. Rates in excess
of $174 billion were adopted by FMR on a voluntary basis on November 1,
1993. Each was adopted pending shareholder approval of a new management
contract reflecting the extended schedule. The extended schedule provides
for lower management fees as total assets under management increase.
The individual fund fee rate is .30%. Based on the average net assets of
funds advised by FMR for September 199 3 , the annual basic fee rate
would be calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE RATE
.3262 % + .30 % = .6262 %
One - twelfth of this annual basic fee rate is applied to the
Fund's net assets for the most recent month, giving a dollar
amount, which is the fee for that month.
Effective August 1, 1988, FMR voluntarily agreed to collect its basic fee
according to the schedule shown above (minus the break points added January
1, 1992 and November 1, 1993 ) until shareholders could meet to
consider the current contract. With the exception of changing the group
fee rate schedule, the terms of the current contract are identical to those
of the prior contract.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee is subject to an
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 (up to a maximum difference
of + or -10) is multiplied by a performance adjustment rate of .02%.
The maximum annualized adjustment rate is therefore + or -.20%. This
performance comparison is made at the end of each month. One twelfth 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 NAV. For the
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 S&P 500 is based on change in value; this is adjusted for any cash
distributions from the companies whose securities comprise the S&P 500.
Because the adjustment to the basic fee is based on the Fund's performance
compared to the investment record of the S&P 500, 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 S&P 500.
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.
Because the Performance Adjustment rate is applied to the Fund's average
net assets for the entire performance period, the dollar amount of the
Performance Adjustment will depend upon the Fund's average net assets over
the extent of the performance period rather than current net assets.
Accordingly, application of the Performance Adjustment rate to average net
assets for the full performance period generally will result in a higher
dollar amount when the Fund's net assets are decreasing (and a lower dollar
amount when the Fund's net assets are increasing), than would occur if the
Performance Adjustment rate were applied to the current month's assets.
During the fiscal years ended September 30, 1993, 1992, and 1991, FMR
received $1,291,906, $1, 087,250, and $1,240,019, respectively, for its
services as investment adviser to the Fund. The fees, including both the
basic fee and the performance adjustment, were equivalent to .54%, .51%,
and .60%, respectively, of the average net assets of the Fund for each of
those years. For fiscal 1992 and 1991, the downward performance adjustments
amounted to $268,871, and $86,141, respectively. The fee for fiscal 1993
includes the basic fee, an upward performance adjustment of $81,040, and an
upward adjustment of $377, 292 to prior periods' fees.
To comply with the California Code of Regulations, FMR will reimburse the
Fund if and to the extent that the Fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the Fund's expenses for purposes of this regulation, the
Fund may exclude interest, taxes, brokerage commissions and extraordinary
expenses as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
FMR retains the ability to be repaid by the Fund for these expense
reimbursements in the amount that expenses fall below the limit prior to
the end of the fiscal year. Fee reimbursements by FMR will increase the
Fund's total return, and reimbursements by the Fund will lower its total
return.
SUB-ADVISERS. On November 1, 1990, FMR entered into sub-advisory
agreements with FMR U.K. and FMR Far East pursuant to which FMR U.K. and
FMR Far East supply FMR with investment research and recommendations
concerning foreign securities for the benefit of the Fund.
FMR U.K. and FMR Far East, both wholly-owned subsidiaries of FMR, were
formed in 1986 and registered under the Investment Advisers Act of 1940 on
May 11, 1987 to research and to make recommendations with respect to
companies located outside of North America.
The sub-advisory agreements provide that FMR will pay fees to FMR
U.K. and FMR Far East equal to 110% and 105%, respectively, of FMR U.K.'s
and FMR Far East's costs incurred in connection with each agreement, said
costs to be determined in relation to the assets of the Fund that benefit
from the services of the sub-advisers.
State Street is transfer, dividend disbursing and shareholder servicing
agent for the Fidelity Advisor Strategic Opportunities Fund. State Street
also is reimbursed for its out-of-pocket expenses for such items as
postage, forms, telephone charges and mail insurance. State Street has
delegated certain transfer, dividend paying and shareholder services to
Fidelity Investments Institutional Services Company (FIIOC), 82 Devonshire
Street, Boston, Massachusetts 02109, affiliate of FMR. Under a revised fee
arrangement effective January 1, 1993, the Fund pays a per account fee and
a monetary transaction fee of $30 and $6, respectively. For accounts that
FIIOC maintains on behalf of State Street, FIIOC receives all such fees.
For accounts as to which FIIOC provides limited services, FIIOC may receive
a portion (currently up to $20 and $6, respectively) of related per account
fees and monetary transaction fees, less applicable charges and expenses of
State Street for account maintenance and transactions.
Service, an affiliate of FMR, performs the calculations necessary
to determine the Fund's NAV and dividends and maintain the Fund's
accounting records. Prior to July 1, 1991, the annual fee for these
pricing and bookkeeping services was based on two schedules, one pertaining
to the Fund's average net assets, and one pertaining to the type and number
of transactions made. The fee rates in effect as of July 1, 1991 are based
on the Fund's average net assets, specifically .06% for the first $500
million of average net assets and .03% for average net assets in excess of
$500 million. The fee is limited to a minimum of $45,000 and a maximum of
$750,000 per year. Service also receives fees for administering the Fund's
securities lending program. Securities lending fees are based on the
number and duration of individual securities loans. For the fiscal years
ended September 30, 1993, 1992, and 1991 , the fees paid to Service
for pricing and bookkeeping services (including reimbursements for related
out-of-pocket expenses) w ere $145,494, $129,183, and
$134,423, respectively. Service also receives fees for administering
the Fund's securities lending program. Securities lending fees are based on
the number and duration of individual securities loans. For the fiscal
years ended September 30, 1993, 1992, and 1991, there were no fees paid to
Service for securities lending.
THE DISTRIBUTOR
The Fund has a General Distribution Agreement with Distributors, a
Massachusetts corporation organized July 18, 1960. Distributors is a
broker-dealer registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities, Inc. The General
Distribution Agreement calls for Distributors to use all reasonable
efforts, consistent with its other business, to secure purchasers for
shares of the Fund, which are offered continuously at NAV. Distributors
also act as general distributor for other publicly offered Fidelity funds.
The expenses of these operations are borne by FMR.
DISTRIBUTION AND SERVICE PLAN
The Trustees of the Trust have adopted a Distribution and Service
Plan (the Plan) pursuant to Rule 12b-1 of the 1940 Act (the Rule) .
The Plan has been approved by the Trustees and by the Fund's shareholders
at a meeting held August 5, 1986. As required by the Rule, the Trustees
carefully considered all pertinent factors relating to the implementation
of the Plan prior to its approval, and have determined that there is a
reasonable likelihood that the Plan will benefit the Fund and its
shareholders. In particular, the Trustees noted that payments under the
Plan may provide additional incentives to promote the sale of shares of the
Fund, which may result in additional sales of the Fund's shares and an
increase in the Fund's assets. The distribution fee is payable at the
annual rate of .65% of its average net assets determined as of the close of
business on each day throughout the month, but excluding assets
attributable to shares purchased more than 144 months prior to such day.
This distribution fee will be paid by the Fund, not by individual accounts.
For the fiscal years ended September 30, 199 3 , 199 2 , and
199 1 the Fund paid distribution fees to Distributors of
$1,423,456, $1,266,638, and $1,222,07, respectively,
of which $330,491, $273,263, and $282,114, respectively,
was retained by Distributors.
The Plan also specifically recognizes that FMR , either
directly or through Distributors, may use its management fee revenue, past
profits or other resources, without limitation, to pay promotional and
administrative expenses in connection with the offer and sale of shares of
the Fund. Under the Plan, if the payment by the Fund to FMR of
management fees should be deemed to be indirect financing of the
distribution of the Fund's shares, such payment is authorized by the Plan.
In addition, the Plan provides that FMR may use its resources, including
its management fee revenues, to make payments to third parties that assist
in selling shares of the Fund or in other distribution activities.
The Plan does not provide for specific payment by the Fund of any of the
expenses of Distributors, nor obligate Distributors or FMR to perform any
specific type or level of distribution activities or incur any specific
level of expense in connection with distribution activities. After
payments by Distributors for advertising, marketing and
distribution , and payments to investments professionals , the
amounts remaining, if any, may be used as Distributors may elect.
The Glass-Steagall Act generally prohibits federally and state chartered
or supervised banks from engaging in the business of underwriting, selling
or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been clearly defined, in Distributors'
opinion it should not preclude a bank from being paid for shareholder
servicing and recordkeeping functions. Distributors intends to engage
banks to perform only such functions. However, changes in federal
or state statutes and regulations pertaining to the permissible activities
of banks and their affiliates or subsidiaries, as well as further judicial
or administrative decisions or interpretations, could prevent a bank from
continuing to perform all or a part of the contemplated services. If a
bank were prohibited from so acting, the Trustees would consider what
actions, if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the operation
of the Fund might occur, including possible termination of any automatic
investment or redemption or other services then provided by the bank. It
is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences. The Fund may execute
portfolio transactions with and purchase securities issued by depository
institutions that receive payments under the Plan. No preference will be
shown in the selection of investments for the instruments of such
depository institutions. In addition, state securities laws on this issue
may differ from the interpretations of federal law expressed herein, and
banks and financial institutions may be required to register as dealers
pursuant to state law.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Advisor Strategic Opportunities Fund
(formerly Fidelity Special Situations Fund: Advisor Class) a fund of
Fidelity Advisor Series VIII (formerly Fidelity Special Situations
Fund) is an open-end management investment company organized as a
Massachusetts business trust on September 23, 1983. Fidelity Strategic
Opportunities fund currently has two classes of a single series of shares,
the Fidelity Strategic Opportunities Fund (formerly Fidelity Special
Situations Fund: Initial Class) and the Fidelity Advisor Strategic
Opportunities Fund. The Fidelity Advisor Strategic Opportunities Fund was
created by action of the Trustees on August 20, 1986. In the event that FMR
ceases to be the investment adviser to the Fund, the right of the Fund to
use the identifying name "Fidelity" may be withdrawn. The Trust 's
Declaration of Trust permits the Trustees to create additional portfolios.
As of December 31 , 1993, the following owned of record 5% or more
of the Fund's outstanding shares: Merrill Lynch Pierce Fenner,
Jacksonville, Florida, owned 25.89%; A.G. Edwards & Sons, St. Louis,
Missouri, owned 10.62%; and Shearson Lehman Brothers, New York, New York,
owned 6.29%.
SHAREHOLDER AND TRUSTEE LIABILITY. The Trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the Trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
Trust or the Trustees shall include a provision limiting the obligations
created thereby to the Trust and its assets. The Declaration of Trust
provides for indemnification out of the Fund's property of any shareholders
held personally liable for the obligations of the Fund. The Declaration of
Trust also provides that the Fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
Fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his or her
office. Claims asserted against the Fidelity Strategic
Opportunities of the Fund may subject the Fidelity Advisor Strategic
Opportunities Fund shareholders to certain liabilities.
VOTING RIGHTS. The Fund's capital consists of two classes of shares of
beneficial interest. The shares have no preemptive or conversion rights;
the voting and dividend rights, the right of redemption, and the privilege
of exchange are described in each Class' Prospectus. Shares are fully paid
and nonassessable, except as set forth under the heading "Shareholder and
Trustee Liability" above. Shareholders representing 10% or more of the
Trust, Fund, or either class may, as set forth in the Declaration of Trust,
call meetings of the Trust, Fund, or class, as the case may be, for any
purpose related to the Fund, including the purpose of voting on removal of
one or more Trustees. The Trust or Fund may be terminated upon the sale of
its assets to another open-end management investment company, or upon
liquidation and distribution of its assets, if approved by vote of the
holders of a majority of the outstanding shares of the Fund as provided in
the Declaration of Trust. If not so terminated, the Fund will continue
indefinitely.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water St., Boston,
Massachusetts, is custodian of the assets of the Fund. The custodian is
responsible for the safekeeping of the Fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the Fund or in deciding which
securities are purchased or sold by the Fund. The Fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the Fund's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. The Boston branch of the Fund's custodian bank leases its office
space from an affiliate of FMR at a lease payment which, when entered into,
was consistent with prevailing market rates. Transactions that have
occurred to date have included mortgages and personal and general business
loans. In the judgment of FMR, the terms and conditions of those
transactions were not influenced by existing or potential custodial or
other fund relationships.
AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, serves as the Trust's independent accountant. The
auditor examines financial statements for the Fund and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
The Fund's Annual Report for the fiscal year ended September 30, 199 3
is a separate report supplied with this Statement of Additional Information
and is incorporated herein by reference.
FIDELITY STRATEGIC
OPPORTUNITIES FUND:
82 Devonshire Street
Boston, Massachusetts 02109
A FUND OF
FIDELITY ADVISOR SERIES VIII
PROSPECTUS
THE FUND page 2
SHAREHOLDER'S SERVICES page 16
January 29, 1994
Fidelity Strategic Opportunities Fund (the Fund) seeks capital
appreciation by investing primarily in securities of companies believed by
Fidelity Management & Research Company to involve a "special
situation."
TABLE OF CONTENTS
Summary of Fund Expenses
Summary
Financial Highlights
How the Fund Works
Matching the Fund to Your
Investment Needs
Limiting Investment Risks
Portfolio Transactions
Performance
Distributions and Taxes
The Fund and the Fidelity
Organization
Management and Service Fees
How to Buy Additional Shares
Investment Requirements to
Remember
Shareholder Services
How to Redeem Shares
Appendix
The Fund is comprised of two classes of shares, Fidelity Strategic
Opportunities Fund and Fidelity Advisor Strategic Opportunities Fund
(formerly Special Situations: Initial Class and Advisor Class). Both
classes share a common investment objective and investment portfolio. The
Strategic Opportunities Fund is available only to existing shareholders of
that Class. The Fund is currently offering shares of the Advisor Strategic
Opportunities Fund to new investors.
Please read this Prospectus before investing. It is designed to provide
you with information and to help you decide if the Fund's goals match your
own. Retain this document for future reference.
A Statement of Additional Information (dated January 29, 1994) for the
Fund has been filed with the Securities and Exchange Commission (SEC) and
is incorporated herein by reference. This free Statement and the Annual
Report for the fiscal year ended September 30, 1993 are available upon
request from Fidelity Distributors Corporation, 82 Devonshire Street,
Boston, MA 02109.
MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, (OR ENDORSED OR GUARANTEED
BY), OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
(FDIC), THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
FIDELITY DISTRIBUTORS CORPORATION
Nationwide 1-800-544-8888
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
22.THE FUND
23.SUMMARY OF FUND EXPENSES
The purpose of the table below is to assist you in understanding the
various costs and expenses that an investor in the Fund would bear directly
or indirectly. This standard format was developed for use by all mutual
funds to help you make your investment decisions. This expense information
should be considered along with other important information in the
Prospectus such as the Fund's investment objective, past performance and
financial highlights.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load on Purchases
(as a percentage of the offering price) 4.75%
Sales Load on Reinvested Dividends None
Deferred Sales Load Imposed on Redemptions None
Redemption Fee None
Administrative Fee None
Shareholder Transaction Expenses represent charges paid when you purchase,
redeem or exchange shares of the Fund. See "How to Buy Additional Shares,"
beginning on page , and "Exchange Privilege" on page .
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees .54%
Other Expenses .35%
TOTAL OPERATING EXPENSES .89%
Annual Fund operating expenses are based on the Fund's historical expenses.
Management fees are paid by the Fund to Fidelity Management & Research
Company (FMR) for managing its investments and business affairs and will
vary based on performance. The Fund incurs other expenses for maintaining
shareholder records, furnishing shareholder statements and reports and
other services. Management fees and other expenses already have been
reflected in the Fund's share price and are not charged directly to
individual shareholder accounts. Please refer to the section "Management
and Service Fees" on page .
EXAMPLE
1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses, including the maximum 4.75% sales
charge, on a $1,000 investment assuming (1) a 5% annual return and (2)
redemption at the end of each time period: $56 $75 $94 $152
The above hypothetical example illustrates the expenses, including the
maximum 4.75% sales charge, associated with a $1,000 investment over
periods of one, three, five and ten years, based on the expenses in the
table and an assumed annual return of 5%. THE RETURN OF 5% AND EXPENSES
SHOULD NOT BE CONSIDERED INDICATIONS OF ACTUAL OR EXPECTED FUND PERFORMANCE
OR EXPENSES, BOTH OF WHICH MAY VARY.
24.SUMMARY
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek capital
appreciation by investing primarily in securities of companies believed by
FMR to involve a "special situation.'' The Fund also may invest in
securities of companies not involving a special situation whose securities
are believed by FMR to be undervalued. The Fund may purchase common stocks,
securities convertible into common stocks and debt securities. The Fund may
not always achieve its investment objective.
INVESTMENT POLICIES. At least 65% of the Fund's assets normally will be
invested in companies involving a special situation. A 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. Typically, these securities will pay little, if any, income,
which will be entirely incidental to the objective of capital growth. The
Fund expects to be fully invested under most market conditions, and may
make substantial temporary investments in high quality debt securities for
defensive purposes. The Fund may purchase foreign securities and may buy
and sell stock index futures contracts, options and options on futures with
respect to a portion of its assets.
INVESTMENT ADVISER AND GENERAL DISTRIBUTOR. Fidelity Management &
Research Company, 82 Devonshire Street, Boston, MA 02109, is the investment
adviser to the Fund. FMR, one of the largest investment management
organizations in the U.S., serves as investment adviser to investment
companies that had aggregate net assets of more than $200 billion and
approximately 15 million shareholder accounts as of November 30, 1993.
Fidelity Distributors Corporation (Distributors) is the general distributor
for shares of the Fund.
INVESTING IN THE FUND. Strategic Opportunities Fund is closed to new
investors. Current shareholders may make additional investments in the Fund
of $250 or more. The Fund's shares of beneficial interest may be purchased
at the net asset value next determined after your order to purchase is
received plus a maximum 4.75% sales charge (as a percentage of the offering
price). See "How to Buy Additional Shares,'' page .
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. Dividends from the Fund's net
investment income and capital gain distributions on the Fund's securities
transactions are distributed annually. Dividends and capital gain
distributions are reinvested automatically in additional shares at net
asset value (without a sales charge) unless you elect otherwise. You also
may elect to reinvest the dividend and capital gain distributions into
another Fidelity fund.
REDEMPTION OF INVESTMENT. You may redeem all or any part of the value of
your account by mail, Fidelity Money Line or by exchange as described under
"How to Redeem Shares,'' page . The price at which your order will be
effected is the net asset value next determined after your order to redeem
is received.
RISK FACTORS. The value of the Fund's securities will fluctuate in response
to stock market developments and interest rate movements. Securities of
companies involved in a special situation may have speculative
characteristics. In addition, investing in securities of foreign companies
may involve currency and other risks not associated with domestic
investments. The Fund may enter into repurchase agreements and lend its
portfolio securities which may involve credit risks. The Fund also may
invest in lower-quality high-yielding debt securities which may present
certain credit risks, and it may also invest in futures and options; see
the Appendix on page . Investors should review the investment objective and
policies of the Fund carefully and consider their ability to assume any
risk involved in purchasing shares of the Fund.
25.FINANCIAL HIGHLIGHTS
The following table gives you information about the financial history of
Fidelity Strategic Opportunities Fund. It uses the Fund's fiscal year
(September 30) and expresses the information in terms of a single share
outstanding throughout each period.
December 31,
1983,
(Commencement
of Operations) to
Years Ended September 30, September 30,
1993 1992(dagger)(dagger) 1991 1990 1989 1988 1987 1986 1985 1984
SELECTED PER-SHARE DATA
Net asset value,
beginning of period $ 19.72 $ 21.55 $ 17.37 $ 19.77 $ 15.65 $ 19.13 $
16.71 $ 12.70 $ 11.05 $ 10.01
Income from Investment
Operations
Net investment income .45 .73 .77 .80 .64 .48 .53 .36 .35 .16
Net realized and
unrealized
gain (loss) on
investments 4.46 .58 4.26 (2.49) 4.08 (1.80) 2.95 5.05 1.56
.88
Total from investment
operations 4.91 1.31 5.03 (1.69) 4.72 (1.32) 3.48 5.41 1.91
1.04
Less Distributions
From net investment
income (.70) (.72) (.85) (.71) (.60) (.25) (.09) (.24) (.06)
- --
From net realized gain on
investments (1.21) (2.42) - -- - (1.91) (.97) (1.16) (.20) --
Total Distributions (1.91) (3.14) (.85) (.71) (.60) (2.16) (1.06)
(1.40) (.26) --
Net asset value, end
of period $ 22.72 $ 19.72 $ 21.55 $ 17.37 $ 19.77 $ 15.65 $ 19.13 $ 16.71
$ 12.70 $ 11.05
TOTAL RETURN (dagger) 26.98% 7.89% 30.01% (8.96)% 31.19% (4.63)%
21.87% 46.10% 17.64% 10.39%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $ 20,707 $ 17,933 $ 19,193 $ 15,988 $ 19,780 $19,221
$27,809 $31,991 $ 13,602 $ 8,078
Ratio of expenses to average
net assets .89%(clear diamond) .87% 1.00% 1.03% .64%# 1.49% 1.30%
1.50% 1.50% 1.50%
Ratio of investment income
- net to average net
assets 2.74% 3.78% 4.12% 4.21% 4.08% 3.31% 2.88% 2.40% 2.87%
2.03%
Portfolio turnover rate 183% 211% 223% 114% 89% 160% 255% 225%
214% 284%
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE.
(dagger)(dagger) AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
# INCLUDES REIMBURSEMENT OF $.08 PER SHARE FROM FIDELITY SERVICE COMPANY
FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THIS REIMBURSEMENT HAD NOT
EXISTED THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.04%.
(clear diamond) INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FIDELITY
MANAGEMENT & RESEARCH COMPANY FOR ADJUSTMENTS TO PRIOR PERIODS' FEES.
IF THIS REIMBURSEMENT HAD NOT EXISTED THE RATIO OF EXPENSES TO AVERAGE NET
ASSETS WOULD HAVE BEEN 1.05%.
The Financial Highlights table has been audited by Coopers & Lybrand,
independent accountants, whose unqualified report for the fiscal year ended
September 30, 1993 is included in the Fund's Annual Report. The Annual
Report is incorporated by reference into the Statement of Additional
Information.
26.HOW THE FUND WORKS
27.THE FUND'S INVESTMENT OBJECTIVE AND POLICIES
Fidelity Strategic Opportunities Fund's investment objective is to seek
capital appreciation by investing primarily in securities of companies
believed by FMR to involve a "special situation.'' As used in this
Prospectus, 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. The Fund may not always achieve its
objective, but FMR will follow the investment style described in the
following paragraphs.
THE FUND'S INVESTMENT
OBJECTIVE, POLICIES, AND
LIMITATIONS, EXCEPT AS NOTED,
ARE FUNDAMENTAL AND MAY BE
CHANGED ONLY BY VOTE OF A
MAJORITY OF THE OUTSTANDING
SHARES OF THE FUND.
A special situation may involve one or more of the following
characteristics:
(bullet) a technological advance or discovery, the offering of a new or
unique product or service, or changes in consumer demand or consumption
forecasts.
THE FUND NORMALLY WILL INVEST
AT LEAST 65% OF ITS ASSETS IN
COMPANIES INVOLVING A
SPECIAL SITUATION.
(bullet) changes in the competitive outlook or growth potential of an
industry or a company within an industry, including changes in the scope or
nature of foreign competition or the development of an emerging industry.
(bullet) new or changed management or material changes in management
policies or corporate structure.
(bullet) significant economic or political occurrences abroad, including
changes in foreign or domestic import and tax laws or other regulations.
(bullet) other events, including natural disasters, favorable litigation
settlements, or a major change in demographic patterns.
In seeking capital appreciation, the Fund also may invest in securities of
companies not involving a special situation, but which are companies with
valuable fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential.
FMR intends to invest primarily in common stocks and securities that are
convertible into common stocks; however, the Fund also may invest in debt
securities of all types and quality if FMR believes that investing in these
securities will result in capital appreciation. As a non-fundamental
investment policy, the Fund may invest in lower rated, high-yielding debt
securities (commonly referred to as "junk bonds''), although it intends to
limit its investments in these securities to 35% of its assets. The Fund
may make substantial temporary investments in high quality debt securities
for defensive purposes when, in FMR's judgment, a more conservative
approach to investment is desirable. The Fund may purchase restricted
securities. The Fund may invest up to 30% of its assets in foreign
securities of all types and may enter into foreign currency exchange
contracts for the purpose of managing exchange rate risks. The Fund may
enter into repurchase agreements, engage in portfolio securities lending,
invest in warrants and zero coupon bonds. The Fund may invest in loans and
other direct debt instruments. In addition, the Fund may buy and sell stock
index futures contracts, options and options on futures with respect to a
portion of its assets. These practices are described in the Appendix on
page . Further information about the Fund's investment policies can be
found in its Statement of Additional Information.
THE FUND EXPECTS TO BE FULLY
INVESTED UNDER MOST MARKET
CONDITIONS.
28.MATCHING THE FUND TO YOUR INVESTMENT NEEDS
By itself, the Fund does not constitute a balanced investment plan; the
Fund stresses capital appreciation and does not emphasize current income.
It is also important to point out that the Fund makes most sense for you if
you can afford to ride out changes in the stock market, as it invests
primarily in common stocks and securities convertible into common stock.
There are greater risks involved in investing in securities of smaller
companies rather than companies operating according to established patterns
and having longer operating histories. Additionally, larger
well-established companies experiencing a special situation may involve, to
a certain extent, breaks with past experience, which also may pose risks.
The Fund's portfolio securities may be ones in which other investors have
not shown significant interest or confidence and may be regarded as
speculative.
AN INVESTMENT IN STRATEGIC
OPPORTUNITIES MAY BE
CONSIDERED MORE SPECULATIVE
THAN AN INVESTMENT IN OTHER
FUNDS WHICH SEEK CAPITAL
APPRECIATION.
29.LIMITING INVESTMENT RISKS
The Fund has adopted the following investment limitations designed to
reduce investment risk:
WHILE AN INVESTMENT IN
STRATEGIC OPPORTUNITIES IS
NOT WITHOUT RISK, FMR FOLLOWS
CERTAIN POLICIES IN MANAGING
THE FUND'S PORTFOLIO WHICH
MAY HELP TO REDUCE RISK.
1. The Fund may not purchase a security if, as a result: (a) more than 5%
of its total assets would be invested in the securities of any issuer; or
(b) it would hold more than 10% of the outstanding voting securities of any
issuer.
2. The Fund may not purchase the securities of any issuer if, as a result,
more than 25% of the Fund's total assets would be invested in securities of
companies having their principal business activities in the same industry.
3. The Fund (a) may borrow money for temporary or emergency purposes in an
amount not exceeding 33 1/3% of the value of its total assets from a bank
or mutual fund advised by FMR or an affiliate; (b) may engage in reverse
repurchase agreements; and (c) may not purchase any security while
borrowings representing 5% or more of its total assets are outstanding.
4. The Fund (a) may lend securities to a broker-dealer or institution when
the loan is fully collateralized, and (b) lend money to other funds advised
by FMR or an affiliate. The Fund will limit all loans in the aggregate to
33 1/3% of its total assets.
Limitations 1 and 2 do not apply to U.S. government securities. The Fund's
investment objective, limitations 1 and 2 and the percentage limitations on
borrowings and loans in limitations 3 and 4 are fundamental policies and
may be changed only by vote of a majority of the Fund's outstanding shares.
Non-fundamental policies may be changed without shareholder approval. In
addition, these limitations and the policies discussed in "How the Fund
Works'' on page , are considered at the time of purchase. With the
exception of the percentage limitations on borrowing, the sale of portfolio
securities is not required in the event of a subsequent change in
circumstances.
The Fund may borrow money from and lend money to other mutual funds advised
by FMR, or its affiliates, subject to certain restrictions (see the
Appendix on page ). If the Fund borrows money, its share price may be
subject to greater fluctuation until the borrowing is paid off. To this
extent, purchasing securities when borrowings are outstanding may involve
an element of leverage.
30.PORTFOLIO TRANSACTIONS
FMR uses various brokerage firms to carry out the Fund's portfolio
transactions. Since FMR places a large number of transactions, including
those of Fidelity's other funds, the Fund pays commissions lower than those
paid by individual investors. Also, the Fund incurs lower costs than those
incurred by individuals when purchasing debt securities.
FMR CHOOSES BROKER-DEALERS
BY JUDGING PROFESSIONAL
ABILITY AND QUALITY OF SERVICE.
The Fund has authorized FMR to allocate transactions to some broker-dealers
who help distribute the Fund's shares or shares of Fidelity's other funds
to the extent permitted by law, and on an agency basis to an affiliate,
Fidelity Brokerage Services Inc. (FBSI). FMR will also allocate brokerage
transactions to Fidelity Portfolio Services, Ltd., a wholly-owned
subsidiary of Fidelity International Limited (FIL). FMR will allocate such
transactions if commissions are comparable to those charged by
non-affiliated qualified broker-dealers for similar services. FMR will also
allocate brokerage transactions to the Fund's custodian so long as
transaction quality is comparable to other qualified brokers. The custodian
may credit a portion of the commissions paid toward payment of the Fund's
custodian charges.
Higher commissions may be paid to those firms that provide research
services to the extent permitted by law. FMR also is authorized to allocate
brokerage transactions to FBSI in order to secure from FBSI research
services produced by third party, independent entities. FMR may use this
research information in managing the Fund's assets, as well as assets of
other clients.
The frequency of portfolio transactions - the Fund's turnover rate - will
vary from year to year depending on market conditions. The Fund's turnover
rate for fiscal 1993 was 183%. Because a higher turnover rate increases
transaction costs and may increase taxable capital gains, FMR carefully
weighs the anticipated benefits of short-term investment against these
consequences.
31.PERFORMANCE
The Fund's performance may be quoted in advertising in terms of total
return. All performance information is historical and is not intended to
indicate future performance. Share price and total return fluctuate in
response to market and other factors, and the value of the Fund's shares
when redeemed may be worth more or less than original cost. For additional
performance information, please call 1-800-544-8888.
TOTAL RETURN shows the overall dollar or percentage change in value
including changes in share price and assuming all the Fund's dividends and
capital gain distributions are reinvested. A CUMULATIVE TOTAL RETURN
reflects the Fund's performance over a stated period of time. An AVERAGE
ANNUAL TOTAL RETURN reflects the hypothetical annually compounded return
that would have produced the same cumulative total return if the Fund's
performance had been constant over the entire period. Average annual
returns tend to smooth out variations in the Fund's return and are not the
same as actual year-by-year results. Average annual and cumulative total
returns usually will include the effect of paying the Fund's maximum 4.75%
sales charge. Excluding the Fund's sales charge from a total return
calculation produces a higher total return figure. To illustrate the
components of overall performance, the Fund may separate its cumulative and
average annual returns into income results and capital gain or loss. The
Fund may quote its total returns on a before-tax or after-tax basis.
The Fund's total returns for the periods ended September 30, 1993 were as
follows:
AVERAGE ANNUAL TOTAL RETURNS(dagger) CUMULATIVE TOTAL RETURNS(dagger)
ONE FIVE LIFE OF ONE FIVE LIFE OF
YEAR YEARS FUND** YEAR YEARS FUND**
20.95% 15.17% 16.58% 26.98% 112.73% 369.11%
(dagger) Average Annual Total Returns include the effect of the Fund's
maximum 4.75% sales charge. Cumulative Total Returns do not include the
effect of the sales charge and would have been lower if the sales charge
had been taken into account.
** Life of Fund: December 31, 1983 - September 30, 1993.
The following chart compares the Fund's year-by-year total returns to the
record of the Standard & Poor's 500 Composite Stock Price Index
(S&P 500), a widely recognized, unmanaged index of common stock prices.
The Fund's total return figures do not include the effect of the Fund's
4.75% maximum sales charge. Figures for the S&P 500 include the change
in value of the S&P 500 and assume reinvestment of all dividends paid
by the S&P 500 stocks. Tax consequences are not included in the
illustration, nor are brokerage or other fees calculated in the S&P 500
figures.
32.COMPARE STRATEGIC OPPORTUNITIES PERFORMANCE TO THE RECORD OF THE S&P
500.
STRATEGIC
YEARS ENDED OPPORTUNITIES S&P 500
SEPTEMBER 30, 1993 TOTAL RETURN TOTAL RETURN
1984 10.39* 4.31
1985 17.64 14.39
1986 46.10 31.51
1987 21.87 43.27
1988 -4.63 -12.54
1989 31.19 32.97
1990 -8.96 -9.23
1991 30.01 31.17
1992 7.89 11.05
1993 26.98 13.00
* From fund commencement date, December 31, 1983 through September 30,
1984.
When considering the Fund's performance you should bear in mind these
additional factors:
(bullet) The Fund's emphasis is on stocks, so performance is related
strongly to stock market performance, including short-term market swings.
(bullet) Stock prices fluctuated widely over the periods shown.
Other illustrations of performance may show moving averages over specified
periods.
33.DISTRIBUTIONS AND TAXES
The Fund distributes substantially all of its net investment income and
capital gains to shareholders each year, normally in December.
YOU SHOULD KEEP ALL
STATEMENTS YOU RECEIVE TO
ASSIST IN YOUR PERSONAL
RECORDKEEPING.
FEDERAL TAXES. Distributions from the Fund's income and short-term capital
gains are taxed as dividends, and long-term capital gain distributions are
taxed as long-term capital gains. A portion of the Fund's dividends may
qualify for the dividends received deduction for corporations. The Fund's
distributions are taxable when they are declared, whether you take them in
cash or reinvest them in additional shares, except that distributions
declared in December and paid in January are taxable as if paid on December
31. The Fund will send you a tax statement by January 31 showing the tax
status of the distributions you received in the past year, and will file a
copy with the Internal Revenue Service (IRS).
CAPITAL GAINS. You may realize a capital gain or loss when you redeem
(sell) or exchange shares. For most types of accounts, the Fund will report
the proceeds of your redemptions to you and the IRS annually. However,
because the tax treatment also depends on your purchase price and your
personal tax position, you also should keep your regular account statements
to use in determining your tax.
"BUYING A DIVIDEND." On the record date for a distribution, the Fund's
share value is reduced by the amount of the distribution. If you buy shares
just before the record date ("buying a dividend"), you will pay the full
price for the shares, and then receive a portion of the price back as a
taxable distribution.
OTHER TAX INFORMATION. In addition to federal taxes, you may be subject to
state or local taxes on your investment, depending on the laws in your
area.
When you sign your account application, you will be asked to certify
that your social security or taxpayer identification number is correct and
that you are not subject to 31% backup withholding for failing to report
income to the IRS. If you violate IRS regulations, the IRS can require the
Fund to withhold 31% of your taxable distributions and redemptions.
34.THE FUND AND THE FIDELITY ORGANIZATION
The Fund is a fund of Fidelity Advisor Series VIII (the Trust), and is an
open-end, diversified management investment company organized as a
Massachusetts business trust on September 23, 1983. As a Massachusetts
business trust, the Fund is not required to hold annual shareholder
meetings, although special meetings may be called for a specific class or
the Fund as a whole for purposes such as electing or removing Trustees,
changing fundamental investment policies or limitations or approving a
management contract or plan of distribution. As a shareholder you receive
one vote for each share of a class you own and fractional votes for each
fractional share you own. Strategic Opportunities and Advisor Strategic
Opportunities shareholders vote separately on those matters, such as the
plan of distribution, which pertain only to that Class. There is a
possibility that claims asserted against Advisor Strategic Opportunities
may subject Strategic Opportunities to certain liabilities.
THE TRUST'S BOARD OF TRUSTEES
SUPERVISES FUND ACTIVITIES
AND REVIEWS CONTRACTUAL
ARRANGEMENTS WITH
COMPANIES THAT PROVIDE THE
FUND WITH SERVICES.
Fidelity Investments is one of America's largest investment management
organizations and has its principal business address at 82 Devonshire
Street, Boston, MA 02109. It includes a number of different companies that
provide a variety of financial services and products. The Fund employs
various Fidelity companies to perform certain activities required to
operate the Fund.
Fidelity Management & Research Company is the original Fidelity
company, founded in 1946. It provides a number of mutual funds and other
clients with investment research and portfolio management services. It
maintains a large staff of experienced investment personnel and a full
complement of related support facilities. Distributors distributes shares
for the Fidelity funds. FMR Corp. is the parent company for the Fidelity
companies. Through ownership of voting common stock, Edward C. Johnson 3d,
(President and a Trustee of the Trust), Johnson family members, and various
trusts for the benefit of the Johnson family form a controlling group with
respect to FMR Corp.
AS OF NOVEMBER 30, 1993,
FMR ADVISED FUNDS HAVING
MORE THAN 15 MILLION
SHAREHOLDER ACCOUNTS WITH A
TOTAL VALUE OF MORE THAN $200
BILLION.
35.MANAGEMENT AND SERVICE FEES
The Fund, pursuant to its management contract, pays FMR a monthly fee for
managing its investments and business affairs made up of a basic fee and a
performance adjustment. The annual basic fee rate is the sum of two
components:
1. A group fee rate based on the monthly average net assets of all the
mutual funds advised by FMR. This rate cannot rise above .52%, and drops
(to as low as a marginal rate of .285%*) as total assets in all these funds
rise. The effective group fee rate for September 30, 1993 was .3262%.
2. An individual fund fee rate of .30%.
* FMR voluntarily agreed to adopt revised group fee rate schedules which
provide for a marginal rate as low as .285% when average group net assets
exceed $336 billion. A new management contract with a revised group fee
rate schedule will be presented for approval at the next shareholder
meeting.
One-twelfth of the annual basic fee rate is applied to the Fund's net
assets averaged over the most recent month, giving a dollar amount which is
the basic fee for that month.
The performance adjustment, also calculated monthly, is based on a
comparison of the Fund's performance to that of the S&P 500 over the
most recent 36-month period. The difference is translated into a dollar
amount that is added to or subtracted from the basic fee. This adjustment
rewards FMR when the Fund outperforms the S&P 500 and reduces FMR's fee
when the Fund underperforms the S&P 500. The maximum annualized
performance adjustment is + or - .20%.
FMR has entered into sub-advisory agreements with Fidelity Management &
Research (U.K.) Inc. (FMR U.K.) and Fidelity Management & Research (Far
East) Inc. (FMR Far East), whose principal business offices are situated in
London and Tokyo, respectively. Pursuant to the agreements, FMR U.K. and
FMR Far East provide research and investment recommendations with respect
to companies based outside the United States; FMR U.K. focuses primarily on
companies based in Europe, FMR Far East focuses primarily on companies
based in Asia and the Pacific Basin.
Under the sub-advisory agreements, FMR pays FMR U.K. and FMR Far East fees
equal to 110% and 105%, respectively, of each sub-adviser's costs
incurred in connection with its sub-advisory agreement. FMR U.K. and FMR
Far East are wholly owned subsidiaries of FMR, both formed in 1986 to
provide research with respect to foreign securities.
FMR may, from time to time, agree to reimburse the Fund for expenses above
a specified percentage of average net assets. FMR retains the ability to be
repaid by the Fund for those expense reimbursements in the amount that
expenses fall below the limit prior to the end of the fiscal year. Fee
reimbursements by FMR will increase the Fund's total return, and
reimbursement by the Fund will lower its total return.
The Fund pays Service, an affiliate of FMR, transfer agent fees based on
the type, size and number of accounts in the Fund, and the number of
monetary transactions made by shareholders. For the 1993 fiscal year, the
Fund's transfer agent fees amounted to $38,794.
FIDELITY SERVICE CO. (SERVICE)
ACTS AS THE FUND'S TRANSFER
AND DIVIDEND-PAYING AGENT
AND MAINTAINS ITS
SHAREHOLDER RECORDS.
The Fund also pays Service to calculate its daily share price, to maintain
its general accounting records, and to administer its securities lending
program. The fees for pricing and bookkeeping services are based on the
Fund's average net assets, but must fall within a range of $45,000 to
$750,000 per year. The fees for securities lending services are based on
the number and duration of individual securities loans. For fiscal 1993,
the Fund's fees for pricing and bookkeeping and securities lending services
(including related out-of-pocket expenses) amounted to $145,494.
The Fund's operating expenses include custodial, legal and accounting fees,
charges to register the Fund with federal and state regulatory authorities
and other miscellaneous expenses. The Fund's total operating expenses for
the fiscal year ended September 30, 1993 were .89% of average net assets.
36.HOW TO BUY ADDITIONAL SHARES
<TABLE>
<CAPTION>
<S> <C>
METHOD Additional (minimum) Investment
BY MAIL - $250
Please make your check payable to the name of
the Fund, with your account number on the
check, and mail to: the address printed on your
account statement.
AT AN INVESTOR Visit the Investor Center nearest you to make
CENTER - investments by check.
FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-544-7777.
BY EXCHANGE - $250
from your account with an identical registration
in certain of Fidelity's other funds.
BY WIRE - $250
Federal funds should be wired to: Bankers Trust
Company, Bank Routing No. 021001033,
Account No. 00163053, together with the name
of the Fund, your account number and name(s).
Call 1-800-544-6666 for additional information.
BY FIDELITY MONEY $250
LINE - You must have received prior notification by
mail from Service that your Fidelity Money
Line is active. The maximum transaction
amount is $50,000.
</TABLE>
37.SHARE PRICE
The price of one share (the offering price) is its net asset value per
share (NAV) plus a sales charge, which is a variable percentage of the
offering price depending upon the amount of the purchase. The table below
shows total sales charges.
<TABLE>
<CAPTION>
<S> <C> <C>
SALES CHARGES AS % OF
AMOUNT OF PURCHASE OFFERING
NET
IN SINGLE TRANSACTION PRICE AMOUNT
INVESTED
Less than $50,000 4.75% 4.99%
$50,000 to less than $100,000 4.50% 4.71%
$100,000 to less than $250,000 3.50% 3.63%
$250,000 to less than $500,000 2.50% 2.56%
$500,000 to less than $1,000,000 2.00% 2.04%
$1,000,000 or more None None
</TABLE>
CALCULATING NAV. Service calculates the Fund's NAV which is computed by
adding the value of all security holdings and other assets of the Fund,
deducting liabilities, and dividing the result by the number of shares of
the Fund outstanding. NAV is calculated at the close of trading, which
coincides with the close of business of the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time). The Fund is open for business each day
the NYSE is open for trading. Portfolio securities and other assets are
valued on the basis of market quotations or, if quotations are not
available, by a method that the Board of Trustees believes accurately
reflects fair value. Foreign securities are valued based on quotations from
the primary market in which they are traded, and are translated from the
local currency into U.S. dollars using current exchange rates.
Reduced sales charges are applicable to purchases of $50,000 or more of the
Fund. To obtain the reduction of the sales charge, Service must be notified
at the time of purchase whenever a quantity discount is applicable to your
purchase. Upon such notification, you will receive the lowest applicable
sales charge.
In addition you may qualify for a reduction of the sales charge under the
Rights of Accumulation or Letter of Intent if your total investment in the
Fund amounts to at least $50,000. Please see the sales charge schedule
above to determine the sales charge for investments totaling more than
$50,000. Please refer to the Application or to the Fund's Statement of
Additional Information for details about each of these investment programs.
SALES CHARGE WAIVERS. Sales charges do not apply to shares of the
Fund purchased: (1) by registered representatives, bank trust officers and
other employees (and their immediate families) of investment professionals
having agreements with Fidelity Distributors Corporation; (2) by a current
or former Trustee or officer of a Fidelity fund or a current or retired
officer, director or full-time employee of FMR Corp. or its direct or
indirect subsidiaries (a "Fidelity Trustee or employee"), the spouse of a
Fidelity Trustee or employee, a Fidelity Trustee or employee acting as
custodian for a minor child, or a person acting as trustee of a trust for
the sole benefit of the minor child of a Fidelity Trustee or employee; (3)
by a charitable organization (as defined in Section 501(c)(3) of the
Internal Revenue Code) investing $100,000 or more; (4) by a charitable
remainder trust or life income pool established for the benefit of a
charitable organization (as defined in Section 501(c)(3) of the Internal
Revenue Code); (5) by trust institutions investing on their own behalf or
on behalf of their clients; (6) in accounts as to which a bank or
broker-dealer charges an investment management fee, provided the bank or
broker-dealer has an agreement with Fidelity Distributors Corporation; (7)
as part of an employee benefit plan (including Fidelity-sponsored 403(b)
and Corporate IRA programs, but otherwise as defined in the Employee
Retirement Income Security Act (ERISA) maintained by a U.S. employer having
more than 200 eligible employees or a minimum of $3,000,000 in plan assets
invested in Fidelity mutual funds, or as part of an employee benefit plan
maintained by a U.S. employer that is a member of a parent-subsidiary group
of corporations (within the meaning of Section 1563(a)(1) of the Internal
Revenue Code, with "50%" substituted for "80%") any member of which
maintains an employee benefit plan having more than 200 eligible employees,
or a minimum of $3,000,000 in plan assets invested in Fidelity mutual
funds, and the assets of which are held in a bona fide trust for the
exclusive benefit of employees participating therein; (8) by any state,
county, or city, or any governmental instrumentality, department, authority
or agency; (9) with redemption proceeds from other mutual fund complexes on
which the investor has paid a front-end sales charge only; and (10) by an
insurance company separate account used to fund annuity contracts purchased
by employee benefit plans (including 403(b) programs, but otherwise as
defined in ERISA), which, in the aggregate, have either more than 200
eligible employees or a minimum of $3,000,000 in assets invested in
Fidelity mutual funds.
YOU MAY BE ELIGIBLE FOR A
SALES CHARGE REDUCTION IF
YOUR PURCHASE MEETS CERTAIN
CONDITIONS.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been fully defined, in Distributors' opinion it
should not prohibit banks from being paid for shareholder servicing and
recordkeeping. If, because of changes in law or regulation, or because of
new interpretations of existing law, a bank or the Fund were prevented from
continuing these arrangements, it is expected that the Trust's Board would
make other arrangements for these services and that shareholders would not
suffer adverse financial consequences. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
38.INVESTMENT REQUIREMENTS TO REMEMBER
Your purchase will be processed at the next offering price based on the
next NAV calculated after your order is received and accepted. All your
purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks. No cash will be accepted. If you make a purchase with more than one
check, each check must have a value of at least $50, and the minimum
investment requirement shown on the chart still applies. The Fund reserves
the right to limit the number of checks processed at one time. If your
check does not clear, your purchase will be canceled and you could be
liable for any losses or fees incurred. When you purchase by check or via
Fidelity Money Line, the Fund may hold payment on redemptions until it is
reasonably satisfied that the investment is collected (which can take up to
seven days).
BEFORE YOU BUY ADDITIONAL
SHARES, PLEASE READ THE
FOLLOWING INFORMATION TO
MAKE SURE YOUR INVESTMENT IS
ACCEPTED AND CREDITED
PROPERLY.
To avoid this collection period, you can wire federal funds from your bank,
which may charge you a fee. "Wiring federal funds'' means that your bank
sends money to the Fund's bank through the Federal Reserve System. You may
initiate many transactions by telephone. Note that Fidelity will not be
responsible for any losses resulting from unauthorized transactions if it
follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
The Fund reserves the right to suspend the offering of shares for a period
of time. The Fund also reserves the right to reject any specific purchase
orders, including certain purchases by exchange (see the "Exchange
Privilege," page ). Purchase orders may be refused if, in FMR's opinion,
they are of a size that would disrupt management of the Fund.
39.SHAREHOLDER SERVICES
40.CHOOSING A DISTRIBUTION OPTION.
A. The SHARE OPTION reinvests your income dividends and capital gain
distributions in additional shares.
WHEN YOU FILL OUT YOUR
ACCOUNT APPLICATION, YOU CAN
CHOOSE FROM FOUR DIFFERENT
DISTRIBUTION OPTIONS.
B. The INCOME-EARNED OPTION reinvests your capital gain distributions and
pays your income dividends in cash.
C. With the CASH OPTION, you receive income dividends and capital gain
distributions in cash.
D. You may choose the DIRECTED DIVIDENDS OPTION to have income dividends
and capital gain distributions from the Fund automatically invested into
another fund. Note that distributions can only be directed to an existing
account with an identical registration as your account in the Fund. The
4.75% load will not apply to shares of the Fund purchased through the
Directed Dividends Option if the originating fund has an equal or higher
sales load. Certain restrictions apply. Call or write Fidelity to learn
more or to change your distribution option.
If you select Option B or C and the U.S. Postal Service cannot deliver your
checks, or if your checks remain uncashed for six months, your
distributions will be reinvested in your account at the then current NAV
and your election will be changed to the Share Option.
You may change your distribution option at anytime. If no distribution
option is selected when you open an account, you automatically will be
assigned the Share Option. On the day the Fund goes ex-dividend, the amount
of the distribution is deducted from its share price. Reinvestment of
distributions will be made at that day's NAV. Cash distribution checks will
be mailed within seven days.
41.EXCHANGE PRIVILEGE
The exchange privilege is a convenient way to buy shares in certain of
Fidelity's other funds that are registered in your state. To protect the
Fund's performance and shareholders, Fidelity discourages frequent trading
in response to short-term market fluctuations. You may make four exchanges
out of the Fund per calendar year; if you exceed this limit, your future
purchases of (including exchanges into) Fidelity funds may be permanently
refused. To make an exchange, follow the procedures indicated in the "How
to Buy Additional Shares of the Fund" and "How to Redeem Shares'' charts.
Before you make an exchange from this Fund please note the following:
YOU MAY EXCHANGE BETWEEN
FIDELITY FUNDS AS YOUR NEEDS
CHANGE.
(bullet) You will not have to pay any sales charge on the shares of
another Fidelity fund you acquire by exchange from this Fund.
(bullet) Call Fidelity for information and a free prospectus for the fund
into which you want to exchange.
(bullet) Complete and sign an application, taking care to register your
new account in the same name, address, and taxpayer identification number
as your existing Fidelity accounts.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to the plan exchange limits and
Department of Labor regulations.
(bullet) TAXES: Each exchange actually represents the sale of shares of
one fund and the purchase of shares in another, which may produce a gain or
loss for tax purposes. Service will send written confirmation for each
exchange transaction.
FIDELITY'S INVESTOR CENTERS
CAN PROVIDE INFORMATION AND
A PROSPECTUS FOR ANY OF
FIDELITY'S OTHER FUNDS
REGISTERED IN YOUR STATE.
(bullet) RESTRICTIONS: Although the exchange privilege is an important
benefit, Fund performance and shareholders can be hurt by excessive
trading. To protect the interests of shareholders, the Fund reserves the
right to temporarily or permanently terminate the exchange privilege for
any person who makes more than four exchanges out of the Fund per calendar
year. Accounts under common ownership or control, including accounts having
the same taxpayer identification number, will be aggregated for the purpose
of the four exchange limit. In addition, the Fund reserves the right at any
time without prior notice to refuse exchange purchases by any person or
group if, in FMR's judgment, the Fund would be unable to invest effectively
in accordance with its investment objective and policies or would otherwise
potentially be adversely affected. Your exchanges may be restricted or
refused if the Fund receives or anticipates simultaneous orders affecting
significant portions of the Funds' assets. In particular, a pattern of
exchanges that coincide with a "market timing'' strategy may be disruptive
to the Fund. Although the Fund will attempt to give you prior notice
whenever it is reasonably able to do so, it may impose these restrictions
at any time. The Fund reserves the right to terminate or modify the
exchange privilege in the future. Other funds may have different exchange
restrictions and may impose administrative fees of up to $7.50 and
redemption fees of up to 1.50% on exchanges. Check each fund's prospectus
for details.
42.FIDELITY TELEPHONE CONNECTION
Use your touch-tone phone for quick, confidential access to frequently
requested information. Call 1-800-544-8544 for Fidelity mutual fund quotes
and 1-800-544-7544 for account balances and last transaction information.
See the back of your quarterly statement for a complete list of Fidelity's
telephone numbers.
43.FIDELITY MONEY LINESM
You can use Fidelity Money Line to move money between your bank account and
your account with one phone call. Allow two to three business days after
the call for the transfer to take place; for money recently invested, allow
normal check-clearing time (up to seven days) before redemption proceeds
are sent to your bank.
FIDELITY MONEY LINE LETS YOU
AUTHORIZE ELECTRONIC TRANSFERS
OF MONEY TO BUY OR SELL
SHARES OF THE FUND.
FIDELITY AUTOMATIC ACCOUNT BUILDER offers a simple way to maintain a
regular investment program. You may arrange automatic transfers (minimum
$250) from your bank account to your Fund account on a periodic basis.
Service will send you written confirmation for every transaction, and a
debit entry will appear on your bank statement.
YOU MAY CHANGE THE AMOUNT
OF YOUR INVESTMENT, SKIP AN
INVESTMENT, OR STOP
AUTOMATIC ACCOUNT BUILDER
BY CALLING FIDELITY
(1-800-544-6666) THREE
BUSINESS DAYS PRIOR TO YOUR
NEXT SCHEDULED INVESTMENT
DATE.
44.STATEMENTS AND REPORTS
Service will send you a statement after every transaction (except a
reinvestment of dividends or capital gains) that affects your share balance
or your account registration. In addition, an account statement will be
mailed to you quarterly. To reduce expenses, only one copy of most Fund
reports (such as the Fund's Annual Report) may be mailed to your household.
Please call Fidelity if you need any additional reports sent each time. The
Fund does not issue share certificates.
The Fund pays for shareholder services but not for special services, such
as a request for a historical transcript of an account. You may be required
to pay a fee for these special services.
If you are purchasing shares of the Fund through a program of services
offered by a securities dealer or financial institution, you should read
the additional materials pertaining to that program in conjunction with
this Prospectus. Certain features of the Fund, such as subsequent
investments, may be modified in these programs, and administrative charges
may be imposed for the services rendered.
AT LEAST TWICE A YEAR YOU WILL
RECEIVE THE FUND'S FINANCIAL
STATEMENTS WITH A SUMMARY
OF ITS INVESTMENTS AND
PERFORMANCE.
45.HOW TO REDEEM SHARES
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next NAV calculated after the Fund has
received and accepted your redemption request. Provided that your account
registration has not changed within the last 60 days, you may redeem shares
of the Fund worth $100,000 or less by calling 1-800-544-7777. For your
protection, if you redeem shares of the Fund having a value of more
than $100,000, or if you are sending the proceeds of a redemption of any
amount to an address other than the address of record listed on the
account, or if you have requested a change of address within the preceding
60 days, you must send a letter of instruction signed by all registered
owners with signature(s) guaranteed to the Transfer Agent. A signature
guarantee is a widely recognized way to protect you by guaranteeing the
signature or your request; it may not be provided by a notary public.
Signature guarantee(s) will be accepted from banks, brokers, dealers,
municipal securities dealers, municipal securities brokers, government
securities dealers, government securities brokers, credit unions (if
authorized under state law), national securities exchanges, registered
securities associations, clearing agencies and savings associations.
Redemption proceeds will be sent to the record address. Remember that the
Fund may hold payment until the Fund is reasonably satisfied that
investments which were made by check or via Fidelity Money Line have been
collected (which may take up to seven days).
46.REDEMPTION REQUIREMENTS TO REMEMBER
Remember that if you should redeem all of your shares, your account will be
closed and you will not be able to reopen an account in the Fund. Once your
shares are redeemed, you normally will be sent the proceeds on the next
business day, but if making immediate payment could adversely affect the
Fund, it may take up to seven days to pay you. Fidelity Money Line
redemptions generally will be credited to your bank account on the second
or third business day after your phone call. When the NYSE is closed (or
when trading is restricted) for any reason other than its customary weekend
or holiday closings, or under any emergency circumstances as determined by
the Securities and Exchange Commission to merit such action, redemptions
may be suspended or payment dates postponed.
TO ENSURE ACCEPTANCE OF YOUR
REDEMPTION REQUEST, PLEASE
FOLLOW THE PROCEDURES
DESCRIBED HERE AND ON THE
CHART ON PAGE .
If you are unable to execute your transactions by telephone (for example,
during times of unusual market activity) consider placing your order by
mail or by visiting one of the Fidelity Investor Centers. The value of
shares redeemed may be more or less than your cost, depending on portfolio
performance during the period you owned your shares.
If you want to keep your account open, please leave shares with a value of
$1,000 in it. If your account balance falls below $1,000 due to redemption,
your account may be closed and the proceeds mailed to you at the address on
record. You will be given 30 days' notice that your account will be closed
unless you make an additional investment to increase your account balance
to the $1,000 minimum. Please note that your shares will be redeemed at the
NAV next determined on the day your account is closed.
47.HOW TO REDEEM SHARES
48.BY MAIL -
TO: FIDELITY INVESTMENTS
P.O. BOX 878
BOSTON, MA 02103-0878
Send a "letter of instruction'' specifying the name of the Fund, the number
of shares to be sold, your name, your account number, and the additional
requirements listed below that apply to your particular account.
49.TYPE OF REGISTRATION
Individual, Joint Tenants, Sole Proprietorship, Custodial (Uniform Gifts or
Transfers To Minors Act), General Partners.
50.REQUIREMENTS
Letter of instruction signed by all person(s) required to sign for the
account, exactly as it is registered, accompanied by signature
guarantee(s).
51.CORPORATIONS, ASSOCIATIONS:
Letter of instruction and a corporate resolution, signed by person(s)
required to sign for the account accompanied by signature guarantee(s).
52.TRUSTS:
Letter of instruction signed by the Trustee(s), with a signature guarantee.
(If the Trustee's name is not registered on your account, also provide a
copy of the Trust document, certified within the last 60 days.)
53.FOR ALL OPTIONS BELOW, PLEASE CALL 1-800-544-7777.
BY FIDELITY MONEY LINE - You must have received prior notification by mail
from Service that your Fidelity Money Line is active. The minimum
redemption amount is $2,500, and the maximum is $50,000. (Accounts cannot
be closed by this service.)
BY EXCHANGE - You must meet the minimum investment requirement of the other
fund. You can only exchange between accounts with identical names,
addresses and taxpayer identification numbers.
Daniel R. Frank is portfolio manager and vice president of Fidelity
Strategic Opportunities Fund which he has managed since December 1983.
Previously, he was an assistant to Peter Lynch on Fidelity Magellan
Fund.
54.APPENDIX
FOREIGN INVESTMENTS. The Fund may invest in foreign securities, which
involve additional risks. Foreign securities and securities denominated in
or indexed to foreign currencies may be affected by the strength of foreign
currencies relative to the U.S. dollar, or by political or economic
developments in foreign countries. Foreign companies may not be subject to
accounting standards or governmental supervision comparable to U.S.
companies, and there may be less public information about their operations.
In addition, foreign markets may be less liquid or more volatile than U.S.
markets, and may offer less protection to investors such as the Fund. FMR
considers these factors in making investments for the Fund. FMR may invest
up to 30% of the Fund's assets in foreign securities. Within this
limitation, there is no restriction on the amount that may be invested in
any one country or currency.
The Fund may enter into forward currency contracts (agreements to exchange
one currency for another at a future date) to manage currency risks and to
facilitate transactions in foreign securities. Although currency forward
contracts can be used to protect the Fund from adverse exchange rate
changes, they involve a risk of loss if FMR fails to predict foreign
currency values correctly.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. In a repurchase agreement the
Fund buys a security and simultaneously agrees to sell it back at a higher
price. In the event of the bankruptcy of the other party to either a
repurchase agreement or a securities loan, the Fund could experience delays
in recovering its cash or the securities it lent. To the extent that, in
the meantime, the value of the securities purchased had decreased, or the
value of the securities lent had increased, the Fund could experience a
loss. In all cases, FMR must find the creditworthiness of the other party
to the transaction satisfactory. The Fund may lend portfolio securities to
an affiliate, Fidelity Brokerage Services, Inc.
OPTIONS AND FUTURES CONTRACTS. The Fund may buy and sell options and
futures contracts to manage its exposure to changing interest rates,
security prices, and currency exchange rates. Some options and futures
strategies, including selling futures, buying puts and writing calls, tend
to hedge the Fund's investments against price fluctuations. Other
strategies, including buying futures, writing puts and buying calls, tend
to increase market exposure. Options and futures may be combined with each
other or with forward contracts in order to adjust the risk and return
characteristics of the overall strategy. The Fund may invest in options and
futures based on any type of security, index, or currency, including
options and futures traded on foreign exchanges and options not traded on
exchanges.
Options and futures can be volatile investments and involve certain risks.
If FMR applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower the Fund's return.
The Fund could also experience losses if the prices of its options and
futures positions were poorly correlated with its other investments, or if
it could not close out its positions because of an illiquid secondary
market.
The Fund will not hedge more than 25% of its total assets by selling
futures, writing calls, or purchasing puts under normal conditions. In
addition, the Fund will not buy futures or write puts whose underlying
value exceeds 25% of its total assets, and will not buy calls with a value
exceeding 5% of its total assets. The Fund's policies regarding futures
contracts and options are not fundamental and may be changed at any time
without shareholder approval.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its assets in
illiquid investments. Under the supervision of the Board of Trustees, FMR
determines the liquidity of the Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for the Fund to sell them promptly at an acceptable price.
RESTRICTED SECURITIES. The Fund may purchase securities which cannot be
sold to the public without registration under the Securities Act of 1933
(restricted securities). Unless registered for sale, these securities can
only be sold in privately negotiated transactions or pursuant to an
exemption from registration.
INTERFUND BORROWING PROGRAM. The Fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally will extend overnight,
but can have a maximum duration of seven days. The Fund will lend through
the program only when the returns are higher than those available at the
same time from other short-term investments (such as repurchase
agreements), and will borrow through the program only when the costs are
equal to or lower than the cost of bank loans. The Fund will not lend more
than 5% of its assets to other funds, and will not borrow through the
program if, after doing so, total outstanding borrowings would exceed 15%
of total assets. Loans may be called on one day's notice, and the Fund may
have to borrow from a bank at a higher interest rate if an interfund loan
is called or not renewed. Any delay in repayment to a lending fund could
result in a lost investment opportunity or additional borrowing costs.
ZERO COUPON BONDS. Zero coupon bonds do not make interest payments;
instead, they are sold at a deep discount from their face value and are
redeemed at face value when they mature. Because zero coupon bonds do not
pay current income, their prices can be very volatile when interest rates
change. In calculating its daily dividend, the Fund takes into account as
income a portion of the difference between a zero coupon bond's purchase
price and its face value.
A broker-dealer creates a DERIVATIVE ZERO by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them
as individual securities. Bonds issued by the Resolution Funding
Corporation (REFCORP) and the Financing Corporation (FICO) can also be
separated in this fashion. ORIGINAL ISSUE ZEROS are zero coupon securities
originally issued by the U.S. government, a government agency, or a
corporation in zero coupon form.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the risk
of loss in case of default or insolvency of the borrower. Direct debt
instruments may offer less legal protection to the Fund in the event of
fraud or misrepresentation. In addition, loan participations involve a risk
of insolvency of the lending bank or other financial intermediary. Direct
debt instruments also may include standby financing commitments that
obligate the Fund to supply additional cash to the borrower on demand.
LOWER-QUALITY DEBT SECURITIES. The Fund may purchase lower-rated debt
securities (those rated Ba or lower by Moody's or BB or lower by S&P)
that have poor protection against default in the payment of principal and
interest, or may be in default. These securities are often considered to be
speculative and involve greater risk of loss or price changes due to
changes in the issuer's capacity to pay. The market prices of lower-rated
debt securities may fluctuate more than those of higher-rated securities,
and may decline significantly in periods of general economic difficulty
which may follow periods of rising interest rates.
DEBT OBLIGATIONS. The table below provides a summary of ratings
assigned to debt holdings (not including money market instruments) in the
Fund's portfolio. These figures are dollar-weighted averages of month-end
portfolio holdings during the thirteen months ended September 30, 1993,
presented as a percentage of total investments. These percentages are
historical and are not necessarily indicative of the quality of current or
future portfolio holdings, which may vary.
S&P MOODY'S
RATING AVERAGE RATING AVERAGE DESCRIPTION
INVESTMENT GRADE
AAA/AA/A 15.99% Aaa/Aa/A 15.99% Highest quality/ high quality
upper medium grade
BBB --% Baa --% Medium grade
LOWER QUALITY
BB --% Ba .18% Moderately speculative
B .80% B .22% Speculative
CCC --% Caa 1.63% Highly speculative
CC/C --% Ca/C --% Poor quality/lowest quality,
no interest
D .89% ___ In default, in arrears
The dollar-weighted average of debt securities not rated by either S&P
or Moody's amounted to .89%. This may include securities rated by other
nationally recognized rating organizations, as well as unrated securities.
Unrated securities are not necessarily lower-quality securities. Please
refer to the Fund's Statement of Additional Information for a more complete
discussion of these ratings.
FIDELITY STRATEGIC OPPORTUNITIES FUND
A FUND OF FIDELITY ADVISOR SERIES VIII
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 29, 1994
This Statement is not a prospectus but should be read in conjunction
with the current Prospectus of Fidelity Strategic Opportunities Fund (the
Fund) (formerly Fidelity Special Situations: Initial Class) (dated January
29, 1994). Please retain this document for future reference. The Fund's
Annual Report for the fiscal year ended September 30, 1993 a separate
report supplied with this Statement of Additional Information is
incorporated herein by reference. Additional copies of the Prospectus,
Statement of Additional Information and Annual Report are available without
charge upon request from Fidelity Distributors Corporation, 82 Devonshire
Street, Boston, Massachusetts 02109.
NATIONWIDE 800-544-8888
TABLE OF CONTENTS PAGE
Investment Policies and Limitations 2
Portfolio Transactions 11
Valuation of Portfolio Securities 13
Performance 13
Additional Purchase, Exchange and Redemption Information 17
Distributions and Taxes 19
FMR 19
Trustees and Officers 20
Management and Other Services 21
The Distributor 25
Description of the Trust 25
Financial Statements 26
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (Distributors)
TRANSFER AGENT
Fidelity Service Company (Service)
CUSTODIAN
Brown Brothers Harriman & Co. (Brown Brothers)
SSF-194
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a Fund's assets which may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation shall be
determined immediately after and as a result of the acquisition of such
security or other asset. Accordingly, any subsequent change in values, net
assets or other circumstances will not be considered when determining
whether the investment complies with the Fund's investment policies and
limitations.
The Fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940 Act))
of the Fund. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued
or guaranteed by the government of the United States, its agencies, or
instrumentalities) if, as a result thereof, more than 5% of the Fund's
total assets (taken at current value) would be invested in the securities
of such issuer;
(2) purchase the securities of any issuer, if such purchase, at the time
thereof, would cause more than 10% of the outstanding voting securities of
such issuer to be held in the Fund's portfolio;
(3) issue senior securities (except to the extent that issuance of one or
more classes of shares of the Fund in accordance with an Order issued by
the Securities and Exchange Commission (SEC) may be deemed to constitute
issuance of a senior security);
(4) make short sales of securities, (unless it owns, or by virtue of its
ownership of other securities has the right to obtain, at no additional
cost, securities equivalent in kind and amount to the securities sold);
provided, however, that the Fund may enter into forward foreign currency
exchange transactions; and further provided that the Fund may purchase or
sell futures contracts;
(5) purchase any securities or other property on margin, (except for such
short-term credits as are necessary for the clearance of transactions);
provided, however, that the Fund may make initial and variation margin
payments in connection with purchases or sales of futures contracts or
options on futures contracts;
(6) borrow money except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of the Fund's total assets (including the
amount borrowed) less liabilities (not including borrowings). Any
borrowings that come to exceed 33 1/3% of the Fund's total assets by reason
of a decline in net assets, will be reduced within three days (exclusive of
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation. The Fund will not purchase securities for investment while
borrowings equaling 5% or more of its total assets are outstanding;
(7) underwrite any issue of securities (except to the extent that the Fund
may be deemed to be an underwriter within the meaning of the Securities Act
of 1933 in the disposition of "restricted securities");
(8) purchase the securities of any issuer (other than obligations issued
or guaranteed by the government of the United States, its agencies, or
instrumentalities) if, as a result thereof, more than 25% of the Fund's
total assets would be invested in the securities of one or more issuers
having their principal business activities in the same industry;
(9) purchase or sell real estate (but this shall not prevent the Fund from
investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein and
participation interests in pools of real estate mortgage loans);
(10) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(11) lend any security or make any other loan if as a result, more than 33
1/3% of the Fund's total assets would be lent to other parties except (i)
through the purchase of a portion of an issue of debt securities in
accordance with its investment objective, policies, and limitations, or
(ii) by engaging in repurchase agreements with respect to portfolio
securities;
(12) purchase securities of other investment companies (except in the open
market where no commission other than the ordinary broker's commission is
paid, or as part of a merger or consolidation, and in no event may
investments in such securities exceed 10% of the value of total assets of
the Fund). The Fund may not purchase or retain securities issued by other
open-end investment companies;
(13) invest more than 5% of the Fund's total assets (taken at market
value) in the securities of companies which, including predecessors, have a
record of less than three years' continuous operation; or
(14) invest in oil, gas, or other mineral exploration or development
programs.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The Fund does not currently intend to sell securities short.
(ii) The Fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (6)). The Fund will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the Fund's total assets.
(iii) The Fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iv) The Fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange (NYSE) or the American Stock Exchange (AMEX) or
traded on the NASDAQ National Market System.
(v) The Fund does not currently intend to lend assets other than
securities to other parties, except by (i) lending money (up to 5% of the
Fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser, or (ii) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vi) The Fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the Fund's net assets.
Included in that amount, but not to exceed 2% of the Fund's net assets, may
be warrants that are not listed on the NYSE or the AMEX. Warrants acquired
by the Fund in units or attached to securities are not subject to these
restrictions.
(vii) The Fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(viii) The Fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the Trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
For the Fund's limitations on futures and options transactions, see
"Limitations on Futures and Options Transactions" beginning on pag e
8.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the Fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the Fund under the 1940 Act. Such transactions may be entered
into only pursuant to procedures established, and periodically reviewed, by
the Board of Trustees. These transactions may include repurchase
agreements with custodian banks; purchases, as principal, of short-term
obligations of, and repurchase agreements with, the 50 largest U.S. banks
(measured by deposits); transactions in municipal securities; and
transactions in U.S. government securities with affiliated banks that are
primary dealers in these securities.
FUND'S RIGHTS AS A SHAREHOLDER. The Fund does not intend to direct or
administer the day-to-day operations of any company. The Fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the Fund's investment in the company.
The activities that the Fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
company's direction or policies; seeking the sale or reorganization of the
company or a portion of its assets; or supporting or opposing third party
takeover efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that the Fund could be involved in lawsuits
related to such activities. FMR will monitor such activities with a view
to mitigating, to the extent possible, the risk of litigation against the
Fund and the risk of actual liability if the Fund is involved in
litigation. No guarantee can be made, however, that litigation against the
Fund will not be undertaken or liabilities incurred.
DELAYED-DELIVERY TRANSACTIONS. The Fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the Fund to purchase or sell specific securities at a
predetermined price and/or yield, with payment and delivery taking place
after the customary settlement period for that type of security (and more
than seven days in the future). Typically, no interest accrues to the
purchaser until the security is delivered. The Fund may receive fees for
entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, the Fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the Fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the Fund's other investments. If the Fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the Fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When the Fund has sold a security on a
delayed-delivery basis, the Fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the Fund could miss a favorable price or yield opportunity, or could suffer
a loss.
The Fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
INTERFUND BORROWING PROGRAM. The Fund has received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates. Interfund loans and borrowing normally will extend
overnight, but can have a maximum duration of seven days. The Fund will
lend through the program only when the returns are higher than those
available at the same time from other short-term instruments (such as
repurchase agreements), and will borrow through the program only when the
costs are equal to or lower than the cost of bank loans. The Fund will not
lend more than 5% of its assets to other funds, and will not borrow through
the program if, after doing so, total outstanding borrowings would exceed
15% of total assets. Loans may be called on one day notice, and the Fund
may have to borrow from a bank at a higher interest rate if an interfund
loan is called or not renewed. Any delay in repayment to a lending fund
could result in a lost investment opportunity or additional borrowing
costs.
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. If may also be
difficult to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments
in developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The Fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject
to transfer restrictions may be marketable abroad, they may be less liquid
than foreign securities of the same class that are not subject to such
restrictions.
The Fund may invest in American Depositary Receipts and European
Depositary Receipts (ADRs and EDRs), which are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or
similar financial institution. Designed for use in U.S. and European
securities markets, respectively, ADRs and EDRs are alternatives to the
purchase of the underlying securities in their national markets and
currencies.
FOREIGN CURRENCY TRANSACTIONS. The Fund may hold foreign currency
deposits from time to time, and may convert dollars and foreign currencies
in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering
into forward contracts to purchase or sell foreign currencies at a future
date and price. Forward contracts generally are traded in an inter bank
market conducted directly between currency traders (usually large
commercial banks) and their customers. The parties to a forward contract
may agree to offset or terminate the contract before its maturity, or may
hold the contract to maturity and complete the contemplated currency
exchange.
The Fund may use currency forward contracts to manage currency risks and
to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the Fund.
In connection with purchases and sales of securities denominated in
foreign currencies, the Fund may enter into currency forward contracts to
fix a definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the Fund's foreign investments. The Fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
The Fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For
example, if the Fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. The Fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling - for example, by entering into a forward
contract to sell Deutschemarks or European Currency Units in return for
U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars. Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the Fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The Fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change the Fund's investment exposure to changes in currency
exchange rates, and could result in losses to the Fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the Fund by selling that currency in exchange for
dollars, the Fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
Fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly,
if FMR increases the Fund's exposure to a foreign currency, and that
currency's value declines, the Fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the Fund or that it will hedge at an appropriate time. The policies
described in this section are non-fundamental policies of the Fund.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the Fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the Fund's investments, FMR may consider various factors
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features) and (5) the nature of the marketplace for
trades (including the ability to assign or offset the Fund's rights and
obligations relating to the investment). Investments currently considered
by the Fund to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days,
over-the-counter options, and non-government stripped fixed-rate
mortgage-backed securities and restricted securities. Also, FMR may
determine some government-stripped fixed-rate mortgage-backed securities,
loans and other direct debt instruments, and swap agreements to be
illiquid. However, with respect to over-the-counter options the Fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the Fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets or
other circumstances, the Fund were in a position where more than 10% of its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the Fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the Fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed by a
corporate, governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the
risk of loss in case of default or insolvency of the borrower. Direct debt
instruments may offer less legal protection to the Fund in the event of
fraud or misrepresentation. In addition, loan participations involve a
risk of insolvency of the lending bank or other financial intermediary.
Direct debt instruments also may include standby financing commitments that
obligate the Fund to supply additional cash to the borrower on demand.
LOWER-RATED DEBT SECURITIES. While the market for high-yield corporate
debt securities has been in existence for many years and has weathered
previous economic downturns, the 1980s brought a dramatic increase in the
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
the future performance of the high-yield bond market, especially during
periods of economic recession. In fact, from 1989 to 1991, the percentage
of lower-rated debt securities that defaulted rose significantly above
prior levels, although the default rate decreased in 1992.
The market for lower-rated debt securities may be thinner and less active
than that for higher-rated debt securities, which can adversely affect the
prices at which the former are sold. If market quotations are not
available, lower-rated debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-rated debt
securities and the Fund's ability to dispose of these securities.
Since the risk of default is higher for lower-rated debt securities, FMR's
research and credit analysis are an especially important part of managing
securities of this type held by the Fund. In considering investments for
the Fund, FMR will attempt to identify those issuers of high-yielding debt
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
The Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the Fund's shareholders.
REPURCHASE AGREEMENTS. In a repurchase agreement the Fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount of interest which is unrelated to the coupon
rate or maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed-upon price, which
obligation is in effect secured by the value (at least equal to the amount
of the agreed upon resale price and marked to market daily) of the
underlying security. The Fund may enter into a repurchase agreement with
respect to any security in which it is authorized to invest. While it does
not presently appear possible to eliminate all risks from these
transactions (particularly the possibility of a decline in the market value
of the underlying securities, as well as delay and costs to the Fund in
connection with bankruptcy proceedings), it is the Fund's current policy to
limit repurchase agreements transactions to those parties whose
creditworthiness has been reviewed and found satisfactory to FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the
Fund sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the Fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The Fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the Fund's
assets and may be viewed as a form of leverage.
SECURITIES LENDING. The Fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the NYSE and a subsidiary of
FMR Corp.
Securities lending allows the Fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that the Fund
may engage in loan transactions only under the following conditions: (1)
the Fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the Fund must be able to terminate
the loan at any time; (4) the Fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the Fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SHORT SALES "AGAINST THE BOX." If the Fund enters into a short sale
against the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities convertible or
exchangeable into such securities) and will be required to hold such
securities while the short sale is outstanding. The Fund will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales against the box.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease the Fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. The Fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the Fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee
by the other party. For example, the buyer of an interest rate cap obtains
the rights to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift the Fund's investment exposure from one
type of investment to another. For example, if the Fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the Fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of the Fund's investments and its share price and yield .
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the Fund. If a swap
agreement calls for payments by the Fund, the Fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. The Fund expects to be able to
reduce its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
The Fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the
Fund enters into a swap agreement on a net basis, it will segregate assets
with a daily value at least equal to the excess, if any, of the Fund's
accrued obligations under the swap agreement over the accrued amount the
Fund is entitled to receive under the agreement. If the Fund enters into a
swap agreement on other than a net basis, it will segregate assets with a
value equal to the full amount of the Fund's accrued obligations under the
agreement.
INDEXED SECURITIES. The Fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
WARRANTS. The Fund may invest in warrants which entitle the holder to buy
equity securities at a specific price for a specific period of time.
Warrants may be considered more speculative then certain other types of
investments in that they do not entitle a holder to dividends or voting
rights with respect to the securities which may be purchased, nor do they
represent any rights in the assets of the issuing company. The value of a
warrant may be more volatile than the value of the securities underlying
the warrants. Also, the value of the warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have
value if it is not exercised prior to the expiration date.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets, before engaging in any purchases or sales of futures
contracts or options on futures contracts. The Fund will comply with
Section 4.5 of the regulations under the Commodity Exchange Act, which
limits the extent to which the Fund can commit assets to initial margin
deposits and option premiums.
In addition to the above limitations, the Fund will not: (a) sell futures
contracts, purchase put options, or write call options if, as a result,
more than 25% of the Fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or write
put options if, as a result, the Fund's total obligations upon settlement
or exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options purchased by
the Fund would exceed 5% of the Fund's total assets. These limitations do
not apply to options attached to or acquired or traded together with their
underlying securities, and do not apply to securities that incorporate
features similar to options.
The above limitations on the Fund's investments in futures contracts and
options, and the Fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When the Fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the Fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's 500 Composite Stock
Price Index (S&P 500). Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the Fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it
had purchased the underlying instrument directly. When the Fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the Fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the Fund, the Fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the Fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The Fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the Fund will lose the entire premium it paid. If the Fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The Fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the Fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the Fund will be required to make margin payments to an FCM as
described above for futures contracts. The Fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the Fund has written, however, the
Fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the Fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The Fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the Fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing
a call option at one strike price and buying a call option at a lower
price, in order to reduce the risk of the written call option in the event
of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be
more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Fund's current or
anticipated investments exactly. The Fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of the Fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The Fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the Fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the Fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the Fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the Fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
Fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The
Fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The Fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the Fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the Fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the Fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Fund will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the fund's assets
could impede portfolio management or the Fund's ability to meet redemption
requests or other current obligations.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Fund by FMR pursuant to authority contained in the Management
Contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment advisor. In selecting broker-dealers subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions and the existence of any directed
brokerage arrangements . Commissions for foreign investments traded on
foreign exchanges will generally be higher than for U.S. investments and
may not be subject to negotiation.
The Fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the Fund or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers is made
by FMR (to the extent possible consistent with execution considerations) in
accordance with a ranking of broker-dealers determined periodically by
FMR's investment staff based upon the quality of such research and
execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the Fund may be useful to FMR in rendering investment management
services to the Fund or its other clients, and conversely, such information
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the Fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commission charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the Fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers
viewed in terms of a particular transaction or FMR's overall
responsibilities to the Fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Fund or other Fidelity funds to the
extent permitted by law. FMR may use research services provided by and
place agency transactions with Fidelity Brokerage Services, Inc. (FBSI) and
Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. Prior
to September 4, 1992, FBSL operated under the name of Fidelity Portfolio
Services, Ltd. (FPSL), as a wholly-owned subsidiary of Fidelity
International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr.
Johnson 3d, Johnson family members, and various trusts for the benefit of
the Johnson family own, directly or indirectly, more than 25% of the voting
common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the SEC. Pursuant to such regulations, the Board of
Trustees has approved a written agreement which permits FBSI to effect the
portfolio transactions on national securities exchanges and to
retain compensation in connection with such transactions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Fund and review the commissions paid by the Fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the Fund.
For the fiscal years ended September 30, 1993 and 1992, the Fund's annual
portfolio turnover rate amounted to 183 %, and 211%, respectively.
The Fund's turnover rate for these periods was substantially greater due to
a higher volume of shareholder purchase orders, short-term interest rate
volatility and other special market conditions.
For the fiscal years ended September 30, 1993, 1992, and 1991, the Fund
paid brokerage commissions of $ 1,068,788, $ 1,087,115, and
$1,079,734, respectively. During fiscal 1993, approximately
$ 872,596 or 82 % of these commissions were paid to brokerage
firms which provided research services, although the providing of such
services was not necessarily a factor in the placement of all business with
such firms. The Fund pays both commissions and spreads in connection with
the placement of portfolio transactions; FBSI is paid on a commission
basis. During fiscal 1993, 1992, and 1991, the Fund paid brokerage
commissions of $ 103,206 , $126,298, and $165,047, respectively, to
FBSI. During fiscal 1993 this amounted to 9.7% of the aggregate
brokerage commissions paid by the Fund for transactions involving 21.7%
of the aggregate dollar amount of transactions in which the Fund paid
brokerage commissions. The difference in the percentage of brokerage
commissions paid to, and the percentage of the dollar amount of
transactions effected through FBSI is a result of the lower commission
rates charged by FBSI.
From time to time the Trustees will review whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. The Fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine, in the exercise of their business judgment,
whether it would be advisable for the Fund to seek such recapture.
Although the Trustees and officers of the Trust are substantially the same
as those of other funds managed by FMR, investment decisions for the Fund
are made independently from those of other funds advised by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions for the Fund. It is
the current opinion of the Trustees that the desirability of retaining FMR
as investment adviser to the Fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Equity securities for
which the primary market is the U.S. are valued at last sale price or, if
no sale has occurred, at the closing bid price. Equity securities for
which the primary market is outside the U.S. are valued using the official
closing price or the last sale price in the principal market where they are
traded. If the last sale price (on the local exchange) is unavailable, the
last evaluated quote or last bid price is normally used. Short-term
securities are valued either at amortized cost or at original cost plus
accrued interest, both of which approximate current value. Fixed-income
securities are valued primarily by a pricing service that uses a vendor
security valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. This twofold
approach is believed to more accurately reflect fair value because it takes
into account appropriate factors such as institutional trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics, and other market data, without exclusive reliance
upon quoted, exchange, or over-the counter prices. Use of pricing services
has been approved by the Board of Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the Fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as
well as corporate bonds, U.S. government securities, money market
instruments, and repurchase agreements, is substantially completed each day
at the close of the NYSE. The values of any such securities held by the
Fund are determined as of such time for the purpose of computing the Fund's
net asset value (NAV). Foreign security prices are furnished by
independent brokers or quotation services which express the value of
securities in their local currency. Service gathers all exchange rates
daily at the close of the NYSE using the last quoted price on the local
currency and then translates the value of foreign securities from their
local currency into U.S. dollars. Any changes in the value of forward
contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of NAV. If an extraordinary event that is
expected to materially affect the value of a portfolio security occurs
after the close of an exchange on which that security is traded, then the
security will be valued as determined in good faith by a committee
appointed by the Board of Trustees.
PERFORMANCE
The Fund may quote its performance in various ways. All performance
information supplied by the Fund in advertising is historical and is not
intended to indicate future returns. The Fund's share price and total
returns fluctuate in response to market conditions and other factors, and
the value of Fund shares when redeemed may be worth more or less than their
original cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of the Fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the Fund's NAV
over the period. AVERAGE ANNUAL TOTAL RETURNS are calculated by
determining the growth or decline in value of a hypothetical historical
investment in the Fund over a stated period, and then calculating the
annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would
produce an average annual return of 7.18%, which is the steady annual rate
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that the Fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the Fund.
In addition to average annual total returns, the Fund may quote unaveraged
or CUMULATIVE TOTAL RETURNS reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a
series of redemptions, over any time period. Total returns may be broken
down into their components of income and capital (including capital gains
and changes in share price) in order to illustrate the relationship of
these factors and their contributions to total return. Total returns may
be quoted with or without taking the Fund's 4.75% maximum sales charge into
account. Excluding the Fund's sales charge from a total return calculation
produces a higher total return figure. Total returns and other performance
information may be quoted numerically or in a table, graph or similar
illustration.
The following chart shows total returns for Fidelity Strategic
Opportunities Fund for the periods ended September 30, 1993.
<TABLE>
<CAPTION>
<S> <C> <C>
Average Annual Total Returns ** Cumulative Total Returns **
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
One Year Five Year Life of Fund* One Year Five Year Life of Fund*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
20.95% 15.17% 16.58% 26.98% 112.73% 369.11%
</TABLE>
* Life of Fund: December 31, 1983 (commencement of operations) to
September 30, 1993.
** Average Annual Total Returns include the effect of the Fund's
maximum 4.75% sales charge. Cumulative total returns do not include the
effect of this charge and would have been lower if it had been taken into
account.
PERFORMANCE COMPARISONS. The Fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. Ibbotson Associates of Chicago, Illinois
(Ibbotson) provides historical returns of the capital markets in the United
States, including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term government
bonds, Treasury bills, the U.S. rate of inflation (based on the Consumer
Price Index), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the funds. Ibbotson calculates total returns in the same method
as the funds. The funds may also compare performance to that of other
compilations or indices that may be developed and made available in the
future. Performance comparisons could include the value of a hypothetical
investment in common stocks, long-term bonds, or treasuries.
The Fund may compare its performance to that of other compilations or
indices of comparable quality to those listed above and to those which may
be developed and made available in the future.
The Fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey which monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank the funds based on yield. In
addition to the mutual fund rankings, the Fund's performance may be
compared to mutual fund performance indices prepared by Lipper.
Each class of shares may quote its performance in advertising and other
types of literature as compared to certificates of deposit (CDs),
bank-issued money market instruments, and money market mutual funds.
Unlike CDs and bank-issued money market instruments, money market mutual
funds and both classes of shares are not insured by the FDIC.
The Fund also may compare its performance to that of the S&P 500 which
is a registered trademark of Standard & Poor's Corporation, the Dow
Jones Industrial Average (DJIA) and the NASDAQ Composite Index (NASDAQ).
The S&P 500, the DJIA and the NASDAQ are widely recognized, unmanaged
indices of common stock prices. The performance of the S&P 500 and the
DJIA is based on changes in the prices of stocks comprising each index and
assumes the reinvestment of all dividends paid on such stocks. Taxes,
brokerage commissions and other fees are disregarded in computing the level
of the S&P 500, the DJIA, and the NASDAQ. The Fund's performance also
may be compared to the increase in the cost of living as measured by the
CPI.
The Fund also may compare its performance or the performance of securities
in which it may invest to IBC/Donoghue's MONEY FUND AVERAGES/All Taxable,
which monitors the performance of over 200 taxable money market funds.
This index, which assumes reinvestment of distributions, is published by
IBC/Donoghue's MONEY FUND REPORT Trademark of Ashland, Massachusetts
01721. Investors should consider the relevant differences in investment
objectives and policies between the Fund and such money market funds in
evaluating such comparisons. Specifically, money market funds invest in
short-term, high quality instruments and seek to maintain a stable $1.00
share price, while the Fund invests in longer-term equity securities
instruments and its share price changes daily in response to a variety of
factors.
As of November 30, 1993 FMR managed over $200 billion in equity
fund assets. This figure represents the largest amount of equity fund
assets under management by a mutual fund investment advisor in the United
States, making FMR America's leading equity (stock) fund manager. From
time to time, the Fund may use this information in advertising and sales
literature.
The Fund may reference and discuss its fund number, Quotron number, CUSIP
number, and current portfolio manager. From time to time, the Fund's
performance also may be compared to other mutual funds tracked by financial
or business publications and periodicals. For example, the Fund may quote
Morningstar, Inc. in its advertising materials. Morningstar, Inc. is a
mutual funds rating service which rates mutual funds on the basis of risk
adjusted performance. In addition, the Fund may quote financial or
business publications and periodicals as they relate to the portfolio
manager, the investment philosophy, and techniques. Rankings that compare
the performance of Fidelity funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.
VOLATILITY. Various measures of volatility and benchmark correlation
may be quoted in advertising. The Fund may quote various measures of
volatility and benchmark correlation in advertising. In addition, the Fund
may compare these measures to those of other funds. Measures of volatility
seek to compare the Fund's historical share price fluctuations or total
returns to those of a benchmark. Measures of benchmark correlation
indicate how valid a comparative benchmark may be. All measures of
volatility and correlation are calculated using averages of historical
data.
ADJUSTED NET ASSET VALUE. Charts and graphs using the Fund's net asset
values, adjusted net asset values and benchmark indices may be used to
exhibit performance. An adjusted NAV includes any distributions paid by
the Fund and reflects all elements of its return. Unless otherwise
indicated, the Fund's adjusted NAVs are not adjusted for sales charges, if
any. In addition to adjusted NAVs, unadjusted closing NAVs may be used to
show the closing price of the Fund's shares on a particular day or series
of days.
The Fund's adjusted NAVs are calculated using an adjustment factor that is
calculated for every business day over the time period in question on which
the Fund was priced. The factor for any given day is derived by adding the
Fund's distributions which went ex-distribution on the following day,
dividing by the NAV on the following day, adding one, and multiplying by
the factor of the following day. By convention, the factor on the last day
of the time period is set to equal one so that the Fund's adjusted NAV on
that day is the same as its NAV.
LONG- AND SHORT-TERM MOVING AVERAGES. A long-term moving average is the
average of each week's adjusted closing NAV for the past 39 or 13 weeks. A
short-term moving average is the average of each day's adjusted closing NAV
for the past 39 or 13 weeks. Long-term moving averages use the Fund's
adjusted closing NAV on the last business day of each week while short-term
moving averages use a daily adjusted closing NAV. Moving Average Activity
Indicators combine adjusted closing NAVs from the last business day of each
week with 39 and 13 week moving averages to produce indicators showing when
an NAV has crossed, stayed above, or stayed below its moving average.
MOMENTUM INDICATORS may be used to indicate the Fund's price movements
over specific periods of time. Each point on the momentum indicator
represents the Fund's percentage change in price movements over that
period. For example, a five-week momentum indicator is calculated for each
week using the closing adjusted NAV for the last business day of that week
and the five weeks prior to it. In short, the Fund's five-week momentum
indicator is the Fund's five-week cumulative total return for that week.
For the fiscal year ended September 30, 1993, Fidelity Strategic
Opportunities Fund latest five-week momentum indicator was .66 %.
The Fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar-cost averaging. In such a
program, the investor invests a fixed dollar amount in the Fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares had been purchased
at the same intervals. In evaluating such a plan, investors should
consider their ability to continue purchasing shares through periods of low
price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may
produce superior after-tax returns over time. For example, an initial
investment of $1,000 earning a taxable return of 10% annually would have an
after-tax value of $1,949 after ten years, assuming tax was deducted from
the return each year at a 31% rate. An equivalent tax-deferred investment
would have an after-tax value of $2,100 after ten years, assuming tax was
deducted at a 31% rate from the tax-deferred earnings at the end of the
ten-year period.
TRADITION OF PERFORMANCE. Fidelity's tradition of performance is achieved
through:
MONEY MANAGEMENT: a proud tradition of money management motivated by the
expectation of excellence backed by solid analysis and worldwide resources.
Fidelity employs a bottom-up approach to security selection based upon
in-depth analysis of the fundamentals of that investment opportunity.
INNOVATION: constant attention to the changing needs of today's investors
and vigilance to the opportunities that arise from changing global markets.
Research is central to Fidelity's investment decision-making process.
Fidelity's greatest resource--over 200 skilled investment professionals--is
supported with the most sophisticated technology available.
Fidelity provides:
Global research resources: an opportunity to diversify portfolios and
share in the growth of markets outside the United States.
In-house, proprietary bond-rating system, constantly updated, which
provides extremely sensitive credit analysis.
Comprehensive chart room with over 1500 exhibits to provide sophisticated
charting of worldwide economic, financial, and technical indicators, as
well as to provide tracking of over 800 individual stocks for portfolio
managers.
State-of-the-art trading desk, with access to over 200 brokerage houses,
providing real-time information to achieve the best executions and optimize
the value of each transaction.
Use of extensive on-line computer-based research services.
SERVICE: Timely, accurate and complete reporting. Prompt and expert
attention when an investor or an investment professional needs it.
HISTORICAL FUND RESULTS. The following chart shows the income and capital
elements of the Fund's total return from December 31, 1983 (commencement of
operations) until September 30, 1993. The chart compares the Fund's return
to the record of the S&P 500, the DJIA, NASDAQ and the cost of living
(measured by the CPI) over the same period. The comparison to the S&P
500 shows how the Fund's total return compared to the record of a broad
average of common stock prices, and the comparison to the DJIA shows how
the Fund's total return compared to the record of a narrower set of stocks
of major industrial companies. The NASDAQ comparison shows how the Fund's
total return compared to the record of a broad range of over-the-counter
stocks. The S&P 500 and DJIA comparisons are provided to show how the
Fund's return compared to the return of common stocks over the same period.
The S&P 500 and DJIA are based on the prices of unmanaged groups of
stocks and, unlike the Fund's returns, their returns do not include the
effect of paying brokerage commissions and other costs of investing. The
Fund has the ability to invest in securities not included in either index,
and its investment portfolio may or may not be similar in composition to
the indices.
During the period from December 31, 1983 (commencement of operations) to
September 30, 1993 a hypothetical investment of $10,000 in the Fund would
have grown to $ 44,683 after deduction of the Fund's 4.75% maximum
sales charge and assuming all distributions were reinvested. This was a
period of widely fluctuating stock prices, and should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in the Fund today.
FIDELITY STRATEGIC OPPORTUNITIES FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Initial Initial Reinvested Cost
Period $10,000 Income Capital Gain Total of
Ended Investment Distributions Distributions Value NASDAQ S&P DJIA Living*
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/84 10,515 0 0 10,515 8,971 10,432 9,950 10,365
9/30/85 12,085 66 219 12,369 10,062 11,948 11,490 10,691
9/30/86 15,900 394 1,777 18,072 12,587 15,741 15,859 109,879
9/30/87 18,203 565 3,256 22,025 15,947 22,580 24,007 11,352
9/30/88 14,892 808 5,305 21,005 13,916 19,789 20,252 11,826
9/30/89 18,812 2,043 6,702 27,557 16,975 26,319 26,782 12,340
9/30/90 16,528 2,670 5,888 25,087 12,366 23,886 25,348 13,100
9/30/91 20,506 4,804 7,305 32,615 18,912 31,333 32,299 13,544
9/30/92 18,765 5,621 10,803 35,189 20,936 34,798 36,071 13,949
9/30/93 21,619 7,994 15,069 44,683 27,379 39,326 40,364 14,324
</TABLE>
* From the month-end closest to the initial investment date.
* From December 31, 1983 (commencement of operations) to September
30, 1993.
EXPLANATORY NOTES: With an initial investment of $10,000 made on December
31, 1983, the net amount invested in Fund shares was $9,525, assuming the
current 4.75% maximum sales charge was deducted as if it had been in effect
at that time. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain distributions
for the period covered (that is, their cash value at the time they were
reinvested), amounted to $ 26,427 . If distributions had not been
reinvested, the amount of distributions earned from the Fund over time
would have been smaller, and the cash payments for the period would have
come to $ 4,016 for income dividends and $ 7,489 for capital
gain distributions. Tax consequences have not been factored into the above
figures.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
The Fund is open for business and its NAV is calculated each day that the
NYSE is open for trading. The NYSE has designated the following holiday
closings for 1994: President's Day (observed), Good Friday, Memorial Day
(observed), Independence Day (observed), Labor Day, Thanksgiving Day, and
Christmas Day (observed). Although FMR expects the same holiday schedule
with the addition of New Year's Day to be observed in the future,
the NYSE may modify its holiday schedule at any time. On any day that the
NYSE closes early, or as permitted by the SEC, the right is reserved to
advance the time on that day by which purchase and redemption orders must
be received. To the extent that portfolio securities are traded in other
markets on days when the NYSE is closed, the Fund's NAV may be affected on
days when investors do not have access to the Fund to purchase or redeem
shares. Certain Fidelity funds may follow different holiday closing
schedules.
If the Trustees determine that existing conditions make cash payment
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the Fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the
Rule), the Fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administration fee,
redemption fee or deferred sales charge ordinarily payable at the time of
exchange, or (ii) the Fund temporarily suspends the offering of shares as
permitted under the 1940 Act or by the SEC or because it is unable to
invest amounts effectively in accordance with its investment objective and
policies. In each class' prospectus, the Fund has notified shareholders
that it reserves the right, at any time without prior notice, to refuse
exchange purchases by any person or group if, in FMR's judgment, the Fund
would be unable to invest effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
In the Prospectus, the Fund has notified shareholders that it reserves
the right, at any time without prior notice, to refuse exchange privileges
by any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected"
PURCHASE INFORMATION
As provided for in Rule 22d-1 under the 1940 Act, Distributors exercises
its right to waive the Fund's maximum 4.75% sales charge in connection with
the Fund's merger with or acquisition of any investment company or trust.
NET ASSET VALUE PURCHASES. Sales charges do not apply to shares of a
Fund purchased: (1) by registered representatives, bank trust officers and
other employees (and their immediate families) of investment professionals
having agreements with Distributors; (2) by a current or former Trustee or
officer of a Fidelity fund or a current or retired officer, director or
full-time employee of FMR Corp. or its direct or indirect subsidiaries (a
"Fidelity Trustee or employee"), the spouse of a Fidelity Trustee or
employee, a Fidelity Trustee or employee acting as custodian for a minor
child, or a person acting as trustee of a trust for the sole benefit of the
minor child of a Fidelity Trustee or employee; (3) by a charitable
organization (as defined in Section 501(c)(3) of the Internal Revenue Code)
investing $100,000 or more; (4) by a charitable remainder trust or life
income pool established for the benefit of a charitable organization (as
defined in Section 501(c)(3) of the Internal Revenue Code); (5) with trust
assets; (6) in accounts as to which a bank or broker-dealer charges an
account management fee, provided the bank or broker-dealer has a Dealer
agreement with Distributions; (7) as part of an employee benefit plan
having more than 200 eligible employees or a minimum of $3,000,000 invested
in Fidelity mutual funds; (8) by any state, county, or city, or any
governmental instrumentality, department, authority or agency; (9) with
redemption proceeds from other mutual fund complexes on which the investor
has paid a front-end sales charge only; and (10) by an insurance company
separate account used to fund annuity contracts purchased by employee
benefit plans (including 403(b) programs, but otherwise as defined in
ERISA), which, in the aggregate, have either more than 200 eligible
employees or a minimum of $3,000,000 in assets invested in Fidelity mutual
funds.
An investor may qualify for a reduction in the sales charge under the
following programs:
RIGHTS OF ACCUMULATION. Your "Rights of Accumulation" permit reduced
sales charges on future purchases after you have reached a new breakpoint.
You can add the value of your existing shares held by you, your spouse, and
your children under age 21, determined at the previous day's NAV at the
close of business, to the amount of your new purchase, valued at the
current public offering price, to determine your reduced sales charge.
LETTER OF INTENT. If you anticipate purchasing additional shares within a
13-month period in an amount that will exceed $50,000, you may obtain
shares at the same reduced sales charge as though the total quantity were
invested in one lump sum, by filing a non-binding Letter of Intent (the
Letter) within 90 days of the start of the purchases. Each investment you
make after signing the Letter will be entitled to the sales charge
applicable to the total investment indicated in the Letter. For example, a
$2,500 purchase toward a $50,000 Letter would receive the same reduced
sales charge as if the $50,000 had been invested at one time. To ensure
that the reduced price will be received on future purchases, you or your
investment professional must inform Service that the Letter is in effect
each time shares are purchased. Neither income dividends nor capital gain
distributions taken in additional shares will apply toward the completion
of the Letter.
Your initial investment must be at least 5% of the total amount you plan
to invest. Out of the initial purchase, 5% of the dollar amount specified
in the Letter will be registered in your name and held in escrow. The
shares held in escrow cannot be redeemed or exchanged until the Letter is
satisfied or the additional sales charges have been paid. All income
dividends and capital gain distributions on escrowed shares will be paid to
you. the escrow will be released when your purchase of the total amount
has been completed. You are not obligated to complete the Letter.
If you purchase more than the amount specified in the Letter and qualify
for a further sales charge reduction, the sales charge will be adjusted to
reflect your total purchase at the end of 13 months. Surplus funds will be
applied to the purchase of additional shares at the then current offering
price applicable to the total purchase.
If you do not complete your purchase under the Letter within the 13 month
period, the sales charge will be adjusted upward, corresponding to the
amount actually purchased, and if after written notice, you do not pay the
increased sales charge, sufficient escrowed shares will be redeemed to pay
such charge.
REDEMPTION INFORMATION
SYSTEMATIC WITHDRAWAL PLAN. If you would like to make arrangements for
systematic monthly or quarterly redemptions from your Fidelity account call
Service for further information. Since a sales charge is applied on new
shares you buy, it is to your disadvantage to buy shares while also making
systematic redemptions.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your check, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at
the then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of the Fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that the Fund's income is derived from qualifying dividends.
Because the Fund may also earn other types of income, such as interest,
income from securities loans, non-qualifying dividends and short-term
capital gains, the percentage of dividends from the equity portfolios that
qualify for the deduction will generally be less than 100%. The Fund will
notify corporate shareholders annually of the percentage of Fund dividends
which qualify for the dividends received deduction. A portion of the
Fund's dividends derived from certain U.S. government obligations may be
exempt from state and local taxation. Gains (losses) attributable to
foreign currency fluctuations are generally taxable as ordinary income and
therefore will increase (decrease) dividend distributions. The Fund will
send each shareholder a notice in January describing the tax status of
dividends and capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains realized by the Fund
on the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the Fund, and such shares are held
less than six months and are sold at a loss, the portion of the loss equal
to the amount of the long-term capital gain distribution will be considered
a long-term loss for tax purposes.
Short-term capital gains distributed by the Fund are taxable to
shareholders as dividends, not as capital gains. Distributions from the
short-term capital gains do not qualify for the dividends received
deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the Fund does
not currently anticipate that securities of foreign corporations will
constitute more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUND. The Fund has qualified and intends to continue to
qualify as a "regulated investment company" for tax purposes, so that it
will not be liable for federal tax on income and capital gains distributed
to shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes, the Fund intends to
distribute substantially all of its net investment income and realized
capital gains within each calendar year as well as on a fiscal year basis.
The Fund also intends to comply with other tax rules applicable to
regulated investment companies, including a requirement that capital gains
from the sale of securities held for less than three months must constitute
less than 30% of the Fund's gross income for each fiscal year. Gains from
some forward currency contracts, futures contracts, and options are
included in this 30% calculation, which may limit the Fund's investments in
such instruments.
If the Fund purchases shares in certain foreign investment entities,
called passive foreign investment companies (PFICs), it may be subject to
U.S. federal income tax on a portion of any excess distribution or gain
from the disposition of such shares. Interest charges may also be imposed
on the Fund with respect to deferred taxes arising from such distributions
or gains.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders of a fund may be subject to
state and local taxes on distributions received from the Fund. Investors
should consult their tax advisors to determine whether the Fund is suitable
to their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a company organized in
1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: Fidelity Service Co.
(Service), which is the transfer and shareholder servicing agent for
certain of the funds advised by FMR; Fidelity Investments Institutional
Operations Company (FIIOC), which performs shareholder servicing functions
for certain institutional customers; and Fidelity Investments Retail
Marketing Company, which provides marketing services to various companies
within the Fidelity organization.
Several affiliates of FMR also are engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research information
to FMR in connection with certain funds advised by FMR. Analysts employed
by FMR, FMR U.K., and FMR Far East research and visit thousands of domestic
and foreign companies each year. FMR Texas Inc. (FMR Texas), a wholly
owned subsidiary of FMR formed in 1989, will supply portfolio management
and research services in connection with certain money market funds advised
by FMR.
TRUSTEES AND OFFICERS
The Board of Trustees and executive officers of the Fund are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. All persons named as
Trustees also serve in similar capacities for other funds advised by FMR.
Unless otherwise noted, the business address of each Trustee and officer is
82 Devonshire Street, Boston, Massachusetts 02109, which is also the
address of FMR. Those Trustees who are "interested persons" (as defined in
the 1940 Act) by virtue of their affiliation with either the Fund or FMR,
are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; a Director of FMR, Chairman and a
Director of FMR Texas (1989), FMR U.K. and FMR Far East.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas (1989), FMR U.K. and FMR Far
East.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee (1992).
Prior to her retirement in September of 1991, Mrs. Davis was the Senior
Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of the University of
Vermont School of Business Administration (1988).
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3 881-2 Lander Road, Chagrin Falls, OH, Trustee
(1 990). Prior to his retirement in 1984, Mr. Jones was Chairman and
Chief Executive Officer of LTV Steel Company. Prior to May 1990, he was
Director of National City Corporation (a bank holding company) and National
City Bank of Cleveland. He is a Director of TRW Inc. (original equipment
and replacement products), Cleveland-Cliffs Inc. (mining), NACCO
Industries, Inc. (mining and marketing), Consolidated Rail Corporation,
Birmingham Steel Corporation (1988), Hyster-Yale Materials Handling, Inc.
(1989), and RPM, Inc. (manufacturer of chemical products, 1990). In
addition, he serves as a Trustee of First Union Real Estate Investments;
Chairman of the Board of Trustees and a member of the Executive Committee
of the Cleveland Clinic Foundation, a Trustee and a member of the Executive
Committee of University School (Cleveland), and a Trustee of Cleveland
Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board
of Directors of the National Arts Stabilization Fund, and Vice Chairman of
the Board of Trustees of the Greenwich Hospital Association (1989).
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction, 1988). In addition, he serves as a Trustee
of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), and Commercial Intertech Corp. (water treatment equipment, 1992) ,
and Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee .
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Portfolios and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustees (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee , is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He
is currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software ) , Georgia Power Company (electric utility),
Gerber Alley & Associates, Inc. (computer software), National Life
Insurance Company of Vermont, American Software, Inc. (1989), and
AppleSouth, Inc. (restaurants, 1992)
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President-Legal of FMR Corp., and Vice President and Clerk of
Distributors.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of FMR.
DANIEL R. FRANK, Vice President of the Fund (1986), and an employee of FMR.
Under a retirement program, which became effective on November 1, 1989, a
Trustee, upon reaching age 72, may become eligible to participate in a
defined benefit retirement program under which they receive payments during
their lifetime from the Fund, based on their basic trustees fees and length
of service. Currently Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham and David L. Yunich participate in this program.
As of December 31, 1993 , the Trustees and officers of the Fund
owned in the aggregate less than 1% of the outstanding shares of the Fund.
MANAGEMENT AND OTHER SERVICES
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, and
compensates all officers of the Fund, all Trustees who are "interested
persons" of the Fund 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
law; developing management and shareholder services for the Fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable
to FSC, each fund pays all of its expenses, without limitation, that are
not assumed by those parties. The funds pay for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although each fund's
management contract provides that the fund will pay for typesetting,
printing, and mailing prospectuses, statements of additional information,
notices, and reports to existing shareholders, each trust has entered into
a revised transfer agent agreement with FSC, pursuant to which FSC bears
the cost of providing these services to existing shareholders. Other
expenses paid by the funds include interest, taxes, brokerage commissions,
each fund's proportionate share of insurance premiums and Investment
Company Institute dues, and the costs of registering shares under federal
and state securities laws. Each fund is also liable for such nonrecurring
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 the trusts'
officers and Trustees with respect to litigation.
FMR is the Fund's manager pursuant to an Amended Management Contract dated
November 29, 1990, which was approved by shareholders on September 19,
1990. For the services of FMR under the Contract, the Fund pays FMR a
monthly management fee composed of the sum of two elements: a basic fee and
a performance adjustment based on a comparison of the Fund's performance to
that of the S&P 500.
COMPUTING THE BASIC FEE. The Fund's basic fee rate is composed of two
elements: a group fee rate and an individual fund fee rate. The group fee
rate is based on the monthly average net assets of all of the registered
investment companies with which FMR has management contracts and is
calculated on a cumulative basis pursuant to the graduated schedule shown
on the left. Also shown below is the effective annual fee rate schedules
which are the results of cumulatively applying the annualized rates at
varying asset levels. For example, the effective annual fee rate at
$ 216.7 billion of group net assets - their approximate level for
September 30, 1993 - was .3262 %, which is the weighted average of
the respective fee rates for each level of group net assets up to that
level.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
Average Group Effective
Group Annualized Net Annual
Assets Rate Assets Fee Rate
$ - 3 billion .520% $ 0.5 billion .5200%
0
3 - 6 .490 10 .4840
6 - 9 .460 20 .4398
9 - 12 .430 30 .4115
12 - 15 .400 40 .3944
15 - 18 .385 50 .3823
18 - 21 .370 60 .3728
21 - 24 .360 70 .3656
24 - 30 .350 80 .3599
30 - 36 .345 90 .3552
36 - 42 .340 100 .3512
42 - 48 .335 110 .3475
48 - 66 .325 120 .3444
66 - 84 .320 130 .3417
84 - 102 .315 140 .3394
102 - 138 .310 150 .3371
138 - 174 .305 160 .3351
174 - 228 .300 170 .3333
228 - 282 .295 180 .3316
282 - 336 .290 190 .3299
Over 336 .285 200 .3284
* The rates shown for average group assets in excess of $138 billion
were adopted by FMR on a voluntary basis on January 1, 1992. Rates in
excess of $174 billion were adopted on November 1, 1993. Each was adopted
pending shareholder approval of a new management contract reflecting the
extended schedule. The extended schedule provides for lower management
fees as total assets under management increase.
The individual fund fee rate is .30 %. Based on the average net
assets of funds advised by FMR for December 1993, the annual basic fee rate
would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
.3262%. + .30 % = .6262 %
One twelfth of this annual basic fee rate is then applied to the Fund's
average net assets for the current month, giving a dollar amount which is
the fee for that month.
Effective August 1, 1988, FMR voluntarily agreed to collect its basic fee
according to the schedule shown above (minus the break points added
January 1, 1992 and November 1, 1993) until shareholders could meet to
consider the current contract. With the exception of changing the group
fee rate schedule, the terms of the current contract are identical to those
of the prior contract.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee is subject to an
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 recent month plus the previous 35
months. Each percentage point of difference (up to a maximum
difference of 10) is multiplied by a performance adjustment rate of .02%.
The maximum annualized adjustment rate is therefore .20%. This
performance comparison is made at the end of each month. One twelfth 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 NAV. For
the 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 S&P 500 is based on change in value; this is adjusted
for any cash distributions from the companies whose securities comprise the
S&P 500.
Because the adjustment to the basic fee is based on the Fund's performance
compared to the investment record of the S&P 500, 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 S&P 500.
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.
Because the Performance Adjustment rate is applied to the Fund's average
net assets for the entire performance period, the dollar amount of the
Performance Adjustment will depend upon the Fund's average net assets over
the extent of the performance period rather than current net assets.
Accordingly, application of the Performance Adjustment rate to average net
assets for the full performance period generally will result in a higher
dollar amount when the Fund's net assets are decreasing (and a lower dollar
amount when the Fund's net assets are increasing), than would occur if the
Performance Adjustment rate were applied to the current month's assets.
During the fiscal years ended September 30, 1993, 1992, and 1991, FMR
received $ 1,291,906 , $1,087,250, and $1,240,019 respectively, for
its services as investment adviser. These fees were equivalent to
.54 %, .51%, and .60%, respectively, of the average net assets of the
Fund for these periods. The fee for fiscal year 1993 includes the
basic fee, an upward adjustment of $81,040. The fees for fiscal years
1993, 1992, and 1991 include both the basic fee and the performance
adjustment. The performance adjustments were downward adjustments of
$268,871, and $86,141, for fiscal years 1992 and 1991, respectively.
To comply with the California Code of Regulations, FMR will reimburse the
Fund if and to the extent that the Fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the Fund's expenses for purposes of this regulation, the
Fund may exclude interest, taxes, brokerage commissions and extraordinary
expenses as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
FMR retains the ability to be repaid by the Fund for these expense
reimbursements in the amount that expenses fall below the limit prior to
the end of the fiscal year. Fee reimbursements by FMR will increase the
Fund's total return, and reimbursements by the Fund will lower its total
return.
SUB-ADVISERS. On November 1, 1990, FMR entered into sub-advisory
agreements with FMR U.K. and FMR Far East pursuant to which FMR U.K. and
FMR Far East supply FMR with investment research and recommendations
concerning foreign securities for the benefit of the Fund.
FMR U.K. and FMR Far East, both wholly-owned subsidiaries of FMR, were
formed in 1986 and registered under the Investment Advisers Act of 1940 on
May 11, 1987 to research and to make recommendations with respect to
companies located outside of North America.
The sub-advisory agreements provide that FMR, and not the Fund, will pay
fees to FMR U.K. and FMR Far East equal to 110% and 105%, respectively, of
FMR U.K.'s and FMR Far East's costs incurred in connection with each
agreement, said costs to be determined in relation to the assets of the
Fund that benefit from the services of the sub-advisers.
Fidelity Service Company is transfer, dividend disbursing and
shareholders' servicing agent for the Fund. Effective June 1, 1990,
pursuant to an amended agreement with Service, the Fund pays a per account
fee and a monetary transaction fee of $65 and $14, respectively or $60 and
$12, respectively, depending on the nature of the service provided. Fees
for certain institutional retirement plan accounts are based on the net
asset value of all such accounts in the Fund.
Under the revised contract, Service pays out-of-pocket expenses associated
with providing transfer agent services. In addition, Service bears the
expense of typesetting, printing and mailing Prospectuses, Statements of
Additional Information, reports, notices and statements to shareholders.
The transfer agent fees paid to Service by the Fund for fiscal years ended
September 30, 1993, 1992, and 1991, amounted to $38,794 , $38,153,
and $38,961.
The Fund's agreement with Service provides that Service will perform the
calculations necessary to determine the Fund's NAV and dividends and
maintain the Fund's accounting records. Prior to July 1, 1991, the annual
fee for these pricing and bookkeeping services was based on two schedules,
one pertaining to the Fund's average net assets, and one pertaining to the
type and number of transactions made. The fee rates in effect as of July
1, 1991 are based on the Fund's average net assets, specifically .06% for
the first $500 million of average net assets and .03% for average net
assets in excess of $500 million. The fee is limited to a minimum of
$45,000 and a maximum of $750,000 per year. Service also receives fees for
administering the Fund's securities lending program. Securities lending
fees are based on the number and duration of individual securities loans.
For the fiscal years ended September 30, 1993, 1992, and 1991, the fees
paid to Service for pricing and bookkeeping services (including
reimbursements for related out-of-pocket expenses) and for administering
the Fund's securities lending program were $ 145,494 , $129,183, and
$134,423, respectively.
THE DISTRIBUTOR
The Fund has a General Distribution Agreement with Distributors, a
Massachusetts corporation organized July 18, 1960. Distributors, located
at 82 Devonshire Street, Boston, Massachusetts 02109, 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 General Distribution
Agreement calls for Distributors to use all reasonable efforts, consistent
with its other business, to secure purchasers for shares of the Fund, which
are offered continuously. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by Distributors.
Distributors also acts as general distributor for other publicly offered
Fidelity funds. The expenses of these operations are borne by FMR or
Distributors.
The Glass-Steagall Act generally prohibits federally and state chartered
or supervised banks from engaging in the business of underwriting, selling
or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been clearly defined, in Distributors'
opinion, it should not preclude a bank from being paid for shareholder
servicing and recordkeeping functions. Distributors intends to engage
banks only to perform such functions. However, changes in federal or state
statutes and regulations pertaining to the permissible activities of banks
and their affiliates or subsidiaries, as well as further judicial or
administrative decisions or interpretations, could prevent a bank from
continuing to perform all or a part of the contemplated services. If a
bank were prohibited from so acting, the Trustees would consider what
actions, if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the operation of
the Fund might occur, including possible termination of any automatic
investment or redemption or other services then provided by the bank. it
is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences. The Fund may execute
portfolio transactions with and purchase securities issued by depository
institutions that receive payments from the Fund for other services. No
preference will be shown in the selection of investments for the
instruments of such depository institutions. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein, and banks and financial institutions may be required to
register as dealers pursuant to state law.
DESCRIPTION OF THE TRUST
Fidelity Strategic Opportunities Fund (formerly Fidelity Special
Situations Fund: Initial Class) a Fund of Fidelity Advisor Series VIII
(formerly Special Situations) (the Trust) is an open-end management
investment company organized as a Massachusetts business trust on September
23, 1983. The Fund currently has two classes of a single series of shares,
the Fidelity Strategic Opportunities Fund and the Fidelity Advisor
Strategic Opportunities Fund (formerly Fidelity Special Situations Fund:
Advisor Class). The Fidelity Advisor Strategic Opportunities Fund was
created by action of the Trustees on August 20, 1986. In the event that
FMR ceases to be the investment adviser to the Fund, the right of the Fund
to use the identifying name "Fidelity" may be withdrawn. The Trust's
Declaration of Trust permits the Trustees to create additional
portfolios.
SHAREHOLDER AND TRUSTEE LIABILITY. The Trust is an entity of the type
commonly known as "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the Fund shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
Fund or the Trustees shall include a provision limiting the obligations
created thereby to the Fund and its assets. The Declaration of Trust
provides for indemnification out of the Fund's property of any shareholders
held personally liable for the obligations of the Fund. The Declaration of
Trust also provides that the Fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
Fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office. Claims asserted against
the Fund may subject the Fidelity Advisor Strategic Opportunities Fund
shareholders to certain liabilities.
VOTING RIGHTS. The Fund's capital consists of two classes of shares of
beneficial interest. The shares have no preemptive or conversion rights;
the voting and dividend rights, the right of redemption, and the privilege
of exchange are described in each Class' Prospectus. Shares are fully paid
and nonassessable, except as set forth under the heading "Shareholder and
Trustee Liability" above. Shareholders representing 10% or more of the
Fund may, as set forth in the Declaration of Trust, call meetings of the
Fund for any purpose related to the Fund, including the purpose of voting
on removal of one or more Trustees. The Fund may be terminated upon the
sale of its assets to another open-end management investment company, or
upon liquidation and distribution of its assets, if approved by vote of the
holders of a majority of the outstanding shares of the Fund as provided in
the Declaration of Trust. If not so terminated, the Fund will continue
indefinitely.
CUSTODIAN. Brown Brothers Harriman & Co., 40 Water St., Boston,
Massachusetts, is custodian of the assets of the Fund. The custodian is
responsible for the safekeeping of the Fund's assets and the appointment of
sub subcustodian banks and clearing agencies. The custodian takes no part
in determining the investment policies of the Fund or in deciding which
securities are purchased or sold by the Fund. The Fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the Trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. The Boston branch of the Fund's custodian bank leases its office
space from an affiliate of FMR at a lease payment which, when entered into,
was consistent with prevailing market rates. Transactions that have
occurred to date have included mortgages and personal and general business
loans. In the judgment of FMR, the terms and conditions of those
transactions were not influenced by existing or potential custodial or
other fund relationships.
AUDITOR. Coopers and Lybrand , serves as the Fund's independent
accountant. The auditor examines financial statements for the Fund and
provides other audit, tax, and related services.
FINANCIAL STATEMENTS
The Fund's Annual Report for the fiscal year ended September 30, 1993
is a separate report supplied with this Statement of Additional information
and is incorporated herein by reference.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Audited financial statements for the fiscal year ended September 30,
1993 are filed herein electronically as
Exhibit 24.
(b) Exhibits:
(1) (a) Declaration of Trust as Amended and Restated October 1, 1986 is
incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 7.
(b) Supplement to the Declaration of Trust dated November 16, 1984 is
incorporated herein by reference to Exhibit 1(a) to Post-Effective
Amendment No. 3.
(2) (a) By-Laws of the Trust are incorporated herein by reference to
Exhibit 2 to Registration Statement No. 2-86711.
(b) Supplement to the By-laws of the Trust dated November 29, 1990 is
incorporated herein by reference to Exhibit 2(a) to Post-Effective
Amendment No. 15.
(3) Not applicable.
(4) Not applicable.
(5) (a) Amended Management Contract between the Registrant and Fidelity
Management & Research Co. is incorporated herein by reference to
Exhibit 5 to Post-Effective Amendment No. 8.
(b) Management Contract between the Registrant and Fidelity Management
& Research Co., dated November 29, 1990 is incorporated herein by
reference to Exhibit 5(b) to Post-Effective Amendment No. 16.
(c) Form of Sub-Advisory agreement between the Registrant, Fidelity
Management & Research Co. and Fidelity Management & Research (U.K.)
Inc. dated November 29, 1990 incorporated herein by reference to Exhibit
5(c) of Post-Effective Amendment No. 15.
(d) Form of Sub-advisory agreement between the Registrant, Fidelity
Management & Research Co. and Fidelity Management & Research (Far
East) Inc. dated November 29, 1990 is incorporated herein by reference to
Exhibit 5(d) to Post-Effective Amendment No. 15.
(6) (a) Distribution Agreement between the Registrant and Fidelity
Distributors Corporation dated December 30, 1983 is incorporated herein
by reference to Exhibit 6 to Post-Effective Amendment No. 1.
(b) Amended Distribution Agreement between the Registrant and Fidelity
Distributors Corporation dated as of April 1, 1987 is incorporated by
reference to Exhibit 6(a) to Post-Effective Amendment No. 9.
(7) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post-Effective No. 18.
(8) (a) Custodian Agreement between the Registrant and Brown Brothers
Harriman & Co. dated December 30, 1983, is incorporated herein by
reference to Exhibit 8 to Post-Effective Amendment No. 1.
(b) Amended Custodian Agreement between the Registrant and Brown
Brothers Harriman & Co. dated July 23, 1987, is incorporated herein by
reference to Exhibit 8(b) to Post-Effective Amendment No. 11.
(9) (a) Master Agreement between the Registrant, FMR Corp., and Fidelity
Service Co. dated April 1, 1984 and Schedules A, B and C relating to
transfer agency, portfolio bookkeeping and securities lending services are
incorporated herein by reference to Exhibit 9 to Post-Effective Amendment
No. 4.
(b) Transfer Agency Agreement between the Registrant's Plymouth Class
shares dated January 1, 1987 and State Street Bank and Trust Company is
incorporated herein by reference to Exhibit 9(b) to Post-Effective
Amendment No. 8.
(c) Form of Amended Service Agreement (including Schedules A, B and C)
between Registrant's Initial class, FMR Corp. and Fidelity Service Co. is
incorporated herein by reference to Exhibit 9(c) to Post-Effective
Amendment No. 15.
(d) Form of Schedule B to the Amended Service Agreement dated July 1,
1991 between Registrant's Initial Class and Plymouth Class, FMR Corp. and
Fidelity Service Co. is incorporated herein by reference to Exhibit 9(d) to
Post-Effective Amendment No. 17.
(10) None.
(11) Consent of Fund's independent accountant is electronically filed
herein as Exhibit 11.
(12) Not Applicable.
(13) Not Applicable.
(14) Forms for:
Fidelity Strategic Opportunities Fund
(a) Individual Retirement Account, Custodial Agreement and Disclosure
Statement;
(b) Defined Contribution Retirement Plan and Trust Agreement;
(c) Defined Benefit Pension Plan and Trust;
(d) IRA Custodial Agreement and Disclosure Statement (Group);
(e) 403(b)(7) Account Custodial Agreement; and
(f) 401(a) Prototype Plan for Tax-Exempt Employees are incorporated
herein by reference to Exhibits 14(a)-(f) to Post-Effective Amendement No.
16.
Fidelity Advisor Strategic Opportunities Fund
(g) Fidelity Master Plan for Savings and Investments - Adoption
Agreement;
(h) Fidelity Master Plan for Savings and Investments - Plan and Trust
Documents
(i) Fidelity Master Plan for Savings and Investments - Summary Plan
Description;
(j) Advisor Investments IRA Custodial Agreement; and
(k) Advisor Investments Defined Contribution Retirement Plan and Trust
Agreement are
incorporated herein by reference to Exhibits 14(g)-(k) to
Post-Effective Amendment No. 16.
(15) (a) Distribution and Service Plan between the Fund and FDC dated
April 1, 1987, is incorporated herein by reference to Exhibit 15 to
Post-Effective Amendment No. 8.
(16) (a) Schedule for computations of performance quotations for Advisor
Class shares is incorporated herein by reference to Exhibit 16(a) to
Post-Effective Amendment No. 11.
(b) Schedule for computation of performance quotations for Initial Class
shares is incorporated herein by reference to Exhibit 16(b) to
Post-Effective Amendment No. 11.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Board of Trustees of the Registrant is the same as the boards of other
funds in the Fidelity family of funds, each of which has Fidelity
Management & Research Company as its investment adviser. In addition
the officers of these funds are substantially identical. Nonetheless, the
Registrant takes the position that it is not under common control with
these other funds since the power residing in the respective boards and
officers arises as the result of an official position with the respective
funds.
Item 26. Number of Holders of Securities
November 30, 1993
Title of Class Number of Record Holders
Fidelity Strategic Opportunities Fund 1,639
Fidelity Advisor Strategic Opportunities Fund 20,424
Fidelity Emerging Markets Income Fund None
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee, or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President and
Chief Executive Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., FMR Texas Inc. (1989),
Fidelity Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; President and
Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.; President
and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management &
Research (Far East) Inc.; Senior Vice President and Trustee of
funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR; Corporate
Preferred Group Leader.
Will Danof Vice President of FMR (1993) and of a fund advised by FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR (1990) and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by FMR.
Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial Officer of
the Fidelity funds; Treasurer of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR (1991).
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised by
FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR (1991) and Treasurer of the funds advised
by FMR (1991). Prior to assuming the position as Treasurer he
was Senior Vice President, Fund Accounting - Fidelity
Accounting & Custody Services Co. (1991) (Vice President,
1990-1991); and Senior Vice President, Chief Financial and
Operations Officer - Huntington Advisers, Inc. (1985-1990).
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR (1989); Income/Growth Group
Leader (1990) and International Group Leader (1990).
Robert Haber Vice President of FMR (1991) and of funds advised by FMR.
Daniel Harmetz Vice President of FMR (1991) and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR (1991).
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
John Hickling Vice President of FMR (1993) and of funds advised by FMR.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR (1989); and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income Group
Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR (1991) and of funds advised by FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR (1991) and of funds advised by FMR.
Jacques Perold Vice President of FMR (1991).
Brian Posner Vice President of FMR (1993) and of a fund advised by FMR.
Anne Punzak Vice President of FMR (1990) and of funds advised by FMR.
Richard A. Spillane Vice President of FMR (1990) and of funds advised by FMR; and
Director of Equity Research (1989).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised by
FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income Division
Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised by
FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds advised by
FMR; and Growth Group Leader (1990).
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised by
FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of FMR;
Vice President, Legal of FMR Corp.; and Secretary of funds
advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the Executive
Committee of FMR; Chief Executive Officer of FMR Corp.;
Chairman of the Board and a Director of FMR, FMR Corp., FMR
Texas Inc., and Fidelity Management & Research (Far East)
Inc.; President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR U.K.; President of FMR; Managing
Director of FMR Corp.; President and a Director of FMR Texas Inc.
and Fidelity Management & Research (Far East) Inc.; Senior
Vice President and Trustee of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR U.K. (1991); Senior Vice President of
Fidelity Management & Research (Far East) Inc. (1991);
Director of Worldwide Research of FMR.
Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity Management &
Research (Far East) Inc.; Treasurer of FMR Texas Inc., Senior Vice
President and Chief Financial Officer of the Fidelity funds.
David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management & Research
(Far East) Inc.; Secretary of FMR Texas Inc.
</TABLE>
(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of FMR,
FMR Corp., FMR Texas Inc. and Fidelity Management &
Research (U.K.) Inc.; President and Trustee of funds advised by
FMR.
J. Gary Burkhead President and Director of FMR Far East; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research
(U.K.) Inc.; Senior Vice President and Trustee of funds advised
by FMR.
Richard C. Habermann Senior Vice President of FMR Far East (1991); Senior Vice
President of Fidelity Management & Research (U.K.) Inc.
(1991); Director of Worldwide Research of FMR.
William R. Ebsworth Vice President of FMR Far East.
Bill Wilder Vice President of FMR Far East (1993).
Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity Management
& Research (U.K.) Inc.; Treasurer of FMR Texas Inc.;
Senior Vice President and Chief Financial Officer of the
Fidelity funds.
David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management &
Research (U.K.) Inc.; Secretary of FMR Texas Inc. .
</TABLE>
(4) FIDELITY INTERNATIONAL INVESTMENT ADVISORS
Pembroke Hall, 42 Crow Lane, Pembroke, Bermuda
The directors and officers of Fidelity International Investment Advisors
(FIIA) have held, during the past two fiscal years, the following positions
of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Anthony Bolton Director of FIIA and FIIAL (U.K.); Director of Fidelity
International Management Holdings Limited.
Martin P. Cambridge Director of FIIA and FIIAL (U.K.); Chief Financial Officer of
Fidelity International Ltd. and Fidelity Investment Services
Ltd..
Kirk Caza Vice President of FIIA (1991).
Charles T. M. Collis Director and Secretary of FIIA; Partner in Conyers, Dill
& Pearman, Hamilton, Bermuda; Secretary to many
companies in the Fidelity international group of companies.
Stephen A. DeSilva Treasurer of FIIA and Fidelity International Limited.
Geoffrey J. Mansfield Director of FIIA.
Frank Mutch Assistant Secretary of FIIA.
David J. Saul President, Director, and Controller of FIIA; Director of
Fidelity International Limited.
Michael Sommerville Vice President of FIIA; Vice President of Fidelity
International Limited.
Toshiaki Wakabayashi Director of FIIA.
</TABLE>
(5) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
27-28 Lovat Lane, London, England
The directors and officers of Fidelity International Investment Advisors
(U.K.) Limited (FIIAL (U.K.)) have held, during the past two fiscal years,
the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Anthony Bolton Director of FIIAL (U.K.) and FIIA; Director of Fidelity
International Management Holdings Limited.
Martin P. Cambridge Director and Secretary of FIIAL (U.K.) and FIIA; Chief
Financial Officer of Fidelity International Ltd. and Fidelity
Investment Services Ltd..
C. Bruce Johnstone Director of FIIAL (U.K.) (1991).
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the Funds'
custodian Brown Brothers Harriman & Co., 40 Water Street, Boston, MA.
Item 31. Management Services.
Not Applicable.
Item 31. Undertakings
The Registrant undertakes to file a Post-Effective Amendment, using
financial statements for Fidelity Advisor Emerging Markets Income Fund,
which need not be certified, within six months of the fund's effectiveness.
The Registrant, on behalf of Fidelity Strategic Opportunities Fund,
Fidelity Advisor Strategic Opportunities Fund undertakes, provided the
information required by Item 5A is contained in the annual report, to
furnish each person to whom a prospectus has been delivered, upon their
request and without charge, a copy of the Registrant's latest annual report
to shareholders.
LG931470.014
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this registration statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 24 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 24th day
of January 1994.
FIDELITY ADVISOR SERIES VIII
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee January 24, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer January 24, 1994
Gary L. French
/s/J. Gary Burkhead Trustee January 24, 1994
J. Gary Burkhead
/s/Ralph F. Cox* Trustee January 24, 1994
Ralph F. Cox
/s/Phyllis Burke Davis* Trustee January 24, 1994
Phyllis Burke Davis
/s/Richard J. Flynn* Trustee January 24, 1994
Richard J. Flynn
/s/E. Bradley Jones* Trustee January 24, 1994
E. Bradley Jones
/s/Donald J. Kirk* Trustee January 24, 1994
Donald J. Kirk
/s/Peter S. Lynch* Trustee January 24, 1994
Peter S. Lynch
/s/Edward H. Malone* Trustee January 24, 1994
Edward H. Malone
/s/Marvin L. Mann* Trustee January 24, 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee January 24, 1994
Gerald C. McDonough
/s/Thomas R. Williams* Trustee January 24, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/Edward H. Malone
J. Gary Burkhead Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993
Ralph F. Cox
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Phyllis Burke Davis October 20, 1993
Phyllis Burke Davis
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Special Situations Fund
Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P.
Fidelity Advisor Series VI Fidelity Trend Fund
Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities
Fidelity Contrafund Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P.
Portfolio, L.P. Spartan U.S. Treasury Money Market
Fidelity Fixed-Income Trust Fund
Fidelity Government Securities Fund Variable Insurance Products Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund II
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Marvin L. Mann October 20, 1993
Marvin L. Mann
ANNUAL REPORT
FOR THE PERIOD ENDED SEPTEMBER 30, 1993
FIDELITY
STRATEGIC
OPPORTUNITIES
FUND
(Registered trademark)
SO-11-93A
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Daniel R. Frank, VICE PRESIDENT
Gary L. French, TREASURER
John H. Costello, ASSISTANT TREASURER
Arthur S. Loring, SECRETARY
Robert H. Morrison, MANAGER,
SECURITY TRANSACTIONS
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
DESIGNED FOR
YOU AND YOUR
INVESTMENT PROFESSIONAL
IN TODAY'S FAST-PACED MARKETS, PRUDENT,
INFORMED DECISIONS ARE THE KEY TO SUCCESSFUL
INVESTING. THE FIDELITY ADVISOR FUNDS PUT THE
RESOURCES OF ONE OF THE WORLD'S LARGEST MUTUAL
FUND MANAGERS AT THE SERVICE OF THE
INVEST-MENT PROFESSIONAL YOU HAVE CHOSEN TO
HELP YOU MAKE FINANCIAL DECISIONS. WE BELIEVE
YOUR INVESTMENT
PORTFOLIO AND YOUR INVESTMENT
RESULTS COULD BE STRONGER WITH THE PARTNERSHIP
OF FIDELITY(Registered trademark) AND YOUR INVESTMENT PROFESSIONAL.
FIDELITY
ADVISOR
STRATEGIC
OPPORTUNITIES
FUND
ANNUAL REPORT
SEPTEMBER 30, 1993
(Registered trademark)
Fidelity Distributors Corporation
82 Devonshire Street
Boston, MA 02109
(Registered trademark)
ASO-11-93A
PRESIDENT'S MESSAGE
As 1993 draws to a close and the stock market continues to climb, many of
you may be wondering if this is the top and what you should do. Making a
sound decision requires some perspective on the market and an understanding
of its risks.
Those of us who invested in the stock market during the '80s benefited from
a period of unusually good performance. During that time, the Standard
& Poor's 500 index - a common proxy for the U.S. stock market -
returned 18% on average each year. This was far above the market's average
annual return since 1926 of 10%. Although the S&P 500 was up 7.62% for
1992, that was less than half of what we saw in the '80s and below the
market's long-term average. Through September of 1993, the S&P was up
7.59%. We believe these could be examples of the more modest returns we
might see in the '90s.
It's impossible to predict where the market will go from here. What we do
know is that historically the market has on average had a decline of 10% or
more every two years. We haven't seen a 10% drop in the market since
October 1990. Furthermore, stocks today are not cheap. Current valuations -
yardsticks like high price-to-earnings ratios and low dividend yields - are
at extremes. Low interest rates and the record amount of money that has
poured into stock funds so far in 1993 have helped push the market higher.
As real estate investments have become less attractive, many people have
instead put money in stocks, also helping to fuel the market's rise.
When there is this much uncertainty about what's next, a long-term,
disciplined approach to the stock market seems to make the most sense. A
good definition of long term is a minimum of five years. If you leave your
money invested that long, you should be able to ride out the market's
declines. A regular investment plan - investing a certain amount of money
each month or quarter - should also help you avoid buying exclusively at
the peak of the market. While this strategy can't protect you from a loss
in a declining market, and won't guarantee a profit, it should over time
help lower the average cost of your purchase. The key is that you follow
your plan during both market ups and downs.
No matter what happens in the market, we believe you can benefit from
practicing these investment principles. If we can help, please call us at
1-800-544-8888.
Best regards,
Edward C. Johnson 3d
PRESIDENT'S MESSAGE
Dear Shareholder:
As 1993 draws to a close and the stock market continues to climb, many of
you may be wondering if this is the top and what you should do. Making a
sound decision requires some perspective on the market and an understanding
of its risks.
Those of us who invested in the stock market during the '80s benefited from
a period of unusually good performance. During that time, the Standard
& Poor's 500 index - a common proxy for the U.S. stock market -
returned 18% on average each year. This was far above the market's average
annual return since 1926 of 10%. Although the S&P 500 was up 7.62% for
1992, that was less than half of what we saw in the '80s and below the
market's long-term average. Through September of 1993, the S&P was up
7.59%. We believe these could be examples of the more modest returns we
might see in the '90s.
It's impossible to predict where the market will go from here. What we do
know is that historically the market has on average had a decline of 10% or
more every two years. We haven't seen a 10% drop in the market since
October 1990. Furthermore, stocks today are not cheap. Current valuations -
yardsticks like high price-to-earnings ratios and low dividend yields - are
at extremes. Low interest rates and the record amount of money that has
poured into stock funds so far in 1993 have helped push the market higher.
As real estate investments have become less attractive, many people have
instead put money in stocks, also helping to fuel the market's rise.
When there is this much uncertainty about what's next, a long-term,
disciplined approach to the stock market seems to make the most sense. A
good definition of long term is a minimum of five years. If you leave your
money invested that long, you should be able to ride out the market's
declines. A regular investment plan - investing a certain amount of money
each month or quarter - should also help you avoid buying exclusively at
the peak of the market. While this strategy can't protect you from a loss
in a declining market, and won't guarantee a profit, it should over time
help lower the average cost of your purchase. The key is that you follow
your plan during both market ups and downs.
No matter what happens in the market, we believe you can benefit from
practicing these investment principles. If we can help, please call us at
1-800-544-8888.
Best regards,
Edward C. Johnson 3d
S&P 500 PERFORMANCE
for the years ended December 31*
Percent
Row: 1, Col: 1, Value: 4.0
Row: 2, Col: 1, Value: 14.0
Row: 3, Col: 1, Value: 18.0
Row: 4, Col: 1, Value: -14.0
Row: 5, Col: 1, Value: -26.0
Row: 6, Col: 1, Value: 38.0
Row: 7, Col: 1, Value: 24.0
Row: 8, Col: 1, Value: -8.0
Row: 9, Col: 1, Value: 6.0
Row: 10, Col: 1, Value: 18.0
Row: 11, Col: 1, Value: 32.0
Row: 12, Col: 1, Value: -6.0
Row: 13, Col: 1, Value: 22.0
Row: 14, Col: 1, Value: 24.0
Row: 15, Col: 1, Value: 6.0
Row: 16, Col: 1, Value: 32.0
Row: 17, Col: 1, Value: 18.0
Row: 18, Col: 1, Value: 5.0
Row: 19, Col: 1, Value: 16.0
Row: 20, Col: 1, Value: 32.0
Row: 21, Col: 1, Value: -4.0
Row: 22, Col: 1, Value: 31.0
Row: 23, Col: 1, Value: 7.619999999999999
Row: 24, Col: 1, Value: 4.45
* 1993 year to date is through September 30.
The S&P 500(Registered trademark) is an unmanaged index of common
stock prices. These performance
figures are historical and include reinvested dividends. They do not
reflect the past or
future performance of any Fidelity fund.
PERFORMANCE UPDATE - FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
$10,000 OVER LIFE OF FUND
FA Strategic
Opportunities (174) S&P 500
12/31/83 9525.00 10000.00
01/31/84 10063.54 9944.00
02/29/84 9601.98 9593.97
03/31/84 9841.35 9759.95
04/30/84 9753.79 9852.67
05/31/84 9254.51 9306.83
06/30/84 9475.45 9508.79
07/31/84 9266.31 9390.88
08/31/84 10272.10 10428.57
09/30/84 10465.00 10430.66
10/31/84 10778.64 10471.34
11/30/84 10490.36 10354.06
12/31/84 10544.09 10627.40
01/31/85 11678.48 11455.28
02/28/85 11664.97 11596.18
03/31/85 11488.48 11604.30
04/30/85 11436.39 11593.85
05/31/85 12120.76 12263.98
06/30/85 12384.38 12456.52
07/31/85 12599.56 12437.84
08/31/85 12738.17 12332.11
09/30/85 12236.43 11946.12
10/31/85 12910.73 12498.03
11/30/85 13738.20 13355.39
12/31/85 14401.90 14001.80
01/31/86 15033.36 14080.21
02/28/86 16291.73 15133.40
03/31/86 17453.80 15977.85
04/30/86 17149.66 15797.30
05/31/86 17483.06 16637.72
06/30/86 18410.92 16918.89
07/31/86 17819.87 15973.13
08/31/86 19012.89 17158.33
09/30/86 17763.82 15739.34
10/31/86 18446.68 16647.50
11/30/86 18726.11 17052.03
12/31/86 18323.19 16617.21
01/31/87 19826.22 18855.54
02/28/87 20029.68 19600.34
03/31/87 20617.46 20166.79
04/30/87 20007.07 19987.30
05/31/87 20199.23 20161.19
06/30/87 20832.22 21179.33
07/31/87 21668.68 22253.12
08/31/87 22098.21 23083.17
09/30/87 21544.34 22577.65
10/31/87 17588.14 17714.42
11/30/87 16785.59 16254.75
12/31/87 17162.33 17491.74
01/31/88 18506.84 18228.14
02/29/88 19113.19 19077.57
03/31/88 18810.01 18488.08
04/30/88 18928.65 18693.29
05/31/88 19258.19 18855.92
06/30/88 20576.34 19721.41
07/31/88 20457.70 19646.47
08/31/88 19824.99 18978.49
09/30/88 20470.89 19786.97
10/31/88 20826.79 20337.05
11/30/88 20958.60 20046.23
12/31/88 20980.67 20397.04
01/31/89 22169.03 21890.10
02/28/89 22073.41 21345.04
03/31/89 22537.83 21842.38
04/30/89 23398.36 22976.00
05/31/89 24477.45 23906.53
06/30/89 24668.68 23770.26
07/31/89 26362.43 25916.71
08/31/89 26703.91 26424.68
09/30/89 26703.91 26316.34
10/31/89 26266.81 25705.80
11/30/89 26977.10 26230.20
12/31/89 27819.92 26859.73
01/31/90 25980.23 25057.44
02/28/90 26120.67 25380.68
03/31/90 26120.67 26053.27
04/30/90 25053.37 25401.94
05/31/90 25867.89 27878.62
06/30/90 26120.67 27689.05
07/31/90 26190.89 27600.44
08/31/90 24351.20 25105.36
09/30/90 24168.64 23882.73
10/31/90 24154.60 23780.04
11/30/90 25221.89 25316.23
12/31/90 25825.15 26022.55
01/31/91 26659.64 27157.13
02/28/91 28255.41 29098.87
03/31/91 29148.46 29803.06
04/30/91 29543.74 29874.59
05/31/91 30597.83 31165.17
06/30/91 29631.58 29737.81
07/31/91 30524.63 31123.59
08/31/91 31183.43 31861.22
09/30/91 31300.56 31329.13
10/31/91 30671.03 31748.94
11/30/91 29924.38 30469.46
12/31/91 31785.40 33955.17
01/31/92 31836.97 33323.60
02/29/92 32455.83 33756.81
03/31/92 31630.69 33098.55
04/30/92 32232.36 34071.65
05/31/92 33280.98 34238.60
06/30/92 33280.98 33728.44
07/31/92 34312.42 35107.94
08/31/92 33710.75 34388.23
09/30/92 33573.22 34794.01
10/31/92 33848.27 34915.79
11/30/92 35292.28 36106.41
12/31/92 35876.98 36550.52
01/31/93 36554.97 36857.55
02/28/93 37590.79 37358.81
03/31/93 38758.44 38147.08
04/30/93 37986.28 37223.92
05/31/93 38871.44 38221.52
06/30/93 39191.60 38332.36
07/31/93 40020.25 38179.04
08/31/93 42525.05 39626.02
09/30/93 42412.05 39320.90
$10,000 OVER LIFE OF FUND: LET'S SAY YOU INVESTED $10,000 IN STRATEGIC
OPPORTUNITIES FUND ON DECEMBER 31, 1983, WHEN THE FUND STARTED AND PAID THE
MAXIMUM 4.75% SALES CHARGE. BY SEPTEMBER 30, 1993, THE VALUE OF YOUR
INVESTMENT WOULD HAVE GROWN TO $44,412 - A 324.12% INCREASE ON YOUR INITIAL
INVESTMENT. FOR COMPARISON LOOK AT HOW A $10,000 INVESTMENT IN THE S&P
500 (WITH DIVIDENDS REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE
GROWN TO $39,321 - A 293.21% INCREASE.
TOP TEN
EQUITY HOLDINGS
AS OF SEPTEMBER 30, 1993
Bell Atlantic Corp.
Ameritech Corp.
Southwestern Bell Corp.
NYNEX Corp.
U.S. West, Inc.
Pacific Telesis Group
Bell South Corp.
Service Corp. International
I-Stat Corporation
Exxon Corp.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1993
One Year Five Life of
Years Fund
STRATEGIC
OPPORTUNITIES 26.33% 107.18% 345.27%
S&P 500 13.00% 98.72% 293.21%
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1993
One Year Five Life of
Years Fund
STRATEGIC
OPPORTUNITIES 20.33% 14.56% 15.96%
THE CHART ABOVE SHOWS STRATEGIC OPPORTUNITIES' TOTAL RETURNS, WHICH
INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. CUMULATIVE TOTAL RETURNS DO NOT REFLECT THE FUND'S MAXIMUM 4.75%
SALES CHARGE WHICH, IF INCLUDED, WOULD HAVE RESULTED IN RETURNS OF 20.33%
FOR ONE YEAR, 97.34% FOR FIVE YEARS AND 324.12% FOR THE LIFE OF THE FUND.
FIGURES FOR THE S&P 500, AN UNMANAGED INDEX OF COMMON STOCK PRICES,
INCLUDE REINVESTMENT OF DIVIDENDS. S&P 500 IS A REGISTERED TRADEMARK OF
STANDARD & POOR'S CORPORATION.
WHEN YOU LOOK AT STRATEGIC OPPORTUNITIES' AVERAGE ANNUAL TOTAL RETURNS, YOU
SHOULD NOTE THAT THEY ARE LOAD-ADJUSTED. FIGURES FOR MORE THAN ONE YEAR
ASSUME A STEADY COMPOUNDED RATE OF RETURN AND ARE NOT THE FUND'S
YEAR-BY-YEAR RESULTS, WHICH FLUCTUATED OVER THE PERIODS SHOWN. THE LIFE OF
FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS, DECEMBER 31, 1983, TO THE
PERIOD LISTED ABOVE.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE AND RETURN
WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
PERFORMANCE UPDATE - FIDELITY STRATEGIC OPPORTUNITIES FUND
$10,000 OVER LIFE OF FUND
FA Strategic Opps:
Initial Class (014) S&P 500
12/31/83 9525.00 10000.00
01/31/84 10076.89 9944.00
02/29/84 9610.63 9593.97
03/31/84 9858.04 9759.95
04/30/84 9772.40 9852.67
05/31/84 9268.08 9306.83
06/30/84 9496.45 9508.79
07/31/84 9287.11 9390.88
08/31/84 10314.78 10428.57
09/30/84 10514.61 10430.66
10/31/84 10838.13 10471.34
11/30/84 10547.97 10354.06
12/31/84 10606.40 10627.40
01/31/85 11765.41 11455.28
02/28/85 11755.67 11596.18
03/31/85 11580.36 11604.30
04/30/85 11531.66 11593.85
05/31/85 12232.91 12263.98
06/30/85 12505.62 12456.52
07/31/85 12729.63 12437.84
08/31/85 12875.72 12332.11
09/30/85 12369.27 11946.12
10/31/85 13060.78 12498.03
11/30/85 13908.00 13355.39
12/31/85 14589.34 14001.80
01/31/86 15238.24 14080.21
02/28/86 16525.21 15133.40
03/31/86 17714.86 15977.85
04/30/86 17412.04 15797.30
05/31/86 17758.12 16637.72
06/30/86 18709.83 16918.89
07/31/86 18115.01 15973.13
08/31/86 19337.09 17158.33
09/30/86 18071.75 15739.34
10/31/86 18774.72 16647.50
11/30/86 19065.68 17052.03
12/31/86 18662.72 16617.21
01/31/87 20205.47 18855.54
02/28/87 20412.71 19600.34
03/31/87 21034.42 20166.79
04/30/87 20424.22 19987.30
05/31/87 20631.46 20161.19
06/30/87 21287.70 21179.33
07/31/87 22162.70 22253.12
08/31/87 22600.20 23083.17
09/30/87 22024.54 22577.65
10/31/87 18017.99 17714.42
11/30/87 17200.56 16254.75
12/31/87 17595.76 17491.74
01/31/88 18991.61 18228.14
02/29/88 19622.42 19077.57
03/31/88 19273.46 18488.08
04/30/88 19394.26 18693.29
05/31/88 19729.80 18855.92
06/30/88 21085.38 19721.41
07/31/88 20964.59 19646.47
08/31/88 20333.77 18978.49
09/30/88 21004.85 19786.97
10/31/88 21380.66 20337.05
11/30/88 21501.45 20046.23
12/31/88 21591.26 20397.04
01/31/89 22887.58 21890.10
02/28/89 22790.00 21345.04
03/31/89 23263.92 21842.38
04/30/89 24142.07 22976.00
05/31/89 25243.24 23906.53
06/30/89 25452.32 23770.26
07/31/89 27194.68 25916.71
08/31/89 27529.21 26424.68
09/30/89 27557.09 26316.34
10/31/89 27111.04 25705.80
11/30/89 27863.74 26230.20
12/31/89 28712.17 26859.73
01/31/90 26849.05 25057.44
02/28/90 27007.92 25380.68
03/31/90 27036.81 26053.27
04/30/90 25939.16 25401.94
05/31/90 26791.28 27878.62
06/30/90 27051.25 27689.05
07/31/90 27152.35 27600.44
08/31/90 25274.80 25105.36
09/30/90 25087.04 23882.73
10/31/90 25087.04 23780.04
11/30/90 26199.13 25316.23
12/31/90 26818.78 26022.55
01/31/91 27711.73 27157.13
02/28/91 29361.42 29098.87
03/31/91 30299.77 29803.06
04/30/91 30723.54 29874.59
05/31/91 31828.38 31165.17
06/30/91 30844.62 29737.81
07/31/91 31782.98 31123.59
08/31/91 32479.17 31861.22
09/30/91 32615.39 31329.13
10/31/91 31979.73 31748.94
11/30/91 31222.99 30469.46
12/31/91 33172.29 33955.17
01/31/92 33243.67 33323.60
02/29/92 33903.90 33756.81
03/31/92 33065.23 33098.55
04/30/92 33707.62 34071.65
05/31/92 34813.96 34238.60
06/30/92 34831.80 33728.44
07/31/92 35902.45 35107.94
08/31/92 35313.59 34388.23
09/30/92 35188.68 34794.01
10/31/92 35474.19 34915.79
11/30/92 36990.94 36106.41
12/31/92 37642.16 36550.52
01/31/93 38350.16 36857.55
02/28/93 39451.50 37358.81
03/31/93 40710.17 38147.08
04/30/93 39923.50 37223.92
05/31/93 40887.17 38221.52
06/30/93 41260.84 38332.36
07/31/93 42165.51 38179.04
08/31/93 44820.52 39626.02
09/30/93 44682.86 39320.90
$10,000 OVER LIFE OF FUND: LET'S SAY YOU INVESTED $10,000 IN STRATEGIC
OPPORTUNITIES FUND ON DECEMBER 31, 1983, WHEN THE FUND STARTED AND PAID THE
MAXIMUM 4.75% SALES CHARGE. BY SEPTEMBER 30, 1993, THE VALUE OF YOUR
INVESTMENT WOULD HAVE GROWN TO $44,683 - A 346.83% INCREASE ON YOUR INITIAL
INVESTMENT. FOR COMPARISON LOOK AT HOW A $10,000 INVESTMENT IN THE S&P
500 (WITH DIVIDENDS REINVESTED) DID OVER THE SAME PERIOD. IT WOULD HAVE
GROWN TO $39,321 - A 293.21% INCREASE.
TOP TEN
EQUITY HOLDINGS
AS OF SEPTEMBER 30, 1993
Bell Atlantic Corp.
Ameritech Corp.
Southwestern Bell Corp.
NYNEX Corp.
U.S. West, Inc.
Pacific Telesis Group
Bell South Corp.
Service Corp. International
I-Stat Corporation
Exxon Corp.
CUMULATIVE TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1993
One Year Five Life of
Years Fund
STRATEGIC
OPPORTUNITIES 26.98% 112.73% 369.11%
S&P 500 13.00% 98.72% 293.21%
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED SEPTEMBER 30, 1993
One Year Five Life of
Years Fund
STRATEGIC
OPPORTUNITIES 20.95% 15.17% 16.58%
THE CHART ABOVE SHOWS STRATEGIC OPPORTUNITIES' TOTAL RETURNS, WHICH
INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. CUMULATIVE TOTAL RETURNS DO NOT REFLECT THE FUND'S MAXIMUM 4.75%
SALES CHARGE WHICH, IF INCLUDED, WOULD HAVE RESULTED IN RETURNS OF 20.95%
FOR ONE YEAR, 102.62% FOR FIVE YEARS AND 346.83% FOR THE LIFE OF THE FUND.
FIGURES FOR THE S&P 500, AN UNMANAGED INDEX OF COMMON STOCK PRICES,
INCLUDE REINVESTMENT OF DIVIDENDS. S&P 500 IS A REGISTERED TRADEMARK OF
STANDARD & POOR'S CORPORATION.
WHEN YOU LOOK AT STRATEGIC OPPORTUNITIES' AVERAGE ANNUAL TOTAL RETURNS, YOU
SHOULD NOTE THAT THEY ARE LOAD-ADJUSTED. FIGURES FOR MORE THAN ONE YEAR
ASSUME A STEADY COMPOUNDED RATE OF RETURN AND ARE NOT THE FUND'S
YEAR-BY-YEAR RESULTS, WHICH FLUCTUATED OVER THE PERIODS SHOWN. THE LIFE OF
FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS, DECEMBER 31, 1983, TO THE
PERIOD LISTED ABOVE.
ALL PERFORMANCE NUMBERS ARE HISTORICAL; THE FUND'S SHARE PRICE AND RETURN
WILL VARY AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
AN INTERVIEW WITH
DAN FRANK,
PORTFOLIO MANAGER OF
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
WE'VE PROVIDED THE FOLLOWING MARKET RECAP AS CONTEXT FOR THE MANAGER'S
INTERVIEW:
BY HISTORICAL STANDARDS, STOCKS PERFORMED WELL DURING THE YEAR ENDED
SEPTEMBER 30, 1993. THE STANDARD & POOR'S 500 INDEX - A BROAD MEASURE
OF THE MARKET'S OVERALL PERFORMANCE - ROSE 13.00%, DUE IN PART TO LOW
INFLATION, DECLINING INTEREST RATES AND A GRADUALLY IMPROVING ECONOMY. THAT
COMPARED FAVORABLY WITH THE MARKET'S LONG-TERM AVERAGE ANNUAL RETURN OF
ABOUT 10%. CONTINUED POOR PERFORMANCE BY THE SO-CALLED NONDURABLES -
TOBACCO, DRUGS AND BRAND-NAME CONSUMER PRODUCTS STOCKS - WAS OFFSET BY
IMPRESSIVE RESULTS IN THE TECHNOLOGY SECTOR. SEMICONDUCTORS, SOFTWARE AND
DEVELOPING COMMUNICATIONS WERE AMONG THE LEADERS. IN GENERAL, SMALL STOCKS
OUTPACED LARGE STOCKS. THE NASDAQ COMPOSITE INDEX, WHICH TRACKS
OVER-THE-COUNTER STOCKS AND INCLUDES MANY TECHNOLOGY COMPANIES, ROSE
30.78%; WHILE THE DOW JONES INDUSTRIAL AVERAGE, AN INDEX OF 30 BLUE-CHIP
STOCKS, ROSE 11.92%. TWO WIDELY WATCHED BENCHMARKS BROKE RECORDS DURING THE
PERIOD. THE YIELD ON THE 30-YEAR TREASURY CRACKED 6% IN EARLY SEPTEMBER,
AND FINISHED THE MONTH AT 6.02%. MEANWHILE, THE DOW BROKE THROUGH THE 3600
MARK ON AUGUST 18, AND FINISHED THE PERIOD AT 3555.
Q. DAN, HOW HAS THE FUND PERFORMED?
A. We've had a good year. For the 12 months ended September 30, 1993, the
fund returned 26.33%. That beat the S&P 500 index which returned 13.00%
over the same period and the average capital appreciation fund's return of
24.59%, according to Lipper Analytical Services.
Q. WHAT EXPLAINS THE FUND'S SUCCESS?
A. Several factors. First, the fund's 25% investment in telecommunications
added to its performance. This sector benefited from changing regulations,
cost cutting and new technology, all of which suggest a promising future
for companies in the industry. Advances in technology are allowing
companies to not only dramatically cut costs but to rapidly expand their
domestic operations in areas such as cellular, voice mail, caller ID, and
video services, in competition with existing cable operators. Further, the
market hasn't seemed to focus on the enormous potential of the investment
these companies have made globally.
Q. WHAT ELSE HELPED THE FUND'S PERFORMANCE?
A. The fund's 15% stake in long-term Treasury bonds and zero coupon bonds.
Interest rates fell during the last year resulting in substantially higher
bond prices as inflation and economic activity globally remain subdued.
Despite the fact that interest rates are at a 20-year low, there still
seems to be room for long-term rates to fall. If that happens, of course,
the prices of the fund's long-term Treasury bonds could increase even more.
Q. WHAT KIND OF INVESTMENTS ARE YOU MAKING OVERSEAS?
A. About half of the fund's 18% stake in foreign investments are Hong Kong
stocks that generate a significant amount of their revenues doing business
in mainland China. Hong Kong companies are also well positioned to benefit
from a move towards a free market economy in China. I've favored consumer,
industrial and infrastructure companies. I'm also investing in foreign
bonds, such as French long-term government bonds, to take advantage of
falling interest rates overseas.
Q. WHAT'S BEHIND THE FUND'S NAME CHANGE?
A. I'm still running the fund the same way - looking for long-term
strategic opportunities or companies that stand to benefit from long-term
trends. I've always tried to manage the fund to minimize its share price
volatility. The old name (Special Situations) may have implied that the
fund was high risk.
Q. WHAT OTHER CHANGES HAVE YOU MADE IN THE FUND?
A. I've virtually eliminated the fund's investments in electric utilities.
I've done this because the fundamentals of the industry are deteriorating.
I also sold the fund's stake in retail stocks - which made up less than one
percent of the fund's investments at the end of September 1993 compared to
6.3% a year ago. Many consumers have put off buying new items because of
their fears of rising taxes and job loss. That doesn't bode well for
retailers.
Q. WHAT WILL YOUR STRATEGY BE OVER THE NEXT SIX MONTHS?
A. I'll probably continue to emphasize the same investment themes -
telecommunications, media, fixed-income investments in countries with
declining interest rates, and Hong Kong stocks. Many U.S. stocks seem
expensive; of course, if there were a market correction, I'd probably use
it as a buying opportunity. Whether this happens or not, shareholders
shouldn't expect the same level of performance two years in a row.
AN INTERVIEW WITH
DAN FRANK,
PORTFOLIO MANAGER OF
FIDELITY STRATEGIC OPPORTUNITIES FUND
WE'VE PROVIDED THE FOLLOWING MARKET RECAP AS CONTEXT FOR THE MANAGER'S
INTERVIEW:
BY HISTORICAL STANDARDS, STOCKS PERFORMED WELL DURING THE YEAR ENDED
SEPTEMBER 30, 1993. THE STANDARD & POOR'S 500 INDEX - A BROAD MEASURE
OF THE MARKET'S OVERALL PERFORMANCE - ROSE 13.00%, DUE IN PART TO LOW
INFLATION, DECLINING INTEREST RATES AND A GRADUALLY IMPROVING ECONOMY. THAT
COMPARED FAVORABLY WITH THE MARKET'S LONG-TERM AVERAGE ANNUAL RETURN OF
ABOUT 10%. CONTINUED POOR PERFORMANCE BY THE SO-CALLED NONDURABLES -
TOBACCO, DRUGS AND BRAND-NAME CONSUMER PRODUCTS STOCKS - WAS OFFSET BY
IMPRESSIVE RESULTS IN THE TECHNOLOGY SECTOR. SEMICONDUCTORS, SOFTWARE AND
DEVELOPING COMMUNICATIONS WERE AMONG THE LEADERS. IN GENERAL, SMALL STOCKS
OUTPACED LARGE STOCKS. THE NASDAQ COMPOSITE INDEX, WHICH TRACKS OVER-THE
COUNTER STOCKS AND INCLUDES MANY TECHNOLOGY COMPANIES, ROSE 30.78%; WHILE
THE DOW JONES INDUSTRIAL AVERAGE, AN INDEX OF 30 BLUE-CHIP STOCKS, ROSE
11.92%. TWO WIDELY WATCHED BENCHMARKS BROKE RECORDS DURING THE PERIOD. THE
YIELD ON THE 30-YEAR TREASURY CRACKED 6% IN EARLY SEPTEMBER, AND FINISHED
THE MONTH AT 6.02%. MEANWHILE, THE DOW BROKE THROUGH THE 3600 MARK ON
AUGUST 18, AND FINISHED THE PERIOD AT 3555.
Q. DAN, HOW HAS THE FUND PERFORMED?
A. We've had a good year. For the 12 months ended September 30, 1993, the
fund returned 26.98%. That beat S&P 500 index which returned 13.00%
over the same period and the average capital appreciation fund's return of
24.59%, according to Lipper Analytical Services.
Q. WHAT EXPLAINS THE FUND'S SUCCESS?
A. Several factors. First, the fund's 25% investment in telecommunications
added to its performance. This sector benefited from changing regulations,
cost cutting and new technology, all of which suggest a promising future
for companies in the industry. Advances in technology are allowing
companies to not only dramatically cut costs but to rapidly expand their
domestic operations in areas such as cellular, voice mail, caller ID, and
video services, in competition with existing cable operators. Further, the
market hasn't seemed to focus on the enormous potential of the investment
these companies have made globally.
Q. WHAT ELSE HELPED THE FUND'S PERFORMANCE?
A. The fund's 15% stake in long-term Treasury bonds and zero coupon bonds.
Interest rates fell during the last year resulting in substantially higher
bond prices as inflation and economic activity globally remain subdued.
Despite the fact that interest rates are at a 20-year low, there still
seems to be room for long-term rates to fall. If that happens, of course,
the prices of the fund's long-term Treasury bonds could increase even more.
Q. WHAT KIND OF INVESTMENTS ARE YOU MAKING OVERSEAS?
A. About half of the fund's 18% stake in foreign investments are Hong Kong
stocks that generate a significant amount of their revenues doing business
in mainland China. Hong Kong companies are also well positioned to benefit
from a move towards a free market economy in China. I've favored consumer,
industrial and infrastructure companies. I'm also investing in foreign
bonds, such as French long-term government bonds, to take advantage of
falling interest rates overseas.
Q. WHAT'S BEHIND THE FUND'S NAME CHANGE?
A. I'm still running the fund the same way - looking for long-term
strategic opportunities or companies that stand to benefit from long-term
trends. I've always tried to manage the fund to minimize its share price
volatility. The old name (Special Situations) may have implied that the
fund was high risk.
Q. WHAT OTHER CHANGES HAVE YOU MADE IN THE FUND?
A. I've virtually eliminated the fund's investments in electric utilities.
I've done this because the fundamentals of the industry are deteriorating.
I also sold the fund's stake in retail stocks - which made up less than one
percent of the fund's investments at the end of September 1993 compared to
6.3% a year ago. Many consumers have put off buying new items because of
their fears of rising taxes and job loss. That doesn't bode well for
retailers.
Q. WHAT WILL YOUR STRATEGY BE OVER THE NEXT SIX MONTHS?
A. I'll probably continue to emphasize the same investment themes -
telecommunications, media, fixed-income investments in countries with
declining interest rates, and Hong Kong stocks. Many U.S. stocks seem
expensive; of course, if there were a market correction, I'd probably use
it as a buying opportunity. Whether this happens or not, shareholders
shouldn't expect the same level of performance two years in a row.
FIDELITY STRATEGIC OPPORTUNITIES FUND
INVESTMENTS/SEPTEMBER 30, 1993
(Showing Percentage of Total Value of Investments)
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - 68.8%
BASIC INDUSTRIES - 0.8%
CHEMICALS & PLASTICS - 0.3%
FMC Corp. (b) 20,000 $ 982,500 30249130
PACKAGING & CONTAINERS - 0.5%
M.C. Packaging (b) 2,399,000 1,054,768 62399092
Thai Glass Industries 26,000 274,336 95099C92
1,329,104
TOTAL BASIC INDUSTRIES 2,311,604
CONGLOMERATES - 1.1%
Guangdong Investments Ltd. Ord. 2,000,000 801,760 40199492
Jardine Matheson & Co. Ltd. Ord. 250,000 1,988,232 47111510
Lam Soon (Hong Kong) Ltd. 307,000 184,605 51299092
2,974,597
CONSTRUCTION & REAL ESTATE - 0.8%
CONSTRUCTION - 0.5%
Hopewell Holdings Ltd. 2,000,000 1,564,720 44099999
REAL ESTATE - 0.3%
Seapower International Holdings 1,000,000 397,650 81299H22
Seapower Resources International Ltd. 4,000,000 569,000 81299A92
Seapower Resources International Ltd.
(warrants) (b) 800,000 16,032 81299A93
982,682
TOTAL CONSTRUCTION & REAL ESTATE 2,547,402
DURABLES - 0.5%
AUTOS, TIRES, & ACCESSORIES - 0.5%
Genuine Parts Company 40,000 1,500,000 37246010
ENERGY - 10.9%
COAL - 1.2%
Addington Resources, Inc. (b) 20,000 342,500 00651610
MAPCO, Inc. 50,000 3,187,500 56509710
3,530,000
ENERGY SERVICES - 0.4%
Baker Hughes, Inc. 15,000 352,500 05722410
Schlumberger Ltd. 15,000 999,375 80685710
1,351,875
OIL & GAS - 9.3%
Amerada Hess Corp. 56,000 2,968,000 02355110
Amoco Corp. 26,000 1,501,500 03190510
Atlantic Richfield Co. 27,000 3,088,125 04882510
Box Energy Corp. Class B (b) 250,000 2,968,750 10316820
British Petroleum PLC ADR 20,000 1,187,500 11088940
Elf Aquitaine Investment Corp. sponsored ADR 49,000 1,813,000 83365840
Exxon Corp. 65,000 4,257,500 30229010
Imperial Oil Ltd. 30,000 1,076,851 45303840
Repsol SA sponsored ADR 20,000 577,500 76026T20
Royal Dutch Petroleum Co. 13,000 1,321,125 78025770
Shell Canada Ltd. Class A 55,000 $ 1,731,959 82256710
Sun Company, Inc. 10,000 285,000 86676210
Texaco, Inc. 50,000 3,387,500 88169410
Total SA sponsored ADR (b) 30,000 813,750 89151E10
Union Texas Petroleum Holdings, Inc. 25,000 659,375 90864010
Unocal Corp. 10,000 281,250 91528910
27,918,685
TOTAL ENERGY 32,800,560
FINANCE - 3.4%
BANKS - 0.4%
Commerce Bancshares, Inc. 5,000 155,000 20052510
First Security Corp. 1,700 47,600 33629410
United Overseas Bank (warrants) (b) 286,875 873,658 91199E92
1,076,258
CREDIT & OTHER FINANCE - 0.9%
Manhattan Card Co. (b) 3,000,000 1,212,330 56299B22
Peregrine Investments Holdings 700,000 1,031,940 71399492
Servicios Financieros Quadrum SA
sponsored ADR (b) 20,000 357,500 81763810
2,601,770
SAVINGS & LOANS - 2.1%
Abington Savings Bank-Massachusetts (b) 2,500 26,875 00358610
American Savings of Florida FSB (b) 40,000 735,000 02941H30
Anchor Bancorp Inc. (b) 190,000 2,707,500 03283710
Coastal Bank Savings Association
(Houston) (b) 87,000 1,174,500 19041510
Commercial Federal Corp. (b) 70,000 1,732,500 20164710
6,376,375
TOTAL FINANCE 10,054,403
HEALTH - 2.0%
DRUGS & PHARMACEUTICALS - 0.3%
IMCERA Group, Inc. 30,700 993,913 45245410
MEDICAL EQUIPMENT & SUPPLIES - 1.7%
I-Stat Corporation (b) 280,000 4,480,000 45031210
Ultronics International Hldgs (b) 4,004,000 662,742 90499G22
5,142,742
TOTAL HEALTH 6,136,655
INDUSTRIAL MACHINERY & EQUIPMENT - 1.7%
ELECTRICAL EQUIPMENT - 0.9%
Hutchison Whampoa Ltd. Ord. 800,000 2,451,832 44841510
Zoltek Cos. Inc. (b) 50,000 337,500 98975W10
2,789,332
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
Joy Technologies, Inc. Class A (b) 210,000 2,257,500 48120610
TOTAL INDUSTRIAL MACHINERY &
EQUIPMENT 5,046,832
VALUE VALUE
SHARES (NOTE 1) SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
MEDIA & LEISURE - 7.5%
BROADCASTING - 4.0%
Associated Communications Corp. Class A (b) 25,000 $ 625,000 04554110
Television Broadcast Limited Ord. (b) 470,000 1,574,162 87953110
Time Warner, Inc. 100,000 4,075,000 88731510
Viacom, Inc. (non-vtg.) (b) 105,000 5,801,250 92552430
12,075,412
ENTERTAINMENT - 1.9%
Paramount Communications, Inc. 20,000 1,577,500 69921610
Savoy Pictures Entertainment, Inc. (b) 85,000 1,848,750 80537510
Shaw Bros Hong Kong Ltd. 1,500,000 2,269,500 82028710
5,695,750
PUBLISHING - 1.6%
Bertelsmann 13,500 1,616,841 08589991
Hachette SA (d) 15,000 381,174 40599999
Ming Pao Enterprise Corp. Ltd. (b) 1,400,000 1,357,818 60399392
Oriental Press Group Ltd. 1,000,000 488,170 68620099
South China Morning Post Holdings 1,290,000 809,062 84249992
4,653,065
TOTAL MEDIA & LEISURE 22,424,227
NONDURABLES - 2.0%
BEVERAGES - 0.8%
Fraser & Neave (warrants) (b) 175,000 729,766 35499394
Tsingtao Brewery Co. Ltd. (b) 2,200,000 1,664,300 87299922
2,394,066
FOODS - 0.5%
Lam Soon Food Industries Ltd. 3,500,000 927,850 51299592
Yaohan Food Process & Trading Co. 2,500,000 783,975 98499E92
1,711,825
HOUSEHOLD PRODUCTS - 0.7%
Gillette Company 35,000 2,008,125 37576610
TOTAL NONDURABLES 6,114,016
RETAIL & WHOLESALE - 0.2%
APPAREL STORES - 0.2%
Goldlion Holdings (b) 1,500,000 746,805 38199C92
SERVICES - 4.6%
ADVERTISING - 0.4%
Norwood Promotional Products, Inc. (b) 80,000 1,100,000 66972910
PRINTING - 0.4%
Starlite Holdings Ltd. (b) 6,200,000 1,306,836 85599892
SERVICES - 3.8%
Kinder-Care Learning Centers, Inc. (b)(d) 198,875 1,942,063
Pinkertons, Inc. (b) 40,000 730,000 72342910
Regis Corporation (b) 170,000 $ 1,997,500 75893210
Service Corp. International 272,600 6,780,925 81756510
11,450,488
TOTAL SERVICES 13,857,324
TECHNOLOGY - 0.8%
COMMUNICATIONS EQUIPMENT - 0.8%
S Megga International 7,100,000 2,019,950 99999C92
S Megga International (warrants) (b) 3,000,000 418,980 99999C93
2,438,930
TRANSPORTATION - 2.2%
RAILROADS - 0.6%
Johnstown America Industries, Inc. (b) 31,000 713,000 47947710
Norfolk Southern Corp. 16,300 1,112,475 65584410
1,825,475
SHIPPING - 0.9%
Shun Tak Holdings Ltd. 2,609,872 2,531,237 82799192
TRUCKING & FREIGHT - 0.7%
Federal Express Corp. (b) 33,800 2,091,375 31330910
TOTAL TRANSPORTATION 6,448,087
UTILITIES - 30.3%
CELLULAR - 3.6%
Cellular Communications, Inc., Series A
(redeemable) (b) 47,000 2,103,250 15091710
Cellular, Inc. (b) 65,000 1,121,250 15116310
Centennial Cellular Corp. Class A (b) 32,000 672,000 15133V10
Contel Cellular, Inc. Class A (b) 115,000 1,955,000 21090410
International Cabletel (b) 55,000 1,546,875 67082E10
Rogers Cantel Mobile Communications, Inc.
Class B (non-vtg.) (b) 105,000 2,647,141 77510210
Vanguard Cellular Systems, Inc. Class A (b) 30,000 877,500 92202210
10,923,016
ELECTRIC UTILITY - 1.6%
Gulf States Utilities Corp. (b) 105,000 2,008,125 40255010
Hong Kong Electric Holdings Ord. 1,000,000 2,741,500 43858010
4,749,625
TELEPHONE SERVICES - 24.6%
Ameritech Corp. 120,000 10,275,000 03095410
Bell Atlantic Corp. 163,000 10,391,250 07785310
BellSouth Corp. 145,000 8,772,500 07986010
GTE Corp. 52,000 1,995,500 36232010
NYNEX Corp. 204,000 9,358,500 67076810
Pacific Telesis Group 165,000 8,930,626 69489010
Rochester Telephone Corp. 35,000 1,688,750 77175810
Southern New England Telecommunications
Corp. 60,000 2,137,500 84348510
VALUE
SHARES (NOTE 1)
COMMON STOCKS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Southwestern Bell Corp. 220,000 $ 9,487,500 84533310
Telephone & Data Systems, Inc. 28,000 1,477,000 87943310
U.S. West, Inc. 187,000 9,209,750 91288910
73,723,876
WATER - 0.5%
Generale des Eaux 3,000 1,354,524 37099210
TOTAL UTILITIES 90,751,041
TOTAL COMMON STOCKS
(Cost $187,415,171) 206,152,483
MOODY'S
RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (A)
NONCONVERTIBLE BONDS - 2.1%
DURABLES - 0.5%
HOME FURNISHINGS - 0.5%
Interco, Inc. 10%, 6/1/01 Ba $ 1,369,000 1,389,535 458507AB
MEDIA & LEISURE - 0.3%
ENTERTAINMENT - 0.3%
Westwood Group, Inc. 14 1/4%,
8/15/97 (c) Caa 2,000,000 900,000 961754AA
SERVICES - 0.2%
SERVICES - 0.2%
Kinder-Care Learning Centers, Inc.
secured Series B 12%,
12/31/02 Caa 491,000 525,370 494521AE
UTILITIES - 1.2%
GAS - 1.2%
Columbia Gas Systems, Inc. (c): 197648BU
9.30%, 9/1/01 - 100,000 111,000 19765AAB
10 1/4%, 8/1/11 Caa 1,000,000 1,170,000
9.24%, 12/30/14 - 1,000,000 1,110,000 19765ABB
9.30%, 12/18/19 Caa 1,000,000 1,110,000 19765A9A
3,501,000
TOTAL NONCONVERTIBLE BONDS
(Cost $6,612,557) 6,315,905
U.S. GOVERNMENT OBLIGATIONS - 15.5%
U.S. TREASURY BONDS - 15.5%
9 1/8%, 5/15/18 Aaa 12,000,000 16,263,720 912810EA
Stripped Coupon Payment, 2/15/12 Aaa 100,000,000 29,983,000 912833DB
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $36,498,578) 46,246,720
MOODY'S
RATINGS PRINCIPAL VALUE
(UNAUDITED) AMOUNT (A) (NOTE 1)
FOREIGN GOVERNMENT OBLIGATIONS - 1.5%
French Government:
Oat Strip, 4/25/23 Aaa FRF 100,000,000 $ 2,353,250 351996BK
Principal Strip 4/25/23 Aaa FRF 90,000,000 2,153,484 351996BL
TOTAL FOREIGN GOVERNMENT
OBLIGATIONS (Cost $4,059,499) 4,506,734
OTHER SECURITIES - 0.5%
PURCHASED BANK DEBT - 0.5%
Macy (R.H.) & Co., Inc. (c):
letter of credit 5/27/94 574,660 436,742 556994CC
mortgage loan participation 5/27/94 1,000,000 760,000 556994BK
variable rate revolving loan 5/27/94 183,323 139,326 556994CB
variable rate term loan 5/27/94 242,018 183,933 556994CA
special real estate cap. 9/30/95 85,981 64,486 557991AA
TOTAL OTHER SECURITIES
(Cost $1,249,319) 1,584,487
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 11.6%
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 3.40% dated
9/30/93 due 10/1/93 $ 34,815,288 34,812,000
TOTAL INVESTMENTS - 100%
(Cost $270,647,124) $ 299,618,329
CURRENCY TYPE ABBREVIATIONS:
FRF - French franc
LEGEND:
(a) Principal amount is stated in United States dollars unless otherwise
noted.
(b) Non-income producing
(c) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
OTHER INFORMATION:
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S S&P
RATINGS RATINGS
Aaa, Aa, A 17.0% AAA, AA, A 17.0%
Baa 0.0% BBB 0.0%
Ba 0.5% BB 0.0%
B 0.0% B 0.5%
Caa 1.2% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.8%
The percentage not rated by either S&P or Moody's amounted to 0.9%.
Distribution of investments by country, as a percentage of total value of
investments, is as follows:
United States 81.9%
Hong Kong 10.1
France 3.0
Canada 1.8
Others (individually less than 1%) 3.2
TOTAL 100.0%
INCOME TAX INFORMATION:
At September 30, 1993, the aggregate cost of investment securities for
income tax purposes was $270,905,425. Net unrealized appreciation
aggregated $28,712,904, of which $35,237,714 related to appreciated
investment securities and $6,524,810 related to depreciated investment
securities.
The fund hereby designates $1,691,449 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1993
ASSETS
Investment in securities, at value (including repurchase agreements of
$34,812,000) (cost
$270,647,124) (Note 1) - See accompanying schedule $ 299,618,329
Receivable for investments sold 3,505,018
Receivable for fund shares sold 3,145,180
Dividends receivable 572,152
Interest receivable 653,171
Other receivables 534,431
Total assets 308,028,281
LIABILITIES
Payable for investments purchased $ 16,417,899
Payable for fund shares redeemed 582,692
Accrued management fee 177,881
Distribution fees payable 143,101
Other payables and accrued expenses 116,534
Total liabilities 17,438,107
NET ASSETS $ 290,590,174
Net Assets consist of:
Paid in capital $ 225,374,768
Undistributed net investment income 8,916,803
Accumulated undistributed net realized gain (loss) on investments
27,327,398
Net unrealized appreciation (depreciation) on investment securities
28,971,205
NET ASSETS $ 290,590,174
CALCULATION OF MAXIMUM OFFERING PRICE
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
Net Asset Value and redemption price per share ($269,882,884
11,983,119
shares) $22.52
Maximum offering price per share (100/95.25 of $22.52) $23.64
FIDELITY STRATEGIC OPPORTUNITIES FUND
Net Asset Value and redemption price per share ($20,707,290
911,349
shares) $22.72
Maximum offering price per share (100/95.25 of $22.72) $23.85
STATEMENT OF OPERATIONS
Year Ended September 30, 1993
INVESTMENT INCOME
Dividends $ 5,145,985
Interest 3,494,498
Total income 8,640,483
EXPENSES
Management fee (Note 4)
Basic fee $ 1,210,866
Performance adjustment 81,040
Transfer agent fees (Note 4)
Fidelity Advisor Strategic Opportunities Fund 511,300
Fidelity Strategic Opportunities Fund 38,794
Distribution fees - Fidelity Advisor Strategic Opportunities Fund (Note 4)
1,423,456
Accounting fees and expenses (Note 4) 145,494
Non-interested trustees' compensation 1,708
Custodian fees and expenses 85,839
Registration fees 53,678
Audit 38,173
Interest (Note 5) 1,198
Miscellaneous 15,619
Total expenses 3,607,165
Net investment income 5,033,318
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Notes 1 and 3):
Net realized gain (loss) on investment securities 25,283,326
Change in net unrealized appreciation (depreciation) on investment
securities 25,715,063
Net gain (loss) 50,998,389
Net increase (decrease) in net assets resulting from operations $
56,031,707
FINANCIAL STATEMENTS - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 5,033,318 $ 6,951,330
Net realized gain (loss) on investments 25,283,326 14,392,698
Change in net unrealized appreciation (depreciation) on investments
25,715,063 (6,479,047)
Net increase (decrease) in net assets resulting from operations
56,031,707 14,864,981
Distributions to shareholders from:
Net investment income
Fidelity Advisor Strategic Opportunities Fund (5,678,505)
(5,738,741)
Fidelity Strategic Opportunities Fund (627,961) (624,280)
Net realized gain
Fidelity Advisor Strategic Opportunities Fund (12,054,370)
(22,399,604)
Fidelity Strategic Opportunities Fund (1,085,476) (2,098,273)
Share transactions - net increase (decrease) (Note 6) 41,361,732
9,841,257
Total increase (decrease) in net assets 77,947,127 (6,154,660)
NET ASSETS
Beginning of period 212,643,047 218,797,707
End of period (including undistributed net investment income of
$8,916,803 and $10,189,951, respectively) $ 290,590,174 $
212,643,047
FINANCIAL HIGHLIGHTS
FIDELITY STRATEGIC OPPORTUNITIES FUND
YEARS ENDED SEPTEMBER 30,
1993 1992(DAGGER)(DAGGER) 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.72 $ 21.55 $ 17.37 $ 19.77 $
15.65
Income from Investment Operations
Net investment income .45 .73 .77 .80 .64
Net realized and unrealized gain (loss) on investments 4.46 .58 4.26
(2.49) 4.08
Total from investment operations 4.91 1.31 5.03 (1.79) 4.72
Less Distributions
From net investment income (.70) (.72) (.85) (.71) (.60)
From net realized gain on investments (1.21) (2.42) - -- -
Total Distributions (1.91) (3.14) (.85) (.71) (.60)
Net asset value, end of period $ 22.72 $ 19.72 $ 21.55 $ 17.37 $ 19.77
TOTAL RETURN (dagger) 26.98% 7.89% 30.01% (8.96)% 31.19%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 20,707 $ 17,933 $ 19,193 $
15,988 $ 19,780
Ratio of expenses to average net assets .89%(clear diamond) .87%
1.00% 1.03% .64%#
Ratio of investment income - net to average net assets 2.74% 3.78%
4.12% 4.21% 4.08%
Portfolio turnover rate 183% 211% 223% 114% 89%
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE.
(dagger)(dagger) AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
# INCLUDES REIMBURSEMENT OF $.08 PER SHARE FROM FIDELITY SERVICE COMPANY
FOR ADJUSTMENTS TO PRIOR PERIODS' FEES. IF THIS REIMBURSEMENT HAD NOT
EXISTED THE RATIO OF EXPENSES TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.04%.
(clear diamond) INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FIDELITY
MANAGEMENT & RESEARCH COMPANY FOR ADJUSTMENTS TO PRIOR PERIODS' FEES.
IF THIS REIMBURSEMENT HAD NOT EXISTED THE RATIO OF EXPENSES TO AVERAGE NET
ASSETS WOULD HAVE BEEN 1.05%.
FINANCIAL HIGHLIGHTS
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
YEARS ENDED SEPTEMBER 30,
1993 1992(DAGGER)(DAGGER) 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 19.53 $ 21.38 $ 17.21 $ 19.55 $
15.53
Income from Investment Operations
Net investment income .33 .61 .66 .70 .50
Net realized and unrealized gain (loss) on investments 4.44 .58 4.26
(2.49) 4.08
Total from investment operations 4.77 1.19 4.92 (1.79) 4.58
Less Distributions
From net investment income (.57) (.62) (.75) (.55) (.56)
From net realized gain on investments (1.21) (2.42) - - -
Total Distributions (1.78) (3.04) (.75) (.55) (.56)
Net asset value, end of period $ 22.52 $ 19.53 $ 21.38 $ 17.21 $ 19.55
TOTAL RETURN (dagger) 26.33% 7.26% 29.51% (9.49)% 30.45%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 269,883 $ 194,710 $ 199,604
$ 172,086 $ 198,174
Ratio of expenses to average net assets 1.57%(clear diamond) 1.46%
1.56% 1.59% 1.51%
Ratio of investment income - net to average net assets 2.06% 3.22%
3.61% 3.70% 3.23%
Portfolio turnover rate 183% 211% 223% 114% 89%
(dagger) TOTAL RETURN DOES NOT INCLUDE THE ONE TIME SALES CHARGE.
(dagger)(dagger) AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF
EQUALIZATION ACCOUNTING.
(clear diamond) INCLUDES REIMBURSEMENT OF $.03 PER SHARE FROM FIDELITY
MANAGEMENT & RESEARCH COMPANY FOR ADJUSTMENTS TO PRIOR PERIODS' FEES.
IF THIS REIMBURSEMENT HAD NOT EXISTED THE RATIO OF EXPENSES TO AVERAGE NET
ASSETS WOULD HAVE BEEN 1.73%.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 1993
55. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Strategic Opportunities Fund (the fund), formerly Fidelity Special
Situations Fund, is a fund of Fidelity Advisor Series VIII (the trust)
(formerly Fidelity Special Situations Fund) and is authorized to issue an
unlimited number of shares. The trust is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust.
The fund is comprised of two classes of shares, Fidelity Strategic
Opportunities Fund and Fidelity Advisor Strategic Opportunities Fund. Both
classes of shares have equal rights as to earnings, assets and voting
privileges except that each class bears different distribution and transfer
agent expenses. Each class has exclusive voting rights with respect to its
distribution plans. Fidelity Strategic Opportunities Fund shares are
available only to the current shareholders of this class.
The following summarizes the significant accounting policies of the fund:
ALLOCATED EARNINGS AND EXPENSES. Investment income, expenses (other than
expenses incurred under each class's Distribution and Service Plans and
Transfer Agent Agreements) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon their relative
net assets.
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an exchange)
are valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees. Short-term
securities maturing within sixty days are valued at amortized cost or
original cost plus accrued interest, both of which approximate current
value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. Differences are primarily due to a differing treatment for
market discount.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
56. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker are
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
57. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $429,350,725 and $413,059,414, respectively, of which U.S.
government and government agency obligations aggregated $7,038,650 and
$1,020,400, respectively.
58. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.31% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .30%.
The basic fee is subject to a performance adjustment (up to a maximum of +
or - .20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .54% of average net
assets after the performance adjustment of $81,040 and an adjustment to
prior periods' fees of $377,292.
On December 12, 1991, the Board of Trustees approved a new group fee rate
schedule with rates ranging from .30% to .52%. Effective January 1, 1992,
FMR has voluntarily agreed to implement this new group fee rate schedule as
it results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act,
Fidelity Advisor Strategic Opportunities Fund pays Fidelity Distributors
Corporation (FDC), an affiliate of FMR, a distribution and service fee that
is based on an annual rate of .65% of its average net assets. For the
period, the Fidelity Advisor Strategic Opportunities Fund paid FDC
$1,423,456 of which $1,092,965 was paid to securities dealers, banks and
other financial institutions for selling shares of the Fidelity Advisor
Strategic Opportunities Fund and providing shareholder support services.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
In addition, FMR or FDC may use its resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services.
SALES LOAD. FDC received sales charges for selling shares of the fund. The
sales charge rates ranged from 0% to 4.75% based on purchase amounts of
$4,000,000 or more to less than $50,000, respectively. For the period, FDC
received $1,299,291 of which $1,102,926 was paid to securities dealers,
banks and other financial institutions.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
transfer, dividend disbursing and shareholder servicing agent for the
Fidelity Strategic Opportunities Fund. FSC receives fees based on the type,
size, number of accounts and the number of transactions made by
shareholders. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements.
State Street Bank and Trust Company (State Street) is the transfer,
dividend disbursing and shareholder servicing agent for the Fidelity
Advisor Strategic Opportunities Fund. State Street is reimbursed for its
out-of-pocket expenses.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $103,206 for the period.
59. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $3,721,000 and $2,926,000,
respectively. The weighted average interest rate was 3.7%.
60. SHARE TRANSACTIONS.
Share transactions for both classes were as follows:
SHARES DOLLARS
YEARS ENDED SEPTEMBER 30, YEARS ENDED SEPTEMBER 30,
1993 1992 1993 1992
FIDELITY ADVISOR STRATEGIC OPPORTUNITIES FUND
Shares sold 3,301,716 1,358,515 $ 68,310,190 $ 25,265,345
Reinvestment of distributions from:
net investment income 184,384 189,794 3,435,074 3,311,901
net realized gain 394,598 744,907 7,351,358 12,998,635
Shares redeemed (1,866,302) (1,661,234) (37,662,274) (31,854,629)
Net increase (decrease) 2,014,396 631,982 $ 41,434,348 $ 9,721,252
FIDELITY STRATEGIC OPPORTUNITIES FUND
Shares sold 13,084 12,443 $ 304,306 $ 239,365
Reinvestment of distributions from:
net investment income 30,173 32,225 564,229 565,245
net realized gain 52,727 109,660 985,989 1,923,423
Shares redeemed (94,063) (135,590) (1,927,140) (2,608,028)
Net increase (decrease) 1,921 18,738 $ (72,616) $ 120,005
61. BENEFICIAL INTEREST.
At the end of the period, one shareholder of Fidelity Advisor Strategic
Opportunities Fund was record owner of approximately 28% of the total
outstanding shares of the fund.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE
SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR
FIDELITY DISTRIBUTORS CORPORATION IS A
BANK AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY
THE FDIC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Advisor Series VIII (formerly Fidelity Special
Situations Fund) and the Shareholders of Fidelity Strategic Opportunities
Fund (formerly Fidelity Special Situations Fund):
We have audited the accompanying statement of assets and liabilities of
Fidelity Advisor Series VIII: Fidelity Strategic Opportunities Fund
(formerly Fidelity Special Situations Fund), including the schedule of
portfolio investments, as of September 30, 1993, and the related statement
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments and cash held by the custodian as of September 30, 1993, and
confirmation by correspondence with brokers as to securities purchased but
not received at that date or other auditing procedures where confirmations
from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Advisor Series VIII: Fidelity Strategic Opportunities Fund as
of September 30, 1993, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts
November 4, 1993
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
Daniel R. Frank, VICE PRESIDENT
Gary L. French, TREASURER
John H. Costello, ASSISTANT TREASURER
Arthur S. Loring, SECRETARY
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Phyllis Burke Davis
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Marvin L. Mann
Gerald C. McDonough
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND
SHAREHOLDER
SERVICING AGENT
State Street Bank and Trust Company
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
THE FIDELITY ADVISOR FUND FAMILY
ASK YOUR INVESTMENT PROFESSIONAL ABOUT THE ADVISOR FUND OR FUNDS THAT BEST
SUIT YOUR INVESTMENT NEEDS.
INCOME
GROWTH
EQUITY FUNDS
Fidelity Advisor Overseas Fund*
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund(dagger)
Fidelity Advisor Global Resources Fund(dagger)(dagger)
GROWTH AND INCOME FUNDS
Fidelity Advisor Equity Portfolio Income
Fidelity Advisor Income & Growth Fund
FIXED-INCOME FUNDS
Fidelity Advisor High Yield Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Limited Term Bond Fund
Fidelity Advisor Short Fixed-Income Fund
TAX-EXEMPT FUNDS
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Limited Term Tax-Exempt Fund**
MONEY MARKET FUNDS
Daily Money Fund: Money Market Portfolio
Daily Money Fund: U.S. Treasury Portfolio
Daily Tax-Exempt Money Fund
ABOUT THESE CHARTS. The bar graphs shown above are intended as a relative
comparison of current income and growth potential among the various fund
types. The graphs are based solely on the general investment objective of
each fund category and do not represent actual or implied fund performance
or
portfolio composition.
* Formerly the Fidelity Advisor European Investment Portfolio. On December
1, 1992, shareholders of the fund voted to change the fund's
name and investment parameters.
** Formerly the Fidelity Advisor Tax-Exempt Portfolio.
(dagger) Formerly the Fidelity Special Situations Fund: Advisor Class.
(dagger)(dagger) Formerly the Fidelity Advisor Global Natural Resources
Portfolio.
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Statement of
Additional Information in Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A (the "Registration Statement") of
Fidelity Advisor Series VIII (formerly Fidelity Special Situations Fund):
Fidelity Strategic Opportunities Fund (formerly Fidelity Special Situations
Fund) of our report dated November 4, 1993, relating to the financial
statements and financial highlights which is incorporated by reference in
said Statement of Additional Information.
We further consent to the references to our Firm in the Prospectus and
Statement of Additional Information under the headings "Financial
Highlights" and "Auditor."
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
January 24, 1994
FIDELITY
INSTITUTIONAL
INDIVIDUAL
RETIREMENT
ACCOUNT
CUSTODIAL
AGREEMENT
Under Section 408(a) of the
Internal Revenue Code
The Depositor whose name appears on the attached Application is
establishing an
individual retirement account (under Section 408(a) of the Internal Revenue
Code) to provide for his or her retirement and for the support of his or
her
beneficiaries after death.
The Custodian named on the attached Application has given the Depositor the
Disclosure Statement required under the Income Tax Regulations under
Section
408(i) of the Code.
The Depositor has deposited with the Custodian an initial contribution in
cash,
as set forth in the attached Application.
The Depositor and the Custodian make the following Agreement:
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) of the Code (but only after
December
31, 1992), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to
a
Simplified Employee Pension Plan as described in Section 408(k). Rollover
contributions before January 1, 1993, include rollovers described in
Section
402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a Simplified Employee Pension Plan as described in
Section 408(k).
ARTICLE II
The Depositor's interest in the balance in the Custodial Account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts,
nor may the assets of the Custodial Account be commingled with other
property
except in a common trust fund or common investment fund (within the meaning
of
Section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the
meaning of Section 408(m) of the Code) except as otherwise permitted by
Section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the Custodial Account shall be
made
in accordance with the following requirements and shall otherwise comply
with
Section 408(a)(6) and Proposed Regulations Section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations Section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to
the Depositor under paragraph 3, or to the surviving spouse under paragraph
4,
other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the
Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a non spouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the Custodial Account must be, or
begin
to be, distributed by the Depositor's required beginning date (April 1
following the calendar year end in which the Depositor reaches age 70 1/2).
By
that date, the Depositor may elect, in a manner acceptable to the
Custodian, to
have the balance in the Custodial Account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Depositor and his or her designated Beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that
may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that
may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated Beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has
begun, distribution must continue to be made in accordance with paragraph
3.
(b) If the Depositor dies before distribution of his or her interest has
begun,
the entire remaining interest will, at the election of the Depositor or, if
the
Depositor has not so elected, at the election of the Beneficiary or
Beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the life
or
life expectancy of the designated Beneficiary or Beneficiaries starting by
December 31 of the year following the year of the Depositor's death. If,
however, the Beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in
which
the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) and its related regulations has
irrevocably
commenced, distributions are treated as having begun on the Depositor's
required beginning date, even though payments may actually have been made
before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the Beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in
the
account.
5. In the case of distribution over life expectancy in equal or
substantially
equal annual payments, to determine the minimum annual payment for each
year,
divide the Depositor's entire interest in the Custodial Account as of the
close
of business on December 31 of the preceding year by the life expectancy of
the
Depositor (or the joint life and last survivor expectancy of the Depositor
and
the Depositor's designated Beneficiary, or the life expectancy of the
designated Beneficiary, whichever applies). In the case of distributions
under
paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and
designated
Beneficiary as of their birthdays in the year the Depositor reaches age 70
1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii),
determine
life expectancy using the attained age of the designated Beneficiary as of
the
Beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for
another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for
the Custodian to prepare any reports required under Section 408(i) of the
Code
and Regulations Sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and
the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling.
Any
additional articles that are not consistent with Section 408(a) of the Code
and
the related regulations will be invalid.
ARTICLE VII
This Agreement will be amended from time to time to comply with the
provisions
of the Code and related regulations. Other amendments may be made with the
consent of the Depositor and the Custodian.
ARTICLE VIII
1. DEFINITIONS. The following definitions shall apply to terms used in this
Article VIII:
(a) "Account" or "Custodial Account" means the custodial account
established
hereunder for the benefit of the Depositor.
(b) "Agreement" means the Fidelity Institutional IRA Custodial Agreement,
including the information and provisions set forth in any Account
Application
that goes with this Agreement. This Agreement, including the Account
Application and any designation of Beneficiary filed with the Custodian,
may be
proved either by an original copy or by a reproduced copy thereof,
including,
without limitation, a copy reproduced by photocopying, facsimile
transmission,
or electronic imaging.
(c) "Application" shall mean the Application by which this Agreement, as
may be
amended from time to time, is established between the Depositor and the
Custodian. The statements contained therein shall be incorporated into this
Agreement.
(d) "Authorized Agent" means the person or persons authorized by the
Depositor,
on a signed form acceptable to and filed with the Custodian, to purchase or
sell Shares in the Depositor's Account.
(e) "Beneficiary" means the person or persons (including a trust or estate)
designated as such by the Depositor on a signed form acceptable to and
filed
with the Custodian pursuant to Article VIII, Section 8 of this Agreement.
(f) "Broker" shall mean either a securities broker-dealer registered as
such
under the Securities Exchange Act of 1934, or a bank as defined in Section
3(a)(6) of the Securities Exchange Act of 1934, which the Depositor has
designated as his or her Broker in the Account Application.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(h) "Company" shall mean FMR Corp., a Massachusetts corporation, or any
successor or affiliate thereof to which FMR Corp. may, from time to time,
delegate or assign any or all of its rights or responsibilities under this
Agreement.
(i) "Custodian" shall mean Fidelity Trust Company of Salt Lake City, Utah,
or
its successor, as specified in the Account Application.
(j) "Depositor" means the person named in the Account Application.
(k) "Investment Company Shares" or "Shares" shall mean shares of stock,
trust
certificates, or other evidences of interest (including fractional shares)
in
any corporation, partnership, trust, or other entity registered under the
Investment Company Act of 1940 (i) for which Fidelity Management &
Research
Company, a Massachusetts corporation, or its successors or affiliates,
serves
as investment advisor (a "Fidelity Fund"), (ii) the records of which are
maintained on a proprietary transfer agent or record-keeping system owned
or
employed by the Company, and (iii) which is among a group of Fidelity Funds
in
which investments are permitted for investment under this Agreement by the
Custodian and whose shares may be exchanged for shares of other Fidelity
Funds
within such group under the terms of its then current prospectus or any
other
agreement maintained by the Company.
(l) "Money Market Shares" shall mean any Investment Company Shares that are
issued by a money market mutual fund.
2. BROKER. The Broker shall be appointed by the Depositor in the
Application as
his or her agent to execute such investment directions with respect to
Investment Company Shares as the Depositor may give under the terms of the
Custodial Account, including the execution of purchase and sale orders
through
the Company's proprietary remote trading system.
In all cases the Broker, and not the Custodian, shall have the
responsibility
for delivering to the Depositor all notices and prospectuses relating to
such
Investment Company Shares. To the extent that the Custodian delivers to the
Broker confirmations, statements and other notices with respect to the
Account,
any such communications delivered to the Broker shall be deemed to have
been
delivered to the Depositor. The Depositor agrees to hold the Custodian and
the
Company harmless from and against any losses, cost or expenses arising in
connection with the delivery or receipt of any such communication(s),
provided
the Custodian has acted in accordance with the above.
3. INVESTMENT OF CONTRIBUTIONS. Contributions to the Account may be
invested
only in Investment Company Shares, and shall be invested as follows:
(a) General. Contributions will be invested in accordance with the
Depositor's
written instructions in the Application, and with subsequent instructions
given
by the Depositor or the Authorized Agent appointed by the Depositor (or,
following the death of the Depositor, his or her Beneficiary) through the
Broker to the Custodian in a manner acceptable to the Custodian. By giving
such
instructions to the Custodian, such person will be deemed to have
acknowledged
receipt of the then current prospectus, if any, for any Investment Company
Shares in which the Depositor (or the Authorized Agent appointed by the
Depositor), through the Broker directs the Custodian to invest assets in
his or
her Account. All charges incidental to carrying out such instructions shall
be
charged and collected in accordance with Article VIII, Section 18. All
Investment Company Shares in the Custodial Account shall be held in the
name of
the Custodian or its nominee or nominees.
(b) Initial Contribution. The Custodian will invest all contributions
promptly
after their receipt, as set forth below; provided, however, that the
Custodian
shall not be obligated to invest the Depositor's initial contribution to
his
Custodial Account as indicated on the Application, until at least seven (7)
calendar days have elapsed from the date of acceptance of the Application
by or
on behalf of the Custodian.
(c) Unclear Instructions. If the Depositor's Custodial Account at any time
contains cash as to which investment instructions in accordance with this
Section 3 have not been received by the Custodian, or if the Custodian
receives
instructions as to investment selection or allocation that are, in the
opinion
of the Custodian, not clear, the Custodian may request instructions from
the
Depositor (or the Depositor's Authorized Agent, Beneficiary, executor or
administrator). Pending receipt of such instructions, any cash may be
invested
in Money Market Shares, and any other investment may remain unchanged. The
Custodian shall not be liable to anyone for any loss resulting from delay
in
investing such cash or in implementing such instructions. Notwithstanding
the
above, the Custodian may, but need not, for administrative convenience
maintain
a balance of up to $100 of un invested cash in the Depositor's Custodial
Account.
(d) Minimum Investment. Any other provision hereof to the contrary
notwithstanding, the Depositor (or the Depositor's Authorized Agent,
Beneficiary, executor, or administrator) may not direct that any part or
all of
the Custodial Account be invested in Investment Company Shares unless the
aggregate amount to be invested is at least such amount as the Custodian
shall
establish from time to time.
(e) No Duty. The Custodian shall not have any duty to question the
directions
of a Depositor (or the Depositor's Broker, Authorized Agent, Beneficiary,
executor, or administrator) in the investment of his or her Custodial
Account
or to advise the Depositor or the Depositor's Broker regarding the
purchase,
retention or sale of assets credited to the Custodial Account. The
Custodian,
or any of its affiliates, shall not be liable for any loss that results
from
the Depositor's (or the Depositor's Broker, Authorized Agent, Beneficiary,
executor, or administrator) exercise of control (whether by his or her
action
or inaction) over the Custodial Account.
4. CONTRIBUTIONS BY DIVORCED OR SEPARATED SPOUSES. All alimony and separate
maintenance payments received by a divorced or separated spouse, and
taxable
under Section 71 of the Code, shall be considered compensation for purposes
of
computing the maximum annual contribution to the Custodial Account, and the
limitations for contributions by a divorced or separated spouse shall be
the
same as for any other individual.
5. TIMING OF CONTRIBUTIONS. A contribution is deemed to have been made on
the
last day of the preceding taxable year if the contribution is made by the
deadline for filing the Depositor's income tax return (not including
extensions), or such later date as may be determined by the Department of
the
Treasury or the IRS, provided the Depositor (or the Depositor's Broker or
Authorized Agent) designates, in a manner acceptable to the Custodian, the
contribution as a contribution for the preceding taxable year.
6. ROLLOVER CONTRIBUTIONS. The Custodian will accept for the Custodial
Account
all rollover contributions that consist of cash, and it may, but shall be
under
no obligation to, accept all or any part of any other rollover
contribution.
The Depositor shall designate each rollover contribution as such to the
Custodian through the Broker, and by such designation shall confirm to the
Custodian that a proposed rollover contribution qualifies as a rollover
contribution within the meaning of Sections 402(a)(5), 402(a)(6),
402(a)(7),
402(c), 403(a)(4), 403(b)(8), and/or 408(d)(3) of the Code. Submission by
or on
behalf of a Depositor of a rollover contribution consisting of assets other
than cash or property permitted as an investment under this Article VIII
shall
be deemed to be the instruction of the Depositor to the Custodian that, if
such
rollover contribution is accepted, the Custodian will use its best efforts
to
sell those assets for the Depositor's account, and to invest the proceeds
of
any such sale in accordance with Section 3. To the extent permitted by law,
the
Custodian shall not be liable to anyone for any loss resulting from such
sale
or delay in effecting such sale; or for any loss of income or appreciation
with
respect to the proceeds thereof after such sale and prior to investment
pursuant to Section 3; or for any failure to effect such sale if such
property
proves not readily marketable in the ordinary course of business. All
brokerage
and other costs incidental to the sale or attempted sale of such property
will
be charged to the Custodial Account in accordance with Article VIII,
Section
18.
7. REINVESTMENT OF EARNINGS. In the absence of other instructions pursuant
to
Section 3, distributions of every nature received in respect of the assets
in a
Depositor's Custodial Account shall be reinvested as follows:
(a) in the case of a distribution in respect of Investment Company Shares
that
may be received, at the election of the shareholder, in cash or in
additional
Shares of such Investment Company, the Custodian shall elect to receive
such
distribution in additional Investment Company Shares;
(b) in the case of a cash distribution that is received in respect of
Investment Company Shares, the Custodian shall reinvest such cash in
additional
Shares of that Investment Company;
(c) in the case of any other distribution of any nature received in respect
of
assets in the Custodial Account, the distribution shall be liquidated to
cash,
if necessary, and shall be reinvested in accordance with the Depositor's
instructions pursuant to Section 3.
8. DESIGNATION OF BENEFICIARY. A Depositor may designate a Beneficiary as
follows:
(a) General. A Depositor may designate a Beneficiary or Beneficiaries at
any
time, and any such designation may be changed or revoked at any time, by
written designation signed by the Depositor on a form acceptable to, and
filed
with, the Custodian; provided, however, that such designation, or change or
revocation of a prior designation, shall not be effective unless it is
received
and accepted by the Custodian no later than thirty (30) days after the
death of
the Depositor, and provided further that the latest such designation or
change
or revocation shall control. If the Depositor had not by the date of his or
her
death properly designated a Beneficiary in accordance with the preceding
sentence, or if no designated Beneficiary survives the Depositor, the
Depositor's Beneficiary shall be his or her surviving spouse, but if he or
she
has no surviving spouse, his or her estate. Unless otherwise specified in
the
Depositor's designation of Beneficiary, if a Beneficiary dies before
receiving
his or her entire interest in the Custodial Account, his or her remaining
interest in the Custodial Account shall be paid to the Beneficiary's
estate.
(b) Minors. If a distribution upon the death of the Depositor is payable to
a
person known by the Custodian to be a minor or otherwise under a legal
disability, the Custodian may, in its absolute discretion, make all, or any
part of the distribution to (a) a parent of such person, (b) the guardian,
conservator, or other legal representative, wherever appointed, of such
person,
(c) a custodial account established under a Uniform Gifts to Minors Act,
Uniform Transfers to Minors Act, or similar act, (d) any person having
control
or custody of such person, or (e) to such person directly.
(c) QTIPs and QDOTs. A Depositor may designate as Beneficiary of his or her
Account a trust for the benefit of his or her surviving spouse that is
intended
to satisfy the conditions of Sections 2056(b)(7) or 2056A of the Code (a
"Spousal Trust"). In that event, if the Depositor is survived by his or her
spouse, the following provisions shall apply to the Account, from and after
the
death of the Depositor until the death of the Depositor's surviving spouse:
(1)
all of the income of the Account shall be paid to the Spousal Trust
annually or
at more frequent intervals, and (2) no person shall have the power to
appoint
any part of the Account to any person other than the Spousal Trust. To the
extent permitted by Section 401(a)(9) of the Code, as determined by the
trustee(s) of the Spousal Trust, the surviving spouse of a Depositor who
has
designated a Spousal Trust as his or her Beneficiary may be treated as his
or
her "designated beneficiary" for purposes of the distribution requirements
of
that Code section. The Custodian shall have no responsibility to determine
whether such treatment is appropriate.
(d) Judicial Determination. Anything to the contrary herein
notwithstanding, in
the event of reasonable doubt respecting the proper course of action to be
taken, the Custodian may in its sole and absolute discretion resolve such
doubt
by judicial determination, which shall be binding on all parties claiming
any
interest in the Account. In such event all court costs, legal expenses,
reasonable compensation of time expended by the Custodian in the
performance of
its duties, and other appropriate and pertinent expenses and costs shall be
collected by the Custodian from the Custodial Account in accordance with
Article VIII, Section 18.
(e) No Duty. The Custodian shall not have any duty to question the
directions
of a Depositor (or the Depositor's Authorized Agent, Beneficiary, executor
or
administrator) as to the time(s) and amount(s) of distributions from the
Custodial Account, or to advise him or her regarding the compliance of such
distributions with Section 401(a)(9), Section 2056(b)(7) or Section 2056A
of
the Code.
9. PAYROLL DEDUCTION. Subject to approval of the Custodian and the Broker,
a
Depositor may choose to have contributions to his or her Custodial Account
made
through payroll deduction if the Account is maintained as part of a program
sponsored by the Depositor's employer. In order to establish payroll
deduction,
the Depositor must authorize his or her employer to deduct a fixed amount
from
each pay period's salary up to a total amount of $2,000 per year, unless
such
contributions are being made pursuant to a Simplified Employee Pension Plan
described under Section 408(k) of the Code, in which case, annual
contributions
up to the limit prescribed by the Internal Revenue Service can be made
(generally, 15% of the Depositor's earned income, up to $30,000 per year).
Contributions to the Custodial Account of the Depositor's spouse may be
made
through payroll deduction if the employer authorizes the use of payroll
deductions for such contributions, but such contributions must be made to a
separate Account maintained for the benefit of the Depositor's spouse. The
payroll deduction authorization shall continue in force until such time as
written amendment or revocation is received by the Depositor's employer and
the
Custodian with reasonable advance notice.
10. TRANSFERS TO OR FROM THE ACCOUNT. Assets held on behalf of the
Depositor in
another IRA may be transferred by the trustee or custodian thereof directly
to
the Custodian, in a form and manner acceptable to the Custodian, to be held
in
the Custodial Account for the Depositor under this Agreement. The Custodian
will not be responsible for any losses the Depositor may incur as a result
of
the timing of any transfer from another trustee or custodian that are due
to
circumstances reasonably beyond the control of the Custodian.
Assets held on behalf of the Depositor in the Account may be transferred
directly to a trustee or custodian of another IRA established for the
Depositor, if so directed by the Depositor in a form and manner acceptable
to
the Custodian; provided, however, that it shall be the Depositor's
responsibility to ensure that any minimum distribution required by Section
401(a)(9) of the Code is made prior to giving the Custodian such transfer
instructions.
11. DISTRIBUTIONS FROM THE ACCOUNT. Subject to Section 13 below,
distributions
from the Account will be made only upon the request of the Depositor (or
the
Depositor's Authorized Agent, Beneficiary, executor, or administrator) to
the
Custodian through the Broker in such form and in such manner as is
acceptable
to the Custodian. For distributions requested pursuant to Article IV, life
expectancy and joint life and last survivor expectancy are calculated based
on
information provided by the Depositor (or the Depositor's Authorized Agent,
Beneficiary, executor, or administrator) using the Expected Return
Multiples in
Section 1.72-9 of the Income Tax Regulations. The Custodian shall not incur
any
liability for errors in such calculations as a result of reliance on
information provided by the Depositor (or the Depositor's Authorized Agent,
Beneficiary, executor, or administrator) or the Depositor's Broker. Without
limiting the generality of the foregoing, the Custodian is not obligated to
make any distribution, including a minimum required distribution as
specified
in Article IV above, absent a specific written direction from the Depositor
(or
the Depositor's Authorized Agent, Beneficiary, executor, or administrator)
through the Broker to do so.
12. ACTIONS IN THE ABSENCE OF SPECIFIC INSTRUCTIONS. If the Custodian
receives
no response to communications sent to the Depositor (or the Depositor's
Authorized Agent, Beneficiary, executor, or administrator) at the
Depositor's
(or the Depositor's Authorized Agent, Beneficiary, executor, or
administrator's) last known address as shown in the records of the
Custodian,
or if the Custodian determines, on the basis of evidence satisfactory to
it,
that the Depositor is legally incompetent, the Custodian thereafter may
make
such determinations with respect to distributions, investments, and other
administrative matters arising under this Agreement as it considers
reasonable,
notwithstanding any prior instructions or directions given by or on behalf
of
the Depositor. Any determinations so made shall be binding on all persons
having or claiming any interest under the Custodial Account, and the
Custodian
shall not incur any obligation or liability for any such determination made
in
good faith, for any action taken in pursuance thereof, or for any
fluctuations
in the value of the Account in the event of a delay resulting from the
Custodian's good faith decision to await additional information or
evidence.
13. RESPONSIBILITY AS TO CONTRIBUTIONS OR DISTRIBUTIONS. The Custodian will
not
under any circumstances be responsible for the timing, purpose or propriety
of
any contribution or of any distribution made hereunder, nor shall the
Custodian
incur any liability or responsibility for any tax imposed on account of any
such contribution or distribution. Notwithstanding Section 11 above, the
Custodian is empowered to make a distribution absent such an instruction if
directed to do so pursuant to a court order of any kind and neither the
Custodian nor the Company shall in such event incur any liability for
acting in
accordance with such court order.
14. WRITTEN INSTRUCTIONS AND NOTICES. All written notices or communications
required to be given by the Custodian to the Depositor shall be deemed to
have
been given when sent by mail to either the Broker or to the last known
address
of the Depositor in the records of the Custodian. All written instructions,
notices, or communications required to be given by the Depositor to the
Custodian shall be mailed or delivered to the Custodian at its designated
mailing address as specified on the Application, and no such instruction,
notice, or communication shall be effective until the Custodian's actual
receipt thereof.
15. EFFECT OF WRITTEN INSTRUCTIONS AND NOTICES. The Custodian shall be
entitled
to rely conclusively upon, and shall be fully protected in any action or
non-action taken in good faith in reliance upon, any written instructions,
notices, communications or instruments believed to have been genuine and
properly executed. Any such notification may be proved by original copy or
reproduced copy thereof, including, without limitation, a copy produced by
photocopying, facsimile transmission, or electronic imaging. For this
purpose,
the Custodian may (but is not required to) give the same effect to a
telephonic
instruction as it gives to a written instruction, and the Custodian's
action in
doing so shall be protected to the same extent as if such telephonic
instructions were, in fact, a written instruction. Any such telephonic
instruction may be proved by audio recorded tape.
16. TAX MATTERS.
(a) General. The Custodian shall submit required reports to the IRS and the
Depositor (or the Depositor's Authorized Agent, Beneficiary, executor, or
administrator); provided, however, that such individual shall prepare any
return or report required in connection with maintaining the Account, or as
a
result of liability incurred by the Account for tax on unrelated business
taxable income, or windfall profits tax.
(b) Annual Report. As soon as is practicable after the close of each
taxable
year, and whenever required by the Code, the Custodian shall deliver to the
Depositor a written report(s) reflecting receipts, disbursements and other
transactions effected in the Custodial Account during such period and the
fair
market value of the assets and liabilities of the Custodial Account as of
the
close of such period in a manner prescribed by the Internal Revenue
Service.
Unless the Depositor sends the Custodian written objection to a report
within
ninety (90) days of receipt, the Depositor shall be deemed to have approved
of
such report, and the Custodian and the Company, and their officers,
employees
and agents shall be forever released and discharged from all liability and
accountability to anyone with respect to their acts, transactions, duties
and
responsibilities as shown on or reflected by such report(s). The Company
shall
not incur any liability in the event the Custodian does not satisfy its
obligations as described herein.
(c) Withholding. Any distributions from the Custodial Account may be made
by
the Custodian net of any required tax withholding.
17. SPENDTHRIFT PROVISION. The interest of a Depositor in the Account shall
not
be transferred or assigned by voluntary or involuntary act of the Depositor
or
by operation of law; nor shall it be subject to alienation, assignment,
garnishment, attachment, receivership, execution or levy of any kind.
Notwithstanding the foregoing, in the event of a property settlement
between a
Depositor and his or her former spouse pursuant to which the transfer of a
Depositor's interest hereunder, or a portion thereof, is incorporated in a
divorce decree or in a written instrument incident to such divorce or legal
separation, then the interest so decreed by a Court to be the property of
such
former spouse shall be transferred to a separate Custodial Account for the
benefit of such former spouse, in accordance with Section 408(d)(6) of the
Code.
18. FEES AND EXPENSES.
(a) General. The fees of the Custodian for performing its duties hereunder
shall be in such amount as it shall establish from time to time. All such
fees,
as well as expenses (such as, without limitation, brokerage commissions
upon
the investment of funds, fees for special legal services, taxes levied or
assessed, or expenses in connection with the liquidation or retention of
all or
part of a rollover contribution), shall be collected by the Custodian from
cash
available in the Custodial Account, or if insufficient cash shall be
available,
by sale of sufficient assets in the Custodial Account and application of
the
sales proceeds to pay such fees and expenses. Alternatively, but only with
the
consent of the Custodian, fees and expenses may be paid directly to the
Custodian by the Depositor by separate check.
(b) Advisor Fees. The Custodian shall, upon direction from the Depositor,
disburse from the Custodial Account payment to the Depositor's registered
investment advisor of any fees for financial advisory services rendered
with
regard to the assets held in the Account. Such direction must be provided
in a
form and manner acceptable to the Custodian, and the Custodian shall not
incur
any liability for executing such direction.
(c) Sale of Assets. Whenever it shall be necessary in accordance with this
Section 18 to sell assets in order to pay fees or expenses, the Custodian
shall
request the Depositor (or the Depositor's Authorized agent, Beneficiary,
executor, or administrator) to provide specific instructions. If such
instructions are not received by the Custodian within ten (10) business
days of
the Custodian's request, the Custodian may sell any or all of the assets
credited to the Custodial Account at that time, and shall invest the
portion of
the sales proceeds remaining after collection of the applicable fees and
expenses therefrom in accordance with Section 3. The Custodian shall not
incur
any liability on account of its sale or retention of assets under such
circumstances.
19. VOTING WITH RESPECT TO SECURITIES. The Custodian shall mail to the
Depositor all prospectuses and proxies that may come into the Custodian's
possession by reason of its holding of Investment Company Shares or other
securities in the Custodial Account. A Depositor may direct the Custodian
as to
the manner in which any securities or Investment Company Shares held in the
Custodial Account shall be voted with respect to any matters as to which
the
Custodian as holder of record is entitled to vote, coming before any
meeting of
shareholders of the corporation that issued such securities, or of holders
of
interest in the Investment Company that issued such Investment Company
Shares.
All such directions shall be in writing on a form approved by the Custodian
and
signed by the Depositor, and delivered to the Custodian within the time
prescribed by it. The Custodian shall vote only those securities and
Shares
with respect to which it has received timely written directions from the
Depositor; provided, however, that the Custodian may without such direction
vote Shares "present" to the extent such a vote is needed to establish a
quorum.
20. LIMITATIONS ON CUSTODIAL LIABILITY AND INDEMNIFICATION. The Depositor
and
the Custodian intend that the Custodian shall have and exercise no
discretion,
authority, or responsibility as to any investment in connection with the
Account and the Custodian shall not be responsible in any way for the
purpose,
propriety or tax treatment of any contribution, or of any distribution, or
any
other action or nonaction taken pursuant to the Depositor's direction or
that
of the Depositor's Authorized Agent, Beneficiary, executor or
administrator.
The Depositor who directs the investment of his or her Account shall bear
sole
responsibility for the suitability of any directed investment and for any
adverse consequences arising from such an investment, including, without
limitation, the inability of the Custodian to value or to sell an illiquid
investment, or the generation of unrelated business taxable income with
respect
to an investment. To the fullest extent permitted by law, the Depositor (or
the
Depositor's Authorized Agent, Beneficiary, executor or administrator, as
appropriate) shall at all times fully indemnify and save harmless the
Custodian, the Company and their agents, affiliates, successors and assigns
and
their officers, directors and employees, from any and all liability arising
from the Depositor's investment direction under this Account, or from the
Broker's execution of such direction, and from any and all other liability
whatsoever that may arise in connection with this Agreement except
liability
arising under applicable law or liability arising from gross negligence or
willful misconduct on the part of the indemnified person. Although the
Custodian shall have no responsibility to give effect to a direction from
anyone other than the Depositor (or the Depositor's Beneficiary, executor
or
administrator), the Custodian may, in its discretion, establish procedures
pursuant to which the Depositor may delegate to a third party any or all of
the
Depositor's powers and duties hereunder; provided, however, that in no
event
may anyone other than the Depositor execute the application by which this
Agreement is adopted or the form by which the Beneficiary is appointed, and
provided, further, that any such third party to whom the Depositor has so
delegated powers and duties shall be treated as the Depositor for purposes
of
applying the preceding sentences of this paragraph and the provisions of
Article VIII, Section 2.
21. DELEGATION TO AGENTS. The Custodian may delegate to one or more
corporations affiliated with the Custodian the performance of record
keeping
and other ministerial services in connection with the Custodial Account,
for a
reasonable fee to be borne by the Custodian and not by the Custodial
Account.
Any such agent's duties and responsibilities shall be confined solely to
the
performance of such services, and shall continue only for so long as the
Custodian named in the Application serves as Custodian.
22. AMENDMENT OF AGREEMENT. The Depositor, the Broker, and Custodian
authorize
and direct the Company to amend this Agreement in any respect at any time
(including retroactively), so that it may conform with applicable
provisions of
the Internal Revenue Code, or with any other applicable law as in effect
from
time to time, or to make such other changes to this Agreement as the
Company
deems advisable. Any such amendment shall be effected by delivery to the
Custodian and mailing to the Depositor at his or her last known address as
shown in the records of the Custodian a copy of such amendment, or a
restatement of this Custodial Agreement including any such amendment. The
Depositor shall be deemed to consent to any such amendment(s) if he or she
fails to object thereto by written notice received by the Custodian within
fifteen (15) calendar days from the date of the Company's mailing to the
Depositor a copy of such amendment(s) or restatement.
23. RESIGNATION OR REMOVAL OF CUSTODIAN. The Company may remove the
Custodian
at any time, and the Custodian may resign at any time, upon thirty (30)
days'
written notice to the Depositor and the Broker. Upon the removal or
resignation
of the Custodian, the Company may, but shall not be required to, appoint a
successor custodian under this Custodial Agreement; provided that any
successor
custodian shall satisfy the requirements of Section 408(a)(2) of the Code.
Upon
any such successor's acceptance of appointment, the Custodian shall
transfer
the assets of the Custodial Account, together with copies of relevant books
and
records, to such successor custodian; provided, however, that the Custodian
is
authorized to reserve such sum of money or property as it may deem
advisable
for payment of any liabilities constituting a charge on or against the
assets
of the Custodial Account, or on or against the Custodian or the Company.
The
Custodian shall not be liable for the acts or omissions of any successor to
it.
If no successor custodian is appointed by the Company, the Custodial
Account
shall be terminated, and the assets of the Account, reduced by the amount
of
any unpaid fees or expenses, will be distributed to the Depositor.
24. TERMINATION OF THE CUSTODIAL ACCOUNT. The Depositor may terminate the
Custodial Account at any time upon notice to the Custodian in a manner and
form
acceptable to the Custodian. Upon such termination, the Custodian shall
transfer the assets of the Custodial Account, reduced by the amount of any
unpaid fees or expenses, to the custodian or trustee of another individual
retirement account (within the meaning of Section 408 of the Code) or other
retirement plan designated by the Depositor, as described in Article VIII,
Section 10. The Custodian shall not be liable for losses arising from the
acts,
omissions, delays or other inaction of any such transferee custodian or
trustee. If notice of the Depositor's intention to terminate the Custodial
Account is received by the Custodian and the Depositor had not designated a
transferee custodian or trustee for the assets in the Account, then the
Account, reduced by any unpaid fees or expenses, will be distributed to the
Depositor.
25. GOVERNING LAW. THIS AGREEMENT, AND THE DUTIES AND OBLIGATIONS OF THE
COMPANY AND THE CUSTODIAN UNDER THE AGREEMENT, SHALL BE CONSTRUED,
ADMINISTERED
AND ENFORCED ACCORDING TO THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
EXCEPT
AS SUPERSEDED BY FEDERAL LAW OR STATUTE.
26. WHEN EFFECTIVE. This Agreement shall not become effective until
acceptance
of the Application by or on behalf of the Custodian at its principal
office, as
evidenced by a written notice to the Depositor.
FIDELITY
INSTITUTIONAL
INDIVIDUAL
RETIREMENT
ACCOUNT
DISCLOSURE
STATEMENT
The following information is provided to you in accordance with the
requirements of the Internal Revenue Code (the "Code") and should be
reviewed
in conjunction with both the Custodial Agreement and the Application for
your
Individual Retirement Account ("IRA"). This information reflects the
provisions
of the Internal Revenue Code as are effective January 1, 1987, and
therefore
applies to contributions for years after, and to distributions taken after
1986.
RIGHT TO CANCEL
You may revoke this Account at any time within seven calendar days after it
is
established by mailing or delivering a written request for revocation to:
Fidelity Investments Institutional Services Company, Inc.
ATTN: Integrated Transaction Services
P.O. Box 1182, Mail Zone ZR5
Boston, Massachusetts 02103-1182
Upon revocation, you will receive a full refund of your initial
contribution,
including sales commissions (if any) and/or administrative fees. To
determine
where to send a revocation request, or if you have any questions relative
to
this procedure, please call our toll free number, 1-800-843-3001.
TYPES OF IRAS
REGULAR IRA. You may make a Regular IRA contribution of $2,000 or 100% of
your
compensation, whichever is less. (To determine the amount of your income
tax
deduction for your IRA contribution, see "Limits on Deductible
Contributions"
below.)
SPOUSAL IRA. If you and your spouse file a joint federal income tax return,
you
may make a Spousal IRA contribution, even if your spouse has received
compensation during the tax year. Your contribution to a Spousal IRA must
not
exceed the lesser of (1) $2,000 or (2) the excess of $2,250 (or if less,
100%
of your compensation) over your contribution to your Regular IRA. Note: If
your
spouse has more than $250 in compensation for the tax year, the two of you
may
make a larger total contribution if you each contribute to a Regular IRA.
ROLLOVER IRA. If you retire or change jobs, you may be eligible for a
distribution from your employer's retirement plan. To avoid mandatory
withholding of 20% of your distribution for federal income tax, and to
preserve
the tax-deferred status of this distribution, you can transfer it directly
to a
Rollover IRA. If you choose to have the distribution paid directly to you,
you
will be subject to the 20% withholding rules. You may still reinvest up to
100%
of the total amount of your distribution that is eligible for rollover in a
Rollover IRA by replacing the 20% that was withheld for taxes with other
assets
you own. You must reinvest in a Rollover IRA within 60 days of receipt of
your
distribution. The amount invested in a Rollover IRA will not be included in
your taxable income for the year in which you receive the qualified plan
distribution.
DESCRIPTION
OF ACCOUNT
Your IRA is a custodial account created for your exclusive benefit. Your
interest in the account is nonforfeitable.
ELIGIBILITY
Employees and self-employed individuals are eligible to contribute to an
IRA
even if they are already covered under another tax-qualified plan.
Employers
may contribute to IRAs established by their employees, and employers may
contribute to IRAs used as part of a Simplified Employee Pension Plan
("SEP,"
described below).
CONTRIBUTIONS
GENERAL. You may make annual cash contributions to an IRA in any amount up
to
100% of your compensation for the year or $2,000, whichever is less. Your
employer may make contributions to your account, but, except as noted below
under a SEP, the total contributions from you and your employer may not
exceed
this limitation. Contributions (other than rollover contributions described
below) must be made in "cash" and not in "kind." Therefore, securities or
other
assets already owned cannot be contributed to an IRA but can be converted
to
cash and then contributed. No part of your contribution may be invested in
life
insurance or be commingled with other property, except in a common trust
fund
or common investment fund.
SPOUSAL ACCOUNTS. If you are married and file a joint tax return, you may
make
cash contributions to a "spousal" IRA in addition to your own IRA (even if
your
spouse has compensation). The total amounts contributed to your own and to
your
spouse's IRA may not exceed 100% of your combined compensation or $2,250,
whichever is less. In no event, however, may the annual contribution to
either
your account or your spouse's account exceed $2,000.
COMPENSATION means wages, salaries, professional fees, or other amounts
derived
from or received for personal service actually rendered and includes the
earned
income of a self-employed individual, and any alimony or separate
maintenance
payment includible in the individual's gross income.
ADJUSTED GROSS INCOME is determined prior to adjustments for personal
exemptions and itemized deductions. For purposes of determining the IRA
deduction (see below), adjusted gross income is modified to take into
account
deductions for IRA contributions, taxable benefits under the Social
Security
Act and the Railroad Retirement Act, and passive loss limitations under
Code
Section 86.
TIME OF CONTRIBUTION. You may make contributions to your IRA any time up to
and
including the due date (not including extensions) for filing your tax
return
for the year. You may continue to make annual contributions to your IRA up
to
(but not including) the calendar year in which you reach age 70 1/2. You
may
continue to make annual contributions to your spouse's IRA up to (but not
including) the calendar year in which your spouse reaches age 70 1/2.
ROLLOVER IRA CONTRIBUTIONS. Qualifying distributions from tax-qualified
plans
(for example, pension, profit-sharing, and Keogh plans) may be eligible for
rollover into your IRA. However, strict limitations apply to such rollovers
and
you should seek competent tax advice regarding these restrictions.
SIMPLIFIED EMPLOYEE PENSION PLAN CONTRIBUTIONS. A separate IRA may be
established for use by your employer as part of a SEP arrangement. Your
employer may contribute to your SEP-IRA up to a maximum of 15% of your
compensation or $30,000, whichever is less. If your SEP-IRA is used as part
of
a salary reduction SEP, you may elect to reduce your annual compensation,
up to
a maximum of 15% of your compensation or $7,000 (indexed to reflect
cost-of-living adjustments), whichever is less, and have your employer
contribute that amount to your SEP-IRA. If your employer maintains both a
salary reduction SEP and a regular SEP, the annual contribution limit to
both
SEPs together is 15% of your compensation or $30,000, whichever is less.
You
may contribute, in addition to the amount contributed by your employer to
your
SEP-IRA, an amount not in excess of the limits referred to under "General"
above. It is your and your employer's responsibility to see that
contributions
in excess of normal IRA limits are made under a valid SEP and are,
therefore,
proper.
EXCESS CONTRIBUTIONS. Contributions that exceed the allowable maximum per
year
are considered excess contributions. A nondeductible penalty tax of 6% of
the
excess amount contributed will be incurred for each year in which the
excess
contribution remains in your IRA. If you make a contribution (or your
employer
makes a SEP contribution, including a salary reduction contribution, on
your
behalf) in excess of your allowable maximum for any taxable year, you may
correct the excess contribution and avoid the 6% penalty tax for that year
by
withdrawing the excess contribution and its earnings on or before the date,
including extensions, for filing your tax return for that year.
The amount of the excess contribution withdrawn will not be considered a
premature distribution or (except in the case of a salary reduction
contribution) be taxed as ordinary income, but the earnings withdrawn will
be
taxed as ordinary income to you. Alternatively, excess contributions for
one
year may be carried forward and reported in the next year to the extent
that
the excess, when aggregated with your IRA contribution (if any) for the
subsequent year, does not exceed the maximum amount for that year. The 6%
excise tax will be imposed on excess contributions in each year they are
neither returned nor carried forward.
DEDUCTIBLE IRA
CONTRIBUTIONS
If you are not married and are not an active participant in an
employer-maintained retirement plan, you may make a fully deductible IRA
contribution in any amount up to 100% of your compensation for the year or
$2,000, whichever is less. The same limits apply if you are married and you
file a joint return with your spouse, and neither of you is an active
participant in an employer-maintained retirement plan. An
"employer-maintained
retirement plan" includes any of the following types of retirement plans:
- a qualified pension, profit-sharing, or stock bonus plan established in
accordance with IRC (sec. mk.) 401 (a) or 401 (k).
- a Simplified Employee Pension Plan (SEP) (IRC (sec. mk.) 408(k)).
- a deferred compensation plan maintained by a governmental unit or
agency.
- tax sheltered annuities and custodial accounts (IRC (sec. mk.) 403(b)
and
403(b)(7)).
- a qualified annuity plan under IRC (sec. mk.) 403(a).
You are an active participant in an employer maintained retirement plan
even
if you do not have a vested right to any benefits under your employer's
plan.
Whether you are an "active participant" depends on the type of plan
maintained
by your employer. Generally, you are considered an active participant in a
defined contribution plan if an employer contribution or forfeiture was
credited to your account under the plan during the year. You are considered
an
active participant in a defined benefit plan if you are eligible to
participate
in the plan, even though you elect not to participate. You are also treated
as
an active participant for a year during which you make a voluntary or
mandatory
contribution to any type of plan, even though your employer makes no
contribution to the plan.
If you (or your spouse, if you are filing a joint tax return) are covered
by an
employer-maintained retirement plan, your IRA contribution is tax
deductible
only to the extent that your adjusted gross income does not exceed the
deductibility limits discussed below.
LIMITS ON
DEDUCTIBLE
CONTRIBUTIONS
The deduction of your IRA contribution is reduced proportionately for
adjusted
gross income that exceeds the applicable dollar amount. The applicable
dollar
amount for an individual is $25,000 and $40,000 for married couples filing
a
joint tax return. The applicable dollar limit for married individuals
filing
separate returns is $0. If your adjusted gross income exceeds the
applicable
dollar amount by not more than $10,000, you may make a deductible IRA
contribution (but the deductible amount will be less than $2,000).
To determine the amount of your deductible contribution, use the following
calculation:
1. Subtract the applicable dollar amount from your adjusted gross income.
If
the result is $10,000 or more, stop; you can only make a nondeductible
contribution.
2. Subtract the above figure from $10,000.
3. Divide the above figure by $10,000.
4. Multiply $2,000 by the fraction resulting from the above steps. This is
your
maximum deductible contribution limit.
If the deduction limit is not a multiple of $10, then it is to be rounded
up to
the next highest $10. There is a $200 minimum floor on the deduction limit
if
your adjusted gross income does not exceed $35,000 (for a single taxpayer),
$50,000 (for married taxpayers filing jointly) or $10,000 (for a married
taxpayer filing separately).
Adjusted gross income for married couples filing a joint tax return is
calculated by aggregating the compensation of both spouses. The deduction
limitations on IRA contributions, as determined above, then apply to each
spouse.
NONDEDUCTIBLE
IRA
CONTRIBUTIONS
Even if your income exceeds the limits described above, you may make a
contribution to your IRA up to the lesser of $2,000 or 100% of your
compensation. To the extent that your contribution exceeds the deductible
limits, it will be nondeductible. Earnings on all IRA contributions are tax
deferred until distribution.
You are required to designate on your tax return (and attach to it Form
8606)
the extent to which your IRA contribution is nondeductible. Therefore, your
designation must be made by the due date (including extensions) for filing
your
tax return. If you overstate the amount of nondeductible contributions for
a
taxable year, a penalty of $100 will be assessed for each overstatement
unless
you can show that the overstatement was due to a reasonable cause.
INVESTMENT
OF ACCOUNT
The assets in your IRA will be invested in accordance with your
instructions.
As with any investment, you should read any publicly available information
(e.g., prospectuses, annual reports, the terms and conditions of any
insurance
annuity contract, etc.) that would enable you to make an informed
investment
decision.
If no investment instructions are received from you, or if the instructions
received are, in the opinion of the Custodian, unclear, you may be
requested to
provide instructions. In the absence of such instructions, your investment
may
be invested in Money Market Shares, which strive to maintain a stable $1
per
share balance. Keep in mind that with respect to investments in regulated
investment company shares (i.e., mutual funds) held in your account, growth
in
the value of your account cannot be guaranteed or projected.
DISTRIBUTIONS
GENERAL. Distributions from your IRA should begin no earlier than the date
you
reach age 59 1/2 (except in cases of your earlier disability or death) and
no
later than the April 1 following the year in which you reach age 70 1/2.
Distributions from your account will be included in your gross income for
federal income tax purposes for the year in which you receive them.
PREMATURE DISTRIBUTIONS. To the extent they are included in income,
distributions from your IRA made before you reach age 59 1/2 will be
subject to
a 10% nondeductible penalty tax (in addition to being taxable as ordinary
income) unless the distribution is an exempt withdrawal of an excess
contribution, or the distribution is rolled over to another qualified
retirement plan, or the distribution is made on account of your death or
disability, or the distribution is one of a scheduled series of payments
over
your life or life expectancy or the joint life expectancies of yourself and
your Beneficiary.
LATEST TIME TO WITHDRAW. You must begin receiving distributions of the
assets
in your account by April 1 of the calendar year following the calendar year
in
which you reach age 70 1/2. Subsequent distributions must be made by
December
31 of each year. If you maintain more than one IRA, you may take from any
of
your IRAs the aggregate amount to be withdrawn.
MINIMUM DISTRIBUTIONS. Once distributions are required to begin, they must
not
be less than the amount each year (determined by actuarial tables) that
would
exhaust the value of the account over the required distribution period,
which
is generally your life expectancy or the joint life and last survivor
expectancy of you and an individual you have designated as your
Beneficiary.
You will be subject to a 50% excise tax on the amount by which the
distribution
you actually received in any year falls short of the minimum distribution
required for the year.
METHODS OF DISTRIBUTION. Assets may be distributed from your account
according
to one or more of the following methods selected by you:
(A) total distribution
(B) distribution over a certain period
(C) purchase of an annuity contract
(See Article IV of your IRA Custodial Agreement for a full description of
these
distribution methods.)
DISTRIBUTION UPON DEATH. The assets remaining in your Account will be
distributed upon your death to the beneficiary(ies) named by you on record
with
the Custodian. If there is no beneficiary designated for your Account in
the
Custodian's records, or if the beneficiary you had designated dies before
you
do, your Account will be paid to your surviving spouse, or if none, to your
estate.
If your spouse was your primary beneficiary and you had started to receive
distributions from your account, but die before receiving the balance of
your
account, your spouse has several options. Your spouse can either keep
receiving
distributions from your account at least as rapidly, or roll over all or
part
of your account into an IRA in his or her name. If distributions from your
account had not yet begun, your spouse may defer taking distributions until
April 1 of the year you would have turned 70 1/2, and then receive
distributions over his or her life expectancy, or roll over the account
into an
IRA in their name, and treat the IRA as his or her own.
If your beneficiary is not your spouse, and distributions had begun from
your
account, your beneficiary may continue to receive them at least as rapidly
as
the payment schedule you had established. If distributions had not yet
begun,
your beneficiary must deplete your account within five (5) years of your
death,
or start taking distributions from your account within one year of your
death
over their own life expectancy.
DISTRIBUTION OF NONDEDUCTIBLE CONTRIBUTIONS. To the extent that a
distribution
constitutes a return of your nondeductible contributions, it will not be
included in your income. The amount of any distribution excludable from
income
is the portion that bears the same ratio to the total distribution that
your
aggregate nondeductible contributions bear to the balance at the end of the
year (calculated after adding back distributions during the year) of your
IRA.
For this purpose, all of your IRAs are treated as a single IRA.
Furthermore,
all distributions from an IRA during a taxable year are to be treated as
one
distribution. The aggregate amount of distributions excludable from income
for
all years is not to exceed the aggregate nondeductible contributions for
all
calendar years. There is a 10% additional income tax assessed against
premature distributions to the extent such distributions are includible in
income (see "Premature Distributions" above).
EXCESS DISTRIBUTIONS. There is a 15% excise tax assessed against annual
distributions from tax-favored retirement plans, including IRAs, that
exceed
the greater of $150,000 or $112,500 (indexed to reflect cost-of-living
increases). To determine whether you have distributions in excess of this
limit, you must aggregate the amounts of all distributions received by you
during the calendar year from all retirement plans, including IRAs. Please
consult with your tax advisor for more complete information, including the
availability of favorable elections.
ROLLOVER TREATMENT. Distributions from your IRA representing all or any
part of
the assets in your IRA account are also eligible for rollover treatment.
You
may roll over all or any part of the same property from this distribution
of
assets, within 60 days of receipt, into another IRA or individual
retirement
annuity, and maintain the tax-deferred status of these assets. A 60 day
rollover can be made once every twelve months per IRA.
DIVORCE OR
LEGAL
SEPARATION
If all or any portion of your IRA is awarded to a former spouse pursuant to
divorce or legal separation, such portion can be transferred to an IRA in
the
receiving spouse's name. This transaction can be processed without any tax
implications to you provided a written instrument executed by a court
incident
to the divorce or legal separation in accordance with Section 408(d)(6) of
the
Code is received by the Custodian, and specifically directs such transfer.
In
addition, you must also provide the Custodian with a letter of instruction
and
an IRA application executed by the receiving spouse, if she or he doesn't
already maintain such IRA at Fidelity.
FEES AND
EXPENSES
Fees and other expenses of maintaining your Fidelity IRA account are
described
in the Application and may be changed from time to time, as provided in the
Custodial Agreement.
PROHIBITED
TRANSACTIONS
If any of the events prohibited by Section 4975 of the Code (such as any
sale,
exchange or leasing of any property between you and your IRA) occurs during
the
existence of your IRA, your account will be disqualified and the entire
balance
in your account will be treated as if distributed to you as of the first
day of
the year in which the prohibited event occurs. This "distribution" would be
subject to ordinary income tax and, if you were under age 59 1/2 at the
time,
to the 10% penalty tax on premature distributions.
If you or your Beneficiary use (pledge) all or any part of your IRA as
security
for a loan, then the portion so pledged will be treated as if distributed
to
you, and will be taxable to you as ordinary income and subject to the 10%
penalty during the year in which you make such a pledge.
OTHER TAX
CONSIDERATIONS
NO SPECIAL TAX TREATMENT. No distribution to you or anyone else from your
account can qualify for capital gain treatment under the federal income tax
laws. It is taxed to the person receiving the distribution as ordinary
income.
(Similarly, you are not entitled to the five-year averaging rule for lump
sum
distributions available to persons receiving distributions from certain
other
types of retirement plans.)
GIFT TAX. If you elect during your lifetime to have all or any part of your
account payable to a Beneficiary at or after your death, the election will
not
subject you to any gift tax liability.
TAX WITHHOLDING. Federal income tax will be withheld from distributions you
receive from an IRA unless you elect not to have tax withheld. However, if
IRA
distributions are to be delivered outside of the United States, this tax is
mandatory and you may not elect otherwise unless you certify to the
Custodian
that you are not a U.S. citizen residing overseas or a "tax avoidance
expatriate" as described in Code Section 877. Federal income tax will be
withheld at the rate of 10%.
REPORTING FOR TAX PURPOSES. Contributions to your IRA must be reported on
your
tax Form 1040 or 1040A for the taxable year contributed. You will be
required
to designate your IRA contribution as deductible or nondeductible. You are
also
required to attach a Form 8606 to your 1040 or 1040A form. Form 8606 is
used to
report nondeductible IRA contributions and to calculate the basis
(nontaxable
part) of your IRA. Other reporting will be required by you in the event
that
special taxes or penalties described herein are due. You must also file
Treasury Form 5329 with the IRS for each taxable year in which the
contribution
limits are exceeded, a premature distribution takes place, or less than the
required minimum amount is distributed from your IRA. The Tax Reform Act of
1986 also requires you to report the amount of all distributions you
received
from your IRA and the aggregate account balance of all IRAs as of the end
of
the calendar year.
IRS APPROVAL
The form of your Individual Retirement Account has been approved by the
Internal Revenue Service. The Internal Revenue Service approval is a
determination only as to the form and does not represent a determination of
the
merits of the Account. You may obtain further information with respect to
your
IRA from any district office of the Internal Revenue Service.
I.BM-IRA-CUS-693
82 Devonshire Street, ZR5
Boston, MA 02109
