SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-86711)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No. 46 [X]
and
REGISTRATION STATEMENT (No. 811-3855)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 46 [X]
Fidelity Advisor Series VIII
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
(X) on (October 31, 1997) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule 485.
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed
post-effective amendment.
FIDELITY ADVISOR FUNDS CLASS A, CLASS T, CLASS B, AND CLASS C
PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
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1 .............................. Cover Page
2 a .............................. Expenses
b,c .............................. Contents; Who May Want to Invest
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance, Appendix B
d .............................. Cover Page; Performance
4 a i............................. Charter
ii........................... Investment Principles and Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Cover Page; Charter
ii........................... Charter
iii.......................... Expenses; Breakdown of Expenses
c .............................. Charter
d .............................. Charter; Breakdown of Expenses
e .............................. Cover Page; Charter; Breakdown of Expenses
f .............................. Expenses
g i............................. Charter
ii........................... *
5A .............................. Performance
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions; Sales Charge Reductions and Waivers
iii.......................... Charter
b ............................. Charter
c .............................. Transaction Details; Exchange Restrictions
d .............................. Who May Want to Invest
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Exchange Restrictions;
Sales Charge Reductions and Waivers
f, g .............................. Dividends, Capital Gains, and Taxes
h .............................. Who May Want to Invest
7 a .............................. Cover Page; Charter
b .............................. Expenses; How to Buy Shares; Transaction Details
c .............................. Sales Charge Reductions and Waivers
d .............................. How to Buy Shares
e .............................. Breakdown of Expenses; Transaction Details
f .............................. Expenses; Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of a fund's most recent financial report and portfolio listing or
a copy of the Statement of Additional Information (SAI) dated October
31, 1997. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is available along with other related materials
on the SEC's Internet Web site (http://www.sec.gov). The SAI is
incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity
Distributors Corporation (FDC), 82 Devonshire Street, Boston, MA
02109, or your investment professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
HIGH YIELD AND STRATEGIC INCOME MAY INVEST SIGNIFICANTLY IN
LOWER-QUALITY DEBT SECURITIES, SOMETIMES CALLED "JUNK BONDS." THESE
SECURITIES CARRY GREATER RISKS, SUCH AS THE RISK OF DEFAULT, THAN
OTHER DEBT SECURITIES.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
ACOM-PRO-0297-01
GROWTH FUNDS: Classes
Fidelity Advisor TechnoQuant(trademark) Growth Fund A,T,B,C Fidelity
Advisor Mid Cap Fund A,T,B,C Fidelity Advisor Equity Growth Fund
A,T,B,C Fidelity Advisor Growth Opportunities Fund A,T,B,C Fidelity
Advisor Strategic Opportunities Fund A,T,B Fidelity Advisor Large Cap
Fund A,T,B,C
FIDELITY ADVISOR FUNDS
CLASS A, CLASS T, CLASS B,
AND CLASS C
GROWTH AND INCOME FUNDS:
Fidelity Advisor Growth & Income Fund A,T,B,C Fidelity Advisor Equity
Income Fund A,T,B,C Fidelity Advisor Balanced Fund A,T,B,C
TAXABLE INCOME FUNDS:
Fidelity Advisor High Yield Fund A,T,B,C Fidelity Advisor Strategic
Income Fund A,T,B,C Fidelity Advisor Mortgage Securities Fund A,T,B
Fidelity Advisor Government Investment Fund A,T,B,C Fidelity Advisor
Intermediate Bond Fund A,T,B,C Fidelity Advisor Short Fixed-Income
Fund A,T,C
MUNICIPAL FUNDS:
Fidelity Advisor High Income Municipal Fund A,T,B,C Fidelity Advisor
Municipal Bond Fund A,T,B Fidelity Advisor Intermediate Municipal
Income Fund A,T,B,C Fidelity Advisor Short-Intermediate Municipal
A,T
Income Fund
STATE MUNICIPAL FUNDS:
Fidelity Advisor California Municipal Income A,T,B Fund
Fidelity Advisor New York Municipal Income Fund A,T,B
PROSPECTUS
OCTOBER 31, 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON,
MA 02109
CONTENTS
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KEY FACTS WHO MAY WANT TO INVEST
EXPENSES EACH CLASS'S SALES CHARGE (LOAD) AND ITS YEARLY
OPERATING EXPENSES.
FINANCIAL HIGHLIGHTS A SUMMARY OF EACH FUND'S FINANCIAL DATA.
PERFORMANCE HOW EACH FUND HAS DONE OVER TIME.
THE FUNDS IN DETAIL CHARTER HOW EACH FUND IS ORGANIZED.
INVESTMENT PRINCIPLES AND RISKS EACH FUND'S OVERALL APPROACH
TO INVESTING.
BREAKDOWN OF EXPENSES HOW OPERATING COSTS ARE CALCULATED
AND WHAT THEY INCLUDE.
YOUR ACCOUNT TYPES OF ACCOUNTS DIFFERENT WAYS TO SET UP YOUR ACCOUNT,
INCLUDING TAX-SHELTERED RETIREMENT PLANS.
HOW TO BUY SHARES OPENING AN ACCOUNT AND MAKING ADDITIONAL
INVESTMENTS.
HOW TO SELL SHARES TAKING MONEY OUT AND CLOSING YOUR ACCOUNT.
INVESTOR SERVICES SERVICES TO HELP YOU MANAGE YOUR ACCOUNT.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS SHARE PRICE CALCULATIONS AND THE TIMING OF
PURCHASES AND REDEMPTIONS.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND WAIVERS
APPENDIX A
APPENDIX B
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Class A, Class T, Class B, and Class C shares are offered to investors
who engage an investment professional for investment advice.
TechnoQuant(Trademark) Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth & Income,
Equity Income, Balanced, High Yield, Mortgage Securities, Government
Investment, Intermediate Bond, Short Fixed-Income, High Income
Municipal, Municipal Bond, and Intermediate Municipal Income are
diversified funds.
Strategic Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income are non-diversified
funds. Non-diversified funds may invest a greater portion of their
assets in securities of individual issuers than diversified funds. As
a result, changes in the market value of a single issuer could cause
greater fluctuations in share value than would occur in a more
diversified fund.
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
and Balanced are designed for investors who are willing to ride out
stock market fluctuations in pursuit of potentially high long-term
returns. TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, and Large Cap are designed for
investors who want to be invested in the stock market for its
long-term growth potential. These funds invest for growth and do not
pursue income. Growth & Income, Equity Income, and Balanced are
designed for those investors who seek a combination of growth and
income from equity and some bond investments.
TechnoQuant Growth is designed to provide an alternative to more
traditional styles of investing for growth-oriented investors. The
fund utilizes computer-aided quantitative analysis emphasizing
technical factors, such as historical price and volume relationships.
High Yield and Strategic Income are designed for investors who want
high current income with some potential for capital growth from a
portfolio of debt instruments with a focus on lower-quality debt
securities and income-producing equity securities. These funds may be
appropriate for long-term, aggressive investors who understand the
potential risks and rewards of investing in lower-quality debt
securities, including defaulted securities.
Strategic Income may also be appropriate for investors who want to
pursue their investment goals in markets outside of the United States.
By including international investments in your portfolio, you can
achieve additional diversification and participate in growth
opportunities around the world.
Mortgage Securities is designed for investors who seek high current
income from a portfolio of mortgage-related securities of all types.
Government Investment is designed for investors who seek high current
income from a portfolio of U.S. Government securities in a manner
consistent with preserving principal.
Intermediate Bond and Short Fixed-Income are designed for investors
who seek high current income from a portfolio of investment-grade debt
securities consistent with capital preservation.
High Income Municipal, Municipal Bond, Intermediate Municipal Income,
and Short-Intermediate Municipal Income are designed for investors in
higher tax brackets who seek high current income that is free from
federal income tax. Municipal Bond, Intermediate Municipal Income, and
Short-Intermediate Municipal Income also invest consistent with
consideration of capital preservation. High Income Municipal may
invest in lower-quality municipal securities which involve greater
risk than investment-grade securities.
California Municipal Income is designed for investors in higher tax
brackets who seek high current income that is free from federal and
California personal income taxes. New York Municipal Income is
designed for investors in higher tax brackets who seek high current
income that is free from federal and New York State and City personal
income taxes.
The value of each fund's investments and, as applicable, the income
they generate, will vary from day to day, and generally reflect
changes in market conditions, interest rates and other company,
political, and economic news. In the short term, stock prices can
fluctuate dramatically in response to these factors. The securities of
small, less well-known companies may be more volatile than those of
larger companies. Bond values fluctuate based on changes in interest
rates and the credit quality of the issuer, and may be subject to
prepayment risk, which can limit their price appreciation potential in
periods of declining interest rates. Over time, however, stocks,
although more volatile, have shown greater growth potential than other
types of securities. Investments in foreign securities may involve
risks in addition to those of U.S. investments, including increased
political and economic risk, as well as exposure to currency
fluctuations.
Each fund is not in itself a balanced investment plan. You should
consider your investment objective and tolerance for risk when making
an investment decision. When you sell your fund shares, they may be
worth more or less than what you paid for them.
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
Class A and Class T shares have a front-end sales charge and pay a
12b-1 fee. Class A and Class T shares may be subject to a contingent
deferred sales charge (CDSC). Class B and Class C shares do not have a
front-end sales charge, but do have a CDSC, and pay a 12b-1 fee.
Institutional Class shares have no sales charge and do not pay a 12b-1
fee, but are available only to certain types of investors. See "Sales
Charge Reductions and Waivers," page , for Institutional Class
eligibility information. You may obtain more information about
Institutional Class shares, which are not offered through this
prospectus, by calling 1-800-843-3001 or from your investment
professional.
The performance of one class of shares of a fund may be different from
the performance of another class of shares of the same fund because of
different sales charges and class expenses. Contact your investment
professional to discuss which class is appropriate for you.
In determining which class of shares is appropriate for you, you
should consider, among other factors, the amount you plan to invest,
the length of time you intend to hold your shares, your eligibility
for a sales charge waiver or reduction, and the package of services
provided to you by your investment professional and the overall costs
of those services.
In general, Class A shares have higher costs than Class T shares over
a short holding period because Class A shares have a higher front-end
sales charge, and Class A shares have lower costs than Class T shares
over a longer holding period because Class A shares have lower 12b-1
fees. If you are planning to invest a significant amount either at one
time or through a regular investment program, you should consider the
reduced front-end sales charges available on Class A and Class T
shares. If you are eligible for a front-end sales charge waiver on a
purchase of both Class A and Class T shares, Class A shares generally
will have lower costs than Class T shares because Class A shares have
lower 12b-1 fees. However, you should evaluate the overall costs of
purchasing Class A shares or Class T shares in the context of the
package of services provided to you by your investment professional.
See "Transaction Details," page , and "Sales Charge Reductions and
Waivers," page , for sales charge reduction and waiver information.
If you prefer not to pay a front-end sales charge, you should consider
Class B or Class C shares. While Class B and Class C shares are
subject to higher ongoing costs than Class A or Class T shares, in
general because of their higher 12b-1 fees, Class B and Class C shares
are sold with a CDSC instead of a front-end sales charge so your
entire purchase amount is immediately invested. In general, Class B
shares have higher costs than Class C shares over a short holding
period because Class B shares have a higher CDSC that declines over a
maximum of six years, and Class B shares have lower costs than Class C
shares over a longer period because Class B shares convert to Class A
shares after a maximum of seven years. Please note that purchase
amounts of more than $250,000 will not be accepted for Class B shares,
that purchase amounts of more than $1,000,000 will not be accepted for
Class C shares, and that Class A or Class T shares may have lower
costs for investments that qualify for a front-end sales charge
reduction or waiver. If you sell your Class B shares of the
Intermediate-Term Bond Funds within three years or your Class B shares
of the Bond Funds and the Equity Funds within six years, you will
normally pay a CDSC that varies depending on how long you have held
your shares. If you sell your Class C shares within one year, you will
normally pay a 1.00% CDSC. See "Transaction Details," page , for CDSC
schedules and related information. Class B shares will automatically
convert to Class A shares after a holding period of four years for the
Intermediate-Term Bond Funds and seven years for the Bond Funds and
the Equity Funds. Class C shares do not convert to another class of
shares. See "Transaction Details," page , for conversion information.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell shares of a fund. In addition, you may be charged an annual
account maintenance fee if your account balance falls below $2,500.
Lower front-end sales charges may be available with purchases of
$50,000 or more. See "Transaction Details," page , for an explanation
of how and when these charges apply.
A CDSC is imposed on Class B shares only if you redeem Class B shares
within three years of purchase for the Intermediate-Term Bond Funds,
or within six years of purchase for the Bond Funds and the Equity
Funds. A CDSC is imposed on Class C shares only if you redeem Class C
shares within one year of purchase. See "Transaction Details," page ,
for information about the CDSC.
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CLASS A CLASS T CLASS B CLASS C
MAXIMUM SALES CHARGE (AS A % OF OFFERING PRICE)
ON PURCHASES OF: TECHNOQUANT GROWTH, MID CAP,
EQUITY GROWTH, GROWTH OPPORTUNITIES, STRATEGIC 5.75% 3.50% NONE NONE
OPPORTUNITIES*, LARGE CAP, GROWTH & INCOME, EQUITY
INCOME, AND BALANCED (THE EQUITY FUNDS)
MAXIMUM SALES CHARGE (AS A % OF OFFERING PRICE)
ON PURCHASES OF: HIGH YIELD, STRATEGIC INCOME,
MORTGAGE SECURITIES*, GOVERNMENT INVESTMENT, HIGH 4.75% 3.50% NONE NONE
INCOME MUNICIPAL, MUNICIPAL BOND*, CALIFORNIA
MUNICIPAL INCOME*, AND NEW YORK MUNICIPAL INCOME*
(THE BOND FUNDS)
MAXIMUM SALES CHARGE (AS A % OF OFFERING PRICE)
ON PURCHASES OF: INTERMEDIATE BOND AND INTERMEDIATE
MUNICIPAL INCOME (THE INTERMEDIATE-TERM BOND 3.75% 2.75% NONE NONE
FUNDS)
MAXIMUM SALES CHARGE (AS A % OF OFFERING PRICE) ON
PURCHASES OF: SHORT FIXED-INCOME AND SHORT-INTERMEDIATE
MUNICIPAL INCOME* (THE SHORT-TERM BOND 1.50% 1.50% ** NONE
FUNDS)
MAXIMUM CDSC FOR ALL EQUITY AND BOND FUNDS (AS A % OF
THE LESSER OF ORIGINAL PURCHASE PRICE OR REDEMPTION
PROCEEDS) NONE[A] NONE[A] 5.00%[B] 1.00%[D]
MAXIMUM CDSC FOR THE INTERMEDIATE-TERM BOND FUNDS
(AS A % OF THE LESSER OF ORIGINAL PURCHASE PRICE OR
REDEMPTION PROCEEDS) NONE[A] NONE[A] 3.00%[C] 1.00%[D]
MAXIMUM CDSC FOR SHORT FIXED-INCOME AND SHORT-
INTERMEDIATE MUNICIPAL INCOME* (AS A % OF THE LESSER
OF ORIGINAL PURCHASE PRICE OR REDEMPTION PROCEEDS) NONE[A] NONE[A] ** 1.00%[D]
S ALES CHARGE ON REINVESTED DISTRIBUTIONS NONE NONE NONE NONE
ANNUAL ACCOUNT MAINTENANCE FEE $12.00 $12.00 $12.00 $12.00
(FOR ACCOUNTS UNDER $2,500)
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUNDS DO NOT OFFER CLASS B SHARES.
[A] A CDSC OF 0.25% IS ASSESSED ON CERTAIN REDEMPTIONS OF CLASS A AND
CLASS T SHARES ON WHICH A FINDER'S FEE WAS PAID. SEE "TRANSACTION
DETAILS," PAGE .
[B] DECLINES OVER 6 YEARS FROM 5.00% TO 0%.
[C] DECLINES OVER 3 YEARS FROM 3.00% TO 0%.
[D] ON CLASS C SHARES REDEEMED WITHIN 1 YEAR OF PURCHASE.
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to Fidelity Management & Research Company
(FMR) that, for Growth Opportunities and Strategic Opportunities,
varies based on performance. Each fund also incurs other expenses for
services such as maintaining shareholder records and furnishing
shareholder statements and financial reports.
12b-1 fees for Class A, Class T, Class B, and Class C include a
distribution fee and, for Class B and Class C, a shareholder service
fee. Distribution fees are paid by each class of each fund to FDC for
services and expenses in connection with the distribution of the
applicable class's shares. Shareholder service fees are paid by Class
B and Class C of the funds to FDC for services and expenses in
connection with providing personal service to and/or maintenance of
Class B and Class C shareholder accounts. Long-term shareholders may
pay more than the economic equivalent of the maximum sales charges
permitted by the National Association of Securities Dealers, Inc., due
to 12b-1 fees.
Each class's expenses are factored into its share price or dividends
and are not charged directly to shareholder accounts (see "Breakdown
of Expenses" on page ).
The following figures are based on estimated or historical expenses,
adjusted to reflect current fees, of each class of each fund and are
calculated as a percentage of average net assets of the applicable
class of each fund.
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EQUITY FUNDS
OPERATING EXPENSES CLASS A CLASS T CLASS B CLASS C
TECHNOQUANT MANAGEMENT FEE 0.60%[A] 0.60%[A] 0.60%[A] 0.61%[A]
GROWTH
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.90%[A] 0.90%[A] 0.90%[A] 0.89%[A]
TOTAL OPERATING EXPENSES 1.75% 2.00% 2.50% 2.50%
MID CAP MANAGEMENT FEE 0.60% [A] 0.60% 0.60% 0.60% [A ]
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS C) 0.52%[A] 0.50% 0.78% 0. 90 %[A]
TOTAL OPERATING EXPENSES 1.37% 1.60% 2.38% 2. 50 %
EQUITY MANAGEMENT FEE 0.61% [A] 0.61% 0.61% [A] 0.61% [A]
GROWTH
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS C) 0.33%[A] 0.25% 0.34%[A] 0.34%[A]
TOTAL OPERATING EXPENSES 1.19% 1.36% 1.95% 1.95%
GROWTH MANAGEMENT FEE 0.61% [A] 0.61% 0.61% [A] 0.61% [A]
OPPORTUNITIES
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS A, CLASS B, AND CLASS C) 0.24%[A] 0.23% 0.24%[A] 0 .24%[A]
TOTAL OPERATING EXPENSES 1.10% 1.34% 1.85% 1.85%
STRATEGIC MANAGEMENT FEE 0.4 1%[B] 0.4 8 % 0.4 8 % *
OPPORTUNITIES
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B SHARES) 0.25% 0.50% 1.00% *
OTHER EXPENSES 0. 83 %[B] 0.3 0 % 0.32% *
TOTAL OPERATING EXPENSES 1. 49 % 1.28% 1.80% *
LARGE CAP MANAGEMENT FEE 0.60% [A] 0.60% 0.60% 0.60% [A]
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.90%[A] 0. 90 % 0. 90 % 0.90%[A]
TOTAL OPERATING EXPENSES 1.75% 2.00% 2. 50 % 2.50%
GROWTH
& MANAGEMENT FEE 0.50%[A] 0.50%[A] 0.50%[A] 0.51%[A]
INCOME
12B-1 FEE (INCLUDING 0.25%
SHAREHOLDER SERVICE FEE FOR CLASS B
AND CLASS C SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS A AND CLASS C) 0.75%[A] 0.56%[A] 0.75%[A] 0. 7 4%[A]
TOTAL OPERATING EXPENSES 1.50% 1.56% 2.25% 2. 2 5%
EQUITY MANAGEMENT FEE 0.50% [A] 0.50% 0.50% 0.50% [A]
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS C) 0.35%[A] 0.27% 0.31% 0.3 5 %[A]
TOTAL OPERATING EXPENSES 1.10% 1.27% 1.81% 1.8 5 %
BALANCED MANAGEMENT FEE 0.45% [A] 0.45% 0.45% [A] ]
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.25% 0.50% 1.00% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS A , CLASS B, AND CLASS C) 0.35%[A] 0.26% 0.35%[A] 0.34 %[A]
TOTAL OPERATING EXPENSES 1.05% 1.21% 1.80% 1.80%
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
[B] SIX MONTHS ENDED JUNE 30, 1997.
TAXABLE INCOME FUNDS
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OPERATING EXPENSES CLASS A CLASS T CLASS B CLASS C
HIGH YIELD MANAGEMENT FEE 0.60% [A] 0.60% 0.60% 0.60% [A]
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES 0.37%[A] 0.27% 0.29% 0.3 1 %[A]
TOTAL OPERATING EXPENSES 1.12% 1.12% 1.79% 1.9 1 %
STRATEGIC MANAGEMENT FEE 0. 60 %[B] 0. 59 % 0. 59 % 0. 60 %[A]
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS A AND CLASS C ) 0.5 0 %[B] 0.3 9 % 0.3 9 % 0. 50 %[A]
TOTAL OPERATING EXPENSES 1.25% 1.23% 1.88% 2.10 %
MORTGAGE MANAGEMENT FEE 0.4 4 %[A] 0.4 4 %[A] 0.4 4 %[A] *
SECURITIES
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B SHARES) 0.15% 0.25% 0.90% *
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.3 1 %[A] 0.3 1 %[A] 0.3 1 %[A] *
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% *
GOVERNMENT MANAGEMENT FEE 0.45% [A] 0.45% 0.45% 0.45% [A]
INVESTMENT
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS A, CLASS B, AND CLASS C) 0.30%[A] 0.30% 0.30% 0.30%[A]
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% 1.75%
INTERMEDIATE MANAGEMENT FEE 0.45% [A] 0.45% 0.45% 0.44%[A]
BOND
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS A, CLASS B, AND CLASS C) 0.30%[A] 0.27% 0.30% 0.31%[A ]
TOTAL OPERATING EXPENSES 0.90% 0.97% 1.65% 1.75%
SHORT MANAGEMENT FEE 0.45% [A] 0.45% ** 0.45% [A]
FIXED-INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS C SHARES) 0.15% 0.15% ** 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS A AND CLASS C) 0.30%[A] 0.28% ** 0.30%[A]
TOTAL OPERATING EXPENSES 0.90% 0.88% ** 1.75%
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
[B] SIX MONTHS ENDED JUNE 30, 1997.
MUNICIPAL FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OPERATING EXPENSES CLASS A CLASS T CLASS B CLASS C
HIGH INCOME MANAGEMENT FEE 0.40% [A] 0.40% 0.40% 0.39%[A]
MUNICIPAL
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT
CLASS A AND CLASS C) 0.35%[A] 0.24% 0.27% 0.36%[A]
TOTAL OPERATING EXPENSES 0.90% 0.89% 1.57% 1.75%
MUNICIPAL MANAGEMENT FEE 0.40%[A] 0.40% 0.40% *
BOND
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B SHARES) 0.15% 0.25% 0.90% *
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35%[A] 0.35% 0.35% *
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% *
INTERMEDIATE MANAGEMENT FEE 0.40% [A] 0.40% 0.40% 0.39%[A ]
MUNICIPAL
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B AND CLASS C
SHARES) 0.15% 0.25% 0.90% 1.00%
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35%[A] 0.35% 0.35% 0.36%[A]
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% 1.75%
SHORT- MANAGEMENT FEE 0.40% [A] 0.40% ** *
INTERMEDIATE
MUNICIPAL
INCOME
12B-1 FEE (DISTRIBUTION FEE) 0.15% 0.15% ** *
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35%[A] 0.35% ** *
TOTAL OPERATING EXPENSES 0.90% 0.90% ** *
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
STATE MUNICIPAL FUNDS
OPERATING EXPENSES CLASS A CLASS T CLASS B CLASS C
CALIFORNIA MANAGEMENT FEE 0.40% [A] 0.40% 0.40% *
MUNICIPAL
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B SHARES) 0.15% 0.25% 0.90% *
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35%[A] 0.35% 0.35% *
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% *
NEW YORK MANAGEMENT FEE 0.40% [A] 0.40% 0.40% *
MUNICIPAL
INCOME
12B-1 FEE (INCLUDING 0.25% SHAREHOLDER
SERVICE FEE FOR CLASS B SHARES) 0.15% 0.25% 0.90% *
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35%[A] 0.35% 0.35% *
TOTAL OPERATING EXPENSES 0.90% 1.00% 1.65% *
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
A portion of the brokerage commissions that certain of the funds pay
is used to reduce fund expenses. In addition, certain funds have
entered into arrangements with their custodian and transfer agent
whereby credits realized as a result of uninvested cash balances are
used to reduce custodian and transfer agent expenses. Including these
reductions, the total operating expenses presented in the preceding
tables for the applicable class would have been:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A CLASS T CLASS B
MID CAP (DAGGER) -- 2.37%
EQUITY GROWTH (DAGGER) 1.34% (DAGGER)
STRATEGIC OPPORTUNITIES 1.48% 1.2 7 % 1. 79 %
CLASS A CLASS T CLASS B
EQUITY INCOME (DAGGER) 1.26% 1.79%
BALANCED (DAGGER) 1.20% (DAGGER)
HIGH YIELD (DAGGER) 1.11% --
STRATEGIC INCOME -- 1.22% 1.87%
GOVERNMENT INVESTMENT (DAGGER) 0.99% --
INTERMEDIATE BOND (DAGGER) 0.96% --
SHORT-INTERMEDIATE MUNICIPAL INCOME (DAGGER) 0.89% *
CALIFORNIA MUNICIPAL INCOME FUND (DAGGER) 0.87% 1.62%
NEW YORK MUNICIPAL INCOME FUND (DAGGER) 0.97% 1.62%
</TABLE>
* FUND DOES NOT OFFER CLASS B SHARES.
(dagger) IMPACT OF CREDITS NOT APPLIED TO FIRST YEAR ESTIMATED
EXPENSES.
EXPENSE TABLE EXAMPLE: You would pay the following amount in total
expenses on a $1,000 investment, assuming a 5% annual
return and either (1) full redemption or (2) no redemption at the end
of each time period . Total expenses shown below include your
shareholder transaction expenses, such as the maximum front-end sales
charge or CDSC, as applicable, and a class's annual operating
expenses.
EQUITY FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
EXAMPLES
FULL REDEMPTION NO REDEMPTION
CLASS A CLASS T CLASS B CLASS C CLASS B CLASS C
TECHNOQU 1 YEAR $74 $55 $75[A] $35[A] $25 $25
ANT
GROWTH
3 YEARS $109 $96 $108[A] $78 $78 $78
MID CAP 1 YEAR $71 $51 $74[A] $3 5 [A] $24 $2 5
3 YEARS $98 $84 $104[A] $7 8 $74 $7 8
5 YEARS $128 $119 $147[A] $1 33 $127 $1 33
10 $213 $218 $249 $2 84 $249 $2 84
YEARS[B
]
EQUITY 1 YEAR $69 $48 $70[A] $30[A] $20 $20
GROWTH
3 YEARS $93 $77 $91[A] $61 $61 $61
5 YEARS $119 $107 $125[A] $105 $105 $105
10 $194 $193 $199 $227 $199 $227
YEARS[B
]
GROWTH 1 YEAR $68 $48 $69[A] $29[A] $19 $19
OPPORTUN
ITIES
3 YEARS $90 $76 $88[A] $58 $58 $58
5 YEARS $115 $106 $120[A] $100 $100 $100
10 $184 $191 $ 188 $217 $ 188 $217
YEARS[B
]
STRATEGIC 1 YEAR $72 $ 48 $68[A] * $18 *
OPPORTUN
ITIES
3 YEARS $102 $74 $87[A] * $57 *
5 YEARS $134 $ 103 $ 117 [A] * $ 97 *
10 $225 $ 184 $ 190 * $ 190 *
YEARS[B
]
LARGE 1 YEAR $74 $55 $75[A] $35[A] $25 $25
CAP
3 YEARS $109 $96 $108[A] $78 $78 $78
5 YEARS $147 $139 $153[A] $133 $133 $133
10 $252 $260 $257 $284 $257 $284
YEARS[B
]
GROWTH 1 YEAR $72 $50 $73[A] $3 3 [A] $23 $2 3
& INCOME
3 YEARS $102 $83 $110[A] $7 0 $70 $7 0
EQUITY 1 YEAR $68 $47 $68[A] $29[A] $18 $19
INCOME
3 YEARS $90 $74 $87[A] $58 $57 $58
5 YEARS $115 $102 $118[A] $ 100 $98 $ 100
10 $184 $183 $185 $21 7 $185 $21 7
YEARS[B
]
BALANCED 1 YEAR $68 $47 $68[A] $28[A] $18 $18
3 YEARS $89 $72 $87[A] $57 $57 $57
5 YEARS $112 $99 $117[A] $97 $97 $97
10 $178 $176 $179 $212 $179 $212
YEARS[B
]
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER
SEVEN YEARS.
TAXABLE INCOME FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
EXAMPLES
FULL REDEMPTION NO REDEMPTION
CLASS A CLASS T CLASS B CLASS C CLASS B CLASS C
HIGH 1 YEAR $58 $46 $68[A] $29[A] $18 $ 19
YIELD
3 YEARS $81 $69 $86[A] $60 $56 $ 60
5 YEARS $106 $95 $117[A] $103 $97 $ 103
10 $177 $167 $185 $22 3 $185 $ 223
YEARS[B
]
STRATEGIC 1 YEAR $55 $47 $69[A] $3 1 [A] $19 $ 21
INCOME
3 YEARS $80 $73 $89[A] $6 6 $59 $ 66
5 YEARS $108 $100 $122[A] $1 13 $102 $ 113
10 $187 $179 $196 $2 43 $196 $243
YEARS[B
]
MORTGAG 1 YEAR $56 $45 $67[A] * $17 *
E
SECURITIES
3 YEARS $75 $66 $82[A] * $52 *
5 YEARS $95 $88 $110[A] * $90 *
10 $153 $153 $166 * $166 *
YEARS[B
]
GOVERNM 1 YEAR $56 $45 $67[A] $28[A] $17 $ 18
ENT
INVESTME
NT
3 YEARS $75 $66 $82[A] $55 $52 $ 55
5 YEARS $95 $88 $110[A] $95 $90 $ 95
10 $153 $153 $166 $ 206 $166 $ 206
YEARS[B
]
INTERMEDI 1 YEAR $46 $37 $47[A] $28[A] $17 $ 18
ATE BOND
3 YEARS $65 $58 $62[A] $ 55 $52 $ 55
5 $85 $80 $90 $ 95 $90 $ 95
YEARS[C
]
10 $144 $143 $166 $ 206 $166 $ 206
YEARS[C
]
SHORT 1 YEAR $24 $24 ** $ 28 [A] ** $ 18
FIXED-INC
OME
3 YEARS $43 $43 ** $ 55 ** $ 55
5 YEARS $64 $63 ** $ 95 ** $ 95
10 $124 $122 ** $ 206 ** $ 206
YEARS
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER
SEVEN YEARS.
[C] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER FOUR
YEARS.
MUNICIPAL FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
EXAMPLES
FULL REDEMPTION NO REDEMPTION
CLASS A CLASS T CLASS B CLASS C CLASS B CLASS C
HIGH 1 YEAR $56 $44 $66[A] $ 28 [A] $16 $ 18
INCOME
MUNICIPAL
3 YEARS $75 $62 $80[A] $ 55 $50 $ 55
5 YEARS $95 $83 $106[A] $ 95 $86 $ 95
10 $153 $141 $160 $206 $160 $ 206
YEARS[B
]
MUNICIPAL 1 YEAR $56 $45 $67[A] * $17 *
BOND
3 YEARS $75 $66 $82[A] * $52 *
5 YEARS $95 $88 $110[A] * $90 *
10 $153 $153 $166 * $166 *
YEARS[B
]
INTERMEDI 1 YEAR $46 $37 $47 [A] $ 28[A] $17 $ 18
ATE
MUNICIPAL
INCOME
3 YEARS $65 $58 $62 [A] $ 55 $52 $ 55
5 $85 $81 $90 $ 95 $90 $ 95
YEARS[C
]
10 $144 $147 $166 $ 206 $166 $ 206
YEARS[C
]
SHORT-INTE 1 YEAR $24 $24 ** * ** *
RMEDIATE
MUNICIPAL
INCOME
3
YEARS $43 $43 ** * ** *
5
YEARS $64 $64 ** * ** *
10 $124 $124 ** * ** *
YEARS
STATE MUNICIPAL FUNDS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
EXAMPLES
FULL REDEMPTION NO REDEMPTION
CLASS A CLASS T CLASS B CLASS C CLASS B CLASS C
CALIFORNIA 1 YEAR $56 $45 $67[A] * $17 *
MUNICIPAL
INCOME
3 YEARS $75 $66 $82[A] * $52 *
5 YEARS $ 95 $9 0 $ 110 [A] * $ 90 *
10 $ 153 $ 166 $166 * $ 166 *
YEARS[B
]
NEW 1 YEAR $56 $45 $67[A] * $17 *
YORK
MUNICIPAL
INCOME
3 YEARS $75 $66 $82[A] * $52 *
5 YEARS $95 $88 $110[A] * $90 *
10 $153 $153 $166 * $166 *
YEARS[B
]
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER
SEVEN YEARS.
[C] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER FOUR
YEARS.
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED EXPENSES OR RETURNS, ALL OF WHICH
MAY VARY.
FMR has voluntarily agreed to reimburse Class A, Class T, Class B, and
Class C of each fund to the extent that total operating expenses, as a
percentage of their respective average net assets, exceed the
following rates:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A EFFECTIVE
DATE CLASS T EFFECTIVE DATE CLASS B EFFECTIVE DATE CLASS C EFFECTIVE DATE
TECHNOQUANT 1.75% 12/31/96 2.00% 12/31/96 2.50% 12/31/96 2.50% 11/1 /97
GROWTH
MID CAP 1.75% 8/30/96 2.00% 2/20/96 2.50% 2/20/96 2.50% 11/1 /97
EQUITY
GROWTH 1. 20 % 1 1/1/97 1.45 % 1 1/1/97 1.95 % 11/1/97 1.95% 11/1 /97
GROWTH 1. 10 % 11/1/97 1.35 % 11 /1/97 1.85 % 11/1/97 1.85% 11/1 /97
OPPORTUNITIES
STRATEGIC 1.75% 3/1/97 2.00% 3/1/97 2.50% 3/1/97 * *
OPPORTUNITIES
LARGE CAP 1.75% 8/30/96 2.00% 2/20/96 2.50% 2/20/96 2.50% 11/1 /97
GROWTH &
INCOME 1.50% 12/31/96 1.75% 12/31/96 2.25% 12/31/96 2.25% 11/1 /97
EQUITY
INCOME 1. 10 % 11 /1/97 1.35 % 11 /1/97 1.85 % 11 /1/97 1.85% 11/1 /97
BALANCED 1. 05 % 11/1/97 1. 30 % 11/1/97 1.80 % 1 1/1/97 1.80% 11/1 /97
HIGH YIELD 1.25% 8/30/96 1.35% 7/1/95 2.00% 1/1/96 2.10% 11/1 /97
STRATEGIC
INCOME 1.25% 8/30/96 1.35% 10/31/94 2.00% 1/1/96 2.10% 11/1 /97
MORTGAGE
SECURITIES 0.90% 3/1/97 1.00% 3/1/97 1.65% 3/1/97 * *
GOVERNMENT 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96 1.75% 11/1 /97
INVESTMENT
INTERMEDIATE
BOND 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96 1.75% 11/1 /97
SHORT FIXED-
INCOME 0.90% 8/30/96 0.90% 8/30/96 ** ** 1.75% 11/1/97
HIGH INCOME 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96 1.75% 11/1 /97
MUNICIPAL
MUNICIPAL
BOND 0.90% 3/1/97 1.00% 7/1/9 6 1.65% 7/1/96 * *
INTERMED
IATE 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96 1.75% 11/1 /97
MUNICIPAL INCOME
SHORT-INTERMED
IATE 0.90% 8/30/96 0.90% 7/1/95 ** ** * *
MUNICIPAL INCOME
CALIFORNIA
MUNICIPAL 0.90% 8/30/96 1.00% 8/1/95 1.65% 1/1/96 * *
INCOME
NEW YORK
MUNICIPAL 0.90% 8/30/96 1.00% 8/1/95 1.65% 1/1/96 * *
INCOME
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
If these agreements were not in effect, other expenses and total
operating expenses, as a percentage of average net assets, would have
been the following amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER EXPENSES TOTAL OPERATING EXPENSES
CLASS A CLASS T CLASS B CLASS C [A] CLASS A CLASS T CLASS B CLASS C[A]
TECHNOQUANT GROWTH 1.37% 0.96% 1.37% 1.33% 2.22% 2.06% 2.97% 2.94%
[A]
MID CAP (DAGGER) (DAGGER) (DAGGER) 1.11% (DAGGER) (DAGGER) (DAGGER) 2.71%
EQUITY GROWTH (DAGGER) (DAGGER) (DAGGER) 0.55% (DAGGER) (DAGGER) (DAGGER) 2.16%
GROWTH OPPORTUNITIES 0.28%[A] (DAGGER) 0.32%[A] 0.29% 1.14%[A] (DAGGER) 1.93%[A] 1.90 %
LARGE CAP 0.96% [A] 1.34% 2.35% 1.49% 1.81%[A] 2.44% 3.95% 3.09 %
GROWTH & 0.86% (DAGGER) (DAGGER) 0.91% 1.61% (DAGGER) (DAGGER) 2.42%
INCOME[A]
EQUITY INCOME (DAGGER) (DAGGER) (DAGGER) 0.38% (DAGGER) (DAGGER) (DAGGER) 1.88%
BALANCED 0.40%[A] (DAGGER) 0.44%[A] 0.93% 1.10%[A] (DAGGER) 1.89%[A] 2.39%
STRATEGIC INCOME 4.21 % (DAGGER) (DAGGER) 0.84% 4.96% (DAGGER) (DAGGER) 2.44 %
MORTGAGE 2.26% 0.54% 1.09% * 2.85% 1.23% 2.43% *
SECURITIES[A]
GOVERNMENT 0.72%[A] (DAGGER) 0.43% 2.34% 1.32%[A] (DAGGER) 1.78% 3.79%
INVESTMENT
INTERMEDIATE BOND 0.48%[A] (DAGGER) 0.44% 1.78% 1.08%[A] (DAGGER) 1.79% 3.22%
SHORT FIXED-INCOME 0.50%[A] (DAGGER) ** 1.28% 1.10%[A] (DAGGER) ** 2.73%
HIGH INCOME 0.48%[A] (DAGGER) (DAGGER) 1.54% 1.03%[A] (DAGGER) (DAGGER) 2.93%
MUNICIPAL
MUNICIPAL BOND 2.80%[A] 0.37% 0.52% * 3.35%[A] 1.02% 1.82% *
INTERMEDIATE 1.00%[A] 0.39% 0.56% 1.39% 1.55%[A] 1.04% 1.86% 2.78%
MUNICIPAL INCOME
SHORT-INTERMEDIATE 1.29%[A] 0.60% ** * 1.84%[A] 1.15% ** *
MUNICIPAL INCOME
CALIFORNIA MUNICIPAL 2.01%[A] 0.38% 0.95% * 2.56%[A] 1.03% 2.25% *
INCOME
NEW YORK MUNICIPAL 1.95%[A] 1.97% 2.42% * 2.50%[A] 2.62% 3.72% *
INCOME
</TABLE>
* FUND DOES NOT OFFER CLASS C SHARES.
** FUND DOES NOT OFFER CLASS B SHARES.
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
(dagger) TOTAL OPERATING EXPENSES WERE LESS THAN THE VOLUNTARY EXPENSE
CAPS SHOWN IN THE FIRST TABLE ABOVE.
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, and extraordinary expenses.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow for certain funds contain
annual information which has been audited by Coopers & Lybrand
L.L.P., independent accountants. The financial highlights tables
that follow for Mortgage Securities have been audited by Price
Waterhouse LLP , independent accountants. The funds' financial
highlights, financial statements, and reports of the auditors are
included in each fund's Annual Report, and are incorporated by
reference into (are legally a part of) the funds' SAI. Contact FDC or
your investment professional for a free copy of an Annual Report or
the SAI. Class C of each fund (except Strategic Opportunities,
Mortgage Securities, Municipal Bond, Short-Intermediate Municipal
Income, California Municipal Income, and New York Municipal Income) is
expected to commence operations on or about November 3 , 1997.
TECHNOQUANT - CLASS A
1.SELECTED PER-SHARE DATA AND RATIOSD 1997G
2.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
3.INCOME FROM INVESTMENT OPERATIONS
4. NET INVESTMENT INCOME (LOSS) (.02)
5. NET REALIZED AND UNREALIZED GAIN (LOSS) .02
6. TOTAL FROM INVESTMENT OPERATIONS .00
7.NET ASSET VALUE, END OF PERIOD $ 10.00
8.TOTAL RETURNB ,C 0.00%
9.NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,957
10.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75%A,E
11.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.42)%A
ASSETS
12.PORTFOLIO TURNOVER 398%A
13.AVERAGE COMMISSION RATEF $ .0281
TECHNOQUANT - CLASS T
14.SELECTED PER-SHARE DATA AND RATIOSD 1997H
15.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
16.INCOME FROM INVESTMENT OPERATIONS
17. NET INVESTMENT INCOME (LOSS) (.03)
18. NET REALIZED AND UNREALIZED GAIN (LOSS) .02
19. TOTAL FROM INVESTMENT OPERATIONS (.01)
20.NET ASSET VALUE, END OF PERIOD $ 9.99
21.TOTAL RETURNB,C (.10)%
22.NET ASSETS, END OF PERIOD (000 OMITTED) $ 11,904
23.RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00%A,E
24.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.67)%A
ASSETS
25.PORTFOLIO TURNOVER 398%A
26.AVERAGE COMMISSION RATEF $ .0281
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO MAY 31, 1997 (UNAUDITED).
H FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO MAY 31, 1997 (UNAUDITED).
KEY FACTS - CONTINUED
TECHNOQUANT - CLASS B
27.
28.SELECTED PER-SHARE DATA AND RATIOSD 1997G
29.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
30.INCOME FROM INVESTMENT OPERATIONS
31. NET INVESTMENT INCOME (LOSS) (.05)
32. NET REALIZED AND UNREALIZED GAIN (LOSS) .01
33. TOTAL FROM INVESTMENT OPERATIONS (.04)
34.NET ASSET VALUE, END OF PERIOD $ 9.96
35.TOTAL RETURNB,C (.40)%
36.NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,973
37.RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.50%A,E
38.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (1.17)%A
ASSETS
39.PORTFOLIO TURNOVER 398%A
40.AVERAGE COMMISSION RATEF $ .0281
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO MAY 31, 1997 (UNAUDITED).
MID CAP - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
41. YEAR ENDED
NOVEMBER 30
42.SELECTED PER-SHARE DATA AND RATIOSD 1997J 1996H
43.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.70 $ 10.74
44.INCOME FROM INVESTMENT OPERATIONS
45. NET INVESTMENT INCOME (LOSS) (.02) (.01)
46. NET REALIZED AND UNREALIZED GAIN (LOSS) .69 .97
47. TOTAL FROM INVESTMENT OPERATIONS .67 .96
48.LESS DISTRIBUTIONS
49. IN EXCESS OF NET INVESTMENT INCOME (.01) --
50. FROM NET REALIZED GAIN (.20) --
51. TOTAL DISTRIBUTIONS (.21) --
52.NET ASSET VALUE, END OF PERIOD $ 12.16 $ 11.70
53.TOTAL RETURNB,C 5.87% 8.94%
54.NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,257 $ 1,239
55.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.60%A,E 1.56%A,E
56.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.55%A,F 1.56%A
REDUCTIONS
57.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.44)%A (.33)%A
ASSETS
58.PORTFOLIO TURNOVER 229%A 101%A
59.AVERAGE COMMISSION RATEG $ .0388 $ .0382
</TABLE>
MID CAP - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C>
60. YEAR ENDED
NOVEMBER 30
61.SELECTED PER-SHARE DATA AND RATIOSD 1997J 1996I
62.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.70 $ 10.00
63.INCOME FROM INVESTMENT OPERATIONS
64. NET INVESTMENT INCOME (LOSS) (.02) (.03)
65. NET REALIZED AND UNREALIZED GAIN (LOSS) .70 1.73
66. TOTAL FROM INVESTMENT OPERATIONS .68 1.70
67.LESS DISTRIBUTIONS
68. FROM NET REALIZED GAIN (.18) --
69.NET ASSET VALUE, END OF PERIOD $ 12.20 $ 11.70
70.TOTAL RETURNB,C 5.94% 17.00%
71.NET ASSETS, END OF PERIOD (000 OMITTED) $ 254,825 $ 187,040
72.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.51%A 1.60%A
73.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.45%A,F 1.60%A
REDUCTIONS
74.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.33)%A (.37)%A
ASSETS
75.PORTFOLIO TURNOVER 229%A 101%A
76.AVERAGE COMMISSION RATEG $ .0388 $ .0382
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
H FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
I FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1996.
J SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
MID CAP - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C>
77. YEAR ENDED
NOVEMBER 30
78.SELECTED PER-SHARE DATA AND RATIOSD 1997H 1996G
79.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.61 $ 10.00
80.INCOME FROM INVESTMENT OPERATIONS
81. NET INVESTMENT INCOME (LOSS) (.05) (.10)
82. NET REALIZED AND UNREALIZED GAIN (LOSS) .69 1.71
83. TOTAL FROM INVESTMENT OPERATIONS .64 1.61
84.LESS DISTRIBUTIONS
85. FROM NET REALIZED GAIN (.15) --
86.NET ASSET VALUE, END OF PERIOD $ 12.10 $ 11.61
87.TOTAL RETURNB,C 5.61% 16.10%
88.NET ASSETS, END OF PERIOD (000 OMITTED) $ 40,527 $ 32,727
89.RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.03%A 2.38%A
90.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.98%A,E 2.37%A,E
REDUCTIONS
91.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.85)%A (1.14)%A
ASSETS
92.PORTFOLIO TURNOVER 229%A 101%A
93.AVERAGE COMMISSION RATEF $ .0388 $ .0382
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1996.
H SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
EQUITY GROWTH - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
94. YEAR ENDED
NOVEMBER 30
95.SELECTED PER-SHARE DATA AND RATIOSB 1997M 1996F
96.NET ASSET VALUE, BEGINNING OF PERIOD $ 44.80 $ 39.47
97.INCOME FROM INVESTMENT OPERATIONS
98. NET INVESTMENT INCOME (LOSS) (.01) .04
99. NET REALIZED AND UNREALIZED GAIN (LOSS) 2.75 5.29
100. TOTAL FROM INVESTMENT OPERATIONS 2.74 5.33
101.LESS DISTRIBUTIONS
102. FROM NET INVESTMENT INCOME (.36) --
103. FROM NET REALIZED GAIN (1.23) --
104. TOTAL DISTRIBUTIONS (1.59) --
105.NET ASSET VALUE, END OF PERIOD $ 45.95 $ 44.80
106.TOTAL RETURNB,C 6.43% 13.50%
107.NET ASSETS, END OF PERIOD (000 OMITTED) $ 13,170 $ 4,423
108.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.52%A,G 1.52%A,D,G
109.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.49%A,H 1.50%A,H
REDUCTIONS
110.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.32)%A .38%A
ASSETS
111.PORTFOLIO TURNOVER 139%A 76%
112.AVERAGE COMMISSION RATEI $ .0425 $ .0414
</TABLE>
EQUITY GROWTH - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
113. YEARS ENDED NOVEMBER 30
114.SELECTED 1997M 1996 1995 1994K 1993 1992J
PER-SHARE DATA AND
RATIOS
115.NET ASSET VALUE, $ 44.81 $ 39.83 $ 28.52 $ 29.50 $ 26.33 $ 23.78
BEGINNING OF PERIOD
116.INCOME FROM
INVESTMENT
OPERATIONS
117. NET INVESTMENT (.01)E .22E .06 .08 (.07)E .01
INCOME (LOSS)
118. NET REALIZED 2.81 6.90 11.54 .39 3.82 2.54
AND UNREALIZED GAIN
(LOSS)
119. TOTAL FROM 2.80 7.12 11.60 .47 3.75 2.55
INVESTMENT
OPERATIONS
120.LESS
DISTRIBUTIONS
121. FROM NET (.17) (.03)L (.08) - (.08) --
INVESTMENT INCOME
122. FROM NET (1.23) (2.11)L (.16) (1.45) (.50) --
REALIZED GAIN
123. IN EXCESS OF NET -- -- (.05) -- -- --
REALIZED GAIN
124. TOTAL (1.40) (2.14) (.29) (1.45) (.58) --
DISTRIBUTIONS
125.NET ASSET VALUE, $ 46.21 $ 44.81 $ 39.83 $ 28.52 $ 29.50 $ 26.33
END OF PERIOD
126.TOTAL RETURNB,C 6.53% 19.00% 41.11% 1.58% 14.52% 10.72%
127.NET ASSETS, END $ 3,801,250 $ 3,536,973 $ 2,051,429 $ 874,172 $ 377,894 $ 22,655
OF PERIOD (000
OMITTED)
128.RATIO OF 1.33%A 1.36% 1.55% 1.71% 1.85% 1.47%A
EXPENSES TO AVERAGE
NET ASSETS
129.RATIO OF 1.30%A,H 1.34%H 1.54%H 1.70%H 1.84%H 1.47%A
EXPENSES TO AVERAGE
NET ASSETS AFTER
EXPENSE REDUCTIONS
130.RATIO OF NET (.12)%A .54% .21% .15% (.24)% .25%A
INVESTMENT INCOME
(LOSS) TO AVERAGE NET
ASSETS
131.PORTFOLIO 139%A 76% 97% 137% 160% 240%
TURNOVER
132.AVERAGE $ .0425 $ .0414
COMMISSION RATEI
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
E NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
J FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1992.
K EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
L THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
M SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
EQUITY GROWTH - CLASS B
133.SELECTED PER-SHARE DATA AND RATIOSD 1997E
134.NET ASSET VALUE, BEGINNING OF PERIOD $ 41.81
135.INCOME FROM INVESTMENT OPERATIONS
136. NET INVESTMENT INCOME (LOSS) (.02)
137. NET REALIZED AND UNREALIZED GAIN (LOSS) 4.08
138. TOTAL FROM INVESTMENT OPERATIONS 4.06
139.LESS DISTRIBUTIONS
140. FROM NET REALIZED GAIN (.03)
141.NET ASSET VALUE, END OF PERIOD $ 45.84
142.TOTAL RETURNB,C 9.72%
143.NET ASSETS, END OF PERIOD (000 OMITTED) $ 26,147
144.RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.17%A
145.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 2.13%A,F
REDUCTIONS
146.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.99)%A
ASSETS
147.PORTFOLIO TURNOVER 139%A
148.AVERAGE COMMISSION RATEG $ .0425
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO MAY 31, 1997 (UNAUDITED).
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSIONS RATE PER
SHARE FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS
AMOUNT MAY VARY FROM PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
<TABLE>
<CAPTION>
<S> <C> <C>
GROWTH OPPORTUNITIES - CLASS A
149. YEAR ENDED
OCTOBER 31
150.SELECTED PER-SHARE DATA AND RATIOSD 1997M 1996B
151.NET ASSET VALUE, BEGINNING OF PERIOD $ 35.39 $ 32.86
152.INCOME FROM INVESTMENT OPERATIONS
153. NET INVESTMENT INCOME .29 .09
154. NET REALIZED AND UNREALIZED GAIN (LOSS) 3.40 2.44
155. TOTAL FROM INVESTMENT OPERATIONS 3.69 2.53
156.LESS DISTRIBUTIONS
157. FROM NET INVESTMENT INCOME (.72) --
158. FROM NET REALIZED GAIN (1.44) --
159. TOTAL DISTRIBUTIONS (2.16) --
160.NET ASSET VALUE, END OF PERIOD $ 36.92 $ 35.39
161.TOTAL RETURNB,C 10.65% 7.70%
162.NET ASSETS, END OF PERIOD (000 OMITTED) $ 52,928 $ 10,185
163.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.15%A 1.48%A,F
164.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.14%A,G 1.47%A,G
REDUCTIONS
165.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.62%A 1.74%A
166.PORTFOLIO TURNOVER 38%A 33%
167.AVERAGE COMMIISSION RATEH $ .0471 $ .0401
</TABLE>
GROWTH OPPORTUNITIES - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
168. YEARS ENDED OCTOBER 31
169.SELECTE 1997M 1996 1995 1994I 1993 1992 1991 1990 1989 1988J
D PER-SHARE
DATA AND
RATIOS
170.NET $ 35.41 $ 30.89 $ 26.62 $ 25.39 $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27 $ 10.00
ASSET VALUE,
BEGINNING OF
PERIOD
171.INCOME
FROM
INVESTMENT
OPERATIONS
172. NET .28D .61D .39 .22 .08 .14 .06 .18K .02 .05
INVESTMENT
INCOME
173. NET 3.39 4.72 5.31 1.92 5.56 2.04 7.70 (2.50) 3.03 4.22
REALIZED AND
UNREALIZED
GAIN (LOSS)
174. TOTAL 3.67 5.33 5.70 2.14 5.64 2.18 7.76 (2.32) 3.05 4.27
FROM
INVESTMENT
OPERATIONS
175.LESS
DISTRIBUTIONS
176. FROM (.54) (.41) (.27) (.07) (.13) (.09) (.17) (.05) (.03) --
NET
INVESTMENT
INCOME
177. FROM (1.44) (.40) (1.16) (.84) (1.26) (1.53) - (1.17) (.76) --
NET REALIZED
GAIN
178. TOTAL (1.98) (.81) (1.43) (.91) (1.39) (1.62) (.17) (1.22) (.79) --
DISTRIBUTIONS
179.NET $ 37.10 $ 35.41 $ 30.89 $ 26.62 $ 25.39 $ 21.14 $ 20.58 $ 12.99 $ 16.53 $ 14.27
ASSET VALUE,
END OF PERIOD
180.TOTAL 10.56% 17.61% 22.88% 8.71% 28.11% 12.09% 60.25% (15.05)% 22.69% 42.70%
RETURNB,C
181.NET $ 16,369,762 $ 14,314,950 $ 9,690,992 $ 4,598,668 $ 2,054,988 $ 580,595 $ 213,095 $ 51,122 $ 34,351 $8,097
ASSETS, END
OF PERIOD
(000
OMITTED)
182.RATIO OF 1.22%A 1.34% 1.59% 1.63% 1.65% 1.60% 1.73% 2.00% 2.45% 2.52%A,L
EXPENSES TO
AVERAGE NET
ASSETS
183.RATIO OF 1.21%A,G 1.34% 1.58%G 1.62%G 1.64%G 1.60% 1.73% 2.00% 2.45% 2.52%A
EXPENSES TO
AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
184.RATIO OF 1.57%A 1.88% 1.56% 1.12% .43% .80% .47% 1.49% .31% .82%A
NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
185.PORTFOLI 38%A 33% 39% 43% 69% 94% 142% 136% 163% 143%A
O TURNOVER
186.AVERAG $ .0471 $ .0401
E
COMMISSION
RATEH
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
I EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPTIAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
J FOR THE PERIOD NOVEMBER 18, 1987 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1988.
K NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.09 PER SHARE.
L EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN
HIGHER.
M SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
GROWTH OPPORTUNITIES - CLASS B
187.SELECTED PER-SHARE DATA AND RATIOSD 1997F
188.NET ASSET VALUE, BEGINNING OF PERIOD $ 37.62
189.INCOME FROM INVESTMENT OPERATIONS
190. NET INVESTMENT INCOME .15
191. NET REALIZED AND UNREALIZED GAIN (LOSS) (.69)
192. TOTAL FROM INVESTMENT OPERATIONS (.54)
193.NET ASSET VALUE, END OF PERIOD $ 37.08
194.TOTAL RETURNB,C (1.44)%
195.NET ASSETS, END OF PERIOD (000 OMITTED) $ 70,791
196.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.81%A
197.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.79%A,G
REDUCTIONS
198.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .90%A
199.PORTFOLIO TURNOVER 38%A
200.AVERAGE COMMISSION RATEE $ .0471
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
F FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO APRIL 30, 1997 (UNAUDITED).
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
STRATEGIC OPPORTUNITIES - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
201. YEARS ENDED
DECEMBER 31
202.SELECTED PER-SHARE DATA AND RATIOSB 1997N 1996K
203.NET ASSET VALUE, BEGINNING OF PERIOD $ 22.51 $ 23.48
204.INCOME FROM INVESTMENT OPERATIONS
205. NET INVESTMENT INCOME (LOSS) (.04) .08
206. NET REALIZED AND UNREALIZED GAIN (LOSS) 2.86 1.26
207. TOTAL FROM INVESTMENT OPERATIONS 2.82 1.34
208.LESS DISTRIBUTIONS
209. FROM NET INVESTMENT INCOME -- (.37)
210. FROM NET REALIZED GAIN (.87) (1.94)
211. TOTAL DISTRIBUTIONS (.87) (2.31)
212.NET ASSET VALUE, END OF PERIOD $ 24.46 $ 22.51
213.TOTAL RETURNB,C 12.88% 5.80%
214.NET ASSETS, END OF PERIOD (000 OMITTED) $ 919 $ 638
215.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.49%A,G .99%A,J
216.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.48%A,H .97%A,H
REDUCTIONS
217.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.40)%A 1.00%A
ASSETS
218.PORTFOLIO TURNOVER 41%A 151%
219.AVERAGE COMMISSION RATEI $ .0420 $ .0409
</TABLE>
STRATEGIC OPPORTUNITIES - CLASS T
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31 YEARS ENDED SEPTEMBER 30
221.SELECTE
1997N 1996 1995 1994L 1994F 1993M 1992 1991 1990 1989 1988 1987
D PER-SHARE
DATA AND
RATIOS
222.NET
$ 22.69 $ 24.88 $ 18.70 $ 19.96 $ 22.52 $ 19.53 $ 21.38 $ 17.21 $ 19.55 $ 15.53 $ 19.06 $ 16.71
ASSET VALUE,
BEGINNING OF
PERIOD
223.INCOME
FROM
INVESTMENT
OPERATIONS
224. NET
(.02)E .17E .39 .10E .39E .33 .61 .66 .70 .50 .42 .46
INVESTMENT
INCOME
(LOSS)
225. NET
2.88 .18 6.73 (.75) (.81) 4.44 .58 4.26 (2.49) 4.08 (1.80) 2.95
REALIZED AND
UNREALIZED
GAIN (LOSS)
226. TOTAL
2.86 .35 7.12 (.65) (.42) 4.77 1.19 4.92 (1.79) 4.58 (1.38) 3.41
FROM
INVESTMENT
OPERATIONS
227.LESS
DISTRIBUTIONS
228. FROM
- -- (.19) (.39) (.35) (.43) (.57) (.62) (.75) (.55) (.56) (.24) (.09)
NET
INVESTMENT
INCOME
229. FROM
(.87) (2.35) (.55) (.26) (1.71) (1.21) (2.42) -- -- -- (1.91) (.97)
NET REALIZED
GAIN
230. TOTAL
(.87) (2.54) (.94) (.61) (2.14) (1.78) (3.04) (.75) (.55) (.56) (2.15) (1.06)
DISTRIBUTIONS
231.NET
$ 24.68 $ 22.69 $ 24.88 $ 18.70 $ 19.96 $ 22.52 $ 19.53 $ 21.38 $ 17.21 $ 19.55 $ 15.53 $ 19.06
ASSET VALUE,
END OF PERIOD
232.TOTAL
12.96% 1.53% 38.16% (3.26)% (2.24)% 26.33% 7.26% 29.51% (9.49)% 30.45% (4.98)% 21.43%
RETURNB,C
233.NET
$ 469 $ 561 $ 620 $ 376 $ 385 $ 270 $ 195 $ 200 $ 172 $ 198 $ 191 $ 283
ASSETS, END OF
PERIOD (IN
MILLIONS)
234.RATIO OF
1.26%A 1.28% 1.61% 1.73%A,G 1.85% 1.57%D 1.46% 1.56% 1.59% 1.51% 1.71% 1.67%G,J
EXPENSES TO
AVERAGE NET
ASSETS
235.RATIO OF
1.25%A,H 1.27%H 1.61% 1.73%A 1.84%H 1.57% 1.46% 1.56% 1.59% 1.51% 1.71% 1.67%
EXPENSES TO
AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
236.RATIO OF
(.17)%A .70% 1.90% 2.03%A 1.89% 2.06% 3.22% 3.61% 3.70% 3.23% 3.10% 2.36%
NET
INVESTMENT
INCOME
(LOSS)
TO AVERAGE
NET ASSETS
237.PORTFOLI
41%A 151% 142% 228%A 159% 183% 211% 223% 114% 89% 160% 225%
O TURNOVER
238.AVERAG $ .0420 $ .0409
E
COMMISSION
RATEI
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D INCLUDES REIMBURSEMENT OF $.03 PER SHARE FOR ADJUSTMENTS TO PRIOR
PERIOD'S FEES.
E NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
F EFFECTIVE OCTOBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
J LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
K FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO DECEMBER 31, 1996.
L THREE MONTHS ENDED DECEMBER 31, 1994
M AS OF OCTOBER 1, 1991, THE FUND DISCONTINUED THE USE OF EQUALIZATION
ACCOUNTING.
N SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
STRATEGIC OPPORTUNITIES - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
239. YEARS ENDED DECEMBER 31
240.SELECTED PER-SHARE DATA AND RATIOS 1997I 1996 1995 1994J 1994E
241.NET ASSET VALUE, BEGINNING OF PERIOD $ 22.36 $ 24.56 $ 18.57 $ 19.98 $ 19.65
242.INCOME FROM INVESTMENT OPERATIONS
243. NET INVESTMENT INCOME (LOSS) (.08)D .04D .38 .06D .05D
244. NET REALIZED AND UNREALIZED GAIN (LOSS) 2.83 .18 6.54 (.74) .28
245. TOTAL FROM INVESTMENT OPERATIONS 2.75 .22 6.92 (.68) .33
246.LESS DISTRIBUTIONS
247. FROM NET INVESTMENT INCOME -- (.07) (.38) (.47) --
248. FROM NET REALIZED GAIN (.87) (2.35) (.55) (.26) --
249. TOTAL DISTRIBUTIONS (.87) (2.42) (.93) (.73) --
250.NET ASSET VALUE, END OF PERIOD $ 24.24 $ 22.36 $ 24.56 $ 18.57 $ 19.98
251.TOTAL RETURNB,C 12.65% 1.00% 37.35% (3.41)% 1.68%
252.NET ASSETS, END OF PERIOD (000 OMITTED) $ 97,397 $ 98,535 $ 87,566 $ 17,090 $ 8,824
253.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.82%A 1.80% 2.11% 2.58%A 2.63%A,F
254.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER
EXPENSE 1.81%A,G 1.79%G 2.10%G 2.53%A,G 2.63%A
REDUCTIONS
255.RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET (.73)%A .18% 1.40% 1.22%A 1.11%A
ASSETS
256.PORTFOLIO TURNOVER 41%A 151% 142% 228%A 159%
257.AVERAGE COMMISSION RATEH $ .0420 $ .0409
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO SEPTEMBER 30, 1994.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
I SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
J THREE MONTHS ENDED DECEMBER 31, 1994
LARGE CAP - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
258. YEARS ENDED
NOVEMBER 30
259.SELECTED PER-SHARE DATA AND RATIOSD 1997J 1996G
260.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.83 $ 10.21
261.INCOME FROM INVESTMENT OPERATIONS
262. NET INVESTMENT INCOME (LOSS) (.01) .00
263. NET REALIZED AND UNREALIZED GAIN (LOSS) .76 1.62
264. TOTAL FROM INVESTMENT OPERATIONS .75 1.62
265.LESS DISTRIBUTIONS
266. FROM NET REALIZED GAIN (.08) --
267.NET ASSET VALUE, END OF PERIOD $ 12.50 $ 11.83
268.TOTAL RETURNB,C 6.40% 15.87%
269.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,540 $ 503
270.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75%A,F 1.75%A,F
271.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.73%A,E 1.75%A
REDUCTIONS
272.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.16)%A .11%A
ASSETS
273.PORTFOLIO TURNOVER 101%A 59%A
274.AVERAGE COMMISSION RATEH $ .0371 $ .0306
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LARGE CAP - CLASS T
275. YEARS ENDED
NOVEMBER 30
276.SELECTED PER-SHARE DATA AND RATIOSD 1997J 1996I
277.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.82 $ 10.00
278.INCOME FROM INVESTMENT OPERATIONS
279. NET INVESTMENT INCOME (LOSS) .00 (.01)
280. NET REALIZED AND UNREALIZED GAIN (LOSS) .76 1.83
281. TOTAL FROM INVESTMENT OPERATIONS .76 1.82
282.LESS DISTRIBUTIONS
283. FROM NET REALIZED GAIN (.06) --
284.NET ASSET VALUE, END OF PERIOD $ 12.52 $ 11.82
285.TOTAL RETURNB,C 6.47% 18.20%
286.NET ASSETS, END OF PERIOD (000 OMITTED) $ 35,913 $ 26,133
287.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65%A 2.00%A,F
288.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.62%A,E 2.00%A
REDUCTIONS
289.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.06)%A (.14)%A
ASSETS
290.PORTFOLIO TURNOVER 101%A 59%A
291.AVERAGE COMMISSION RATEH $ .0371 $ .0306
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
H A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
I FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1996.
J SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
LARGE CAP - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C>
292. YEARS ENDED
NOVEMBER 30
293.SELECTED PER-SHARE DATA AND RATIOSD 1997I 1996H
294.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.77 $ 10.00
295.INCOME FROM INVESTMENT OPERATIONS
296. NET INVESTMENT INCOME (LOSS) (.04) (.05)
297. NET REALIZED AND UNREALIZED GAIN (LOSS) .75 1.82
298. TOTAL FROM INVESTMENT OPERATIONS .71 1.77
299.LESS DISTRIBUTIONS
300. FROM NET REALIZED GAIN (.05) --
301.NET ASSET VALUE, END OF PERIOD $ 12.43 $ 11.77
302.TOTAL RETURNB,C 6.07% 17.70%
303.NET ASSETS, END OF PERIOD (000 OMITTED) $ 16,132 $ 9,721
304.RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.22%A 2.50%A,E
305.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 2.19%A,F 2.50%A
REDUCTIONS
306.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.64)%A (.64)%A
ASSETS
307.PORTFOLIO TURNOVER 101%A 59%A
308.AVERAGE COMMISSION RATEG $ .0371 $ .0306
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
H FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1996.
I SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
GROWTH & INCOME - CLASS A
309.
310.SELECTED PER-SHARE DATA AND RATIOSD 1997G
311.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
312.INCOME FROM INVESTMENT OPERATIONS
313. NET INVESTMENT INCOME .03
314. NET REALIZED AND UNREALIZED GAIN (LOSS) .89
315. TOTAL FROM INVESTMENT OPERATIONS .92
316.LESS DISTRIBUTIONS
317. FROM NET INVESTMENT INCOME (.01)
318.NET ASSET VALUE, END OF PERIOD $ 10.91
319.TOTAL RETURNB,C 9.21%
320.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,953
321.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50%A,E
322.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .76%A
323.PORTFOLIO TURNOVER 93%A
324.AVERAGE COMMISSION RATEF $ .0275
GROWTH & INCOME - CLASS T
325.
326.SELECTED PER-SHARE DATA AND RATIOSD 1997H
327.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
328.INCOME FROM INVESTMENT OPERATIONS
329. NET INVESTMENT INCOME .02
330. NET REALIZED AND UNREALIZED GAIN (LOSS) .87
331. TOTAL FROM INVESTMENT OPERATIONS .89
332.LESS DISTRIBUTIONS
333. FROM NET INVESTMENT INCOME (.01)
334.NET ASSET VALUE, END OF PERIOD $ 10.88
335.TOTAL RETURNB,C 8.91%
336.NET ASSETS, END OF PERIOD (000 OMITTED) $ 43,225
337.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.75%A,E
338.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .45%A
339.PORTFOLIO TURNOVER 93%A
340.AVERAGE COMMISSION RATEF $ .0275
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO MAY 31, 1997 (UNAUDITED).
H FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO MAY 31, 1997 (UNAUDITED).
GROWTH & INCOME - CLASS B
341.
342.SELECTED PER-SHARE DATA AND RATIOSD 1997G
343.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
344.INCOME FROM INVESTMENT OPERATIONS
345. NET INVESTMENT INCOME (LOSS) .00
346. NET REALIZED AND UNREALIZED GAIN (LOSS) .88
347. TOTAL FROM INVESTMENT OPERATIONS .88
348.LESS DISTRIBUTIONS
349. FROM NET INVESTMENT INCOME (.01)
350.NET ASSET VALUE, END OF PERIOD $ 10.87
351.TOTAL RETURNB,C 8.81%
352.NET ASSETS, END OF PERIOD (000 OMITTED) $ 10,376
353.RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.25%A,E
354.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.05)%A
ASSETS
355.PORTFOLIO TURNOVER 93%A
356.AVERAGE COMMISSION RATEF $ .0275
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO MAY 31, 1997 (UNAUDITED).
EQUITY INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
357. YEAR ENDED
NOVEMBER 30
358.SELECTED PER-SHARE DATA AND RATIOSE 1997L 1996J
359.NET ASSET VALUE, BEGINNING OF PERIOD $ 22.78 $ 20.38
360.INCOME FROM INVESTMENT OPERATIONS
361. NET INVESTMENT INCOME .13 .06
362. NET REALIZED AND UNREALIZED GAIN (LOSS) 1.85 2.44
363. TOTAL FROM INVESTMENT OPERATIONS 1.98 2.50
364.LESS DISTRIBUTIONS
365. FROM NET INVESTMENT INCOME (.20) (.10)
366. FROM NET REALIZED GAIN (.59) --
367. TOTAL DISTRIBUTIONS (.79) (.10)
368.NET ASSET VALUE, END OF PERIOD $ 23.97 $ 22.78
369.TOTAL RETURNB,C 9.02% 12.31%
370.NET ASSETS, END OF PERIOD (000 OMITTED) $ 11,312 $ 3,306
371.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.44%A,F 1.46%A,D,F
372.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.43%A,G 1.44%A,G
REDUCTIONS
373.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.17%A 1.27%A
374.PORTFOLIO TURNOVER 50%A 78%
375.AVERAGE COMMISSION RATEH $ .0423 $ .0424
</TABLE>
EQUITY INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
376. YEARS ENDED NOVEMBER 30
377.SELECTED PER-SHARE DATA AND RATIOS 1997L 1996 1995 1994I 1993 1992K
378.NET ASSET VALUE, BEGINNING OF
PERIOD $ 22.83 $ 19.95 $ 15.96 $ 14.86 $ 12.86 $ 12.37
379.INCOME FROM INVESTMENT OPERATIONS
380. NET INVESTMENT INCOME .15E .30E .31 .28E .33 .13
381. NET REALIZED AND UNREALIZED
GAIN (LOSS) 1.86 3.35 4.26 1.03 1.97 .47
382. TOTAL FROM INVESTMENT OPERATIONS 2.01 3.65 4.57 1.31 2.30 .60
383.LESS DISTRIBUTIONS
384. FROM NET INVESTMENT INCOME (.14) (.31) (.30) (.21) (.30) (.11)
385. FROM NET REALIZED GAIN (.59) (.46) (.28) -- -- --
386. TOTAL DISTRIBUTIONS (.73) (.77) (.58) (.21) (.30) (.11)
387.NET ASSET VALUE, END OF PERIOD $ 24.11 $ 22.83 $ 19.95 $ 15.96 $ 14.86 $ 12.86
388.TOTAL RETURNB,C 9.11% 18.89% 29.46% 8.84% 18.03% 4.88%
389.NET ASSETS, END OF PERIOD (000
OMITTED) $ 1,899,588 $ 1,672,994 $ 880,054 $ 179,501 $ 42,326 $ 1,462
390.RATIO OF EXPENSES TO AVERAGE NET
ASSETS 1.25%A 1.27% 1.48% 1.67% 1.77% 1.55%A
391.RATIO OF EXPENSES TO AVERAGE NET
ASSETS AFTER EXPENSE 1.24%A,G 1.26%G 1.47%G 1.64%G 1.77% 1.55%A
REDUCTIONS
392.RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 1.31%A 1.45% 1.78% 1.69% 2.02% 3.39%A
393.PORTFOLIO TURNOVER 50%A 78% 80% 140% 120% 51%
394.AVERAGE COMMISSION RATEH $ .0423 $ .0424
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
I EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
J FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
K FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1992.
L SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
EQUITY INCOME - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
395. YEARS ENDED NOVEMBER 30
396.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996 1995 1994E
397.NET ASSET VALUE, BEGINNING OF PERIOD $ 22.73 $ 19.90 $ 15.94 $ 15.21
398.INCOME FROM INVESTMENT OPERATIONS
399. NET INVESTMENT INCOME .09D .19D .26 .08D
400. NET REALIZED AND UNREALIZED GAIN (LOSS) 1.87 3.33 4.23 .72
401. TOTAL FROM INVESTMENT OPERATIONS 1.96 3.52 4.49 .80
402.LESS DISTRIBUTIONS
403. FROM NET INVESTMENT INCOME (.08) (.23) (.25) (.07)
404. FROM NET REALIZED GAIN (.59) (.46) (.28) --
405.TOTAL DISTRIBUTIONS (.67) (.69) (.53) (.07)
406.NET ASSET VALUE, END OF PERIOD $ 24.02 $ 22.73 $ 19.90 $ 15.94
407.TOTAL RETURNB,C 8.91% 18.22% 28.95% 5.25%
408.NET ASSETS, END OF PERIOD (000 OMITTED) $ 573,916 $ 500,447 $ 270,101 $ 35,373
409.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.78%A 1.81% 1.85% 2.24%A
410.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.77%A,F 1.79%F 1.84%F 2.18%A,F
REDUCTIONS
411.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .79%A .92% 1.41% 1.15%A
412.PORTFOLIO TURNOVER 50%A 78% 80% 140%
413.AVERAGE COMMISSION RATEG $ .0423 $ .0424
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1994.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
BALANCED - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
414. YEAR ENDED
OCTOBER 31
415.SELECTED PER-SHARE DATA AND RATIOSH 1997L 1996D
416.NET ASSET VALUE, BEGINNING OF PERIOD $ 16.04 $ 15.22
417.INCOME FROM INVESTMENT OPERATIONS
418. NET INVESTMENT INCOME .23 .08
419. NET REALIZED AND UNREALIZED GAIN (LOSS) 1.24 .88
420. TOTAL FROM INVESTMENT OPERATIONS 1.47 .96
421.LESS DISTRIBUTIONS
422. FROM NET INVESTMENT INCOME (.26) (.14)
423. FROM NET REALIZED GAIN (.11) --
424. TOTAL DISTRIBUTIONS (.37) (.14)
425.NET ASSET VALUE, END OF PERIOD $ 17.14 $ 16.04
426.TOTAL RETURNB,C 9.26% 6.34%
427.NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,914 $ 1,181
428.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.44%A,E 1.50%A,E
429.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.44%A 1.49%A,F
REDUCTIONS
430.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.79%A 3.07%A
431.PORTFOLIO TURNOVER 75%A 223%
432.AVERAGE COMMISSION RATEG $ .0452 $ .0106
</TABLE>
BALANCED - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
433. YEARS ENDED OCTOBER 31
434.SELEC
TE 1997L 1996 1995 1994I 1993 1992 1991 1990 1989 1988 1987J
D PER-SHARE
DATA AND
RATIOS
435.NET $ 16.07 $ 15.30 $ 14.67 $ 15.91 $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44 $ 10.00
ASSET VALUE,
BEGINNING OF
PERIOD
436.INCOME
FROM
INVESTMENT
OPERATIONS
437. NET .25H .51H .59 .38 .48 .50 .51 .56 1.01K .62 .27
INVESTMENT
INCOME
438. NET 1.24 .88 .54 (.79) 2.18 .85 3.74 (1.34) 1.27 1.56 (.63)
REALIZED AND
UNREALIZED
GAIN (LOSS)
439. TO
TAL 1.49 1.39 1.13 (.41) 2.66 1.35 4.25 (.78) 2.28 2.18 (.36)
FROM
INVESTMENT
OPERATIONS
440.LESS
DISTRIBUTIONS
441. FROM (.29) (.59) (.50) (.28) (.56) (.46) (.53) (1.06) (.58) (.55) (.20)
NET
INVESTMENT
INCOME
442. IN -- -- -- (.02) -- -- -- -- -- -- --
EXCESS OF NET
INVESTMENT
INCOME
443. FROM (.11) (.03) -- (.49) (.60) (.61) -- (.52) -- -- --
NET REALIZED
GAIN
444.RETURN -- -- -- (.04) -- -- -- -- -- -- --
OF CAPITAL
445. TOTAL (.40) (.62) (.50) (.83) (1.16) (1.07) (.53) (1.58) (.58) .55 (.20)
DISTRIBUTIONS
446.NET $ 17.16 $ 16.07 $ 15.30 $ 14.67 $ 15.91 $ 14.41 $ 14.13 $ 10.41 $ 12.77 $ 11.07 $ 9.44
ASSET VALUE,
END OF PERIOD
447.TOTAL 9.37% 9.30% 7.85% (2.69)% 19.66% 10.27% 41.73% (7.15)% 21.15% 23.66% (3.90)%
RETURNB,C
448.NET $ 2,802 $ 2,993 $ 3,441 $ 3,129 $ 1,654 $ 398 $ 136 $ 61 $ 46 $ 36 $ 34
ASSETS, END
OF PERIOD (IN
MILLIONS)
449.RATIO
OF 1.21%A 1.26% 1.47% 1.59% 1.52% 1.60% 1.71% 1.85% 1.91% 2.06% 2.06%A
EXPENSES TO
AVERAGE NET
ASSETS
450.RATIO
OF 1.20%A,F 1.25%F 1.46%F 1.58%F 1.51%F 1.60% 1.71% 1.85% 1.91% 2.06% 2.06%A
EXPENSES TO
AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
451.RATIO
OF 3.03%A 3.32% 3.99% 3.79% 3.24% 3.97% 4.19% 5.29% 8.80% 5.83% 3.95%A
NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
452.PORT
FOLI 75%A 223% 297% 202% 200% 389% 220% 297% 151% 204% 206%A
O TURNOVER
453.AVERAG $ .0452 $ .0106
E
COMMISSION
RATEG
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
I EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
J FOR THE PERIOD JANUARY 6, 1987 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1987.
K NET INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.26 PER SHARE.
L SIX MONTHS ENDED APRIL 30, 1997
BALANCED - CLASS B
454.
455.SELECTED PER-SHARE DATA AND RATIOSG 1997C
456.NET ASSET VALUE, BEGINNING OF PERIOD $ 16.36
457.INCOME FROM INVESTMENT OPERATIONS
458. NET INVESTMENT INCOME .10
459. NET REALIZED AND UNREALIZED GAIN (LOSS) .78
460. TOTAL FROM INVESTMENT OPERATIONS .88
461.LESS DISTRIBUTIONS
462. FROM NET INVESTMENT INCOME (.12)
463.NET ASSET VALUE, END OF PERIOD $ 17.12
464.TOTAL RETURNB,D 5.38%
465.NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,793
466.RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.19%A,E
467.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.97%A
468.PORTFOLIO TURNOVER 75%A
469.AVERAGE COMMISSION RATEF $ .0452
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO APRIL 30, 1997.
D TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
HIGH YIELD - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
470. YEAR ENDED
OCTOBER 31
471.SELECTED PER-SHARE DATA AND RATIOSD 1997K 1996E
472.NET ASSET VALUE, BEGINNING OF PERIOD $ 12.300 $ 12.010
473.INCOME FROM INVESTMENT OPERATIONS
474. NET INVESTMENT INCOME .516 .163
475. NET REALIZED AND UNREALIZED GAIN (LOSS) (.117) .267
476. TOTAL FROM INVESTMENT OPERATIONS .399 .430
477.LESS DISTRIBUTIONS
478. FROM NET INVESTMENT INCOME (.639) (.140)
479. FROM NET REALIZED GAIN (.060) --
480. TOTAL DISTRIBUTIONS (.699) (.140)
481.NET ASSET VALUE, END OF PERIOD $ 12.000 $ 12.300
482.TOTAL RETURNB,C 3.28% 3.58%
483.NET ASSETS, END OF PERIOD (000 OMITTED) $ 16,787 $ 3,860
484.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.25%A,F 1.25%A,F
485.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 8.62%A 9.06%A
486.PORTFOLIO TURNOVER 94%A 121%
487.AVERAGE COMMISSION RATEG $ .0369 $ .0388
</TABLE>
HIGH YIELD - CLASS T
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31
489.SELECTE
1997K 1996 1995 1994H 1993 1992 1991 1990 1989 1988 1987J
D PER-SHARE
DATA AND
RATIOS
490.NET
$ 12.310 $ 11.910 $ 11.220 $ 12.010 $ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090 $ 10.000
ASSET VALUE,
BEGINNING OF
PERIOD
491.INCOME
FROM
INVESTMENT
OPERATIONS
492. NET
.535D 1.105D .930D .848 .980 1.146 1.115 1.144 1.237 1.165 .878
INVESTMENT
INCOME
493. NET
(.132) .364 .680 (.537) 1.153 .975 1.948 (.820) (.890) .770 (.910)
REALIZED AND
UNREALIZED
GAIN (LOSS)
494. TOTAL
.403 1.469 1.610 .311 2.133 2.121 3.063 .324 .347 1.935 (.032)
FROM
INVESTMENT
OPERATIONS
495.LESS
DISTRIBUTIONS
496. FROM
(.643) (1.069) (.920) (.851) (.963) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)
NET
INVESTMENT
INCOME
497. FROM
(.060) -- -- (.250) (.230) -- -- -- -- -- --
NET REALIZED
GAIN
498. TOTAL
(.703) (1.069) (.920) (1.101) (1.193) (1.171) (1.093) (1.144) (1.237) (1.165) (.878)
DISTRIBUTIONS
499.NET
$ 12.010 $ 12.310 $ 11.910 $ 11.220 $ 12.010 $ 11.070 $ 10.120 $ 8.150 $ 8.970 $ 9.860 $ 9.090
ASSET VALUE,
END OF PERIOD
500.TOTAL
3.31% 12.92% 15.05% 2.64% 20.47% 21.96% 39.67% 3.58% 3.34% 22.14% (.81)%
RETURNB,C
501.NET
$ 1,881,451 $ 1,709,294 $ 1,200,495 $ 679,623 $ 485,559 $ 136,316 $ 38,681 $ 15,134 $ 13,315 $ 11,900 $ 9,077
ASSETS, END
OF PERIOD
(000
OMITTED)
502.RATIO OF
1.10%A 1.12% 1.15% 1.20% 1.11% 1.10%F 1.10%F 1.10%F 1.10%F 1.10%F 1.24%A,
EXPENSES TO
F
AVERAGE NET
ASSETS
503.RATIO OF
1.09%A,I 1.11%I 1.15% 1.20% 1.11% 1.10% 1.10% 1.10% 1.10% 1.10% 1.24%A
EXPENSES TO
AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
504.RATIO OF
8.81%A 9.20% 8.32% 6.92% 8.09% 9.95% 12.20% 12.72% 12.98% 11.86% 10.74%A
NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
505.PORTFOLI
94%A 121% 112% 118% 79% 100% 103% 90% 131% 135% 166%A
O TURNOVER
506.AVERAG $ .0369 $ .0388
E
COMMISSION
RATEG
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
I FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
J FOR THE PERIOD JANUARY 5, 1987 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1987.
K SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
HIGH YIELD - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
507. YEARS ENDED OCTOBER 31
508.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996 1995 1994E
509.NET ASSET VALUE, BEGINNING OF PERIOD $ 12.280 $ 11.890 $ 11.210 $ 11.300
510.INCOME FROM INVESTMENT OPERATIONS
511. NET INVESTMENT INCOME .492D 1.017D .794D .223
512. NET REALIZED AND UNREALIZED GAIN (LOSS) (.129) .361 .721 (.118)
513. TOTAL FROM INVESTMENT OPERATIONS .363 1.378 1.515 .105
514.LESS DISTRIBUTIONS
515. FROM NET INVESTMENT INCOME (.603) (.988) (.835) (.195)
516. FROM NET REALIZED GAIN (.060) -- -- --
517. TOTAL DISTRIBUTIONS (.663) (.988) (.835) (.195)
518.NET ASSET VALUE, END OF PERIOD $ 11.980 $ 12.280 $ 11.890 $ 11.210
519.TOTAL RETURNB,C 2.99% 12.10% 14.12% 0.94%
520.NET ASSETS, END OF PERIOD (000 OMITTED) $ 426,322 $ 344,328 $ 155,730 $ 16,959
521.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.76%A 1.79% 2.01% 2.20%A
522.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.75%A,F 1.79% 2.01% 2.20%A
REDUCTIONS
523.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 8.14%A 8.52% 7.46% 5.92%A
524.PORTFOLIO TURNOVER 94%A 121% 112% 118%
525.AVERAGE COMMISSION RATEG $ .0369 $ .0388
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1994.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
STRATEGIC INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
526. 527.YEAR
ENDED
DECEMBER 31
528.SELECTED PER-SHARE DATA AND RATIOSD 1997I 1996E
529.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.250 $ 11.010
530.INCOME FROM INVESTMENT OPERATIONS
531. NET INVESTMENT INCOME .413 .267
532. NET REALIZED AND UNREALIZED GAIN (LOSS) .079 .493
533. TOTAL FROM INVESTMENT OPERATIONS .492 .760
534.LESS DISTRIBUTIONS
535. FROM NET INVESTMENT INCOME (.372) (.280)
536. FROM NET REALIZED GAIN (.060) (.240)
537. TOTAL DISTRIBUTIONS (.432) (.520)
538.NET ASSET VALUE, END OF PERIOD $ 11.310 $ 11.250
539.TOTAL RETURNB,C 4.49% 6.95%
540.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,652 $ 587
541.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.25%A,F 1.25%A,
F
542.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.24%A, 1.25%A
REDUCTIONS G
543.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 7.52%A 7.32%A
544.PORTFOLIO TURNOVER 139%A 119%
</TABLE>
STRATEGIC INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
545. YEARS ENDED DECEMBER 31
546.SELECTED PER-SHARE DATA AND RATIOS 1997I 1996 1995 1994H
547.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.250 $ 11.000 $ 9.920 $ 10.000
548.INCOME FROM INVESTMENT OPERATIONS
549. NET INVESTMENT INCOME .411D .813D .885 .064D
550. NET REALIZED AND UNREALIZED GAIN (LOSS) .086 .542 1.231 (.046)
551. TOTAL FROM INVESTMENT OPERATIONS .497 1.355 2.116 .018
552.LESS DISTRIBUTIONS
553. FROM NET INVESTMENT INCOME (.377) (.805) (.806) (.098)
554. FROM NET REALIZED GAIN (.060) (.300) (.230) --
555. TOTAL DISTRIBUTIONS (.437) (1.105) (1.036) (.098)
556.NET ASSET VALUE, END OF PERIOD $ 11.310 $ 11.250 $ 11.000 $ 9.920
557.TOTAL RETURNB,C 4.53% 12.89% 22.02% .17%
558.NET ASSETS, END OF PERIOD (000 OMITTED) $ 112,285 $ 99,327 $ 52,626 $ 10,687
559.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.18%A 1.23% 1.35%F 1.35%A,F
560.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER 1.17%A,G 1.22%G 1.35% 1.35%A
EXPENSE REDUCTIONS
561.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 7.44%A 7.34% 7.28% 5.80%A
562.PORTFOLIO TURNOVER 139%A 119% 193% 104%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO DECEMBER 31, 1996.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H FOR THE PERIOD OCTOBER 31, 1994 (COMMENCEM ENT OF OPERATIONS)
T O DECEMBER 31, 1994.
I SIX MONTHS ENDED JUNE 30, 19 97 (UNAUDITED)
STRATEGIC INCOME - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
563. YEARS ENDED DECEMBER 31
564.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996 1995 1994E
565.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.260 $ 11.010 $ 9.910 $ 10.000
566.INCOME FROM INVESTMENT OPERATIONS
567. NET INVESTMENT INCOME .376D .743D .820 .072D
568. NET REALIZED AND UNREALIZED GAIN (LOSS) .094 .538 1.237 (.078)
569. TOTAL FROM INVESTMENT OPERATIONS .470 1.281 2.057 (.006)
570.LESS DISTRIBUTIONS
571. FROM NET INVESTMENT INCOME (.340) (.731) (.727) (.084)
572. FROM NET REALIZED GAIN (.060) (.300) (.230) --
573. TOTAL DISTRIBUTIONS (.400) (1.031) (.957) (.084)
574.NET ASSET VALUE, END OF PERIOD $ 11.330 $ 11.260 $ 11.010 $ 9.910
575.TOTAL RETURNB,C 4.28% 12.14% 21.35% (.06)%
576.NET ASSETS, END OF PERIOD (000 OMITTED) $ 45,712 $ 37,403 $ 26,654 $ 9,379
577.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.84%A 1.88% 2.10% 2.10%A,F
F
578.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.83%A, 1.87%G 2.10% 2.10%A
REDUCTIONS G
579.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.79%A 6.69% 6.53% 5.06%A
580.PORTFOLIO TURNOVER 139%A 119% 193% 104%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD OCTOBER 31, 1994 (COMMENCEMENT OF OPERATIONS) TO
DECEMBER 31, 1994.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
MORTGAGE SECURITIES - CLASS A
581. YEAR ENDED
JULY 31
582.SELECTED PER-SHARE DATA AND RATIOSF 1997E
583.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.830
584.INCOME FROM INVESTMENT OPERATIONS
585. NET INVESTMENT INCOME .268
586. NET REALIZED AND UNREALIZED GAIN (LOSS) .224
587. TOTAL FROM INVESTMENT OPERATIONS .492
588.LESS DISTRIBUTIONS
589. FROM NET INVESTMENT INCOME (.272)
590.NET ASSET VALUE, END OF PERIOD $ 11.050
591.TOT AL RET URNB,C 4.61%
592.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,586
593.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%A,D
594.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.09%A
595.PORTFOLIO TURNOVER 149%
MORTGAGE SECURITIES - CLASS T
596. YEAR ENDED
JULY 31
597.SELECTED PER-SHARE DATA AND RATIOSF 1997G
598.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.830
599.INCOME FROM INVESTMENT OPERATIONS
600. NET INVESTMENT INCOME .255
601. NET REALIZED AND UNREALIZED GAIN (LOSS) .233
602. TOTAL FROM INVESTMENT OPERATIONS .488
603.LESS DISTRIBUTIONS
604. FROM NET INVESTMENT INCOME (.268)
605.NET ASSET VALUE, END OF PERIOD $ 11.050
606.TOTAL RETURNB,C 4.57%
607.NET ASSETS, END OF PERIOD (000 OMITTED) $ 12,193
608.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.00%A,D
609.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.99%A
610.PORTFOLIO TURNOVER 149%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO JULY 31, 1997.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
G FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO JULY 31, 1997.
MORTGAGE SECURITIES - CLASS B
611. YEAR ENDED
JULY 31
612.SELECTED PER-SHARE DATA AND RATIOSF 1997D
613.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.830
614.INCOME FROM INVESTMENT OPERATIONS
615. NET INVESTMENT INCOME .234
616. NET REALIZED AND UNREALIZED GAIN (LOSS) .214
617. TOTAL FROM INVESTMENT OPERATIONS .448
618.LESS DISTRIBUTIONS
619. FROM NET INVESTMENT INCOME (.238)
620.NET ASSET VALUE, END OF PERIOD $ 11.040
621.TOTAL RETURNB,C 4. 20 %
622.NET ASSETS, END OF PERIOD (000 OMITTED) $ 823
623.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65%A,E
624.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.34%A
625.PORTFOLIO TURNOVER 149%
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO JULY 31, 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
GOVERNMENT INVESTMENT - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
626. YEAR ENDED
OCTOBER 31
627.SELECTED PER-SHARE DATA AND RATIOS D 1 997E 1996 F
628.NET ASSET VALUE, BEGINNING OF PERIOD $ 9.490 $ 9.250
629.INCOME FROM INVESTMENT OPERATIONS
630. NET INVESTMENT INCOME .272 .090
631. NET REALIZED AND UNREALIZED GAIN (LOSS) (.162) .241
632. TOTAL FROM INVESTMENT OPERATIONS .110 .331
633.LESS DISTRIBUTIONS
634. FROM NET INVESTMENT INCOME (.280) (.091)
635.NET ASSET VALUE, END OF PERIOD $ 9.320 $ 9.490
636.TOTAL RETURN B , C 1.17% 3.58%
637.NET ASSETS, END OF PERIOD (000 OMITTED) $ 623 $ 223
638.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A , G .90 %A,G
639.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.94% A 6.28% A
640.PORTFOLIO TURNOVER 160% A 153%
</TABLE>
GOVERNMENT INVESTMENT - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
641. YEARS ENDED OCTOBER 31
642.SELECTE
199 7E 1996 1995 1994 H 1993 1992 1991 1990 1989 1988 1987 J
D PER-SHARE
DATA AND
RATIOS
643.NET
$ 9.490 $ 9.670 $ 8.960 $ 10.140 $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200 $ 10.000
ASSET VALUE,
BEGINNING OF
PERIOD
644.INCOME
FROM
INVESTMENT
OPERATIONS
645. NET
.276 D .586 D .594 .515 .567 .666 .700 .735 .773 .769 .614
INVESTMENT
INCOME
646. NET
(.181) (.180) .701 (1.031) .601 .125 .419 (.160) .050 .060 (.800)
REALIZED AND
UNREALIZED
GAIN (LOSS)
647. TOTAL
.095 .406 1.295 (.516) 1.168 .791 1.119 .575 .823 .829 (.186)
FROM
INVESTMENT
OPERATIONS
648.LESS
DISTRIBUTIONS
649. FROM
(.275) (.586) (.585) (.504) (.558) (.651) (.679) (.735) (.773) (.769) (.614)
NET
INVESTMENT
INCOME
650. FROM
- -- -- -- (.130) (.200) -- -- -- -- -- --
NET REALIZED
GAIN
651. IN
- -- -- -- (.030) -- -- -- -- -- -- --
EXCESS OF NET
REALIZED GAIN
652. TOTAL
(.275) (.586) (.585) (.664) (.758) (.651) (.679) (.735) (.773) (.769) (.614)
DISTRIBUTIONS
653.NET
$ 9.310 $ 9.490 $ 9.670 $ 8.960 $ 10.140 $ 9.730 $ 9.590 $ 9.150 $ 9.310 $ 9.260 $ 9.200
ASSET VALUE,
END OF PERIOD
654.TOTAL
1.01% 4.38% 14.91% (5.27)% 12.53% 8.49% 12.65% 6.48% 9.37% 9.34% (1.84)%
RETURN B , C
655.NET
$ 169,077 $ 217,883 $ 208,620 $ 114,453 $ 69,876 $ 23,281 $ 13,058 $ 9,822 $ 8,203 $ 6,590 $ 4,584
ASSETS, END
OF PERIOD
(000
OMITTED)
656.RATIO OF
1.00% A , 1.00% .89% .74% .68% 1.10% 1.10% 1.10% 1.10% 1.10% 1.29% A,G
EXPENSES TO
G G G G G G G G G
AVERAGE NET
ASSETS
657.RATIO OF
1.00% A .99% I .89% .74% .68% 1.10% 1.10% 1.10% 1.10% 1.10% 1.29% A
EXPENSES TO
AVERAGE NET
ASSETS
AFTER
EXPENSE
REDUCTIONS
658.RATIO OF
5.90% A 6.19% 6.34% 6.18% 6.11% 6.98% 7.47% 8.04% 8.45% 8.30% 8.12% A
NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
659.PORTFOLI
160% A 153% 261% 313% 333% 315% 54% 31% 42% 44% 32% A
O TURNOVER
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E SIX MONTHS ENDED APRIL 30 , 1997 (UNAUDITED)
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
H EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
I FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
J FOR THE PE RIOD JANUARY 7, 1 987 (COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1987.
GOVERNMENT INVESTMENT - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
660. YEARS ENDED OCTOBER 31
661.SELECTED PER-SHARE DATA
AND RATIOS 1997 G 1996 1995 1994 E
662.NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.490 $ 9.670 $ 8.950 $ 9.100
663.INCOME FROM INVESTMENT
OPERATIONS
664. NET INVESTMENT
INCOME .245 D .520 D .542 .144
665. NET REALIZED AND
UNREALIZED GAIN (LOSS) (.179) (.177) .693 (.137)
666. TOTAL FROM INVESTMENT
OPERATIONS .066 .343 1.235 .007
667.LESS DISTRIBUTIONS
668. FROM NET INVESTMENT
INCOME (.246) (.523) (.515) (.157)
669.NET ASSET VALUE, END OF
PERIOD $ 9.310 $ 9.490 $ 9.670 $ 8.950
670.TOTAL RETURN B ,
C 0.70% 3.69% 14.19% 0.10%
671.NET ASSETS, END OF PERIOD
(000 OMITTED) $ 16,990 $ 17,355 $ 11,766 $ 2,062
672.RATIO OF EXPENSES TO
AVERAGE NET ASSETS 1.65% A , F 1.67% F 1.65% F 1.70% A , F
673.RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS 5.26% A 5.51% 5.58% 5.22% A
674.PORTFOLIO TURNOVER 160% A 153% 261% 313%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1994.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INTERMEDIATE BOND - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
675. YEAR ENDED
NOVEMBER 30
676.SELECTED PER-SHARE DATA AND RAT IOSI 1997 D 1996 H
677.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.590 $ 10.350
678.INCOME FROM INVESTMENT OPERATIONS
679. NET INVESTMENT INCOME .318 .159
680. NET REALIZED AND UNREALIZED GAIN (LOSS) (.208) .235
681. TOTAL FROM INVESTMENT OPERATIONS .110 .394
682.LESS DISTRIBUTIONS
683. FROM NET INVESTMENT INCOME (.320) (.154)
684.NET ASSET VALUE, END OF PERIOD $ 10.380 $ 10.590
685.TOTAL RETURN B , C 1.07% 3.83%
686.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,826 $ 687
687.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A , G .90% A , G
688.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.29% A 6.45% A
689.PORTFOLIO TURNOVER 121% A 200%
</TABLE>
INTERMEDIATE BOND - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
690. YEARS ENDED NOVEMBER 30
691.SELECTED PER-SHARE
DATA AND RATIOS 1997 D 1996 1995 1994 F 1993 1992 E
692.NET ASSET VALUE,
BEGINNING OF
PERIOD $ 10.610 $ 10.760 $ 10.260 $ 11.140 $ 10.640 $ 10.960
693.INCOME FROM
INVESTMENT
OPERATIONS
694. NET INVESTMENT
INCOME .320 I .671 I .649 .609 .785 .170
695. NET REALIZED
AND UNREALIZED
GAIN (LOSS) (.221) (.147) .491 (.876) .511 (.320)
696. TOTAL FROM
INVESTMENT
OPERATIONS .099 .524 1.140 (.267) 1.296 (.150)
697.LESS DISTRIBUTIONS
698. FROM NET
INVESTMENT INCOME (.319) (.674) (.640) (.555) (.796) (.170)
699. FROM RETURN OF
CAPITAL -- -- -- (.058) -- --
700. TOTAL
DISTRIBUTIONS (.319) (.674) (.640) (.613) (.796) (.170)
701.NET ASSET VALUE,
END OF PERIOD $ 10.390 $ 10.610 $ 10.760 $ 10.260 $ 11.140 $ 10.640
702.TOTAL
RETURN B,C .96% 5.10% 11.43% (2.44)% 12.50% (1.37)%
703.NET ASSETS, END OF
PERIOD (000 OMITTED) $ 257, 656 $ 262,103 $ 228,439 $ 141,866 $ 59,184 $ 2,583
704.RATIO OF EXPENSES TO
AVERAGE NET ASSETS .96% A .97% .94% G 1.02% G 1.23% .82% A
705.RATIO OF EXPENSES TO
AVERAGE NET ASSETS
AFTER .96% A .96% I .94% 1.02% 1.23% .82% A
EXPENSE REDUCTIONS
706.RATIO OF NET
INVESTMENT INCOME
TO AVERAGE NET
ASSETS 6.18% A 6.38% 6.20% 6.04% 6.81% 7.67% A
707.PORTFOLIO
TURNOVER 121% A 200% 189% 68% 59% 7%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
E FOR THE PERIOD SEPTEMBER 10, 1992 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1992.
F EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
H FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
I NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
J FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
INTERMEDIATE BOND - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
708. YEARS ENDED NOVEMBER 30
709.SELECTED PER-SHARE DATA
AND RATIOS 1997 G 1996 1995 1994 E
710.NET ASSET VALUE, BEGINNING
OF PERIOD $ 10.590 $ 10.750 $ 10.250 $ 10.430
711.INCOME FROM INVESTMENT OPERATIONS
712. NET INVESTMENT INCOME .283 D .597 D .579 .204
713. NET REALIZED AND UNREALIZED
GAIN (LOSS) (.211) (.153) .483 (.178)
714. TOTAL FROM INVESTMENT
OPERATIONS .072 .444 1.062 .026
715.LESS DISTRIBUTIONS
716. FROM NET INVESTMENT INCOME (.282) (.604) (.562) (.187)
717. FROM RETURN OF CAPITAL -- -- -- (.019)
718. TOTAL DISTRIBUTIONS (.282) (.604) (.562) (.206)
719.NET ASSET VALUE, END OF PERIOD $ 10.380 $ 10.590 $ 10.750 $ 10.250
720.TOTAL RETURN B , C .70% 4.32% 10.62% .24%
721.NET ASSETS, END OF PERIOD (000
OMITTED) $ 19,446 $ 18,972 $ 15,830 $ 3,156
722.RATIO OF EXPENSES TO AVERAGE
NET ASSETS 1.65% A , F 1.66% 1.70% 1.65% A , F
F F
723.RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 5.48% A 5.69% 5.44% 5.42% A
724.PORTFOLIO TURNOVER 121% A 200% 189% 68%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1994.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
SHORT FIXED - INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
725. YEAR ENDED
OCTOBER 31
726.SELECTED PER-SHARE DATA AND RATIOS D 1997 E 1996 F
727.NET ASSET VALUE, BEGINNING OF PERIOD $ 9.370 $ 9.290
728.INCOME FROM INVESTMENT OPERATIONS
729. NET INVESTMENT INCOME .276 .090
730. NET REALIZED AND UNREALIZED GAIN (LOSS) (.110) .081
731. TOTAL FROM INVESTMENT OPERATIONS .166 .171
732.LESS DISTRIBUTIONS
733. FROM NET INVESTMENT INCOME (.286) (.091)
734.NET ASSET VALUE, END OF PERIOD $ 9.250 $ 9.370
735.TOTAL RETURN B , C 1.80% 1.85%
736.NET ASSETS, END OF PERIOD (000 OMITTED) $ 693 $ 204
737.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A , G .90% A , G
738.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.03% A 6.27% A
739.PORTFOLIO TURNOVER 107% A 124%
</TABLE>
SHORT FIXED-INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
740. YEARS ENDED OCTOBER 31
741.SELECTE
1997 E 1996 1995 1994 H 1993 1992 1991 1990 1989 1988 1987 I
D PER-SHARE
DATA AND
RATIOS
742.NET
$ 9.380 $ 9.470 $ 9.480 $ 10.090 $ 9.950 $ 9.870 $ 9.620 $ 9.950 $ 9.940 $ 10.060 $ 10.000
ASSET VALUE,
BEGINNING OF
PERIOD
743.INCOME
FROM
INVESTMENT
OPERATIONS
744. NET
.288 D .594 D .403 .479 .732 .830 .848 .868 .832 .852 .101
INVESTMENT
INCOME
745. NET
(.092) (.094) .148 (.501) .146 .071 .270 (.330) .010 (.120) .060
REALIZED AND
UNREALIZED
GAIN (LOSS)
746. TOTAL
.196 .500 .551 (.022) .878 .901 1.118 .538 .842 .732 .161
FROM
INVESTMENT
OPERATIONS
747.LESS
DISTRIBUTIONS
748. FROM
(.286) (.590) (.407) (.464) (.738) (.821) (.868) (.868) (.832) (.852) (.101)
NET
INVESTMENT
INCOME
749. IN
- -- -- -- (.044) -- -- -- -- -- -- --
EXCESS OF NET
INVESTMENT
INCOME
750. FROM
- -- -- (.154) (.080) -- -- -- -- -- -- --
R ETURN OF
CAPITAL
751. TOTAL
(.286) (.590) (.561) (.588) (.738) (.821) (.868) (.868) (.832) (.852) (.101)
DISTRIBUTIONS
752.NET
$ 9.290 $ 9.380 $ 9.470 $ 9.480 $ 10.090 $ 9.950 $ 9.870 $ 9.620 $ 9.950 $ 9.940 $ 10.060
ASSET VALUE,
END OF PERIOD
753.TOTAL
2.12% 5.45% 6.05% (.22)% 9.13% 9.44% 12.19% 5.59% 8.89% 7.56% 1.61%
RETURN B , C
754.NET
$ 372,238 $ 416,700 $ 546,546 $ 787,926 $ 654,202 $ 170,558 $ 25,244 $ 13,062 $ 12,394 $ 13,433 $ 3,252
ASSETS, END
OF PERIOD
(000
OMITTED)
755.RATIO OF
.89% .88% .89% .97% .95% .90% G .90% G .90%G .90% G .90%G .90% A ,
EXPENSES TO
A G
AVERAGE NET
ASSETS
756.RATIO OF
6.22% 6.29% 6.05% 5.91% 6.77% 7.59% 8.50% 8.86% 8.45% 8.39% 7.65% A
NET
A
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
757.PORTFOLI
107% 124% 179% 108% 58% 57% 127% 144% 157% 178% 119% A
O TURNOVER
A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
H EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
I FOR THE PERIOD SEPTEMBER 16, 1987 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1987.
HIGH INCOME MUNICIPAL - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
758. YEAR ENDED
OCTOBER 31
759.SELECTED PER-SHARE DATA AND RATIOSF 1997E 1996H
760.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.740 $ 11.630
761.INCOME FROM INVESTMENT OPERATIONS
762. NET INTEREST INCOME .298 .105G
763. NET REALIZED AND UNREALIZED GAIN (LOSS) (.011) .109
764. TOTAL FROM INVESTMENT OPERATIONS .287 .214
765.LESS DISTRIBUTIONS
766. FROM NET INTEREST INCOME (.325)G (.104)
767. IN EXCESS OF NET INTEREST INCOME (.002)I --
768. TOTAL DISTRIBUTIONS (.327) (.104)
769.NET ASSET VALUE, END OF PERIOD $ 11.700 $ 11.740
770.TOTAL RETURNB,C 2.46% 1.84%
771.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,611 $ 202
772.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%A, .90%A,
D D
773.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 5.21%A 5.73%A
774.PORTFOLIO TURNOVER 44%A 49%
</TABLE>
HIGH INCOME MUNICIPAL - CLASS T
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
775. YEARS ENDED OCTOBER 31
776.SELECTE
1997E 1996 1995 1994J 1993 1992 1991 1990 1989 1988 1987K
D PER-SHARE
DATA AND
RATIOS
777.NET
$ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850 $ 10.000
ASSET VALUE,
BEGINNING OF
PERIOD
778.INCOME
FROM
INVESTMENT
OPERATIONS
779. NET
.304F .677F,G .700 .689 .710 .774 .803 .811 .800 .750 .092
INTEREST
INCOME
780. NET
(.041) (.136) .660 (1.430) 1.100 .250 .660 .150 .410 .610 (.150)
REALIZED AND
UNREALIZED
GAIN (LOSS)
781. TOTAL
.263 .541 1.360 (.741) 1.810 1.024 1.463 .961 1.210 1.360 (.058)
FROM
INVESTMENT
OPERATIONS
782.LESS
DISTRIBUTIONS
783. FROM
(.321)G (.661) (.700) (.689) (.710) (.774) (.803) (.811) (.800) (.750) (.092)
NET INTEREST
INCOME
784. FROM
- -- -- -- (.060) (.030) (.010) (.120) (.100) (.050) -- --
NET REALIZED
GAIN
785. IN
(.002)I -- -- -- -- -- -- -- -- -- --
EXCESS OF NET
INTEREST
INCOME
786. IN
- -- -- -- (.010) -- -- -- -- -- -- --
EXCESS OF NET
REALIZED GAIN
787. TOTAL
(.323) (.661) (.700) (.759) (.740) (.784) (.923) (.911) (.850) (.750) (.092)
DISTRIBUTIONS
788.NET
$ 11.700 $ 11.760 $ 11.880 $ 11.220 $ 12.720 $ 11.650 $ 11.410 $ 10.870 $ 10.820 $ 10.460 $ 9.850
ASSET VALUE,
END OF PERIOD
789.TOTAL
2.26% 4.68% 12.50% (6.03)% 15.95% 9.21% 14.02% 9.28% 12.05% 14.22% (.58)%
RETURNB,C
790.NET
$ 413,225 $ 480,432 $ 565,131 $ 544,422 $ 497,575 $ 156,659 $ 67,135 $ 22,702 $ 6,669 $ 3,290 $ 1,275
ASSETS, END
OF PERIOD
(000
OMITTED)
791.RATIO OF
.89% .89% .91% .89% .92% .90%D .90%D .90%D .90%D .89%D .80%A,
EXPENSES TO
A D
AVERAGE NET
ASSETS
792.RATIO OF
5.21% 5.74% 6.06% 5.78% 5.59% 6.59% 7.08% 7.37% 7.60% 7.33% 7.24%A
NET INTEREST
A
INCOME TO
AVERAGE NET
ASSETS
793.PORTFOLI
44% 49% 37% 38% 27% 13% 10% 11% 27% 19% 0%
O TURNOVER
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
F NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
J EFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
K FOR THE PERIOD SEPTEMBER 16, 1987 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1987.
HIGH INCOME MUNICIPAL - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
794. YEARS ENDED OCTOBER 31
795.SELECTED PER-SHARE DATA AND RATIOS 1997I 1996 1995 1994G
796.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.740 $ 11.860 $ 11.210 $ 11.610
797.INCOME FROM INVESTMENT OPERATIONS
798. NET INTEREST INCOME .263E .596E,F .612 .188
799. NET REALIZED AND UNREALIZED GAIN (LOSS) (.044) (.136) .650 (.400)
800. TOTAL FROM INVESTMENT OPERATIONS .219 .460 1.262 (.212)
801.LESS DISTRIBUTIONS
802. FROM NET INTEREST INCOME (.287)F (.580) (.612) (.188)
803. IN EXCESS OF NET INTEREST INCOME (.002)H -- -- --
804. TOTAL DISTRIBUTIONS (.289) (.580) (.612) (.188)
805.NET ASSET VALUE, END OF PERIOD $ 11.670 $ 11.740 $ 11.860 $ 11.210
806.TOTAL RETURNB,C 1.87% 3.98% 11.57% (1.86)%
807.NET ASSETS, END OF PERIOD (000 OMITTED) $ 39,396 $ 39,389 $ 32,395 $ 9,968
808.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.58%A 1.57% 1.86%D 2.09%A
809.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.53%A 5.06% 5.18% 4.58%A
810.PORTFOLIO TURNOVER 44%A 49% 37% 38%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
G FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO OCTOBER 31, 1994.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
I SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
MUNICIPAL BOND - CLASS A
811.
812.SELECTED PER-SHARE DATA AND RATIOS 1997G
813.NET ASSET VALUE, BEGINNING OF PERIOD $ 8.200
814.INCOME FROM INVESTMENT OPERATIONS
815. NET INTEREST INCOME .123
816. NET REALIZED AND UNREALIZED GAIN (LOSS) .040
817. TOTAL FROM INVESTMENT OPERATIONS .163
818.LESS DISTRIBUTIONS
819. FROM NET INTEREST INCOME (.123)
820.NET ASSET VALUE, END OF PERIOD $ 8.240
821.TOTAL RETURNB,C 2.01%
822.NET ASSETS, END OF PERIOD (000 OMITTED) $ 509
823.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%A,
D
824.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.57%A
825.PORTFOLIO TURNOVER 34%A
MUNICIPAL BOND - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C>
826. YEAR ENDED
DECEMBER 31
827.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996F
828.NET ASSET VALUE, BEGINNING OF PERIOD $ 8.190 $ 7.990
829.INCOME FROM INVESTMENT OPERATIONS
830. NET INTEREST INCOME .182 .185
831. NET REALIZED AND UNREALIZED GAIN (LOSS) .040 .200
832. TOTAL FROM INVESTMENT OPERATIONS .222 .385
833.LESS DISTRIBUTIONS
834. FROM NET INTEREST INCOME (.182) (.185)
835.NET ASSET VALUE, END OF PERIOD $ 8.230 $ 8.190
836.TOTAL RETURNB,C 2.75% 4.86%
837.NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,694 $ 3,878
838.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.00%A,D 1.00%A,
D
839.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .92%A,E 1.00%A
REDUCTIONS
840.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.48%A 4.40%A
841.PORTFOLIO TURNOVER 34%A 35%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FOR THE PERIOD JULY 1, 1996 (COMMENCEMENT OF SALE OF CLASS T SHARES)
TO DECEMBER 31, 1996.
G FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO JUNE 30, 1997 (UNAUDITED).
H SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
MUNICIPAL BOND - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C>
842. YEAR ENDED
DECEMBER 31
843.SELECTED PER-SHARE DATA AND RATIOS 1997F 1996E
844.NET ASSET VALUE, BEGINNING OF PERIOD $ 8.190 $ 7.990
845.INCOME FROM INVESTMENT OPERATIONS
846. NET INTEREST INCOME .158 .160
847. NET REALIZED AND UNREALIZED GAIN (LOSS) .050 .200
848. TOTAL FROM INVESTMENT OPERATIONS .208 .360
849.LESS DISTRIBUTIONS
850. FROM NET INTEREST INCOME (.158) (.160)
851.NET ASSET VALUE, END OF PERIOD $ 8.240 $ 8.190
852.TOTAL RETURNB,C 2.57% 4.54%
853.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,146 $ 259
854.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65%A, 1.65%A,
D D
855.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.91%A 3.91%A
856.PORTFOLIO TURNOVER 34%A 35%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FOR THE PERIOD JULY 1, 1996 (COMMENCEMENT OF SALE OF CLASS B SHARES)
TO DECEMBER 31, 1996.
F SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
INTERMEDIATE MUNICIPAL - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
857. YEAR ENDED
NOVEMBER 30
858.SELECTED PER-SHARE DATA AND RATIOS 1 997F 1996 G
859.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.410 $ 10.160
860.INCOME FROM INVESTMENT OPERATIONS
861. NET INTEREST INCOME .230 .113
862. NET REALIZED AND UNREALIZED GAIN (LOSS) (.089) .250
863. TOTAL FROM INVESTMENT OPERATIONS .141 .363
864.LESS DISTRIBUTIONS
865. FROM NET INTEREST INCOME (.230) (.113)
866. FROM NET REALIZED GAIN (.001) --
867. TOTAL DISTRIBUTIONS (.231) (.113)
868.NET ASSET VALUE, END OF PERIOD $ 10.320 $ 10.410
869.TOTAL RETURN B , C 1.38% 3.59%
870.NET ASSETS, END OF PERIOD (000 OMITTED) $ 344 $ 103
871.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%A,E .90%A,
E
872.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.47%A 4.60%A
873.PORTFOLIO TURNOVER 21%A 35%
</TABLE>
INTERMEDIATE MUNICIPAL - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
874. YEARS ENDED NOVEMBER 30
875.SELECTED PER-SHARE DATA AND
RATIOS 1997 F 1996 1995 1994 D 1993 19 92 H
876.NET ASSET VALUE, BEGINNING OF
PERIOD $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080 $ 11.010
877.INCOME FROM INVESTMENT OPERATIONS
878. NET INTEREST
INCOME .225 .461 .451 .455 .508 .131
879. NET REALIZED AND UNREALIZED GAIN
(LOSS) (.079) .030 .980 (1.040) .260 .070
880. TOTAL FROM INVESTMENT OPERA
TIONS .146 .491 1.431 (.585) .768 .201
881.LESS DISTRIBUTIONS
882. FROM NET INTEREST
INCOME (.225) (.461) (.451) (.455) (.508) (.131)
883. FROM NET REALIZED
GAIN (.001) -- -- -- (.880) --
884. IN EXCESS OF NET REALIZED
GAIN -- -- -- (.020) -- --
885. TOTAL DISTRIBU
TIONS (.226) (.461) (.451) (.475) (1.388) (.131)
886.NET ASSET VALUE, END OF
PERIOD $ 10.330 $ 10.410 $ 10.380 $ 9.400 $ 10.460 $ 11.080
887.TOTAL RETURN
B,C 1.43% 4.89% 15.49% (5.78)% 7.72% 1.37%
888.NET ASSETS, END OF PERIOD (000
OMITTED) $ 49,852 $ 56,729 $ 62,852 $ 57,382 $ 39,800 $ 1,752
889.RATIO OF EXPENSES TO AVERAGE NET
ASSETS 1.00%A,E 1.00%E .94%E .90%E .90%E 1.04%A,E
890.RATIO OF NET INTEREST INCOME TO AVERAGE NET
ASSETS 4.38%A 4.42% 4.56% 4.49% 4.76% 5.65%A
891.PORTFOLIO TURN
OVER 21%A 35% 53% 53% 46% 36%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
G FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
H FOR THE PERIOD SEPTEMBER 10, 1992 (COMENC EMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1992.
INTERMEDIATE MUNICIPAL - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
892. YEARS ENDED NOVEMBER 30
893.SELECTED PER-SHARE DATA AND RATIOS 19 97 D 1996 1995 1994 E
894.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.410 $ 10.380 $ 9.400 $ 9.890
895.INCOME FROM INVESTMENT OPERATIONS
896. NET INTEREST INCOME .193 .394 .373 .155
897. NET REALIZED AND UNREALIZED GAIN
(LOSS) (.089) .030 .980 (.490)
898. TOTAL FROM INVESTMENT OPERATIONS .104 .424 1.353 (.335)
899.LESS DISTRIBUTIONS
900. FROM NET INTEREST INCOME (.193) (.394) (.373) (.155)
901. FROM NET REALIZED GAIN (.001) -- -- --
902. TOTAL DISTRIBUTIONS (.194) (.394) (.373) (.155)
903.NET ASSET VALUE, END OF PERIOD $ 10.320 $ 10.410 $ 10.380 $ 9.400
904.TOTAL RETURN B , C 1.01% 4.21% 14.60% (3.44)%
905.NET ASSETS, END OF PERIOD (000 OMITTED) $ 7,349 $ 7,445 $ 6,226 $ 1,682
906.RATIO OF EXPENSES TO AVERAGE NET
ASSETS 1.65%A,F 1.66% 1.68% 1.65%A,
F F F
907.RATIO OF NET INTEREST INCOME TO
AVERAGE NET ASSETS 3.75%A 3.76% 3.71% 3.74%A
908.PORTFOLIO TURNOVER 21%A 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
E FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1994.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
SHORT - INTERMEDIATE MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
909. YEAR ENDED
NOVEMBER 30
910.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996D
911.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.210 $ 10.100
912.INCOME FROM INVESTMENT OPERATIONS
913. NET INTEREST INCOME .202 .100
914. NET REALIZED AND UNREALIZED GAIN (LOSS) (.070) .110
915. TOTAL FROM INVESTMENT OPERATIONS .132 .210
916.LESS DISTRIBUTIONS
917. FROM NET INTEREST INCOME (.202) (.100)
918. FROM NET REALIZED GAIN (.030) --
919. TOTAL DISTRIBUTIONS (.232) (.100)
920.NET ASSET VALUE, END OF PERIOD $ 10.110 $ 10.210
921.TOTAL RETURNB,C 1.32% 2.09%
922.NET ASSETS, END OF PERIOD (000 OMITTED) $ 159 $ 186
923.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%A,F .90%A,F
924.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.02%A 4.06%A
925.PORTFOLIO TURNOVER 35%A 62%
</TABLE>
SHORT-INTERMEDIATE MUNICIP AL INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
926. YEARS ENDED NOVEMBER 30
927.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996 1995 1994E
928.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.210 $ 10.240 $ 9.770 $ 10.000
929.INCOME FROM INVESTMENT OPERATIONS
930. NET INTEREST INCOME .202 .404 .430 .259
931. NET REALIZED AND UNREALIZED GAIN (LOSS) (.070) .000 .470 (.230)
932. TOTAL FROM INVESTMENT OPERATIONS .132 .404 .900 .029
933.LESS DISTRIBUTIONS
934. FROM NET INTEREST INCOME (.202) (.404) (.430) (.259)
935. FROM NET REALIZED GAIN (.030) (.030) -- --
936. TOTAL DISTRIBUTIONS (.232) (.434) (.430) (.259)
937.NET ASSET VALUE, END OF PERIOD $ 10.110 $ 10.210 $ 10.240 $ 9.770
938.TOTAL RETURNB,C 1.31% 4.06% 9.38% .27%
939.NET ASSETS, END OF PERIOD (000 OMITTED) $ 24,327 $ 29,887 $ 29,274 $ 16,563
940.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%A ,F .90%F .82%F .75%A ,
F
941.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER
EXPENSE .90%A .89%G .82% .75%A
REDUCTIONS
942.RATIO OF NET INTEREST INCOME TO AVERAGE NET
ASSETS 4.01%A 3.97% 4.25% 3.74%A
943.PORTFOLIO TURNOVER 35%A 62% 80% 111%A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996.
E FOR THE PERIOD MARCH 16, 1994 (COMMENCEMENT OF SALE OF CLASS T
SHARES) TO NOVEMBER 30, 1994.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
CALIFORNIA MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
944. YEAR ENDED
OCTOBER 31
945.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996F
946.NET ASSET VALUE, BEGINNING OF PERIOD $ 9.930 $ 9.750
947.INCOME FROM INVESTMENT OPERATIONS
948. NET INTEREST INCOME .211 .066
949. NET REALIZED AND UNREALIZED GAIN (LOSS) (.070) .180
950. TOTAL FROM INVESTMENT OPERATIONS .141 .246
951.LESS DISTRIBUTIONS
952. FROM NET INTEREST INCOME (.211) (.066)
953.NET ASSET VALUE, END OF PERIOD $ 9.860 $ 9.930
954.TOTAL RETURNB,C 1.41% 2.53%
955.NET ASSETS, END OF PERIOD (000 OMITTED) $ 137 $ 102
956.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90%A,D .90%A,D
957.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .89%A,E .90%A
REDUCTIONS
958.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.27%A 3.98%A
959.PORTFOLIO TURNOVER 13%A 21%A
</TABLE>
CALIFORNIA MUNICIPAL INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C>
960. YEAR ENDED
OCTOBER 31
961.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996G
962.NET ASSET VALUE, BEGINNING OF PERIOD $ 9.920 $ 10.000
963.INCOME FROM INVESTMENT OPERATIONS
964. NET INTEREST INCOME .206 .261
965. NET REALIZED AND UNREALIZED GAIN (LOSS) (.050) (.080)
966. TOTAL FROM INVESTMENT OPERATIONS .156 .181
967.LESS DISTRIBUTIONS
968. FROM NET INTEREST INCOME (.206) (.261)
969.NET ASSET VALUE, END OF PERIOD $ 9.870 $ 9.920
970.TOTAL RETURNB,C 1.46% 1.99%
971.NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,279 $ 2,244
972.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.00%A,D 1.00%A,D
973.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER .99%A,E .87%A,E
EXPENSE REDUCTIONS
974.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.21%A 3.92%A
975.PORTFOLIO TURNOVER 13%A 21%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
G FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996.
H SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
CALIFORNIA MUNICIPAL INCOME - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C>
976. YEARS ENDED
OCTOBER 31
977.SELECTED PER-SHARE DATA AND RATIOS 1997F 1996G
978.NET ASSET VALUE, BEGINNING OF PERIOD $ 9.900 $ 10.000
979.INCOME FROM INVESTMENT OPERATIONS
980. NET INTEREST INCOME .174 .229
981. NET REALIZED AND UNREALIZED GAIN (LOSS) (.060) (.100)
982. TOTAL FROM INVESTMENT OPERATIONS .114 .129
983.LESS DISTRIBUTIONS
984. FROM NET INTEREST INCOME (.174) (.229)
985.NET ASSET VALUE, END OF PERIOD $ 9.840 $ 9.900
986.TOTAL RETURNB,C 1.14% 1.35%
987.NET ASSETS, END OF PERIOD (000 OMITTED) $ 676 $ 646
988.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65%A, 1.65%A,
D D
989.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.64%A,E 1.62%A,
REDUCTIONS E
990.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 3.64%A 3.38%A
991.PORTFOLIO TURNOVER 13%A 21%A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
G FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996.
NEW YORK MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
992. YEAR ENDED
OCTOBER 31
993.SELECTED PER-SHARE DATA AND RATIOS 1997 H 1996 F
994.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.490 $ 10.290
995.INCOME FROM INVESTMENT OPERATIONS
996. NET INTEREST INCOME .231 .072
997. NET REALIZED AND UNREALIZED GAIN (LOSS) (.070) .200
998. TOTAL FROM INVESTMENT OPERATIONS .161 .272
999.LESS DISTRIBUTIONS
1000. FROM NET INTEREST INCOME (.231) (.072)
1001. FROM NET REALIZED GAIN (.060) --
1002. TOTAL DISTRIBUTIONS (.291) (.072)
1003.NET ASSET VALUE, END OF PERIOD $ 10.360 $ 10.490
1004.TOTAL RETURN B , C 1.54% 2.65%
1005.NET ASSETS, END OF PERIOD (000 OMITTED) $ 201 $ 102
1006.RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A , .90% A , D
D
1007.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER .89% A , E .90% A
EXPENSE REDUCTIONS
1008.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.35% A 4.43% A
1009.PORTFOLIO TURNOVER 18% A 17%
</TABLE>
NEW YORK MUNICIPAL INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1010. YEARS ENDED OCTOBER 31
1011.SELECTED PER-SHARE DATA AND RATIOS 1997 H 1996 1995 G
1012.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.480 $ 10.400 $ 10 .000
1013.INCOME FROM INVESTMENT OPERATIONS
1014. NET INTE RES T INCOME .226 .444 .084
1015. NET REALIZED AND UNREALIZED GAIN (LOSS) (.060) .080 .400
1016. TOTAL FROM INVESTMENT OPERATIONS .166 .524 .484
1017.LESS DISTRIBUTIONS
1018. FROM N ET INTEREST INCOME (.226) (.444) (.084)
1019. FROM NET REALIZED GAIN (.060) -- --
1020. TOTAL DISTRIBUTIONS (.286) (.444) (.084)
1021.NET ASSET VALUE, END OF PERIOD $ 10.360 $ 10.480 $ 10.400
1022.TOTAL RETURN B , C 1.59% 5.15% 4.85%
1023.NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,229 $ 4,125 $ 2,033
1024.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.00% A , D 1.00% D 1.00% A , D
1025.RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER .99% A , E .97% E 1.00% A
EXPENSE REDUCTIONS
1026.RATIO OF NET INTEREST INCOME TO AVERAGE
NET ASSETS 4.29% A 4.30% 4.16% A
1027.PORTFOLIO TURNOVER 18% A 17% 0%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
G FOR THE PERIOD AUGUST 21, 1995 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1995.
H SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
NEW YORK MUNICIPAL INCOME - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1028. YEARS ENDED OCTOBER 31
1029.SELECTED PER-SHARE DATA AND RATIOS 1997 G 1996 1995 F
1030.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.470 $ 10.390 $ 10 . 000
1031.INCOME FROM INVESTMENT OPERATIONS
1032. NET IN TEREST INCOME .192 .375 .074
1033. NET REALIZED AND UNREALIZED GAIN (LOSS) (.050) .080 .390
1034. TOTAL FROM INVESTMENT OPERATIONS .142 .455 .464
1035.LESS DISTRIBUTIONS
1036. FROM NET IN TEREST INCOME (.192) (.375) (.074)
1037. FROM NET REALIZED GAIN (.060) -- --
1038. TOTAL DISTRIBUTIONS (.252) (.375) (.074)
1039.NET ASSET VALUE, END OF PERIOD $ 10.360 $ 10.470 $ 10.390
1040.TOTAL RETURN B , C 1.36% 4.46% 4.65%
1041.NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,677 $ 2,445 $ 1,161
1042.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.65% A , D 1.66% D 1.75% A , D
1043.RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER 1.64% A , E 1.62% E 1.75% A
EXPENSE REDUCTIONS
1044.RATIO OF NET IN TEREST INCOME TO
AVERAGE NET ASSETS 3.63% A 3.62% 3.52% A
1045.PORTFOLIO TURNOVER 18% A 17% 0%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN S WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES
CHARGE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FOR THE PERIOD AUGUST 21, 1995 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1995.
G SIX M ONTHS ENDED APRIL 30, 1997 (UNAUDITED)
KEY FACTS
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or
YIELD.
For Growth Opportunities, Balanced, High Yield, Government Investment,
Short Fixed-Income, High Income Municipal, California Municipal
Income, and New York Municipal Income , the fiscal year runs
from November 1 to October 31. For TechnoQuant Growth, Mid Cap, Equity
Growth, Large Cap, Growth & Income, Equity Income, Intermediate Bond,
Intermediate Municipal Income, and Short-Intermediate Municipal
Income , the fiscal year runs from December 1 to November 30.
For Strategic Opportunities, Strategic Income, and Municipal Bond, the
fiscal year runs from January 1 to December 31. For Mortgage
Securities the fiscal year runs from August 1 to July 31. The tables
below show the performance of each class of each fund (except Mortgage
Securities) over past fiscal periods ended April 30, 1997, May 31,
1997, or June 30, 1997, as indicated. The performance of each
class of Mortgage Securities over past fiscal years is shown in the
tables below. The charts in Appendix B, beginning on page , present
calendar year performance for each class compared to different
measures, including a competitive funds average.
EQUITY FUNDS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
TECHNOQU N/A N/A N/A N/A N/A N/A 0.00%
ANT
GROWTH -
CLASS A [C]
TECHNOQU N/A N/A N/A N/A N/A N/A -5.75%
ANT
GROWTH -
CLASS A
(LOAD ADJ.)
[A][C]
MID CAP - 9.91% N/A 18.22% 5.87% 9.91% N/A 23.87%
CLASS A [C]
MID CAP - 3.59% N/A 12.87% -0.21% 3.59% N/A 16.75%
CLASS A
(LOAD ADJ.)
[A][C]
EQUITY 14.73% 18.31% 18.87% 6.43% 14.73% 131.81% 463.19%
GROWTH -
CLASS A[C]
EQUITY 8.13% 16.92% 18.17% 0.31% 8.13% 118.48% 430.81%
GROWTH -
CLASS A
(LOAD ADJ.)
[A][C]
GROWTH 20.37% 17.39% 20.74% 10.65% 20.37% 122.88% 494.57%
OPPORTUNIT
IES - CLASS
A[B]
GROWTH 13.45% 16.00% 19.99% 4.28% 13.45% 110.07% 460.38%
OPPORTUNIT
IES - CLASS
A
(LOAD
ADJ.)[A][B]
STRATEGIC 14.60% 13.80% 11.79% 12.88% 14.60% 90.85% 204.89%
OPPORTUNIT
IES - CLASS
A [D]
STRATEGIC 8.01% 12.46% 11.13% 6.39% 8.01% 79.87% 187.36%
OPPORTUNIT
IES - CLASS
A
(LOAD ADJ.)
[A][D]
LARGE CAP 21.73% N/A 19.71% 6.40% 21.73% N/A 25.87%
- CLASS A
[C]
LARGE CAP 14.73% N/A 14.29% 0.28% 14.73% N/A 18.63%
- CLASS A
(LOAD ADJ.)
[A][C]
GROWTH & N/A N/A N/A N/A N/A N/A 9.21%
INCOME -
CLASS A [C]
GROWTH & N/A N/A N/A N/A N/A N/A 2.93%
INCOME -
CLASS A
(LOAD ADJ.)
[A][C]
EQUITY 19.51% 17.63% 12.96% 9.02% 19.51% 125.20% 238.28%
INCOME -
CLASS A [C]
EQUITY 12.64% 16.24% 12.29% 2.75% 12.64% 112.25% 218.83%
INCOME -
CLASS A
(LOAD ADJ.)
[A][C]
BALANCED 16.25% 9.39% 11.17% 9.26% 16.25% 56.67% 188.38%
- CLASS
A[B]
BALANCED 9.57% 8.11% 10.52% 2.97% 9.57% 47.66% 171.80%
- CLASS A
(LOAD
ADJ.)[A][B]
TAXABLE BOND FUNDS
- - CLASS A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH
YIELD 9.42% 11.94% 13.24% 3.28% 9.42% 75.78% 246.74%
- CLASS
A[B]
HIGH YIELD 4.22% 10.86% 12.69% -1.63% 4.22% 67.43% 230.29%
- CLASS A
(LOAD
ADJ.)[A][B]
STRATEGIC 13.73% N/A 14.67% 4.49% 13.73% N/A 44.08%
INCOME -
CLASS A [D]
STRATEGIC 8.33% N/A 12.60% -0.48% 8.33% N/A 37.23%
INCOME -
CLASS A
(LOAD
ADJ.)[A][D]
MORTGAGE 10.25% 7.65% 8.80% N/A 10.25% 44.60% 132.33%
SECURITIES
- CLASS
A[E]
MORTGAGE 5.01% 6.61% 8.27% N/A 5.01% 37.73% 121.29%
SECURITIES -
CLASS A
(LOAD ADJ.)
[A][E]
GOVERNME 5.87% 6.43% 7.42% 1.17% 5.87% 36.53% 104.61%
NT
INVESTMENT
- CLASS A
[B]
GOVERNMEN 0.84% 5.40% 6.90% -3.64% 0.84% 30.05% 94.89%
T
INVESTMENT
- CLASS A
(LOAD ADJ.)
[A][B]
INTERMEDIA 6.36% 6.29% 7.91% 1.07% 6.36% 35.69% 114.06%
TE BOND -
CLASS A [C]
INTERMED
IATE 2.37% 5.48% 7.50% 2.72% 2.37% 30.60% 106.03%
BOND -
CLASS A
(LOAD ADJ.)
[A][C]
SHORT 5.32% 5.24% 6.95% 1.80% 5.32% 29.09% 90.96%
FIXED-INCO
ME - CLASS
A [B]
SHORT 3.74% 4.92% 6.78% 0.27% 3.74% 27.16% 88.10%
FIXED-INCO
ME - CLASS
A
(LOAD
ADJ.)[A][B]
</TABLE>
MUNICIPAL FUNDS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH 6.36% 6.49% 8.89% 2.46% 6.36% 36.94% 127.09%
INCOME
MUNICIPAL
- CLASS A
[B]
HIGH 1.31% 5.46% 8.34% -2.41% 1.31% 30.43% 116.31%
INCOME
MUNICIPAL
- CLASS A
(LOAD
ADJ.)[A][B]
MUNICIPAL 7.76% 6.45% 7.84% 2.89% 7.76% 36.67% 112.73%
BOND -
CLASS A [D]
MUNICIPAL 2.64% 5.42% 7.32% -1.99% 2.64% 30.17% 102.63%
BOND -
CLASS A
(LOAD
ADJ.)[A] [D]
INTERMEDIA 6.66% 5.49% 6.52% 1.38% 6.66% 30.65% 87.99%
TE
MUNICIPAL
INCOME -
CLASS A [C]
INTERMEDIA 2.66% 4.69% 6.11% -2.42% 2.66% 25.75% 80.94%
TE
MUNICIPAL
INCOME -
CLASS A
(LOAD
ADJ.)[A][C]
SHORT-
INTER 4.67% N/A 4.62% 1.32% 4.67% N/A 15.61%
MEDIATE
MUNICIPAL
INCOME -
CLASS A [C]
SHORT-
INTER 3.10% N/A 4.13% -0.20% 3.10% N/A 13.88%
MEDIATE
MUNICIPAL
INCOME -
CLASS A
(LOAD
ADJ.)[A][C]
</TABLE>
STATE MUNICIPAL FUNDS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
CALIFORNIA 6.24% N/A 2.85% 1.41% 6.24% N/A 3.41%
MUNICIPAL
INCOME -
CLASS A [B]
CALIFORNIA 1.20% N/A -1.26% -3.40% 1.20% N/A -1.50%
MUNICIPAL
INCOME -
CLASS A
(LOAD
ADJ.)[A][B]
NEW YORK 6.07% N/A 6.93% 1.54% 6.07% N/A 12.03%
MUNICIPAL
INCOME -
CLASS A [B]
NEW YORK 1.03% N/A 3.90% -3.28% 1.03% N/A 6.71%
MUNICIPAL
INCOME -
CLASS A
(LOAD
ADJ.)[A][B]
</TABLE>
EQUITY FUNDS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
TECHNOQU N/A N/A N/A N/A N/A N/A -0.10%
ANT
GROWTH -
CLASS T[C]
TECHNOQU N/A N/A N/A N/A N/A N/A -3.60%
ANT
GROWTH -
CLASS T
(LOAD ADJ.)
[A][C]
MID CAP - 9.98% N/A 18.28% 5.94% 9.98% N/A 23.95%
CLASS T[C]
MID CAP - 6.13% N/A 15.03% 2.23% 6.13% N/A 19.61%
CLASS T
(LOAD ADJ.)
[A][C]
EQUITY 14.86% 18.34% 18.88% 6.53% 14.86% 132.07% 463.83%
GROWTH -
CLASS T [C]
EQUITY 10.84% 17.50% 18.46% 2.80% 10.84% 123.95% 444.10%
GROWTH -
CLASS T
(LOAD ADJ.)
[A][C]
GROWTH 20.35% 17.38% 20.74% 10.56% 20.35% 122.84% 494.45%
OPPORTUNIT
IES - CLASS
T [B]
GROWTH 16.14% 16.55% 20.29% 6.69% 16.14% 115.04% 473.64%
OPPORTUNIT
IES - CLASS
T
(LOAD
ADJ.)[A][B]
STRATEGIC 14.67% 13.81% 11.80% 12.96% 14.67% 90.97% 205.08%
OPPORTUNIT
IES - CLASS
T [D]
STRATEGIC 10.66% 13.00% 11.40% 9.01% 10.66% 84.28% 194.40%
OPPORTUNIT
IES - CLASS
T
(LOAD ADJ.)
[A][D]
LARGE CAP 21.71% N/A 19.69% 6.47% 21.71% N/A 25.85%
- CLASS T
[C]
LARGE CAP 17.45% N/A 16.41% 2.75% 17.45% N/A 21.45%
- CLASS T
(LOAD ADJ.)
[A][C]
GROWTH & N/A N/A N/A N/A N/A N/A 8.91%
INCOME -
CLASS T [C]
GROWTH & N/A N/A N/A N/A N/A N/A 5.09%
INCOME -
CLASS T
(LOAD ADJ.)
[A][C]
EQUITY 19.70% 17.67% 12.98% 9.11% 19.70% 125.56% 238.83%
INCOME -
CLASS T [C]
EQUITY 15.51% 16.83% 12.58% 5.29% 15.51% 117.67% 226.97%
INCOME -
CLASS T
(LOAD ADJ.)
[A][C]
BALANCED 16.44% 9.43% 11.19% 9.37% 16.44% 56.93% 188.86%
- CLASS T
[B]
BALANCED 12.37% 8.65% 10.80% 5.55% 12.37% 51.43% 178.75%
- CLASS T
(LOAD
ADJ.)[A][B]
</TABLE>
TAXABLE BOND FUNDS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH
YIELD 9.67% 11.99% 13.27% 3.31% 9.67% 76.18% 247.53%
- CLASS T
[B]
HIGH
YIELD 5.83% 11.20% 12.86% -0.31% 5.83% 70.01% 235.37%
- CLASS T
(LOAD
ADJ.)[A]][B]
STRATEGIC 13.86% N/A 14.72% 4.53% 13.86% N/A 44.24%
INCOME -
CLASS T [D]
STRATEGIC 9.88% N/A 13.20% 0.88% 9.88% N/A 39.20%
INCOME -
CLASS T
(LOAD
ADJ.)[A][D]
MORTGAGE 10.20% 7.65% 8.79% N/A 10.20% 44.54% 132.24%
SECURITIES
- CLASS T
[E]
MORTGAGE 6.35% 6.88% 8.40% N/A 6.35% 39.48% 124.11%
SECURITIES -
CLASS T
(LOAD ADJ.)
[A][E]
GOVERNME 5.74% 6.40% 7.41% 1.01% 5.74% 36.36% 104.35%
NT
INVESTMENT
- CLASS T
[B]
GOVERNMEN 2.04% 5.64% 7.03% -2.53% 2.04% 31.59% 97.20%
T
INVESTMENT
- CLASS T
(LOAD ADJ.)
[A][B]
INTERME
DIA 6.48% 6.32% 7.92% 0.96% 6.48% 35.84% 114.31%
TE BOND -
CLASS T [C]
INTERMED
IATE 3.55% 5.73% 7.62% -1.82% 3.55% 32.11% 108.42%
BOND -
CLASS T
(LOAD ADJ.)
[A] [C]
SHORT 5.82% 5.34% 7.00% 2.12% 5.82% 29.71% 91.87%
FIXED-INCO
ME - CLASS
T [B]
SHORT 4.23% 5.02% 6.83% 0.59% 4.23% 27.76% 88.99%
FIXED-INCO
ME - CLASS
T
(LOAD
ADJ.)[A][B]
</TABLE>
MUNICIPAL FUNDS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH 6.40% 6.50% 8.89% 2.26% 6.40% 36.99% 127.18%
INCOME
MUNICIPAL
- CLASS T
[B]
HIGH 2.68% 5.74% 8.49% -1.32% 2.68% 32.20% 119.23%
INCOME
MUNICIPAL
- CLASS T
(LOAD
ADJ.)[A][B]
MUNICIPAL 7.61% 6.42% 7.83% 2.75% 7.61% 36.48% 112.44%
BOND -
CLASS T [D]
MUNICIPAL 3.84% 5.66% 7.44% -0.85% 3.84% 31.70% 105.00%
BOND -
CLASS T
(LOAD
ADJ.)[A][D]
INTERMEDIA 6.72% 5.50% 6.52% 1.43% 6.72% 30.72% 88.09%
TE
MUNICIPAL
INCOME -
CLASS T [C]
INTERMEDIA 3.78% 4.92% 6.22% -1.36% 3.78% 27.12% 82.92%
TE
MUNICIPAL
INCOME -
CLASS T
(LOAD
ADJ.)[A][C]
SHORT-
INTER 4.68% N/A 4.62% 1.31% 4.68% N/A 15.62%
MEDIATE
MUNICIPAL
INCOME -
CLASS T [C]
SHORT-
INTER 3.11% N/A 4.13% -0.21% 3.11% N/A 13.89%
MEDIATE
MUNICIPAL
INCOME -
CLASS T
(LOAD
ADJ.)[A][C]
</TABLE>
STATE MUNICIPAL FUNDS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
CALIFORNIA 6.31% N/A 2.90% 1.46% 6.31% N/A 3.48%
MUNICIPAL
INCOME -
CLASS T[B]
CALIFORNIA 2.59% N/A -0.12% -2.09% 2.59% N/A -0.14%
MUNICIPAL
INCOME -
CLASS T
(LOAD
ADJ.)[A][B]
NEW YORK 6.04% N/A 6.91% 1.59% 6.04% N/A 12.00%
MUNICIPAL
INCOME -
CLASS T [B]
NEW YORK 2.33% N/A 4.69% -1.97% 2.33% N/A 8.08%
MUNICIPAL
INCOME -
CLASS T
(LOAD
ADJ.)[A][B]
</TABLE>
EQUITY FUNDS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
TECHNOQU N/A N/A N/A N/A N/A N/A -0.40%
ANT
GROWTH -
CLASS B [C]
TECHNOQU N/A N/A N/A N/A N/A N/A -5.38%
ANT
GROWTH -
CLASS B
(LOAD
ADJ.)[A][C]
MID CAP - 9.09% N/A 17.28% 5.61% 9.09% N/A 22.62%
CLASS B [C]
MID CAP - 4.09% N/A 14.28% 0.61% 4.09% N/A 18.62%
CLASS B
(LOAD
ADJ.)[A][C]
EQUITY 13.94% 18.15% 18.79% 5.68% 13.94% 130.21% 459.32%
GROWTH -
CLASS B [C]
EQUITY 8.94% 17.94% 18.79% 0.68% 8.94% 128.21% 459.32%
GROWTH -
CLASS B
(LOAD ADJ.)
[A][C]
GROWTH 20.28% 17.37% 20.73% 10.50% 20.28% 122.72% 494.13%
OPPORTUNIT
IES - CLASS
B [B]
GROWTH 15.28% 17.16% 20.73% 5.50% 15.28% 120.72% 494.13%
OPPORTUNIT
IES - CLASS
B
(LOAD
ADJ.)[A][B]
STRATEGIC 14.10% 13.49% 11.64% 12.65% 14.10% 88.25% 200.74%
OPPORTUNIT
IES - CLASS
B [D]
STRATEGIC 9.10% 13.25% 11.64% 7.65% 9.10% 86.25% 200.74%
OPPORTUNIT
IES - CLASS
B
(LOAD ADJ.)
[A][D]
LARGE CAP 20.85% N/A 18.94% 6.07% 20.85% N/A 24.84%
- CLASS B
[C]
LARGE CAP 15.85% N/A 15.95% 1.07% 15.85% N/A 20.84%
- CLASS B
(LOAD
ADJ.)[A][C]
GROWTH & N/A N/A N/A N/A N/A N/A 8.81%
INCOME -
CLASS B [C]
GROWTH & N/A N/A N/A N/A N/A N/A 3.81%
INCOME -
CLASS B
(LOAD
ADJ.)[A][C]
EQUITY 19.13% 17.38% 12.84% 8.91% 19.13% 122.82% 234.71%
INCOME -
CLASS B [C]
EQUITY 14.13% 17.17% 12.84% 3.91% 14.13% 120.82% 234.71%
INCOME -
CLASS B
(LOAD
ADJ.)[A][C]
BALANCED 16.04% 9.35% 11.15% 8.99% 16.04% 56.38% 187.85%
- CLASS B
[B]
BALANCED 11.04% 9.07% 11.15% 3.99% 11.04% 54.38% 187.85%
- CLASS B
(LOAD
ADJ.)[A][B]
</TABLE>
TAXABLE BOND FUNDS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH YIELD 8.98% 11.46% 13.00% 2.99% 8.98% 72.06% 239.41%
- CLASS B
[B]
HIGH YIELD 4.00% 11.20% 13.00% -1.89% 4.00% 70.06% 239.41%
- CLASS B
(LOAD
ADJ.)[A][B]
STRATEGIC 13.22% N/A 13.99% 4.28% 13.22% N/A 41.82%
INCOME -
CLASS B [D]
STRATEGIC 8.22% N/A 13.08% -0.72% 8.22% N/A 38.82%
INCOME -
CLASS B
(LOAD
ADJ.)[A][D]
MORTGAGE 9.81% 7.57% 8.75% N/A 9.81% 44.02% 131.40%
SECURITIES
- CLASS B
[E]
MORTGAGE 4.81% 7.27% 8.75% N/A 4.81% 42.02% 131.40%
SECURITIES -
CLASS B
(LOAD ADJ.)
[A][E]
GOVERNME 5.18% 5.97% 7.19% 0.70% 5.18% 33.63% 100.26%
NT
INVESTMENT
- CLASS B
[B]
GOVERNME 0.20% 5.66% 7.19% -4.20% 0.20% 31.67% 100.26%
NT
INVESTMENT
- CLASS B
(LOAD
ADJ.)[A][B]
INTERMEDIA 5.86% 5.84% 7.68% 0.70% 5.86% 32.85% 109.58%
TE BOND -
CLASS B [C]
INTERMEDIA 2.86% 5.84% 7.68% -2.24% 2.86% 32.85% 109.58%
TE BOND -
CLASS B
(LOAD
ADJ.)[A][C]
</TABLE>
MUNICIPAL FUNDS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH 5.64% 5.99% 8.63% 1.87% 5.64% 33.78% 121.85%
INCOME
MUNICIPAL
- CLASS B
[B]
HIGH 0.64% 5.67% 8.63% -3.10% 0.64% 31.78% 121.85%
INCOME
MUNICIPAL
- CLASS B
(LOAD
ADJ.)[A][B]
MUNICIPAL 7.10% 6.32% 7.77% 2.57% 7.10% 35.83% 111.43%
BOND -
CLASS B [D]
MUNICIPAL 2.10% 6.01% 7.77% -2.43% 2.10% 33.90% 111.43%
BOND -
CLASS B
(LOAD
ADJ.)[A][D]
INTERMEDIA 6.04% 5.04% 6.29% 1.01% 6.04% 27.85% 83.97%
TE
MUNICIPAL
INCOME -
CLASS B [C]
INTERMEDIA 3.04% 5.04% 6.29% -1.96% 3.04% 27.85% 83.97%
TE
MUNICIPAL
INCOME -
CLASS B
(LOAD
ADJ.)[A][C]
</TABLE>
STATE MUNICIPAL FUNDS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
CALIFORNIA 5.51% N/A 2.10% 1.14% 5.51% N/A 2.51%
MUNICIPAL
INCOME -
CLASS B [B]
CALIFORNIA 0.51% N/A -1.19% -3.83% 0.51% N/A -1.43%
MUNICIPAL
INCOME -
CLASS B
(LOAD
ADJ.)[A][B]
NEW YORK 5.47% N/A 6.24% 1.36% 5.47% N/A 10.81%
MUNICIPAL
INCOME -
CLASS B [B]
NEW YORK 0.47% N/A 3.96% -3.59% 0.47% N/A 6.81%
MUNICIPAL
INCOME -
CLASS B
(LOAD
ADJ.)[A][B]
</TABLE>
EQUITY FUNDS - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
TECHNOQU N/A N/A N/A N/A N/A N/A -0.40%
ANT
GROWTH -
CLASS C [C]
TECHNOQU N/A N/A N/A N/A N/A N/A -1.40%
ANT
GROWTH -
CLASS C
(LOAD ADJ.)
[A][C]
MID CAP - 9.09% N/A 17.28% 5.61% 9.09% N/A 22.62%
CLASS C [C]
MID CAP - 8.09% N/A 17.28% 4.61% 8.09% N/A 22.62%
CLASS C
(LOAD ADJ.)
[A][C]
EQUITY 13.94% 18.15% 18.79% 5.68% 13.94% 130.21% 459.32%
GROWTH -
CLASS C[C]
EQUITY 12.94% 18.15% 18.79% 4.68% 12.94% 130.21% 459.32%
GROWTH -
CLASS C
(LOAD ADJ.)
[A][C]
GROWTH 20.28% 17.37% 20.73% 10.50% 20.28% 122.72% 494.13%
OPPORTUNIT
IES - CLASS
C[B]
GROWTH 19.28% 17.37% 20.73% 9.50% 19.28% 122.72% 494.13%
OPPORTUNIT
IES - CLASS
C
(LOAD
ADJ.)[A][B]
LARGE CAP 20.85% N/A 18.94% 6.07% 20.85% N/A 24.84%
- CLASS C
[C]
LARGE CAP 19.85% N/A 18.94% 5.07% 19.85% N/A 24.84%
- CLASS C
(LOAD ADJ.)
[A][C]
GROWTH & N/A N/A N/A N/A N/A N/A 8.81%
INCOME -
CLASS C [C]
GROWTH & N/A N/A N/A N/A N/A N/A 7.81%
INCOME -
CLASS C
(LOAD ADJ.)
[A][C]
EQUITY 19.13% 17.38% 12.84% 8.91% 19.13% 122.82% 234.71%
INCOME -
CLASS C [C]
EQUITY 18.13% 17.38% 12.84% 7.91% 18.13% 122.82% 234.71%
INCOME -
CLASS C
(LOAD ADJ.)
[A][C]
BALANCED 16.04% 9.35% 11.15% 8.99% 16.04% 56.38% 187.85%
- CLASS
C[B]
BALANCED 15.04% 9.35% 11.15% 7.99% 15.04% 56.38% 187.85%
- CLASS C
(LOAD
ADJ.)[A][B]
</TABLE>
TAXABLE BOND FUNDS - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH YIELD 8.98% 11.46% 13.00% 2.99% 8.98% 72.06% 239.41%
- CLASS
C[B]
HIGH YIELD 7.98% 11.46% 13.00% 1.99% 7.98% 72.06% 239.41%
- CLASS C
(LOAD
ADJ.)[A][B]
STRATEGIC 13.22% N/A 13.99% 4.28% 13.22% N/A 41.82%
INCOME -
CLASS C [D]
STRATEGIC 12.22% N/A 13.99% 3.28% 12.22% N/A 41.82%
INCOME -
CLASS C
(LOAD
ADJ.)[A][D]
GOVERNME 5.18% 5.97% 7.19% 0.70% 5.18% 33.63% 100.26%
NT
INVESTMENT
- CLASS C
[B]
GOVERNMEN 4.18% 5.97% 7.19% -0.30% 4.18% 33.63% 100.26%
T
INVESTMENT
- CLASS C
(LOAD ADJ.)
[A][B]
INTERMEDIA 5.86% 5.84% 7.68% 0.70% 5.86% 32.85% 109.58%
TE BOND -
CLASS C [C]
INTERMED
IATE 4.86% 5.84% 7.68% -0.30% 4.86% 32.85% 109.58%
BOND -
CLASS C
(LOAD ADJ.)
[A][C]
SHORT 5.82% 5.34% 7.00% 2.12% 5.82% 29.71% 91.87%
FIXED-INCO
ME - CLASS
C [B]
SHORT 4.82% 5.34% 7.00% 1.12% 4.82% 29.71% 91.87%
FIXED-INCO
ME - CLASS
C
(LOAD
ADJ.)[A][B]
</TABLE>
MUNICIPAL FUNDS - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN [F] CUMULATIVE TOTAL RETURN [F]
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH 5.64% 5.99% 8.63% 1.87% 5.64% 33.78% 121.85%
INCOME
MUNICIPAL
- CLASS C
[B]
HIGH 4.64% 5.99% 8.63% 0.87% 4.64% 33.78% 121.85%
INCOME
MUNICIPAL
- CLASS C
(LOAD
ADJ.)[A][B]
INTERMEDIA 6.04% 5.04% 6.29% 1.01% 6.04% 27.85% 83.97%
TE
MUNICIPAL
INCOME -
CLASS C [C]
INTERMEDIA 5.04% 5.04% 6.29% 0.01% 5.04% 27.85% 83.97%
TE
MUNICIPAL
INCOME -
CLASS C
(LOAD
ADJ.)[A][C]
</TABLE>
+ LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS
(NOVEMBER 18, 1987 FOR GROWTH OPPORTUNITIES; OCTOBER 31, 1994 FOR
STRATEGIC INCOME; SEPTEMBER 16, 1987 FOR SHORT FIXED-INCOME AND HIGH
INCOME MUNICIPAL; MARCH 16, 1994 FOR SHORT-INTERMEDIATE MUNICIPAL
INCOME; AUGUST 21, 1995 FOR NEW YORK MUNICIPAL INCOME; FEBRUARY 20,
1996 FOR MID CAP, LARGE CAP, AND CALIFORNIA MUNICIPAL INCOME; AND
DECEMBER 31, 1996 FOR TECHNOQUANT GROWTH AND GROWTH & INCOME) THROUGH
THE SEMIANNUAL PERIODS ENDED 1997 (THROUGH THE ANNUAL PERIOD ENDED
1997 FOR MORTGAGE SECURITIES).
[A] LOAD ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING CLASS A'S
MAXIMUM FRONT-END SALES CHARGE OF 5.75% FOR THE EQUITY FUNDS; 4.75%
FOR THE BOND FUNDS; 3.75% FOR THE INTERMEDIATE-TERM BOND FUNDS; AND
1.50% FOR THE SHORT-TERM BOND FUNDS. LOAD ADJUSTED RETURNS INCLUDE THE
EFFECT OF PAYING CLASS T'S MAXIMUM FRONT-END SALES CHARGE OF 3.50% FOR
THE EQUITY FUNDS AND BOND FUNDS; 2.75% FOR THE INTERMEDIATE-TERM BOND
FUNDS; AND 1.50% FOR THE SHORT-TERM BOND FUNDS.
CLASS B'S AND CLASS C'S CDSC INCLUDED IN THE TOTAL RETURN FIGURES
ARE CALCULATED PURSUANT TO THE CDSC INFORMATION BEGINNING ON PAGE
.
[B] PERIOD ENDED APRIL 30, 1997.
[C] PERIOD ENDED MAY 31, 1997.
[D] PERIOD ENDED JUNE 30, 1997.
[E] PERIOD ENDED JULY 31, 1997.
[F] INITIAL OFFERING OF CLASS A FOR EACH FUND (EXCEPT MORTGAGE
SECURITIES, MUNICIPAL BOND, TECHNOQUANT GROWTH, AND GROWTH & INCOME)
TOOK PLACE ON SEPTEMBER 3, 1996. CLASS A RETURNS PRIOR TO SEPTEMBER 3,
1996 (EXCEPT FOR EQUITY GROWTH, EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME) ARE THOSE OF CLASS T WHICH REFLECT A
12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996) FOR EQUITY FUNDS
AND 0.15% FOR SHORT-TERM BOND FUNDS. IF CLASS A'S 12B-1 FEE HAD BEEN
REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996 FOR THE EQUITY
FUNDS WOULD HAVE BEEN HIGHER.
FOR EQUITY GROWTH, EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME, RETURNS FROM SEPTEMBER 3, 1996 THROUGH
SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.50% (0.65% PRIOR TO JANUARY 1, 1996) FOR EQUITY GROWTH AND EQUITY
INCOME AND 0.25% FOR INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL
INCOME. CLASS A RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF
INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS A'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996 THROUGH
SEPTEMBER 10, 1992 WOULD HAVE BEEN HIGHER AND TOTAL RETURNS PRIOR TO
SEPTEMBER 10, 1992 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS A, CLASS T, AND CLASS B OF MORTGAGE
SECURITIES TOOK PLACE ON MARCH 3, 1997. CLASS A, CLASS T, AND CLASS B
RETURNS PRIOR TO MARCH 3, 1997 ARE THOSE OF INITIAL CLASS WHICH HAS NO
12B-1 FEE. IF CLASS A'S, CLASS T'S, AND CLASS B'S RESPECTIVE 12B-1
FEES HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO MARCH 3, 1997 WOULD
HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS A OF MUNICIPAL BOND TOOK PLACE ON MARCH
3, 1997. CLASS A RETURNS PRIOR TO MARCH 3, 1997 THROUGH JULY 1, 1996
ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.25%. CLASS A
RETURNS PRIOR TO JULY 1, 1996 ARE THOSE OF INITIAL CLASS WHICH HAS NO
12B-1 FEE. IF CLASS A'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS
PRIOR TO MARCH 3, 1997 THROUGH JULY 1, 1996 WOULD HAVE BEEN HIGHER AND
TOTAL RETURNS PRIOR TO JULY 1, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS T AND CLASS B OF MUNICIPAL BOND TOOK
PLACE ON JULY 1, 1996. CLASS T AND CLASS B RETURNS PRIOR TO JULY 1,
1996 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS T'S
AND CLASS B'S RESPECTIVE 12B-1 FEES HAD BEEN REFLECTED, TOTAL RETURNS
PRIOR TO JULY 1, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS T OF EQUITY GROWTH, EQUITY INCOME,
INTERMEDIATE BOND, AND INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON
SEPTEMBER 10, 1992. CLASS T RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE
THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS T'S
12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 10,
1992 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF EQUITY GROWTH TOOK PLACE ON
DECEMBER 31, 1996. CLASS B RETURNS PRIOR TO DECEMBER 31, 1996 THROUGH
SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.50% (0.65% PRIOR TO JANUARY 1, 1996). CLASS B RETURNS PRIOR TO
SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1
FEE. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO
DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF BALANCED TOOK PLACE ON DECEMBER 31,
1996. CLASS B RETURNS PRIOR TO DECEMBER 31, 1996 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996).
IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO
DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF GROWTH OPPORTUNITIES TOOK PLACE ON
MARCH 3, 1997. CLASS B RETURNS PRIOR TO MARCH 3, 1997 ARE THOSE OF
CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50%(0.65% PRIOR TO JANUARY 1,
1996). IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR
TO MARCH 3, 1997 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF EQUITY INCOME, INTERMEDIATE BOND,
AND INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON JUNE 30, 1994. CLASS B
RETURNS PRIOR TO JUNE 30, 1994 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF
CLASS T WHICH REFLECT A12B-1 FEE OF 0.65% FOR EQUITY INCOME, AND 0.25%
FOR INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS B
RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL CLASS
WHICH HAS NO 12B-1 FEE. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF STRATEGIC OPPORTUNITIES TOOK PLACE
ON JUNE 30, 1994. CLASS B RETURNS PRIOR TO JUNE 30, 1994 ARE THOSE OF
CLASS T WHICH REFLECT A 12B-1 FEE OF 0.65%. IF CLASS B'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN
LOWER.
INITIAL OFFERING OF CLASS B OF HIGH YIELD, GOVERNMENT INVESTMENT,
AND HIGH INCOME MUNICIPAL TOOK PLACE ON JUNE 30, 1994. CLASS B RETURNS
PRIOR TO JUNE 30, 1994 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE
OF 0.25%. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS
PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
CLASS C OF EACH FUND (EXCEPT STRATEGIC OPPORTUNITIES, MORTGAGE
SECURITIES, MUNICIPAL BOND, SHORT-INTERMEDIATE MUNICIPAL INCOME,
CALIFORNIA MUNICIPAL INCOME, AND NEW YORK MUNICIPAL INCOME) IS
EXPECTED TO COMMENCE OPERATIONS ON OR ABOUT NOVEMBER 3, 1997.
CLASS C RETURNS FOR TECHNOQUANT GROWTH, MID CAP, LARGE CAP, AND
GROWTH & INCOME FOR THE PERIOD ENDED MAY 31, 1997 ARE THOSE OF CLASS B
WHICH REFLECT A 12B-1 FEE OF 1.00%.
CLASS C RETURNS FOR STRATEGIC INCOME FOR THE PERIOD ENDED JUNE 30,
1997 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 0.90%(1.00%
PRIOR TO JANUARY 1, 1996). IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS AFTER DECEMBER 31, 1995 WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR EQUITY GROWTH FROM MAY 31, 1997 THROUGH
DECEMBER 31, 1996 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF
1.00%. CLASS C RETURNS PRIOR TO DECEMBER 31, 1996 THROUGH SEPTEMBER
10, 1992 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50%
(0.65% PRIOR TO JANUARY 1, 1996). CLASS C RETURNS PRIOR TO SEPTEMBER
10, 1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF
CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO
DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR GROWTH OPPORTUNITIES FROM APRIL 30, 1997
THROUGH MARCH 3, 1997 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE
OF 1.00%. CLASS C RETURNS PRIOR TO MARCH 3, 1997 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996).
IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO
MARCH 3, 1997 WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR BALANCED FROM APRIL 30, 1997 THROUGH DECEMBER
31, 1996 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%.
CLASS C RETURNS PRIOR TO DECEMBER 31, 1996 ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996). IF
CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO
DECEMBER 31, 1996 WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR HIGH YIELD, GOVERNMENT INVESTMENT, AND HIGH
INCOME MUNICIPAL FROM APRIL 30, 1997 THROUGH JUNE 30, 1994 ARE THOSE
OF CLASS B WHICH REFLECT A 12B-1 FEE OF 0.90% (1.00% PRIOR TO JANUARY
1, 1996). CLASS C RETURNS PRIOR TO JUNE 30, 1994 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.25%. IF CLASS C'S 12B-1 FEE HAD BEEN
REFLECTED, TOTAL RETURNS PRIOR TO APRIL 30, 1997 THROUGH DECEMBER 31,
1995 AND PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR SHORT FIXED-INCOME FOR THE PERIOD ENDED APRIL
30, 1997 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.15%. IF
CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS WOULD HAVE BEEN
LOWER.
CLASS C RETURNS FOR EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME FROM MAY 31, 1997 THROUGH JUNE 30, 1994
ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00% FOR EQUITY
INCOME AND 0.90% (1.00% PRIOR TO JANUARY 1, 1996) FOR INTERMEDIATE
BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS C RETURNS PRIOR TO JUNE
30, 1994 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT
A 12B-1 FEE OF 0.65% FOR EQUITY INCOME AND 0.25% FOR INTERMEDIATE BOND
AND INTERMEDIATE MUNICIPAL INCOME. CLASS C RETURNS PRIOR TO SEPTEMBER
10, 1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF
CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS FOR EQUITY
INCOME PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER. IF CLASS C'S
12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS FOR INTERMEDIATE BOND AND
INTERMEDIATE MUNICIPAL INCOME PRIOR TO MAY 31, 1997 THROUGH DECEMBER
31, 1995 AND PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
The exclusion of any applicable sales charge from a performance
calculation produces a higher return.
If FMR had not reimbursed certain class expenses during these periods,
total returns would have been lower.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
Average annual total returns covering periods of less than one year
assume that performance will remain constant for the rest of the year.
Average annual and cumulative total returns usually will include the
effect of paying the maximum applicable sales charge.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields
are calculated according to a standard that is required for all stock
and bond funds. Because this differs from other accounting methods,
the quoted yield may not equal the income actually paid to
shareholders.
This difference may be significant for funds whose investments are
denominated in foreign securities.
In calculating yield, a fund may from time to time use a security's
coupon rate instead of its yield to maturity in order to reflect the
risk premium on that security. This practice will have the effect of
reducing a fund's yield.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn
before taxes to equal a tax-free yield.
THE COMPETITIVE FUNDS AVERAGE is each fund's applicable Lipper Funds
Average, which reflects the performance of mutual funds with similar
objectives. These averages, published by Lipper Analytical Services,
Inc., exclude the effect of sales loads.
STANDARD & POOR'S 500 INDEX (S&P 500 (registered trademark)) is
a widely recognized, unmanaged index of common stocks.
STANDARD & POOR'S MIDCAP 400 INDEX is a widely recognized, unmanaged
index of 400 medium-capitalization stocks.
MERRILL LYNCH HIGH YIELD MASTER INDEX is a market capitalization
weighted index of all domestic and yankee high-yield bonds. Issues
included in the index have maturities of at least one year and have a
credit rating lower than BBB-/Baa3, but are not in default.
LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX is a market
value weighted performance benchmark for government and corporate
fixed-rate debt issues with maturities between one and three years.
SALOMON BROTHERS MORTGAGE INDEX is a market capitalization weighted
index of 15- and 30-year fixed-rate securities backed by mortgage
pools of the Government National Mortgage Association (GNMA), Fannie
Mae and Federal Home Loan Mortgage Corporation (FHLMC), and Fannie Mae
and FHLMC balloon mortgages with fixed-rate coupons.
SALOMON BROTHERS TREASURY/AGENCY INDEX is a market capitalization
weighted index of U.S. Treasury and U.S. government agency securities
with fixed-rate coupons and weighted average lives of at least one
year.
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is a
market value weighted performance benchmark for government and
corporate fixed-rate debt issues with maturities between one and 10
years.
Unlike each class's returns, the total returns of each comparative
index do not include the effect of any brokerage commissions,
transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
Each class of each equity fund may quote its adjusted net asset value
including all distributions paid. This value may be averaged over
specified periods and may be used to calculate a class's moving
average.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please contact your
investment professional or, if you are investing through a
broker-dealer or insurance representative, call 1-800-522-7297 or, if
you are investing through a bank representative, call
1-800-843-3001 .
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. TechnoQuant Growth,
Equity Growth, Mid Cap, Large Cap, and Growth & Income are diversified
funds of Fidelity Advisor Series I, a Massachusetts business trust
organized on June 24, 1983. Growth Opportunities, Balanced, High
Yield, Government Investment, and Short Fixed-Income are diversified
funds and Strategic Income is a non-diversified fund of Fidelity
Advisor Series II, a Massachusetts business trust organized on April
23, 1986. Equity Income is a diversified fund of Fidelity Advisor
Series III, a Massachusetts business trust organized on May 17, 1982.
Intermediate Bond is a diversified fund of Fidelity Advisor Series IV,
a Massachusetts business trust organized on May 6, 1983. High Income
Municipal is a diversified fund and California Municipal Income and
New York Municipal Income are non-diversified funds of Fidelity
Advisor Series V, a Massachusetts business trust organized on April
23, 1986. Intermediate Municipal Income is a diversified fund and
Short-Intermediate Municipal Income is a non-diversified fund of
Fidelity Advisor Series VI, a Massachusetts business trust organized
on June 1, 1983. Strategic Opportunities is a diversified fund of
Fidelity Advisor Series VIII, a Massachusetts business trust organized
on September 22, 1983. Mortgage Securities is a diversified fund of
Fidelity Income Fund, a Massachusetts business trust organized on
August 7, 1984. Municipal Bond is a diversified fund of Fidelity
Municipal Trust, a Massachusetts business trust organized on June 22,
1984. Each trust is an open-end management investment company. There
is a remote possibility that one fund might become liable for a
misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
funds' activities, review contractual arrangements with companies that
provide services to the funds, and review the funds' performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. The transfer agent will mail proxy
materials in advance, including a voting card and information about
the proposals to be voted on. The number of votes you are entitled to
is based upon the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust,
respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business
address at 82 Devonshire Street, Boston, Massachusetts 02109. It
includes a number of different subsidiaries and divisions which
provide a variety of financial services and products. The funds employ
various Fidelity companies to perform activities required for their
operation.
The funds are managed by FMR, which chooses each fund's investments
and handles its business affairs. FMR chooses investments with the
assistance of foreign affiliates for all funds except Government
Investment, High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income.
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for TechnoQuant
Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, Balanced,
High Yield, Strategic Income, Mortgage Securities, Intermediate Bond,
and Short Fixed-Income.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for TechnoQuant
Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, Balanced,
High Yield, Strategic Income, Mortgage Securities, Intermediate Bond,
and Short Fixed-Income.
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda, serves as a sub-adviser for Strategic
Income.
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L), in London, England, serves as a sub-adviser for
Strategic Income.
(small solid bullet) Fidelity Investment Japan Limited (FIJ), in
Tokyo, Japan serves as a sub-adviser for Strategic Income.
As of September 30, 1997, FMR advised funds having approximately 33
million shareholder accounts with a total value of more than
$ 521 billion.
John Avery is associate manager of Advisor Balanced, which he has
managed since September 1997. He also manages another Fidelity fund.
Mr. Avery joined Fidelity as an analyst in 1995. Previously, he was an
analyst for Putnam Investments from 1993 to 1994. Mr. Avery received
his MBA from The Wharton School at the University of Pennsylvania in
1993.
John Carlson is Vice President and lead manager of Advisor
Strategic Income, which he has managed since August 1995. He also
manages several other Fidelity funds. Prior to joining Fidelity in
1995, Mr. Carlson was Executive Director of emerging markets at Lehman
Brothers International from 1992 through 1995.
Robert Chow is manager of Advisor Equity Income, which he has managed
since March 1996. Previously, he managed other Fidelity funds. Since
joining Fidelity in 1989, Mr. Chow has worked as an analyst, portfolio
assistant , and manager.
Katherine Collins is manager of Advisor Mid Cap, which she has managed
since January 1997. She also manages another Fidelity fund. Since
joining Fidelity in 1990, Ms. Collins has worked as an analyst and
manager.
Bettina Doulton is Vice President and lead manager of Advisor
Balanced, which she has managed since March 1996. She also manages
other Fidelity funds. Since joining Fidelity in 1986, Ms. Doulton has
worked as a research assistant, analyst , and manager.
Andrew Dudley is manager of Advisor Short Fixed-Income, which he has
managed since February 1997. Prior to joining Fidelity as a manager
in 1996, Mr. Dudley was a portfolio manager with Putnam
Investments from 1991 to 1996.
Margaret Eagle is Vice President and manager of Advisor High Yield and
Advisor Strategic Income, which she has managed since January 1987 and
January 1996, respectively. Ms. Eagle manages the high yield
investments for Advisor Strategic Income. In addition , she is a
Senior Vice President of Fidelity Trust Company. Ms. Eagle joined
Fidelity in 1980.
George Fischer is Vice President and manager of Advisor Municipal Bond
and Advisor High Income Municipal, which he has managed since October
1995 and April 1997, respectively. He also manages several other
Fidelity funds. Since joining Fidelity in 1989, Mr. Fischer has worked
as an analyst and manager.
Kevin Grant is Vice President and manager of Advisor Intermediate Bond
and Advisor Balanced, which he has managed since October 1995 and
March 1996, respectively. Mr. Grant manages the fixed-income
investments for Advisor Balanced. He also manages several other
Fidelity funds. Prior to joining Fidelity in 1993, Mr. Grant was a
vice president and chief mortgage strategist at Morgan Stanley for
three years.
Brian Hogan is manager of Advisor Strategic Income ' s emerging
market securities , which he has managed since September 1997.
Since joining Fidelity in 1994, Mr. Hogan has worked as a fixed-income
analyst, research analyst , and manager. Previously, he worked
as an analyst for Conseco Capital Management from 1993 to 1994 and
Aegon USA Investment Management from 1990 to 1993.
Curt Hollingsworth is Vice President and manager of Advisor Government
Investment and Advisor Strategic Income, both of which he has managed
since February 1997. Mr. Hollingsworth manages the domestic
investment-grade and U.S. Government investments for Advisor Strategic
Income. He also manages several other Fidelity funds. Since joining
Fidelity in 1983, Mr. Hollingsworth has worked as a fixed-income
trader and portfolio manager.
Jonathan Kelly is manager of Advisor Strategic Income ' s foreign
bond investments in developed markets, which he has managed since
January 1996. Previously, he managed other Fidelity funds. Since
joining Fidelity in 1991, Mr. Kelly has worked as a foreign bond
analyst and manager.
Tim Krochuk is manager of Advisor TechnoQuant Growth, which he has
managed since inception. He also manages another Fidelity fund.
Previously, he was a quantitative analyst. Mr. Krochuk joined Fidelity
as a research associate in 1992, after receiving a bachelor of arts
degree in economics/pre-med from Harvard University.
Harris Leviton is Vice President and manager of Advisor Strategic
Opportunities, which he has managed since March 1996. Previously, he
managed other Fidelity funds. Since joining Fidelity in 1986, he has
worked as an analyst and manager.
Norm Lind is Vice President and manager of Advisor New York Municipal
Income and Advisor Short-Intermediate Municipal Income, which he has
managed since August 1995 and October 1995, respectively. He also
manages several other Fidelity funds. Since joining Fidelity in
1986, Mr. Lind has worked as an analyst and manager.
David Murphy is Vice President and manager of Advisor Intermediate
Municipal Income, which he has managed since March 1995. He also
manages several other Fidelity funds. Mr. Murphy joined Fidelity as a
portfolio manager in 1989.
Jonathan Short is Vice President and manager of Advisor California
Municipal Income, which he has managed since inception. He also
manages several other Fidelity funds. Since joining Fidelity in 1990,
Mr. Short has worked as an analyst and manager.
Thomas Silvia is manager of Advisor Mortgage Securities . He
h as been a co-manager of the fund since February 1997. Mr.
Silvia joined Fidelity as a senior mortgage trader in 1993.
Previously, he was a quantitative analyst with Donaldson, Lufkin &
Jenrette in New York from 1990 to 1993.
Thomas Sprague is Vice President and manager of Advisor Large Cap,
which he has managed since March 1996. He also manages another
Fidelity fund. Since joining Fidelity in 1989, he has worked as an
analyst and manager.
Beth Terrana is Vice President and manager of Advisor Growth & Income,
which she has managed since inception. She also manages other Fidelity
funds. Since joining Fidelity in 1983, Ms. Terrana has worked as an
analyst, portfolio assistant , and manager.
Jennifer Uhrig is Vice President and manager of Advisor Equity Growth,
which she has managed since January 1997. She also manages another
Fidelity fund. Since joining Fidelity in 1987, Ms. Uhrig has worked as
an analyst and manager.
George Vanderheiden is Vice President and manager of Advisor Growth
Opportunities, which he has managed since November 1987. He also
manages several other Fidelity funds. Mr. Vanderheiden joined Fidelity
in 1971.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services.
Fidelity Investments Institutional Operations Company, Inc. (FIIOC)
performs transfer agent servicing functions for each class of the
Equity Funds, High Yield, Strategic Income, Mortgage Securities,
Government Investment, Intermediate Bond, and Short Fixed-Income. UMB
Bank, n.a. (UMB) is the transfer agent for High Income Municipal,
Municipal Bond, Intermediate Municipal Income, Short-Intermediate
Municipal Income, California Municipal Income, and New York Municipal
Income, although it employs FIIOC to perform these functions for each
class of each fund. UMB is located at 1010 Grand Avenue, Kansas City,
Missouri.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant
owners of a class of shares of common stock representing approximately
49% of the voting power of FMR Corp. Under the Investment Company Act
of 1940 (the 1940 Act), control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company; therefore, the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to FMR
Corp.
Fidelity International Limited (FIL), is the parent company of FIIA,
FIJ, and FIIA(U.K.)L . The Johnson family group also owns,
directly or indirectly, more than 25% of the voting common stock of
FIL.
As of September 30, 1997, approximately 41.85 % and
29.83 % of California Municipal Income's and New York
Municipal Income's total outstanding shares, respectively, were
held by an FMR affiliate .
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out a fund's transactions, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
T he value of each fund's domestic and foreign investments
varies in response to many factors. Stock values fluctuate in response
to the activities of individual companies and general market and
economic conditions. Bond values fluctuate based on changes in
interest rates, market conditions, other economic and political news,
and on their quality and maturity. In general, bond prices rise when
interest rates fall, and fall when interest rates rise. This effect is
more pronounced for longer-term securities. Lower-quality securities
offer higher yields, but also carry more risk.
Funds which invest in foreign securities have increased economic and
political risks as they are exposed to events and factors in the
various world markets. This is especially true for funds that invest
in emerging markets. Also, because many of the funds' investments are
denominated in foreign currencies, changes in the value of foreign
currencies can significantly affect a fund's share price. FMR may use
a variety of investment techniques to either increase or decrease a
fund's investment exposure to any currency.
The total return from a bond includes both income and price gains or
losses. In selecting investments for a bond fund, FMR considers a
bond's expected income together with its potential for price gains or
losses. While income is generally the most important component of bond
returns over time, a bond fund's emphasis on income does not mean the
fund invests only in the highest-yielding bonds available, or that it
can avoid losses of principal.
FMR generally focuses on assembling a portfolio of bonds that it
believes will provide the best balance between risk and return within
the range of eligible investments for the fund. FMR's evaluation of a
potential investment includes an analysis of the credit quality of the
issuer, its structural features, its current price compared to FMR's
estimate of its long-term value, and any short-term trading
opportunities resulting from market inefficiencies.
FMR may use various investment techniques to hedge a portion of the
funds' risks, but there is no guarantee that these strategies will
work as FMR intends. When you sell your shares, they may be worth more
or less than what you paid for them.
TECHNOQUANT GROWTH FUND seeks growth of capital by investing mainly in
common stocks. However, the fund has the flexibility to invest in
other types of equity securities and debt securities as well. The
fund's security selection process utilizes computer-aided,
quantitative analysis. FMR's computer models use many types of data,
but emphasize technical factors such as historical price and volume
relationships. Fundamental criteria, such as earnings estimates, and
dividend yield may also be considered.
FMR's emphasis on technical analysis can result in the fund holding
different types of stocks at different times. For example, the fund
may hold stocks of companies with large or small market capitalization
or high or low price/earnings ratios. The fund's focus may change
rapidly based on FMR's analysis of the most current information. At
times, the fund may be concentrated in a small number of market
sectors or securities.
MID CAP FUND seeks long-term growth of capital by investing primarily
in equity securities of companies with medium market capitalizations.
FMR normally invests at least 65% of the fund's total assets in these
securities. The fund has the flexibility, however, to invest the
balance in other market capitalizations and security types.
Medium market capitalization companies are those whose market
capitalization falls within the capitalization range of the S&P MidCap
400 at the time of the fund's investment. The S&P MidCap 400 Index is
an unmanaged index of medium-capitalization stocks. Companies whose
capitalization falls outside this range after purchase continue to be
considered medium-capitalized for purposes of the 65% policy. As of
December 31, 1996, the S&P MidCap 400 included companies with
capitalizations of between $192 million and $6.5 billion.
Investing in medium capitalization stocks may involve greater risk
than investing in large capitalization stocks, since they can be
subject to more abrupt or erratic movements. However, they tend to
involve less risk than stocks of small capitalization companies.
EQUITY GROWTH FUND seeks capital appreciation by investing primarily
in common and preferred stock and securities convertible into the
common stock of companies with above-average growth characteristics.
FMR normally invests at least 65% of the fund's total assets in common
and preferred stock. The fund looks for domestic and foreign companies
with above-average growth characteristics compared to the average of
the companies included in the S&P 500. The S&P 500 is a registered
trademark of Standard & Poor's.
Growth may be measured by factors such as earnings or gross sales.
Companies with strong growth potential often have new products,
technologies, distribution channels, or other opportunities. As a
general rule, these companies may include smaller, less well-known
companies, and companies whose stocks have higher than average
price/earnings (P/E) ratios. The market prices of these stocks may be
particularly sensitive to economic, market, or company news. FMR may
also pursue growth in larger or revitalized companies or companies
that hold a strong position in the market. These growth
characteristics may be found in mature or declining industries.
GROWTH OPPORTUNITIES FUND seeks capital growth by investing primarily
in common stocks and securities convertible into common stocks. FMR
normally invests at least 65% of the fund's total assets in securities
of companies that FMR believes have long-term growth potential.
Although the fund invests primarily in common stock and securities
convertible into common stock, it has the ability to purchase other
securities, such as preferred stock and bonds, that may produce
capital growth. The fund may invest in foreign securities without
limitation.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a
"special situation." FMR normally invests at least 65% of the fund's
total assets in these securities. The term "special situation" refers
to FMR's identification of an unusual, and possibly non-repetitive,
development taking place in a company or a group of companies in an
industry.
A special situation may involve one or more of the following
characteristics:
(small solid bullet) A technological advance or discovery, the
offering of a new or unique product or service, or changes in consumer
demand or consumption forecasts.
(small solid bullet) Changes in the competitive outlook or growth
potential of an industry or a company within an industry, including
changes in the scope or nature of foreign competition or the
development of an emerging industry.
(small solid bullet) New or changed management, or material changes in
management policies or corporate structure.
(small solid bullet) Significant economic or political occurrences
abroad, including changes in foreign or domestic import and tax laws
or other regulations.
(small solid bullet) Other events, including natural disasters,
favorable litigation settlements, or a major change in demographic
patterns.
"Special situations" often involve breaks with past experience. They
can be relatively aggressive investments. In seeking capital
appreciation, the fund also may invest in securities of companies not
involving a special situation, but which are companies with valuable
fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential. FMR intends to invest primarily in common stocks and
securities that are convertible into common stocks; however, it also
may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital
appreciation. The fund may invest up to 30% of its assets in foreign
investments.
LARGE CAP FUND seeks long-term growth of capital by investing
primarily in equity securities of companies with large market
capitalizations. FMR normally invests at least 65% of the fund's total
assets in these securities. The fund has the flexibility, however, to
invest the balance in other market capitalizations and security types.
FMR defines large market capitalization companies as those with market
capitalizations of $1 billion or more at the time of the fund's
investment. Companies whose capitalization falls below this level
after purchase continue to be considered large-capitalized for
purposes of the 65% policy.
Companies with large market capitalizations typically have a large
number of publicly held shares and a high trading volume, resulting in
a high degree of liquidity. These tend to be quality companies with
strong management organizations. However, large capitalization
companies may have less growth potential than smaller companies and
may be able to react less quickly to changes in the marketplace.
GROWTH & INCOME FUND seeks high total return through a combination of
current income and capital appreciation. The fund invests mainly in
equity securities. The fund expects to invest the majority of its
assets in domestic and foreign equity securities, with a focus on
those that pay current dividends and show potential earnings growth.
However, the fund may buy debt securities as well as equity securities
that are not currently paying dividends, but offer prospects for
capital appreciation or future income.
EQUITY INCOME FUND seeks a yield which exceeds the composite dividend
yield of securities comprising the S&P 500. In addition, consistent
with the primary objective of obtaining income, the fund will consider
the potential for achieving capital appreciation. FMR normally invests
at least 65% of the fund's total assets in income-producing equity
securities. For purposes of this policy, equity securities are defined
as common and preferred stocks. The balance of the fund's assets will
tend to be invested in debt securities, a high percentage of which are
expected to be convertible into common stocks.
The fund seeks to achieve a yield that beats that of the S&P 500. The
fund does not intend to invest in securities of issuers without proven
earnings and/or credit histories. Because the fund invests for income,
as well as capital appreciation, investors should not expect capital
appreciation comparable with funds which seek only capital
appreciation. The yield on the fund's assets generally will increase
or decrease from year to year in accordance with market conditions and
in relation to the changes in yields of the stocks included in the S&P
500.
BALANCED FUND seeks both income and growth of capital by investing in
a diversified portfolio of equity and fixed-income securities with
income, growth of income, and capital appreciation potential. FMR
manages the fund to maintain a balance between stocks and bonds. When
FMR's outlook is neutral, it will invest approximately 60% of the
fund's assets in stocks and other equity securities and the remainder
in bonds and other fixed-income securities. FMR may vary from this
target if it believes stocks or bonds offer more favorable
opportunities, but will always invest at least 25% of the fund's total
assets in fixed-income senior securities (including debt securities
and preferred stock).
The fund may buy securities that are not currently paying income but
offer prospects for future income. The fund may invest in securities
of foreign issuers. In selecting investments for the fund, FMR will
consider such factors as the issuer's financial strength, its outlook
for increased dividend or interest payments, and the potential for
capital gains.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible
securities and preferred stocks. FMR normally invests at least 65% of
the fund's total assets in these securities.
The fund may also invest in securities issued or guaranteed by the
U.S. Government, any state or any of their respective subdivisions,
agencies or instrumentalities, and securities of foreign issuers,
including securities of foreign governments. The fund may invest up to
35% of its total assets in equity securities, including common stocks,
warrants, and rights.
STRATEGIC INCOME FUND seeks a high level of current income by
investing primarily in debt securities. The fund may also seek capital
appreciation.
The fund invests primarily in fixed-income securities, allocated among
four general investment categories: high yield securities, U.S.
Government and investment-grade securities, emerging market
securities, and foreign developed market securities. The fund's
neutral mix, or the benchmark for its combination of investments in
each category over time, is approximately 40% high yield, 30% U.S.
Government and investment-grade, 15% emerging markets and 15% foreign
developed markets.
FMR regularly reviews the fund's allocation and makes changes
gradually over time to favor investments that it believes provide the
most favorable outlook for achieving the fund's objective. In normal
market environments, FMR expects the fund's asset allocation to
approximate the neutral mix within a range of plus or minus 10% of
assets per category. There are no absolute limits on the percent of
assets invested in each category, however, and FMR reserves the right
to change the neutral mix from time to time.
The HIGH YIELD category includes high-yielding, lower-quality debt
securities consisting mainly of U.S. securities of a quality grade
lower than BBB. The U.S. GOVERNMENT AND INVESTMENT-GRADE category
includes mortgage securities, U.S. Government securities, government
agency securities and other U.S. dollar-denominated securities of
investment-grade quality. The EMERGING MARKET category includes
corporate and governmental debt securities of issuers located in
emerging markets. The FOREIGN DEVELOPED MARKET category includes
corporate and governmental debt securities of issuers located in
developed foreign markets. These investment categories are only
general guidelines, and FMR may use its judgment as to which category
an investment falls within. The fund may also make investments that do
not fall within these categories.
By allocating its investments across different types of fixed-income
securities, the fund attempts to moderate the significant risks of
each investment category through diversification. Diversification,
when successful, can mean higher returns with decreased volatility.
However, each of the fund's four investment categories may experience
periods of volatile returns, and it is possible for all investment
categories to decline at the same time.
MORTGAGE SECURITIES FUND seeks high current income, consistent with
prudent investment risk, by investing primarily in mortgage-related
securities. When consistent with its goal, the fund may also consider
the potential for capital gain. FMR normally invests at least 65% of
the fund's total assets in mortgage-related securities. The fund may
also invest in U.S. Government securities and instruments related to
U.S. Government securities. Instruments related to U.S. Government
securities may include futures or options on U.S. Government
securities or interests in U.S. Government securities that have been
repackaged by dealers or other third parties.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to government bonds with maturities between two and 10
years. However, the reaction of mortgage securities to changes in
interest rates can be difficult to predict since mortgage securities
are subject to prepayment of principal and can be structured in a
complex manner. As of July 31, 1997, the fund's dollar-weighted
average maturity was approximately 5.8 years.
GOVERNMENT INVESTMENT FUND seeks high current income by investing in
U.S. Government securities and instruments related to U.S. Government
securities under normal conditions. FMR normally invests the fund's
assets only in U.S. Government securities, repurchase agreements, and
other instruments related to U.S. Government securities. Under normal
conditions, FMR invests at least 65% of the fund's total assets in
U.S. Government securities and repurchase agreements for U.S.
Government securities. Other instruments may include futures or
options on U.S. Government securities or interests in U.S. Government
securities that have been repackaged by dealers or other third
parties. It is important to note that neither the fund nor its yield
is guaranteed by the U.S. Government.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to government bonds with maturities between five and
12 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 8.5 years.
INTERMEDIATE BOND FUND seeks high current income by investing in U.S.
dollar-denominated investment-grade debt securities under normal
conditions. When consistent with its primary objective, the fund may
also seek capital appreciation. Although the fund can invest in
securities of any maturity, the fund normally maintains a
dollar-weighted average maturity between three and 10 years.
In determining a security's maturity for purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This can be substantially shorter
than its stated final maturity. As of November 30, 1996, the fund's
dollar-weighted average maturity was approximately 5.7 years.
SHORT FIXED-INCOME FUND seeks high current income, consistent with the
preservation of capital, by investing in U.S. dollar-denominated
investment-grade debt securities under normal conditions. Where
appropriate the fund will take advantage of opportunities to realize
capital appreciation. FMR normally invests at least 65% of the fund's
total assets in fixed-income securities of all types which may include
convertible and zero coupon securities.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of three years or less
under normal conditions. In determining a security's maturity for
purposes of calculating the fund's average maturity, an estimate of
the average time for its principal to be paid may be used. This can be
substantially shorter than its stated final maturity. As of October
31, 1996, the fund's dollar-weighted average maturity was
approximately 2.2 years.
HIGH INCOME MUNICIPAL FUND seeks high current income that is free from
federal income tax by investing primarily in investment-grade
municipal securities. The fund may also invest up to 35% of its assets
in below investment-grade securities. FMR normally invests so that at
least 80% of the fund's assets is invested in municipal securities
whose interest is free from federal income tax. In addition, FMR may
invest all of the fund's assets in municipal securities issued to
finance private activities. The interest from these securities is a
tax preference item for the purposes of the federal alternative
minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 16.4 years.
MUNICIPAL BOND FUND seeks a high level of current income that is free
from federal income tax, consistent with preservation of capital, by
investing in investment-grade municipal securities under normal
conditions. FMR normally invests so that at least 80% of the fund's
assets is invested in municipal securities whose interest is free from
federal income tax. In addition, FMR may invest all of the fund's
assets in municipal securities issued to finance private activities.
The interest from these securities is a tax preference item for
purposes of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years. As of December 31, 1996, the fund's dollar-weighted average
maturity was approximately 12.4 years.
INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income that is
free from federal income tax, consistent with the preservation of
capital, by investing in investment-grade municipal securities under
normal conditions. FMR normally invests so that at least 80% of the
fund's assets is invested in municipal securities whose interest is
free from federal income tax. In addition, FMR may invest all of the
fund's assets in municipal securities issued to finance private
activities. The interest from these securities is a tax preference
item for the purposes of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of between three and 10
years under normal conditions. FMR seeks to manage the fund so that it
generally reacts to changes in interest rates similarly to municipal
bonds with maturities between seven and 10 years. As of November 30,
1996, the fund's dollar-weighted average maturity was approximately
8.6 years.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income
that is free from federal income tax, consistent with preservation of
capital, by investing in investment-grade municipal securities under
normal conditions. FMR normally invests so that at least 80% of the
fund's assets is invested in municipal securities whose interest is
free from federal income tax. In addition, FMR may invest all of the
fund's assets in municipal securities issued to finance private
activities. The interest from these securities is a tax preference
item for the purposes of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of between two and five
years under normal conditions. As of November 30, 1996, the fund's
dollar-weighted average maturity was approximately 3.4 years.
CALIFORNIA MUNICIPAL INCOME FUND seeks high current income that is
free from federal income tax and California state personal income tax
by investing in investment-grade municipal securities under normal
conditions. FMR normally invests so that at least 80% of the fund's
assets is invested in securities whose interest is free from federal
and California income taxes. In addition, FMR may invest all of the
fund's assets in municipal securities issued to finance private
activities. The interest from these securities is a tax preference
item for the purposes of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 14.4 years.
The performance of California Municipal Income is affected by the
economic and political conditions within the state of California.
California suffered a severe economic recession between 1990-1993,
which resulted in broad-based revenue shortfalls for the State and
many local governments. California's fiscal condition has improved as
its economy has been in a sustained recovery since 1994. During the
recession, the State substantially reduced local assistance, and
further reductions could adversely affect the financial condition of
cities, counties and other government agencies facing constraints in
their own revenue collections. California's long-term credit rating
stabilized after having been reduced in the past several years.
California voters in the past have passed amendments to the California
Constitution and other measures that limit the taxing and spending
authority of California governmental entities, and future voter
initiatives could result in adverse consequences affecting California
municipal bonds.
NEW YORK MUNICIPAL INCOME FUND seeks high current income that is free
from federal income tax and New York State and City personal income
taxes by investing in investment-grade municipal securities under
normal conditions. FMR normally invests so that at least 80% of the
fund's assets is invested in securities whose interest is free from
federal and New York State and City personal income taxes. In
addition, FMR may invest all of the fund's assets in municipal
securities issued to finance private activities. The interest from
these securities is a tax preference item for the purposes of the
federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 13.3 years.
The performance of New York Municipal Income is affected by the
economic and political conditions within the state of New York. Both
New York City and State have recently experienced significant
financial difficulty, and both the City's and the State's credit
ratings are among the lowest in the country.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets
according to its investment strategy.
Each of the Equity Funds, High Yield, and Strategic Income reserves
the right to invest without limitation in preferred stocks and
investment-grade debt instruments for temporary, defensive purposes.
Each of Mortgage Securities, Government Investment, Intermediate Bond,
and Short Fixed-Income reserves the right to invest without limitation
in investment-grade money market or short-term debt instruments for
temporary, defensive purposes.
Each of High Income Municipal, Municipal Bond, Intermediate Municipal
Income, and Short-Intermediate Municipal Income do not expect to
invest in federally taxable obligations. California Municipal Income
and New York Municipal Income do not expect to invest in federally or
state taxable obligations. Each of High Income Municipal, Municipal
Bond, Intermediate Municipal Income, Short-Intermediate Municipal
Income, California Municipal Income, and New York Municipal Income,
reserves the right to invest without limitation in short-term
instruments, to hold a substantial amount of uninvested cash, or to
invest more than normally permitted in taxable obligations for
temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in
the funds' SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a fund's
investment objective and policies and that doing so will help a fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
your investment professional.
EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's
financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of total assets, each of the Equity
Funds, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal,
Municipal Bond, and Intermediate Municipal Income may not purchase
more than 10% of the outstanding voting securities of a single issuer.
For TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, and Growth & Income, this
limitation does not apply to securities of other investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes. In addition, bond prices are also
affected by the credit quality of the issuer.
Lower-quality debt securities are considered to have speculative
characteristics, and involve greater risk of default or price changes
due to changes in the issuer's creditworthiness, or they may already
be in default. The market prices of these securities may fluctuate
more than higher-quality securities and may decline significantly in
periods of general or regional economic difficulty. Lower-quality
securities may be thinly traded, making them difficult to sell
promptly at an acceptable price. Adverse publicity and changing
investor perceptions may affect the ability to obtain prices for, or
to sell these securities.
The default rate of lower-quality debt securities is likely to be
higher when issuers have difficulty meeting projected goals or
obtaining additional financing. This could occur during economic
recessions or periods of high interest rates. If an issuer defaults,
the fund may try to protect the interests of security holders if it
determines such action to be in the interest of its shareholders.
The table below provides a summary of ratings assigned to debt
holdings (not including money market instruments) in the funds'
portfolios. These figures are dollar-weighted averages of month-end
portfolio holdings during the fiscal year ended 1996, and are
presented as a percentage of total security investments. These
percentages are historical and do not necessarily indicate a fund's
current or future debt holdings.
FISCAL YEAR ENDED 1996 DEBT HOLDINGS (AS A % OF INVESTMENTS), BY
RATING
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MID** EQUITY** GROWTH* STRATEGIC*** LARGE** EQUITY** BALANCED HIGH* STRATEGIC HIGH
CAP GROWTH OPPORTU OPPORT *** INCOME*
S&P Rating NITIES UNITIES CAP INCOME
* YIELD INCOME MUNICIPAL
(AVERAGE OF TOTAL INVESTMENTS)
INVESTMENT GRADE
HIGHEST QUALITY AAA
HIGH QUALITY AA -- -- 15.44% 6.43% -- 2.80% 31.90% -- 40.55% 27.16%
UPPER-MEDIUM GRADE A
MEDIUM GRADE BBB -- -- -- -- -- 3.26% 0.30% 0.57% 22.24%
LOWER QUALITY
MODERATELY SPECULATIVE BB -- -- -- -- -- 0.45% 0.56% 11.90% 8.33% 9.89%
SPECULATIVE B 0.06% -- -- -- -- 0.06% 1.96% 47.80% 27.31% 0.53%
HIGHLY SPECULATIVE CCC -- -- -- -- -- -- 0.25% 5.40% 2.20% --
POOR QUALITY CC -- -- -- -- -- -- -- -- -- --
LOWEST QUALITY, NO INTEREST C
IN DEFAULT, IN ARREARS D -- -- -- -- -- -- -- 0.10% -- 0.38%
MID EQUITY GROWTH STRATEGIC LARGE EQUITY BALANCED HIGH STRATEGIC HIGH
CAP GROWTH OPPORTU OPPORT INCOME
S&P Rating NITIES UNITIES CAP INCOME YIELD INCOME MUNICIPAL
(AVERAGE OF TOTAL INVESTMENTS)
INVESTMENT GRADE
HIGHEST QUALITY AAA
HIGH QUALITY AA -- -- 15.44% 6.43% -- 2.80% 33.87% -- 39.06% 26.58%
UPPER-MEDIUM GRADE A
MEDIUM GRADE BAA -- -- -- -- -- 0.02% 2.29% 0.10% 0.18% 22.72%
LOWER QUALITY
MODERATELY SPECULATIVE BA -- -- -- -- -- 0.25% 0.94% 8.60% 7.21% 9.19%
SPECULATIVE B -- -- -- 0.21% -- 0.26% 2.29% 48.90% 2 1 .31% 0.18%
HIGHLY SPECULATIVE CAA -- -- -- -- -- -- 0.12% 9.70% 3.23% 0.60%
POOR QUALITY CA -- -- -- -- -- -- -- 0.03% 0.02% --
LOWEST QUALITY, NO INTEREST C -- -- -- -- -- -- -- -- -- --
IN DEFAULT, IN ARREARS --- -- -- -- -- -- -- -- -- -- --
</TABLE>
* FISCAL YEAR ENDED OCTOBER 31, 1996.
** FISCAL YEAR ENDED NOVEMBER 30, 1996.
*** FISCAL YEAR ENDED DECEMBER 31, 1996.
REFER TO THE APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUNDS DO NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P
TO DETERMINE COMPLIANCE WITH THEIR DEBT QUALITY POLICIES. SECURITIES
NOT RATED BY MOODY'S AND S&P AMOUNTED TO 0.76% OF
BALANCED'S INVESTMENTS, 1.02% OF STRATEGIC OPPORTUNITIES'
INVESTMENTS, 7.68% OF HIGH YIELD'S INVESTMENTS, 8.98% OF STRATEGIC
INCOME'S INVESTMENTS, AND 27.02% OF HIGH INCOME
MUNICIPAL'S INVESTMENTS. THESE PERCENTAGES MAY INCLUDE SECURITIES
RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS,
AS WELL AS UNRATED SECURITIES. UNRATED LOWER-QUALITY SECURITIES
AMOUNTED TO 0.76% OF BALANCED'S INVESTMENTS, 1.02% OF STRATEGIC
OPPORTUNITIES' INVESTMENTS, 7.68% OF HIGH YIELD'S INVESTMENTS, 8.97%
OF STRATEGIC INCOME'S INVESTMENTS, AND 24.84% OF
HIGH INCOME MUNICIPAL'S INVESTMENTS.
FOR FOREIGN GOVERNMENT OBLIGATIONS NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE
RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
RESTRICTIONS: For all of the Equity Funds, purchase of a debt security
is consistent with a fund's debt quality policy if it is rated at or
above the stated level by Moody's Investors Service (Moody's) or rated
in the equivalent categories by Standard & Poor's (S&P), or is unrated
but judged to be of equivalent quality by FMR.
Each of Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, and Balanced
currently intends to limit its investments in lower than Baa-quality
debt securities to less than 35% of its assets.
TechnoQuant Growth currently intends to limit its investments in lower
than Baa-quality debt securities to 5% of its assets.
Each of Mortgage Securities, Short Fixed-Income, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income normally invests in
investment-grade securities, but reserves the right to invest up to 5%
of its assets in below investment-grade securities. A security is
considered to be investment-grade if it is rated investment-grade by
Moody's, S&P, Duff & Phelps Credit Rating Co. (Duff & Phelps), or
Fitch Investors Service, L.P. (Fitch), or is unrated but judged by FMR
to be of equivalent quality.
Intermediate Bond invests only in investment-grade securities, and
will limit its investments in medium quality securities to 5% of its
assets. A security is considered to be investment-grade or medium
quality if it is rated investment-grade or medium quality,
respectively, by Moody's, S&P, Duff & Phelps, or Fitch, or is unrated
but judged by FMR to be of equivalent quality.
High Income Municipal currently intends to limit its investment in
below investment-grade securities to less than 35% of its assets and
does not currently intend to invest more than 10% of its total assets
in bonds that are in default. A security is considered to be
investment-grade if it is rated investment-grade by Moody's, S&P, Duff
& Phelps, or Fitch, or is unrated but judged by FMR to be of
equivalent quality.
Municipal Bond invests only in investment-grade securities. A security
is considered to be investment-grade if it is judged by FMR to be of
equivalent quality to securities rated Baa or BBB or higher by Moody's
or S&P, respectively. However, the fund will limit its investments in
medium quality securities as judged by FMR to one-third of its total
assets; will not purchase securities rated below Baa or BBB by Moody's
or S&P, respectively; and will not invest more than 20% of its total
assets in securities not rated by Moody's and S&P.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of
the U.S. Government. Not all U.S. Government securities are backed by
the full faith and credit of the United States. For example, U.S.
Government securities such as those issued by Fannie Mae are supported
by the instrumentality's right to borrow money from the U.S. Treasury
under certain circumstances. Other U.S. Government securities, such as
those issued by the Federal Farm Credit Banks Funding Corporation, are
supported only by the credit of the entity that issued them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
or private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities.
They may be fully or partially backed by the local government, or by
the credit of a private issuer or the current or anticipated revenues
from specific projects or assets. Because many municipal securities
are issued to finance similar types of projects, especially those
relating to education, health care, housing, transportation, and
utilities, the municipal markets can be affected by conditions in
those sectors. In addition, all municipal securities may be affected
by uncertainties regarding their tax status, legislative changes, or
rights of municipal securities holders. A municipal security may be
owned directly or through a participation interest.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms of
credit and liquidity enhancement, including letters of credit,
guarantees, puts and demand features, and insurance, provided by
foreign or domestic entities such as banks and other financial
institutions. These arrangements expose a fund to the credit risk of
the entity providing the credit or liquidity support. Changes in the
credit quality of the provider could affect the value of the security
and a fund's share price.
STATE MUNICIPAL SECURITIES include municipal obligations issued by the
state of California or New York or their respective counties,
municipalities, authorities, or other subdivisions. The ability of
issuers to repay their debt can be affected by many factors that
impact the economic vitality of either the state or a region within
the state.
Other state municipal securities include obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, Puerto
Rico, and their political subdivisions and public corporations. The
economy of Puerto Rico is closely linked to the U.S. economy and will
be affected by the strength of the U.S. dollar, interest rates, the
price stability of oil imports, and the continued existence of
favorable tax incentives.
OTHER INSTRUMENTS may include securities of closed-end investment
companies.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve additional risks and considerations. These
include risks relating to political or economic conditions in foreign
countries, fluctuations in foreign currencies, withholding or other
taxes, operational risks, increased regulatory burdens, and the
potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile than U.S.
investments.
ASSET-BACKED SECURITIES include interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities, debt securities, or consumer loans. The value of these
securities depends on many factors, including changes in interest
rates, the availability of information concerning the pool and its
structure, the credit quality of the underlying assets, the market's
perception of the servicer of the pool, and any credit enhancement
provided. In addition, these securities may be subject to prepayment
risk.
MORTGAGE SECURITIES include interests in pools of commercial or
residential mortgages, and may include complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed
securities. Mortgage securities may be issued by agencies or
instrumentalities of the U.S. Government or by private entities.
The price of a mortgage security may be significantly affected by
changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other
factors difficult to predict, making their price highly volatile.
Also, mortgage securities, especially stripped mortgage-backed
securities, are subject to prepayment risk. Securities subject to
prepayment risk generally offer less potential for gains during a
declining interest rate environment, and similar or greater potential
for loss in a rising interest rate environment.
RESTRICTIONS: Government Investment does not currently intend to
invest more than 40% of its assets in mortgage securities.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a
benchmark rate changes. Inverse floaters have interest rates that move
in the opposite direction from a benchmark, making the security's
market value more volatile.
STRIPPED SECURITIES are the separate income or principal components of
a debt security. The risks associated with stripped securities are
similar to those of other debt securities, although stripped
securities may be more volatile, and the value of certain types of
stripped securities may move in the same direction as interest rates.
U.S. Treasury securities that have been stripped by a Federal Reserve
Bank are obligations issued by the U.S. Treasury.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a
security at one price and simultaneously agrees to sell it back at a
higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund temporarily transfers possession of a portfolio instrument to
another party in return for cash. This could increase the risk of
fluctuation in the fund's yield or in the market value of its assets.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire
land, equipment, or facilities. If the municipality stops making
payments or transfers its obligations to a private entity, the
obligation could lose value or become taxable.
PUT FEATURES entitle the holder to put (sell back) an instrument to
the issuer or another party. In exchange for this benefit, a fund may
accept a lower interest rate. Demand features and standby commitments
are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For
example, industrial revenue bonds are backed by private entities, and
resource recovery bonds often involve private corporations. The
viability of a project or tax incentives could affect the value and
credit quality of these securities.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors
such as changes in real estate values and property taxes, interest
rates, cash flow of underlying real estate assets, overbuilding, and
the management skill and creditworthiness of the issuer. Real
estate-related instruments may also be affected by tax and regulatory
requirements, such as those relating to the environment.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap
agreements, purchasing indexed securities, and selling securities
short.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other
borrower. They have additional risks beyond conventional debt
securities because they may entail less legal protection for a fund,
or there may be a requirement that the fund supply additional cash to
a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: Each fund (except High Yield and Strategic Income) may
not purchase a security if, as a result, more than 10% of its assets
would be invested in illiquid securities.
Each of High Yield and Strategic Income may not purchase a security
if, as a result, more than 15% of its assets would be invested in
illiquid securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading
practices in which payment and delivery for the security take place at
a later date than is customary for that type of security. The market
value of the security could change during this period.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income (exempt from federal income tax in
the case of a municipal money market fund) while maintaining a stable
$1.00 share price. A major change in interest rates or a default on
the money market fund's investments could cause its share price to
change.
RESTRICTIONS: California Municipal Income and New York Municipal
Income do not currently intend to invest in a money market fund. High
Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and
New York Municipal Income do not currently intend to invest in
repurchase agreements.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: With respect to 75% of its total assets, each of the
Equity Funds, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal,
Municipal Bond, and Intermediate Municipal Income may not purchase a
security if, as a result, more than 5% would be invested in the
securities of any issuer. This limitation does not apply to U.S.
Government securities or, for TechnoQuant Growth, Mid Cap, Equity
Growth, Growth Opportunities, Strategic Opportunities, Large Cap, and
Growth & Income, to securities of other investment companies.
Strategic Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income are considered
non-diversified. Generally, to meet federal tax requirements at the
close of each quarter, each fund does not invest more than 25% of its
total assets in any issuer and, with respect to 50% of total assets,
does not invest more than 5% of its total assets in any issuer. These
limitations do not apply to U.S. Government securities or to
securities of other investment companies.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each of High Income Municipal, Municipal Bond, Intermediate Municipal
Income, Short-Intermediate Municipal Income, California Municipal
Income, and New York Municipal Income may invest more than 25% of its
total assets in tax-free securities that finance similar types of
projects.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If a fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a
delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a
fund's total assets; however, Government Investment, High Income
Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and
New York Municipal Income do not currently intend to make loans.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
TECHNOQUANT GROWTH FUND seeks capital growth.
MID CAP FUND seeks long-term growth of capital.
EQUITY GROWTH FUND seeks to achieve capital appreciation by investing
primarily in common and preferred stock and securities convertible
into the common stock of companies with above-average growth
characteristics.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common
stocks.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a
"special situation." Under normal conditions, the fund will invest at
least 65% of its total assets in companies involving a special
situation. FMR intends to invest primarily in common stocks and
securities that are convertible into common stocks; however, it also
may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital
appreciation. The fund may invest up to 30% of its assets in foreign
investments.
LARGE CAP FUND seeks long-term growth of capital.
GROWTH & INCOME FUND seeks high total return through a combination of
current income and capital appreciation.
EQUITY INCOME FUND seeks a yield from dividend and interest income
which exceeds the composite dividend yield on securities comprising
the S&P 500. In addition, consistent with the primary objective of
obtaining dividend and interest income, the fund will consider the
potential for achieving capital appreciation.
BALANCED FUND seeks both income and growth of capital by investing in
a diversified portfolio of equity and fixed-income securities with
income, growth of income, and capital appreciation potential.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
STRATEGIC INCOME FUND seeks a high level of current income by
investing primarily in debt securities. The fund may also seek capital
appreciation.
MORTGAGE SECURITIES FUND seeks a high level of current income,
consistent with prudent investment risk, by investing primarily in
mortgage-related securities. In seeking current income, the fund may
also consider the potential for capital gain.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by
investing primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
INTERMEDIATE BOND FUND seeks to provide a high rate of income through
investment primarily in investment-grade fixed-income obligations.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current
income, consistent with the preservation of capital, by investing
primarily in a broad range of investment-grade fixed-income
securities. Where appropriate the fund will take advantage of
opportunities to realize capital appreciation.
HIGH INCOME MUNICIPAL FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
MUNICIPAL BOND FUND seeks to provide as high a level of interest
income exempt from federal income tax as is consistent with
preservation of capital.
The fund invests in a diversified portfolio of municipal bonds. The
fund will invest primarily in municipal bonds judged by FMR to be of
high-grade or upper-medium-grade quality, although it may invest up to
one-third of its total assets in bonds judged to be of medium-grade
quality if they are suitable for achieving its investment objective.
The fund's standards for high-grade, upper-medium-grade, and
medium-grade obligations are essentially the same as Moody's and S&P's
four highest categories of Baa or BBB and above. The fund will not
invest in any bond rated lower than Baa by Moody's or BBB by S&P, but
may invest up to 20% of its total assets in bonds not rated by either
of these rating services if FMR judges them to meet the fund's quality
standards. The fund will normally invest at least 80% of its assets in
municipal securities whose interest is exempt from federal income tax.
INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of income
exempt from federal income taxes that can be obtained consistent with
the preservation of capital. The fund normally invests at least 80% of
its assets in securities whose interest is free from federal income
tax.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks as high a level of
current income, exempt from federal income tax, as is consistent with
preservation of capital. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
CALIFORNIA MUNICIPAL INCOME FUND seeks a high level of current income
free from federal income tax and California state personal income tax
by investing primarily in municipal securities. The fund normally
invests at least 80% of its assets in securities whose interest is
free from federal and California income taxes.
NEW YORK MUNICIPAL INCOME FUND seeks a high level of current income
free from federal income tax and New York State and City personal
income taxes by investing primarily in municipal securities. The fund
normally invests at least 80% of its assets in securities whose
interest is free from federal and New York State and City personal
income taxes.
With respect to 75% of its total assets, each of the Equity Funds,
High Yield, Mortgage Securities, Government Investment, Intermediate
Bond, Short Fixed-Income, High Income Municipal, Municipal Bond, and
Intermediate Municipal Income may not purchase a security if, as a
result, more than 5% would be invested in the securities of any one
issuer and may not purchase more than 10% of the outstanding voting
securities of a single issuer. These limitations do not apply to U.S.
Government securities or, for TechnoQuant Growth, Mid Cap, Equity
Growth, Growth Opportunities, Strategic Opportunities, Large Cap, and
Growth & Income, to securities of other investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in
that class's share price or dividends; they are neither billed
directly to shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services for certain of the funds. Each fund
also pays OTHER EXPENSES, which are explained on pag e .
FMR may, from time to time, agree to reimburse a fund for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a fund if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be terminated at any time without notice, can decrease a
fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Equity
Income pays a monthly management fee at an annual rate of 0.50% of its
average net assets. For each of TechnoQuant Growth, Mid Cap, Equity
Growth, Large Cap, Growth & Income, Balanced, High Yield, Strategic
Income, Mortgage Securities, Government Investment, Intermediate Bond,
Short Fixed-Income, High Income Municipal, Municipal Bond,
Intermediate Municipal Income, Short-Intermediate Municipal Income,
California Municipal Income, and New York Municipal Income, the fee is
calculated by adding a group fee rate to an individual fund fee rate,
and multiplying the result by the fund's average net assets. For
Growth Opportunities and Strategic Opportunities, the fee is
calculated by taking a basic fee and then applying a performance
adjustment. The performance adjustment either increases or decreases
the management fee, depending on how well each fund has performed
relative to the S&P 500.
The basic fee rate (calculated monthly) is calculated by adding a
group fee rate to an individual fund fee rate, and multiplying the
result by the fund's average net assets.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52% for
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, and Balanced or
0.37% for High Yield, Strategic Income, Mortgage Securities,
Government Investment, Intermediate Bond, Short Fixed-Income, High
Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and
New York Municipal Income, and it drops as total assets under
management increase.
The performance adjustment rate is calculated monthly by comparing
Growth Opportunities' and Strategic Opportunities' performance to that
of the S&P 500 over the most recent 36-month period. The difference is
translated into a dollar amount that is added to or subtracted from
the basic fee. The maximum annualized performance adjustment rate is
(plus/minus) 0.20% of a fund's average net assets over the performance
period.
For the purposes of calculating the performance adjustment for each of
Growth Opportunities and Strategic Opportunities, the fund's
investment performance will be based on the average performance of all
classes of the fund weighted according to their average assets for
each month in the performance period.
The following table states the management fee rate for each fund for
its most recent fiscal year end:
GROUP INDIVIDUAL TOTAL MANAGEMENT
FEE RATE FUND FEE FEE RATE
RATE
TECHNOQUANT 0.30% 0.30% 0.60%
GROWTH [A]
MID CAP 0.30% 0.30% 0.60%
EQUITY GROWTH 0.30% 0.30% 0.61%
GROWTH 0.30% 0.30% 0.61%
OPPORTUNITIES [B]
STRATEGIC 0.30% 0.30% 0.48%
OPPORTUNITIES [B]
LARGE CAP 0.30% 0.30% 0.60%
GROWTH & INCOME 0.30% 0.20% 0.50%
[A]
EQUITY INCOME N/A N/A 0.50%
BALANCED 0.30% 0.15%[C] 0.50%
HIGH YIELD 0.14% 0.45% 0.60%
STRATEGIC INCOME 0.14% 0.45% 0.59%
MORTGAGE SECURITIES 0.1 4 % 0.30% 0.4 4 %
GOVERNMENT 0.14% 0.30% 0.45%
INVESTMENT
INTERMEDIATE BOND 0.14% 0.30% 0.45%
SHORT FIXED-INCOME 0.14% 0.30% 0.45%
HIGH INCOME 0.14% 0.25% 0.40%
MUNICIPAL FUND
MUNICIPAL BOND 0.14% 0.25% 0.40%
FUND
INTERMEDIATE 0.14% 0.25% 0.40%
MUNICIPAL INCOME
SHORT-INTERMEDIATE 0.14% 0.25% 0.40%
MUNICIPAL INCOME
CALIFORNIA MUNICIPAL 0.14% 0.25% 0.40%
INCOME [A]
NEW YORK MUNICIPAL 0.14% 0.25% 0.40%
INCOME
[A] ESTIMATED
[B] THE BASIC FEE RATE FOR THE FISCAL YEAR ENDED 1996 WAS 0.61% FOR
GROWTH OPPORTUNITIES AND 0.61% FOR STRATEGIC OPPORTUNITIES.
[C] EFFECTIVE AUGUST 1, 1996, FMR VOLUNTARILY AGREED TO REDUCE THE
FUND'S INDIVIDUAL FUND FEE RATE FROM 0.20% TO 0.15%. IF THIS REDUCTION
WERE NOT IN EFFECT, THE TOTAL FEE WOULD HAVE BEEN 0.5 0 %.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR
Far East, FIJ and FIIA. FIIA in turn has a sub-advisory agreement with
FIIA(U.K.)L. These sub-advisers are compensated for providing FMR with
investment research and advice on issuers based outside the United
States. FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of the costs of providing these services. FMR pays
FIJ and FIIA a fee equal to 30% of its management fee rate associated
with investments for which the sub-adviser provided investment advice.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to
50% of its management fee rate with respect to a fund's investments
that the sub-adviser manages on a discretionary basis. FIIA pays
FIIA(U.K.)L a fee equal to 110% of the cost of providing these
services.
For the fiscal year ended 1996, FMR, on behalf of each fund with
sub-advisory agreements paid FMR U.K., FMR Far East, FIJ, and FIIA
fees equal to less than 0.01% of each fund's average net assets.
OTHER EXPENSES
While the management fee is a significant component of each fund's
annual operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for each class of the Equity Funds, High Yield,
Strategic Income, Mortgage Securities, Government Investment,
Intermediate Bond, and Short Fixed-Income (the Taxable Funds).
Fidelity Service Company, Inc. (FSC) calculates the net asset value
per share (NAV) and dividends for each class of the Taxable Funds and
maintains the general accounting records and administers the
securities lending program for the Taxable Funds.
For the fiscal year ended 1997, transfer agency fees (as a percentage
of average net assets) for Class A, Class T, and Class B of Mortgage
Securities amounted to 0.22 %, 0.14 %, and 0.57 %,
respectively. Pricing and bookkeeping fees (as a percentage of average
net assets) for Mortgage Securities amounted to 0.04 %. These
amounts are before expense reductions, if any.
For the fiscal year ended 1996, transfer agency and pricing and
bookkeeping fees (as a percentage of average net assets) amounted to
the following. These amounts are before expense reductions, if any.
TRANSFER AGENCY FEES PAID BY PRICING AND
BOOKKEEPING
FEES PAID
CLASS T CLASS B BY FUND
MID CAP 0.25% 0.27% 0.05%
EQUITY GROWTH 0.19% ** 0.02%
GROWTH 0.19% *** 0.01%
OPPORTUNITIES
STRATEGIC 0.22% 0.25% 0.05%
OPPORTUNITIES
LARGE CAP 0.24% 0.28% 0.22%
EQUITY INCOME 0.20% 0.22% 0.04%
BALANCED 0.19% ** 0.02%
HIGH YIELD 0.20% 0.20% 0.04%
STRATEGIC INCOME 0.22% 0.20% 0.06%
GOVERNMENT 0.21% 0.24% 0.04%
INVESTMENT
INTERMEDIATE BOND 0.19% 0.24% 0.04%
SHORT-FIXED INCOME 0.22% * 0.04%
* FUND DOES NOT OFFER CLASS B SHARES.
** CLASS COMMENCED OPERATIONS ON DECEMBER 31, 1996.
*** CLASS COMMENCED OPERATIONS ON MARCH 3, 1997.
UMB is the transfer and service agent for High Income Municipal,
Municipal Bond, Intermediate Municipal Income, Short-Intermediate
Municipal Income, California Municipal Income, and New York Municipal
Income (the Municipal Funds). UMB has entered into a sub-agreement
with FIIOC. FIIOC performs transfer agency, dividend disbursing and
shareholder servicing functions for each class of the Municipal Funds.
UMB has also entered into a sub-agreement with FSC. FSC calculates the
NAV and dividends for each class of the Municipal Funds, and maintains
the general accounting records for each fund. Under the terms of the
sub-agreements, FIIOC and FSC receive all related fees paid to UMB by
the applicable class.
For the fiscal year ended 1996, transfer agency and pricing and
bookkeeping fees paid (as a percentage of average net assets) amounted
to the following. These amounts are before expense reductions, if any.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRANSFER AGENCY FEES PAID BY PRICING AND
BOOKKEEPING
FEES PAID
CLASS T CLASS B BY FUND
HIGH INCOME 0.18% 0.16% 0.04%
MUNICIPAL
MUNICIPAL BOND 0.20% 0.46% 0.03%
INTERMEDIATE 0.17% 0.20% 0.08%
MUNICIPAL INCOME
SHORT-INTERMEDIATE 0.20% * 0.20%
MUNICIPAL INCOME
CALIFORNIA MUNICIPAL 0.22% 0.24% 0.18%
INCOME
NEW YORK MUNICIPAL 0.14% 0.17% 0.10%
INCOME
</TABLE>
* FUND DOES NOT OFFER CLASS B SHARES.
Class A shares of each fund have adopted a DISTRIBUTION AND SERVICE
PLAN. Under the plans, Class A of each fund is authorized to pay FDC a
monthly distribution fee as compensation for its services and expenses
in connection with the distribution of Class A shares. Class A of the
Equity Funds may pay FDC a distribution fee at an annual rate of 0.75%
of its average net assets, or such lesser amount as the Trustees may
determine from time to time. Class A of the Bond Funds, the
Intermediate-Term Bond Funds, and the Short-Term Bond Funds may pay
FDC a distribution fee at an annual rate of 0.40% of its average net
assets, or such lesser amount as the Trustees may determine from time
to time. Class A of the Equity Funds currently pays FDC a monthly
distribution fee at an annual rate of 0.25% o f its average net
assets throughout the month; Class A of each of the Bond Funds, the
Intermediate-Term Bond Funds, and the Short-Term Bond Funds currently
pays FDC a monthly distribution fee at an annual rate of 0.15% of its
average net assets throughout the month. Class A distribution fee
rates may be increased only when the Trustees believe that it is in
the best interests of Class A shareholders to do so.
Class T shares of each fund have adopted a DISTRIBUTION AND SERVICE
PLAN. Under the plans, Class T of each fund is authorized to pay FDC a
monthly distribution fee as compensation for its services and expenses
in connection with the distribution of Class T shares. Class T of
TechnoQuant Growth, Mid Cap, Equity Growth, Equity Income, Large Cap,
and Growth & Income may pay FDC a distribution fee at an annual rate
of 0.75% of its average net assets, or such lesser amount as the
Trustees may determine from time to time. Class T of Growth
Opportunities, Strategic Opportunities, and Balanced may pay FDC a
distribution fee at an annual rate of 0.65% of its average net assets,
or such lesser amount as the Trustees may determine from time to time.
Class T of High Yield, Strategic Income, Mortgage Securities,
Government Investment, Intermediate Bond, High Income Municipal,
Municipal Bond, Intermediate Municipal Income, Short-Intermediate
Municipal Income, California Municipal Income, and New York Municipal
Income may pay FDC a distribution fee at an annual rate of 0.40% of
its average net assets, or such lesser amount as the Trustees may
determine from time to time. Class T of Short Fixed-Income may pay FDC
a distribution fee at an annual rate of 0.15% of its average net
assets, or such lesser amount as the Trustees may determine from time
to time. Class T of each of the Equity Funds currently pays FDC a
monthly distribution fee at an annual rate of 0.50% if its average net
assets throughout the month; Class T of each of the Bond Funds and the
Intermediate-Term Bond Funds currently pays FDC a monthly distribution
fee at an annual rate of 0.25% of its average net assets throughout
the month; and Class T of each of the Short-Term Bond Funds currently
pays FDC a monthly distribution fee at an annual rate of 0.15% of its
average net assets throughout the month. Class T distribution fee
rates for all funds except Short Fixed-Income may be increased only
when the Trustees believe that it is in the best interests of Class T
shareholders to do so.
Up to the full amount of the Class A and Class T distribution fees may
be reallowed to investment professionals, as compensation for their
services in connection with the distribution of Class A and Class T
shares and for providing support services to Class A and Class T
shareholders, based upon the level of such services provided. These
services may include, without limitation, answering investor inquiries
regarding the funds; providing assistance to investors in changing
dividend options, account designations, and addresses; performing
subaccounting and maintaining Class A and Class T shareholder
accounts; processing purchase and redemption transactions, including
automatic investment and redemption of investor account balances;
providing periodic statements showing an investor's account balance
and integrating other transactions into such statements; and
performing other administrative services in support of the
shareholder.
Class B shares of each Equity Fund, Bond Fund, and Intermediate-Term
Bond Fund have adopted a DISTRIBUTION AND SERVICE PLAN. Under the
plans, Class B of each fund is authorized to pay FDC a monthly
distribution fee as compensation for its services and expenses in
connection with the distribution of Class B shares. Class B of each
fund may pay FDC a distribution fee at an annual rate of 0.75% of its
average net assets, or such lesser amount as the Trustees may
determine from time to time. Class B of the Equity Funds currently
pays FDC a monthly distribution fee at an annual rate of 0.75% of its
average net assets throughout the month. Class B of each of the Bond
Funds and the Intermediate-Term Bond Funds pays FDC a monthly
distribution fee at an annual rate of 0.65% of its average net assets,
or such lesser amount as the Trustees may determine from time to time.
Class B distribution fee rates for each of the Bond Funds and
Intermediate-Term Bond Funds may be increased only when the Trustees
believe that it is in the best interests of Class B shareholders to do
so.
In addition, pursuant to each Class B plan, Class B of each fund pays
FDC a monthly service fee at an annual rate of 0.25% of Class B's
average net assets throughout the month. The full amount of the Class
B service fee is reallowed to investment professionals for providing
personal service to and/or maintenance of Class B shareholder
accounts.
Class C shares of each fund (except Strategic Opportunities, Mortgage
Securities, Municipal Bond, Short-Intermediate Municipal Income,
California Municipal Income, and New York Municipal Income) have
adopted a DISTRIBUTION AND SERVICE PLAN. Under the plans, Class C of
each fund is authorized to pay FDC a monthly distribution fee as
compensation for its services and expenses in connection with the
distribution of Class C shares. Class C of each fund may pay FDC a
distribution fee at an annual rate of 0.75% of its average net assets,
or such lesser amount as the Trustees may determine from time to time.
Class C of each fund currently pays FDC a monthly distribution fee at
an annual rate of 0.75% of its average net assets throughout the
month. After the first year of investment, up to the full amount of
the Class C distribution fee may be reallowed to investment
professionals as compensation for their services in connection with
the distribution of Class C shares.
In addition, pursuant to each Class C plan, Class C of each fund pays
FDC a monthly service fee at an annual rate of 0.25% of Class C's
average net assets throughout the month. After the first year of
investment, the full amount of the Class C service fee is reallowed to
investment professionals for providing personal service to and/or
maintenance of Class C shareholder accounts.
The Class A, Class T, Class B, and Class C plans specifically
recognize that FMR may make payments from its management fee revenue,
past profits, or other resources to FDC for expenses incurred in
connection with the distribution of the applicable class's shares,
including payments made to investment professionals that provide
shareholder support services or engage in the sale of the applicable
class's shares. Currently, the Board of Trustees of each fund has
authorized such payments.
Each fund also pays other expenses, such as legal, audit, and
custodian fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
The portfolio turnover rate for TechnoQuant Growth is projected to
exceed 200% for its first fiscal period ending November 30, 1997. The
portfolio turnover rate for Growth & Income is not expected to exceed
200% for its first fiscal period ending November 30, 1997. These rates
will vary from year to year.
The portfolio turnover rate for the fiscal year ended 1997 was
149 % for Mortgage Securities.
The portfolio turnover rate for the fiscal year ended 1996 was 101%
for Mid Cap, 76% for Equity Growth, 33% for Growth Opportunities, 151%
for Strategic Opportunities, 59% for Large Cap, 78% for Equity Income,
223% for Balanced, 121% for High Yield, 119% for Strategic Income,
153% for Government Investment, 200% for Intermediate Bond, 124% for
Short Fixed-Income, 49% for High Income Municipal, 35% for Municipal
Bond, 35% for Intermediate Municipal Income, 62% for
Short-Intermediate Municipal Income, 21% for California Municipal
Income, and 17% for New York Municipal Income.
Portfolio turnover rates vary from year to year. High turnover rates
increase transaction costs and may increase taxable capital gains. FMR
considers these effects when evaluating the anticipated benefits of
short-term investing.
YOUR ACCOUNT
TYPES OF ACCOUNTS
When you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of
fund shares. Read your investment professional's program materials in
conjunction with this prospectus for additional service features or
fees that may apply. Certain features of the funds, such as minimum
initial or subsequent investment amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain funds or
to certain retirement accounts. For instance, municipal funds are not
available for purchase in retirement accounts. If you are investing
through a retirement account or if your employer offers a fund through
a retirement program, you may be subject to additional fees. For more
information, please refer to your program materials, contact your
employer, or call your retirement benefits number or your investment
professional directly, as appropriate.
If you have selected Fidelity Advisor funds as an investment option
through an insurance company group pension program, please contact the
provider directly.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have
two or more owners (tenants).
RETIREMENT (THE FOLLOWING OPTIONS ARE AVAILABLE ONLY FOR TAXABLE
FUNDS)
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of
legal age and under 70 1/2(checkmark)(solid club) with earned income
to invest up to $2,000 per tax year. Individuals can also invest in a
spouse's IRA if the spouse has earned income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) 401(K) PLANS allow employees of corporations of all
sizes to contribute a percentage of their wages on a tax-deferred
basis. These accounts need to be established by the trustee of the
plan.
(solid bullet) MONEY PURCHASE/PROFIT SHARING PLANS (KEOGH PLANS) are
tax-deferred pension accounts designated for employees of
unincorporated businesses or for persons who are self-employed.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide
small business owners or those with self-employed income (and their
eligible employees) with many of the same advantages as a Keogh, but
with fewer administrative requirements.
(solid bullet) SIMPLE IRAS provide small business owners and those
with self-employed income (and their eligible employees) with many of
the advantages of a 401(k) plan, but with fewer administrative
requirements.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you
can set up a custodial account under the Uniform Gifts to Minors Act
(UGMA) or the Uniform Transfers to Minors Act (UTMA). Contact your
investment professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
Contact your investment professional.
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of Class A or Class T is the
class's offering price or the class's net asset value per share (NAV),
depending on whether you pay a front-end sales charge. If you pay a
front-end sales charge, your price will be Class A's or Class T's
offering price. When you buy Class A or Class T shares at the offering
price, Fidelity deducts the appropriate sales charge and invests the
rest in Class A or Class T shares of the fund. If you qualify for a
front-end sales charge waiver, your price will be Class A's or Class
T's NAV. See "Transactions Details," page , and "Sales Charge
Reductions and Waivers," page , for explanations of how and when the
sales charge and waivers apply.
For Class B and Class C, the PRICE TO BUY ONE SHARE is the class's
NAV. Class B and Class C shares are sold without a front-end sales
charge, but may be subject to a CDSC upon redemption. See "Transaction
Details," page , for information on how the CDSC is calculated.
Your s hares will be purchased at the next offering price
or NAV, as applicable, calculated after your order is received and
accepted. Each class's offering price and NAV , as
applicable, are normally calculated each business day at
4:00 p.m. Eastern time.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Fidelity must receive payment within three business days after an
order for shares is placed; otherwise your purchase order may be
canceled and you could be held liable for resulting fees and/or
losses.
Share certificates are not available for Class A, Class T, Class B, or
Class C shares.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an
account application and mail it along with your check. If there is no
account application accompanying this prospectus, call your investment
professional or, if you are investing through a broker-dealer or
insurance representative, call 1-800-522-7279 or, if you are investing
through a bank representative, call 1-800-843-3001 .
If you are investing through a tax-sheltered retirement plan, such as
an IRA, for the first time, you will need a special application.
Contact your investment professional for more information and a
retirement account application.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you
can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place an order and wire money into your account,
(small solid bullet) Open your account by exchanging from the same
class of another Fidelity Advisor fund or from another Fidelity fund,
or
(small solid bullet) Contact your investment professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity Advisor IRA, Rollover IRA,
SEP-IRA and Keogh accounts $500
Through regular investment plans* $1,000
TO ADD TO AN ACCOUNT $250
For Fidelity Advisor IRA, Rollover IRA,
SEP-IRA and Keogh accounts $100
Through regular investment plans* $100
MINIMUM BALANCE $1,000
For Fidelity Advisor IRA, Rollover IRA,
SEP-IRA and Keogh accounts None
*AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $1,000, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED. FOR MORE INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE
REFER TO "INVESTOR SERVICES," PAGE .
Investment and account minimums are waived for purchases of Class T
shares with distributions from a Fidelity Defined Trust account.
There is no minimum account balance or initial or subsequent
investment minimum for certain retirement accounts funded through
salary deduction, or accounts opened with the proceeds of
distributions from such Fidelity retirement accounts. Refer to the
program materials for details.
PURCHASE AMOUNTS OF MORE THAN $250,000 WILL NOT BE ACCEPTED FOR CLASS
B SHARES.
PURCHASE AMOUNTS OF MORE THAN $1 MILLION WILL NOT BE ACCEPTED FOR
CLASS C SHARES.
For further information on opening an account, please consult your
investment professional or refer to the account application.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE (small solid bullet) Contact your (small solid bullet) Contact your investment professional or,
if you are investing
YOUR INVESTMENT investment through a broker-dealer or insurance representative, call
professional or, if you 1-800-522-7297. If you are investing through a bank
PROFESSIONAL are investing through representative, call 1-800-843-3001.
a broker-dealer or (small solid bullet) Exchange from the same class of another
Fidelity Advisor fund
insurance or from another Fidelity fund account with the same
representative, call registration, including name, address, and taxpayer ID number.
1-800-522-7297.
If you are investing
through a bank
representative, call
1-800-843-3001.
(small solid bullet) Exchange from the
same class of another
Fidelity Advisor fund or
from another Fidelity
fund account with the
same registration,
including name,
address, and taxpayer
ID number.
Mail
(mail_graphic) (small solid bullet) Complete and sign
the (small solid bullet) Make your check payable to the complete
name of the fund of
account application. your choice and note the applicable class. Indicate your fund
Make your check account number on your check and mail to the address printed
payable to the on your account statement.
complete name of the (small solid bullet) Exchange by mail: call, your investment
professional for
fund of your choice instructions.
and note the
applicable class. Mail
to the address
indicated on the
application.
In Person
(hand_graphic) (small solid bullet) Bring your account (small solid bullet) Bring your check to your investment
professional.
application and check
to your investment
professional.
Wire (wire_graphic)(small solid bullet) Not available (small solid bullet) Wire to:
Banker's Trust Co.
Routing # 021001033
Fidelity DART Depository
Account # 00159759
FBO: (Account name)
(Account number)
Specify the complete name of the fund of your choice, note the
applicable class, and include your account number and your
name.
Automatically
(automatic_graphic)(small solid bullet) Not available (small solid bullet) Use Fidelity Advisor Systematic Investment
Program. Sign up
for this service when opening your account, or call your
investment professional to begin the program.
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of each class is the class's NAV, minus
any applicable CDSC.
Your shares will be sold at the next NAV, minus any applicable
CDSC, calculated after your order is received and accepted. Each
class's NAV is normally calculated each business day at 4:00 p.m.
Eastern time.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the
methods described on these two pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request
must be made in writing, except for exchanges to shares of the same
class of another Fidelity Advisor fund or shares of other Fidelity
funds, which can be requested by phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least
$1,000 worth of shares in the account to keep it open (account minimum
balances do not apply to retirement and Fidelity Defined Trust
accounts).
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service
in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner,
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity Advisor account with a different registration,
(small solid bullet) You wish to set up the bank wire feature, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, signed certificates (if previously issued), and
(small solid bullet) Any other applicable requirements listed in the
following table .
Deliver your letter to your investment professional, or mail it to the
following address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
Unless otherwise instructed, Fidelity will send a check to the record
address.
CHECKWRITING
If you have a checkbook for your account in Short Fixed-Income or
Short-Intermediate Municipal Income, you may write an unlimited number
of checks. The minimum amount for a check is $500. Do not, however,
try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
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PHONE All account types except (small solid bullet) Maximum check request: $100,000.
YOUR
INVESTMENT retirement (small solid bullet) You may exchange to the same class of other
Fidelity Advisor
All account types funds or to other Fidelity funds if both accounts are registered
PROFESSIONAL with the same name(s), address, and taxpayer ID number.
PHONE
YOUR INVESTMENT
PROFESSIONAL
Mail or in Person
(mail_graphic)
(hand_graphic) Individual, Joint Tenant, (small solid bullet) The letter of instruction must be signed by all
persons required to
Sole Proprietorship, sign for transactions, exactly as their names appear on the
UGMA, UTMA account and sent to your investment professional.
(small solid bullet) The account owner should complete a retirement
distribution
form. Contact your investment professional or, if you purchased
your shares through a broker-dealer or insurance representative,
Retirement account call 1-800-522-7297. If you purchased your shares through a
bank representative, call 1-800-843-3001.
Trust (small solid bullet) The trustee must sign the letter indicating capacity
as trustee. If the
trustee's name is not in the account registration, provide a copy of
the trust document certified within the last 60 days.
Business or (small solid bullet) At least one person authorized by corporate resolution
to act on
Organization the account must sign the letter.
Executor, (small solid bullet) For instructions, contact your investment professional
or, if you
Administrator, purchased your shares through a broker-dealer or insurance
Conservator/Guardian representative, call 1-800-522-7297. If you purchased your
shares through a bank representative, call 1-800-843-3001.
Wire (wire_graphic) All account types except (small solid bullet) You must sign up for the wire feature before using it.
To verify
retirement that it is in place, contact your investment professional or, if
you purchased your shares through a broker-dealer or insurance
representative, call 1-800-522-7297. If you purchased your
shares through a bank representative, call 1-800-843-3001.
Minimum wire: $500
(small solid bullet) Your wire redemption request must be received and
accepted by
Fidelity before 4:00 p.m. Eastern time for money to be wired on
the next business day.
Check
(check_graphic) For all non-retirement (small solid bullet) Minimum check: $500.
Short Fixed-Income and (small solid bullet) All account owners must sign a signature card to receive
a
Short-Intermediate checkbook.
Municipal Income
accounts only.
</TABLE>
INVESTOR SERVICES
Fidelity Advisor funds provide a variety of services to help you
manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements after certain
transactions
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
a fund. Call your investment professional if you need additional
copies of financial reports and prospectuses.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your Class A or Class T shares and
buy the same class of shares of other Fidelity Advisor funds or Daily
Money Class shares of Treasury Fund, Prime Fund, and Tax-Exempt Fund
by telephone or in writing. You may sell your Class B shares and buy
Class B shares of other Fidelity Advisor funds or Advisor B Class
shares of Treasury Fund by telephone or in writing. You may sell your
Class C shares and buy Class C shares of other Fidelity Advisor funds
or Advisor C Class shares of Treasury Fund by telephone or in writing.
The shares you exchange will carry credit for any front-end sales
charge you previously paid in connection with their purchase.
Note that exchanges out of a fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see "Exchange Restrictions," page .
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM lets you set up
periodic redemptions from your Class A, Class T, Class B, or Class C
account. Accounts with a value of $10,000 or more in Class A, Class T,
Class B, or Class C shares are eligible for this program. Aggregate
redemptions per 12-month period from your Class B or Class C account
may not exceed 10% of the account value and are not subject to a CDSC.
Because of Class A's and Class T's front-end sales charge, you may not
want to set up a systematic withdrawal plan during a period when you
are buying Class A or Class T shares on a regular basis.
One easy way to pursue your financial goals is to invest money
regularly. Fidelity Advisor funds offer convenient services that let
you transfer money into your fund account, or between fund accounts,
automatically. While regular investment plans do not guarantee a
profit and will not protect you against loss in a declining market,
they can be an excellent way to invest for retirement, a home,
educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call your investment
professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY ADVISOR FUND
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<S> <C> <C>
MINIMUM MINIMUM
INITIAL ADDITIONAL FREQUENCY SETTING UP OR CHANGING
$1,000 $100 MONTHLY, BIMONTHLY, QUARTERLY, (SMALL SOLID BULLET) FOR A NEW ACCOUNT, COMPLETE THE APPROPRIATE
OR SEMI-ANNUALLY SECTION ON THE APPLICATION.
(SMALL SOLID BULLET) FOR EXISTING ACCOUNTS, CALL YOUR INVESTMENT
PROFESSIONAL FOR AN APPLICATION.
(SMALL SOLID BULLET) TO CHANGE THE AMOUNT OR FREQUENCY OF YOUR
INVESTMENT, CONTACT YOUR INVESTMENT
PROFESSIONAL DIRECTLY OR, IF YOU PURCHASED YOUR
SHARES THROUGH A BROKER-DEALER OR INSURANCE
REPRESENTATIVE, CALL 1-800-522-7297. IF YOU
PURCHASED YOUR SHARES THROUGH A BANK
REPRESENTATIVE, CALL 1-800-843-3001. CALL AT
LEAST 10 BUSINESS DAYS PRIOR TO YOUR NEXT
SCHEDULED INVESTMENT DATE (20 BUSINESS DAYS IF
YOU PURCHASED YOUR SHARES THROUGH A BANK).
</TABLE>
TO DIRECT DISTRIBUTIONS FROM A FIDELITY DEFINED TRUST TO CLASS T OF A
FIDELITY ADVISOR FUND
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM MINIMUM
INITIAL ADDITIONAL SETTING UP OR CHANGING
NOT NOT (SMALL SOLID BULLET) FOR A NEW OR EXISTING ACCOUNT, ASK YOUR
APPLICABLE APPLICABLE INVESTMENT PROFESSIONAL FOR THE APPROPRIATE
ENROLLMENT FORM.
(SMALL SOLID BULLET) TO CHANGE THE FUND TO WHICH YOUR DISTRIBUTIONS
ARE DIRECTED, CONTACT YOUR INVESTMENT
PROFESSIONAL FOR INSTRUCTIONS.
</TABLE>
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND OR A FIDELITY ADVISOR
FUND TO ANOTHER FIDELITY ADVISOR FUND
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, quarterly, (small solid bullet) To establish, call your investment professional
semi-annually, or annually after both accounts are opened.
(small solid bullet) To change the amount or frequency of your
investment, contact your investment
professional directly or, if you purchased your
shares through a broker-dealer or insurance
representative, call 1-800-522-7297. If you
purchased your shares through a bank
representative, call 1-800-843-3001.
(small solid bullet) The account from which the exchanges are to
be processed must have a minimum balance of
$10,000. The account into which the
exchange is being processed must have a
minimum of $1,000.
(small solid bullet) Both accounts must have the same
registrations and taxpayer ID numbers.
(small solid bullet) Call at least 2 business days prior to your next
scheduled exchange date.
</TABLE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital
gains to shareholders each year. Each fund pays capital gains, if any,
in December and may pay additional capital gains after the close of
its fiscal year. Normally, dividends for Growth & Income, Equity
Income, and Balanced are distributed in March, June, September and
December; dividends for TechnoQuant Growth, Mid Cap, Equity Growth,
and Large Cap are distributed in December and January ;
dividends for Growth Opportunities are distributed in December;
dividends for Strategic Opportunities are distributed in December and
February; dividends for Strategic Income, High Yield, Mortgage
Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income are declared daily and
paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you
want to receive your distributions. The funds offer four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
4. DIRECTED DIVIDENDS(registered trademark) PROGRAM. Your dividend
distributions will be automatically invested in the same class of
shares of another identically registered Fidelity Advisor fund. You
will be sent a check for your capital gain distributions or your
capital gain distributions will be automatically reinvested in
additional shares of the same class of the fund.
If you select distribution option 2, 3, or 4 and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed
for six months, those checks will be reinvested in your account at the
current NAV and your election may be converted to the Reinvestment
Option. To change your distribution option, call your investment
professional directly, or if you purchased your shares through a
broker-dealer or insurance representative, call 1-800-522-7297. If you
purchased your shares through a bank representative, call
1-800-843-3001.
For retirement accounts, all distributions are automatically
reinvested. When you are over 59 years old, you can receive
distributions in cash.
Shares purchased through reinvestment of dividend and capital gain
distributions are not subject to a sales charge. If you direct Class A
or Class T distributions to a fund with a front-end sales charge, you
will not pay a sales charge on those purchases.
When each of the Equity Funds deducts a distribution from its NAV, the
reinvestment price is the applicable class's NAV at the close of
business that day. Dividends from the Bond Funds, the
Intermediate-Term Bond Funds and the Short-Term Bond Funds will be
reinvested at the applicable class's NAV on the last day of the month.
Capital gain distributions from the Bond Funds, the Intermediate-Term
Bond Funds, and the Short-Term Bond Funds will be reinvested at the
NAV as of the date the applicable fund deducts the distributions from
its NAV. The mailing of distribution checks will begin within seven
days, or longer for a December ex-dividend date.
TAXES
As with any investment, you should consider how an investment in the
funds could affect you. Below are some of the funds' tax implications.
If your account is not a tax-deferred retirement account, be aware of
these tax implications.
TAXES ON DISTRIBUTIONS. Interest income that the Municipal Funds earn
is distributed to shareholders as income dividends. Interest that is
federally tax-free remains tax-free when it is distributed.
Distributions from each fund (except the Municipal Funds), however,
are subject to federal income tax. Each fund (except California
Municipal Income and New York Municipal Income) may also be subject to
state or local taxes. If you live outside the United States, your
distributions from these funds could also be taxed by the country in
which you reside.
For federal tax purposes, income and short-term capital gain s from
the Taxable Funds are distributed as dividends and taxed as ordinary
income; capital gain distributions are taxed as long-term capital
gains.
However , for shareholders of the Municipal Funds, gain on the
sale of tax-free bonds results in taxable distributions. Short-term
capital gains and a portion of the gain on bonds purchased at a
discount are distributed as dividends and taxed as ordinary
income; capital gain distributions, if any, are taxed as long-term
capital gains.
Mutual fund dividends from U.S. Government securities are generally
free from state and local income taxes. However, particular states may
limit this benefit, and some types of securities, such as repurchase
agreements and some agency-backed securities, may not qualify for the
benefit. Ginnie Mae securities and other mortgage-backed securities
are notable exceptions in most states. In addition, some states may
impose intangible property taxes. You should consult your own tax
adviser for details and up-to-date information on the tax laws in your
state.
Distributions are taxable when they are paid, whether you take them in
cash or reinvest them. However, distributions declared in December and
paid in January are taxable as if they were paid on December 31.
Every January, Fidelity will send you and the IRS a statement showing
the tax characterization of distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each of the Municipal Funds may invest up to
100% of its assets in these securities. Individuals who are subject to
the tax must report this interest on their tax returns.
A portion of the dividends from each of the Municipal Funds may be
free from state or local taxes. Income from investments in your state
are often tax-free to you. Each year, Fidelity will send you a
breakdown of each of these funds' income from each state to help you
calculate your taxes.
To the extent that California Municipal Income's income dividends are
derived from interest on California state tax-free investments, they
will be free from California state personal income tax. Distributions
derived from obligations that are not California state tax-free
obligations, as well as distributions from short or long-term capital
gains, are subject to California state personal income tax. Corporate
taxpayers should note that the fund's income dividends and other
distributions are not exempt from California state franchise or
corporate income taxes. Interest on indebtedness incurred to
purchase, or continued to carry, shares of California Municipal Income
generally will not be deductible for Calfiornia State income tax
purposes.
To the extent that New York Municipal Income's income dividends are
derived from state tax-free investments, they will be free from New
York State and City personal income taxes. Corporate taxpayers
should note that New York Municipal Income's income dividends and
other distributions are not exempt from New York State and City
franchise or corporate income taxes. In addition, interest on
indebtedness incurred to purchase, or continued to carry, shares of
New York Municipal Income generally will not be deductible for New
York State personal income tax purposes.
During the fiscal year ended 1996, 100% of the income dividends from
High Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and
New York Municipal Income was free from federal income tax. During the
fiscal year ended 1996, 100% of California Municipal Income's income
dividends was free from California taxes, and 100% of New York
Municipal Income's income dividends was free from New York taxes.
During the fiscal year ended 1996, 26.36% of High Income Municipal's,
0.79% of Municipal Bond's, 7.58% of Intermediate Municipal Income's,
18.99% of Short-Intermediate Municipal Income's, 5.5% of California
Municipal Income's, and 0.09% of New York Municipal Income's income
dividends were subject to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions-including exchanges-are
subject to capital gains tax. A capital gain or loss is the difference
between the cost of your shares and the price you receive when you
sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price.
You will also receive a consolidated transaction statement at least
quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of
tax to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount
of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a class has realized but
not yet distributed income or capital gains, you will pay the full
price for the shares and then receive a portion of the price back in
the form of a taxable distribution.
CURRENCY CONSIDERATIONS. For funds that can invest in foreign
securities, if a fund 's dividends exceed its taxable income in any
year, which is sometimes the result of currency-related losses, all or
a portion of the fund's dividends may be treated as a return of
capital to shareholders for tax purposes. To minimize the risk of a
return of capital, a fund may adjust its dividends to take currency
fluctuations into account, which may cause the dividends to vary. Any
return of capital will reduce the cost basis of your shares, which
will result in a higher reported capital gain or a lower reported
capital loss when you sell your shares. The statement you receive in
January will specify if any distributions included a return of
capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes
on a fund and its investment s, and these taxes generally will
reduce a fund's distributions. However, if you meet certain
holding period requirements with respect to your fund shares, an
offsetting tax credit may be available to you. If you do not meet
such holding period requirements, you may still be entitled to a
deduction for certain foreign taxes. In either case, your tax
statement will show more taxable income or capital gains than were
actually distributed by the fund, but will also show the amount of the
available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements,
a fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates e ach class's NAV and
offering price , as applicable, as of the close of business
of the NYSE, normally 4:00 p.m. Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class is
computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting
that class's pro rata share of the value of the applicable fund's
liabilities, subtracting the liabilities allocated to that class, and
dividing the result by the number of shares of that class that are
outstanding.
Each fund's assets are valued primarily on the basis of market
quotations or on the basis of information furnished by a pricing
service. Short-term securities with remaining maturities of sixty days
or less for which quotations and information furnished by a pricing
service are not readily available are valued on the basis of amortized
cost. This method minimizes the effect of changes in a security's
market value. Foreign securities are valued on the basis of quotations
from the primary market in which they are traded, and are translated
from the local currency into U.S. dollars using current exchange
rates. In addition, if quotations and information furnished by a
pricing service are not readily available, or if the values have been
materially affected by events occurring after the closing of a foreign
market, assets may be valued by another method that the Board of
Trustees believes accurately reflects fair value.
THE OFFERING PRICE of Class A or Class T is its NAV
divided by the difference between one and the applicable front-end
sales charge percentage. Class A has a maximum front-end
sales charge of 5.75% of the offering price for the Equity Funds;
4.75% of the offering price for the Bond Funds; 3.75% of the offering
price for the Intermediate-Term Bond Funds; and 1.50% of the offering
price for the Short-Term Bond Funds. Class T has a maximum
front-end sales charge of 3.50% of the offering price for the
Equity Funds and the Bond Funds; 2.75% of the offering price for the
Intermediate-Term Bond Funds; and 1.50% of the offering price for the
Short-Term Bond Funds.
SALES CHARGES AND INVESTMENT PROFESSIONAL
CONCESSIONS - CLASS A
EQUITY Sales Charge: Investment
FUNDS: Professional
Concession as %
of Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
Up to $49,999 5.75% 6.10% 5.00%
$50,000 to 4.50% 4.71% 3.75%
$99,999
$100,000 to 3.50% 3.63% 2.75%
$249,999
$250,000 to 2.50% 2.56% 2.00%
$499,999
$500,000 to 2.00% 2.04% 1.75%
$999,999
$1,000,000 to 1.00% 1.01% 0.75%
$24,999,999
$25,000,000 or None* None* *
more
BOND Sales Charge: Investment
FUNDS: Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
Up to $49,999 4.75% 4.99% 4.25%
$50,000 to 4.50% 4.71% 4.00%
$99,999
$100,000 to 3.50% 3.63% 3.00%
$249,999
$250,000 to 2.50% 2.56% 2.25%
$499,999
$500,000 to 2.00% 2.04% 1.75%
$999,999
$1,000,000 to 0.50% 0.50% 0.50%
$24,999,999
$25,000,000 or None* None* *
more
* SEE SECTION ENTITLED FINDER'S FEE.
INTERMEDIAT Sales Charge: Investment
E-TERM Professional
BOND Concession as % of
FUNDS: Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
Up to $49,999 3.75% 3.91% 3.00%
$50,000 to 3.00% 3.10% 2.25%
$99,999
$100,000 to 2.25% 2.30% 1.75%
$249,999
$250,000 to 1.75% 1.78% 1.50%
$499,999
$500,000 to 1.50% 1.52% 1.25%
$999,999
$1,000,000 to 0.50% 0.50% 0.50%
$24,999,999
$25,000,000 or None* None* *
more
SHORT-TERM Sales Charge: Investment
BOND Professional
FUNDS: Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
Up to $499,999 1.50% 1.52% 1.25%
$500,000 to 1.00% 1.01% 0.75%
$999,999
$1,000,000 or None* None* *
more
SALES CHARGES AND INVESTMENT PROFESSIONAL
CONCESSIONS - CLASS T
EQUITY Sales Charge: Investment
FUNDS: Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
Up to $49,999 3.50% 3.63% 3.00%
$50,000 to 3.00% 3.09% 2.50%
$99,999
$100,000 to 2.50% 2.56% 2.00%
$249,999
$250,000 to 1.50% 1.52% 1.25%
$499,999
$500,000 to 1.00% 1.01% 0.75%
$999,999
$1,000,000 or None* None* *
more
BOND Sales Charge: Investment
FUNDS: Professional
Concession as % of
Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
Up to $49,999 3.50% 3.63% 3.00%
$50,000 to 3.00% 3.09% 2.50%
$99,999
$100,000 to 2.50% 2.56% 2.00%
$249,999
$250,000 to 1.50% 1.52% 1.25%
$499,999
$500,000 to 1.00% 1.01% 0.75%
$999,999
$1,000,000 or None* None* *
more
INTERMEDIAT Sales Charge: Investment
E-TERM Professional
BOND Concession as % of
FUNDS: Offering Price
As a % of As an
Offering Price approximate %
of Net Amount
Invested
Up to $49,999 2.75% 2.83% 2.25%
$50,000 to 2.25% 2.30% 2.00%
$99,999
$100,000 to 1.75% 1.78% 1.50%
$249,999
$250,000 to 1.50% 1.52% 1.25%
$499,999
$500,000 to 1.00% 1.01% 0.75%
$999,999
$1,000,000 or None* None* *
more
SHORT-TERM Sales Charge: Investment
BOND Professional
FUNDS: Concession as % of
Offering Price
As a % of As an
Offering approximate %
Price of Net Amount
Invested
Up to $499,999 1.50% 1.52% 1.25%
$500,000 to 1.00% 1.01% 0.75%
$999,999
$1,000,000 or None* None* *
more
* SEE SECTION ENTITLED FINDER'S FEE.
FINDER'S FEE. For all funds except the Short-Term Bond Funds,
o n eligible purchases of (i) Class A shares in amounts of $1
million or more that qualify for a Class A load waiver, (ii) Class A
shares in amounts of $25 million or more, or (iii) Class T shares in
amounts of $1 million or more, investment professionals will be
compensated with a fee at the rate of 0.25% of the purchase
amount. For the Short-Term Bond Funds, on eligible purchases of
Class A or Class T shares in amounts of $1 million or more, investment
professionals will be compensated with a fee at the rate of 0.25% of
the purchase amount.
Any assets on which a finder's fee has been paid will bear a CDSC
(Class A or Class T CDSC) if they do not remain in Class A or Class T
shares of the Fidelity Advisor funds, or Daily Money Class shares of
Treasury Fund, Prime Fund, or Tax-Exempt Fund, for a period of at
least one uninterrupted year. The Class A or Class T CDSC will be
0.25% of the lesser of the cost of the Class A or Class T
shares , as applicable, at the initial date of purchase or
the value of the Class A or Class T shares , as
applicable, at redemption, not including any reinvested dividends
or capital gains. Class A and Class T shares acquired
through distributions (dividends or capital gains) will not be subject
to a Class A or Class T CDSC. In determining the applicability and
rate of any Class A or Class T CDSC at redemption, Class A or Class T
shares representing reinvested dividends and capital gains, if any,
will be redeemed first, followed by those Class A or Class T shares
that have been held for the longest period of time.
Shares held by an insurance company separate account will be
aggregated at the client (e.g., the contract holder or plan sponsor)
level, not at the separate account level. Upon request, anyone
claiming eligibility for the 0.25% fee with respect to shares held by
an insurance company separate account must provide FDC access to
records detailing purchases at the client level.
With respect to employee benefit plans, the Class A or Class T CDSC
does not apply to the following types of redemptions: (i) plan loans
or distributions or (ii) exchanges to non-Advisor fund investment
options. With respect to Individual Retirement Accounts, the Class A
or Class T CDSC does not apply to redemptions made for disability,
payment of death benefits, or required partial distributions starting
at age 70. Your investment professional should advise Fidelity at the
time your redemption order is placed if you qualify for a waiver of
the Class A or Class T CDSC.
CONTINGENT DEFERRED SALES CHARGE. Class B shares may, upon redemption,
be assessed a CDSC based on the following schedule:
EQUITY
FUNDS:
From Date of Contingent Deferred
Purchase Sales Charge
Less than 1 year 5%
1 year to less 4%
than 2 years
2 years to less 3%
than 3 years
3 years to less 3%
than 4 years
4 years to less 2%
than 5 years
5 years to less 1%
than 6 years
6 years to less 0%
than 7 years [A]
BOND
FUNDS:
From Date of Contingent Deferred
Purchase Sales Charge
Less than 1 year 5%
1 year to less 4%
than 2 years
2 years to less 3%
than 3 years
3 years to less 3%
than 4 years
4 years to less 2%
than 5 years
5 years to less 1%
than 6 years
6 years to less 0%
than 7 years [A]
INTERMEDIAT
E-TERM
BOND
FUNDS:
From Date Of Contingent Deferred
Purchase Sales Charge
Less than 1 year 3%
1 year to less 2%
than 2 years
2 years to less 1%
than 3 years
3 years to less 0%
than 4 years [B]
[A] AFTER A HOLDING PERIOD OF SEVEN YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND. SEE
"CONVERSION FEATURE" BELOW FOR MORE INFORMATION.
[B] AFTER A HOLDING PERIOD OF FOUR YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND. SEE
"CONVERSION FEATURE" BELOW FOR MORE INFORMATION.
When exchanging Class B shares of one fund for Class B shares of
another Fidelity Advisor fund or Advisor B Class shares of Treasury
Fund, your Class B shares retain the CDSC schedule in effect when they
were originally purchased.
At the time of sale, investment professionals with whom FDC has
agreements receive as compensation from FDC a concession equal to
4.00% (2.00% for the Intermediate-Term Bond Funds) of your purchase of
Class B shares.
Class C shares may, upon redemption within one year of purchase, be
assessed a CDSC of 1.00%.
At the time of sale, investment professionals with whom FDC has
agreements receive as compensation from FDC a concession equal to
1.00% of your purchase of Class C shares.
The CDSC for Class B and Class C shares will be calculated based on
the lesser of the cost of the Class B or Class C shares , as
applicable, at the initial date of purchase or the value of those
Class B or Class C shares , as applicable, at redemption,
not including any reinvested dividends or capital gains. Class B and
Class C shares acquired through distributions (dividends or capital
gains) will not be subject to a CDSC. In determining the applicability
and rate of any CDSC at redemption, Class B or Class C shares
representing reinvested dividends and capital gains, if any, will be
redeemed first, followed by those Class B or Class C shares
that have been held for the longest period of time.
CONVERSION FEATURE. After a holding period of seven years (four years
for the Intermediate-Term Bond Funds) from the initial date of
purchase, Class B shares and any capital appreciation associated with
those shares, convert automatically to Class A shares of the same
Fidelity Advisor fund. Conversion to Class A shares will be made at
NAV. At the time of conversion, a portion of the Class B shares
purchased through the reinvestment of dividends or capital gains
(Dividend Shares) will also convert to Class A shares. The portion of
Dividend Shares that will convert is determined by the ratio of your
converting Class B non-Dividend Shares to your total Class B
non-Dividend Shares.
For more information about the CDSC, including the conversion feature
and the permitted circumstances for CDSC waivers, contact your
investment professional.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class A,
Class T, Class B, or Class C shares of a fund, you may reinvest an
amount equal to all or a portion of the redemption proceeds in the
same class of the fund or any of the other Fidelity Advisor funds, at
the NAV next determined after receipt and acceptance of your
investment order, provided that such reinvestment is made within 90
days of redemption. Under these circumstances, the dollar amount of
the CDSC, if any, you paid on Class A, Class T, Class B, or Class C
shares will be reimbursed to you by reinvesting that amount in Class
A, Class T, Class B, or Class C shares, as applicable. You must
reinstate your shares into an account with the same registration. This
privilege may be exercised only once by a shareholder with respect to
a fund and certain restrictions may apply. For purposes of the CDSC
holding period schedule, the holding period of your Class A, Class T,
Class B, or Class C shares will continue as if the shares had not been
redeemed.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does
not follow 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 the confirmation statements immediately after receipt. If you do
not want the ability to redeem and exchange by telephone, call
Fidelity for instructions. Additional documentation may be required
from corporations, associations, and certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a
period of time. Each fund also reserves the right to reject any
specific purchase order, including certain purchases by exchange. See
"Exchange Restrictions" on page . Purchase orders may be refused if,
in FMR's opinion, they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased
at the next offering price or NAV , as applicable,
calculated after your order is received and accepted. Note the
following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.
(small solid bullet) Automated Purchase Orders: For shares of the Bond
Funds, the Intermediate-Term Bond Funds, and the Short-Term Bond
Funds, you begin to earn dividends as of the day your funds are
received.
(small solid bullet) Other Purchases: For shares of the Bond Funds,
the Intermediate-Term Bond Funds, and the Short-Term Bond Funds, you
begin to earn dividends as of the first business day following the day
your funds are received.
AUTOMATED PURCHASE ORDERS. Class A, Class T, Class B, and Class C
shares can be purchased or sold through investment professionals
utilizing an automated order placement and settlement system that
guarantees payment for orders on a specified date.
CONFIRMED PURCHASES. Certain financial institutions that meet FDC's
creditworthiness criteria may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow no later than
close of business on the next business day. If payment is not received
by the next business day, the order will be canceled and the financial
institution will be liable for any losses.
TO AVOID THE COLLECTION PERIOD associated with check purchases,
consider buying shares by bank wire, U.S. Postal money order, U.S.
Treasury check, Federal Reserve check, or automatic investment plans.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received and accepted ,
minus any applicable CDSC. Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares of the Bond Funds, the Intermediate-Term
Bond Funds, and the Short-Term Bond Funds will earn dividends through
the date of redemption; however, shares redeemed on a Friday or prior
to a holiday will continue to earn dividends until the next business
day.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check have been
collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares of Short Fixed-Income and
Short-Intermediate Municipal Income by writing a check and the amount
of the check is greater than the value of your account, your check
will be returned to you and you may be subject to additional charges.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500 (including any
amount paid as a sales charge), subject to an annual maximum charge of
$60.00 per shareholder. Accounts opened after September 30 will not be
subject to the fee for that year. The fee, which is payable to the
transfer agent, is designed to offset in part the relatively higher
costs of servicing smaller accounts. The fee will not be deducted from
retirement accounts (except non-prototype retirement accounts),
accounts using a systematic investment program, certain (Network Level
I and III) accounts which are maintained through National Securities
Clearing Corporation (NSCC), or if total assets in Fidelity mutual
funds exceed $50,000. Eligibility for the $50,000 waiver is determined
by aggregating Fidelity mutual fund accounts (excluding contractual
plans) maintained (i) by FIIOC and (ii) through NSCC; provided those
accounts are registered under the same primary social security number.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000 you will be
given 30 days' notice to reestablish the minimum balance. If you do
not increase your balance, Fidelity reserves the right to close your
account and send the proceeds to you. Your shares will be redeemed at
the NAV, minus any applicable CDSC, on the day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC will, at its expense, provide promotional incentives such as sales
contests and luxury trips to investment professionals who support the
sale of shares of the funds. In some instances, these incentives will
be offered only to certain types of investment professionals, such as
bank-affiliated or non-bank affiliated broker-dealers, or to
investment professionals whose representatives provide services in
connection with the sale or expected sale of significant amounts of
shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging Class A, Class
T, Class B, or Class C shares of a fund for the same class of shares
of other Fidelity Advisor funds; Class A or Class T shares for Daily
Money Class shares of Treasury Fund, Prime Fund, or Tax-Exempt Fund;
Class B shares for Advisor B Class shares of Treasury Fund; and Class
C shares for Advisor C Class shares of Treasury Fund. If you purchased
your Class T shares through certain investment professionals that have
signed an agreement with FDC, you also have the privilege of
exchanging your Class T shares for shares of Fidelity Capital
Appreciation Fund. However, you should note the following:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) If you have held Class A or Class T shares of
Short Fixed-Income or Short-Intermediate Municipal Income for less
than six months and you exchange into Class A or Class T of another
Advisor fund, you pay the difference between that fund's Class A or
Class T front-end sales charge and any Class A or Class T front-end
sales charge you may have previously paid in connection with the
shares you are exchanging.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of a fund per calendar
year. Accounts under common ownership or control, including accounts
with the same taxpayer identification number, will be counted together
for purposes of the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
in certain institutional retirement plans to conform to plan exchange
limits and Department of Labor regulations. See your plan materials
for further information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to a
fund.
(small solid bullet) Any exchanges of Class A, Class T, Class B, or
Class C shares are not subject to a CDSC.
Although the funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify these
exchange privileges in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
trading fees of up to 1.00% on exchanges. Check each fund's
prospectus for details.
SALES CHARGE REDUCTIONS AND WAIVERS
If your purchase qualifies for one of the following reduction
plans, the front-end sales charge will be reduced for purchases of
Class A and Class T shares according to the Sales Charge schedule
beginning on pag e . Please refer to the funds' SAI for
more details about each plan or call your investment professional.
If you purchased your shares through a broker-dealer or insurance
representative, call 1-800-522-7297. If you purchased your shares
through a bank representative, call 1-800-843-3001.
Your purchases and existing balances of Class A, Class T, Class B, and
Class C shares may be included in the following programs for purposes
of qualifying for a Class A or Class T front-end sales charge
reduction.
QUANTITY DISCOUNTS apply to purchases of Class A or Class T shares of
a single Fidelity Advisor fund or to combined purchases of (i) Class
A, Class T, Class B, and Class C shares of any Fidelity Advisor fund,
(ii) Advisor B Class shares and Advisor C Class shares of Treasury
Fund, and (iii) Daily Money Class shares of Treasury Fund, Prime Fund,
and Tax-Exempt Fund acquired by exchange from any Fidelity Advisor
fund. The minimum investment eligible for a quantity discount is
$50,000, except that the minimum investment for the Short-Term Bond
Funds is $500,000.
To qualify for a quantity discount, investing in a fund's Class A,
Class T, Class B, and Class C shares for several accounts at the same
time will be considered a single transaction (Combined Purchase), as
long as shares are purchased through one investment professional and
the total is at least $50,000 (or at least $500,000 for the Short-Term
Bond Funds).
RIGHTS OF ACCUMULATION let you determine your front-end sales charge
on Class A and Class T shares by adding to your new purchase of Class
A and Class T shares the value of all of the Fidelity Advisor fund
Class A, Class T, Class B, and Class C shares held by you, your
spouse, and your children under age 21. You can also add the value of
Advisor B Class shares and Advisor C Class shares of Treasury Fund,
and Daily Money Class shares of Treasury Fund, Prime Fund, and
Tax-Exempt Fund acquired by exchange from any Fidelity Advisor fund.
A LETTER OF INTENT (Letter) lets you receive the same reduced
front-end sales charge on purchases of Class A and Class T shares made
during a 13-month period as if the total amount invested during the
period had been invested in a single lump sum (see Quantity Discounts
above). Purchases of Class B and Class C shares during the 13-month
period will count toward the completion of your Letter. You must file
your non-binding Letter with Fidelity within 90 days of the start of
your purchases. Your initial investment must be at least 5% of the
amount you plan to invest. Out of the initial investment, Class A or
Class T shares equal to 5% of the dollar amount specified in your
Letter will be registered in your name and held in escrow. You will
earn income dividends and capital gain distributions on escrowed Class
A and Class T shares. Reinvested income and capital gain distributions
do not count toward the completion of your Letter. The escrow will be
released when your purchase of the total amount has been completed.
You are not obligated to complete your Letter, and in such a case,
sufficient escrowed Class A or Class T shares will be redeemed to pay
any applicable front-end sales charges.
A FRONT-END SALES CHARGE WILL NOT APPLY TO THE FOLLOWING CLASS A
SHARES:
1. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans which, in the aggregate,
have more than 200 eligible employees or a minimum of $1 million in
plan assets invested in Fidelity Advisor funds;
2. Purchased by a trust institution or bank trust department
(excluding employee benefit plan assets) that has executed a
participation agreement with FDC specifying certain asset minimums and
qualifications, and marketing restrictions. Assets managed by third
parties do not qualify for this waiver;
3. Purchased for use in a broker-dealer managed account program,
provided the broker-dealer has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing, program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver;
4. Purchased on a discretionary basis by a registered investment
advisor which is not part of an organization primarily engaged in the
brokerage business, that has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing, program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver; or
5. Purchased as part of an employee benefit plan having $25 million or
more in plan assets.
For the purpose of load waiver (3), certain broker-dealers that
otherwise meet the qualifications and asset minimums established by
FDC are not required to sign a participation agreement.
A FRONT-END SALES CHARGE WILL NOT APPLY TO THE FOLLOWING CLASS T
SHARES:
1. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC;
2. Purchased by a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director or regular employee of
FMR Corp. or FIL or their direct or indirect subsidiaries (a Fidelity
trustee or employee), the spouse of a Fidelity trustee or employee, a
Fidelity trustee or employee acting as custodian for a minor child, or
a person acting as trustee of a trust for the sole benefit of the
minor child of a Fidelity trustee or employee;
3. Purchased by a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or
more;
4. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined
for purposes of Section 501(c)(3) of the Internal Revenue Code);
5. Purchased for a Fidelity or Fidelity Advisor account with the
proceeds of a distribution (i) from an employee benefit plan that
qualified for waiver (11) below or had a minimum of $3 million in plan
assets invested in Fidelity funds; or (ii) from an insurance company
separate account qualifying under (6) below, or used to fund annuity
contracts purchased by employee benefit plans having in the aggregate
at least $3 million in plan assets invested in Fidelity funds.
(Distributions other than those transferred to an IRA account must be
transferred directly into a Fidelity account);
6. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans which, in the aggregate,
have more than 200 eligible employees or a minimum of $1 million in
plan assets invested in Fidelity Advisor funds;
7. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency;
8. Purchased with redemption proceeds from other mutual fund complexes
on which you have previously paid a front-end sales charge or CDSC;
9. Purchased by a trust institution or bank trust department
(excluding assets described in (11) and (12) below) that has executed
a participation agreement with FDC specifying certain asset minimums
and qualifications, and marketing restrictions. Assets managed by
third parties do not qualify for this waiver;
10. Purchased for use in a broker-dealer managed account program,
provided the broker-dealer has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing, program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver;
11. Purchased as part of an employee benefit plan having more than (i)
200 eligible employees or a minimum of $1 million of plan assets
invested in Fidelity Advisor funds; or (ii) 25 eligible employees or
$250,000 of plan assets invested in Fidelity Advisor funds that
subscribe to the Advisor Retirement Connection or similar
FIIS-sponsored program;
12. Purchased as part of an employee benefit plan through an
intermediary that has executed a participation agreement with FDC
specifying certain asset minimums and qualifications, and marketing,
program and trading restrictions;
13. Purchased on a discretionary basis by a registered investment
advisor which is not part of an organization primarily engaged in the
brokerage business, that has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing, program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver; or
14. Purchased with distributions of income, principal, and capital
gains from Fidelity Defined Trusts.
Employee benefits plans that purchased Class T shares load waived
prior to June 30, 1995 but do not meet the qualifications of waiver
(12) will be permitted to make additional purchases of Class T shares
on a load waived basis.
You must notify FDC in advance if you qualify for a front-end sales
charge waiver. Employee benefit plan investors must meet additional
requirements specified in the funds' SAI.
If you are investing through an insurance company separate account,
if you are investing through a trust department, if your are investing
through an account managed by a broker-dealer, or if you
have authorized an investment adviser to make investment decisions for
you, you may qualify to purchase Class A shares without a sales charge
(as described in (1), (2), (3) and (4) on page ), Class
T shares without a sales charge (as described in (6), (9), (10)
and (13) at left) , or Institutional Class shares. Because
Institutional Class shares have no sales charge, and do not pay a
12b-1 fee, Institutional Class shares are expected to have a higher
total return than Class A, Class T, Class B, and Class C
shares. Contact your investment professional to discuss if you
qualify.
THE CDSC ON CLASS B AND CLASS C SHARES MAY BE WAIVED:
1. In cases of disability or death, provided that the shares are
redeemed within one year following the death or the initial
determination of disability;
2. In connection with a total or partial redemption related to certain
distributions from retirement plans or accounts at age 701/2, which
are permitted without penalty pursuant to the Internal Revenue Code;
or
3. In connection with redemptions through the Fidelity Advisor
Systematic Withdrawal Program.
Your investment professional should call Fidelity for more
information.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related SAI,
in connection with the offer contained in this Prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the funds or FDC. This Prospectus
and the related SAI do not constitute an offer by the funds or by FDC
to sell or to buy shares of the funds to any person to whom it is
unlawful to make such offer.
APPENDIX A
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF CORPORATE BONDS
Moody's ratings for obligations with an original remaining maturity in
excess of one year fall within nine categories. They range from Aaa
(highest quality) to C (lowest quality). Moody applies numerical
modifiers of 1, 2, or 3 to each generic rating classification from Aa
through B. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS
Debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA to CCC may be modified by the addition of a plus sign (+) or minus
sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
APPENDIX B
EQUITY GROWTH - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
year total
returns+
EQUITY -0.57% 15.57% 44.84% 6.93% 64.71% 9.89% 14.85% -0.89% 39.14% 16.21%
GROWT
H -
CLASS
A
Lipper 3.08% 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
Growt
h
Funds
Averag
eA
S&P 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
500
Consu 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
mer
Price
Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.51
ROW: 2, COL: 1, VALUE: -0.5700000000000001
ROW: 3, COL: 1, VALUE: 15.57
ROW: 4, COL: 1, VALUE: 44.84
ROW: 5, COL: 1, VALUE: 6.930000000000001
ROW: 6, COL: 1, VALUE: 64.71000000000001
ROW: 7, COL: 1, VALUE: 9.890000000000001
ROW: 8, COL: 1, VALUE: 14.85
ROW: 9, COL: 1, VALUE: -0.8900000000000001
ROW: 10, COL: 1, VALUE: 39.14
ROW: 11, COL: 1, VALUE: 16.21
(LARGE SOLID BOX) EQUITY GROWTH - CLASS A
GROWTH OPPORTUNITIES - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
GROWTH 33.28% 24.14% -1.65% 42.68% 15.03% 22.17% 2.86% 33.04% 17.69%
OPPORTUNITI
ES - CLASS
A
Lipper 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
Growth
Funds
AverageA
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 33.28
ROW: 4, COL: 1, VALUE: 24.14
ROW: 5, COL: 1, VALUE: -1.65
ROW: 6, COL: 1, VALUE: 42.68
ROW: 7, COL: 1, VALUE: 15.03
ROW: 8, COL: 1, VALUE: 22.17
ROW: 9, COL: 1, VALUE: 2.86
ROW: 10, COL: 1, VALUE: 33.04
ROW: 11, COL: 1, VALUE: 17.69
(LARGE SOLID BOX) GROWTH OPPORTUNITIES - CLASS A
STRATEGIC OPPORTUNITIES - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
STRATEGIC -6.33% 22.25% 32.60% -7.17% 23.08% 12.87% 20.44% -7.17% 38.16% 1.53%
OPPORTUNITI
ES - CLASS
A
Lipper -0.03% 14.09% 26.60% -8.24% 39.91% 8.78% 15.68% -3.38% 30.34% 16.31%
Capital
Appreciatio
n FundsB
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 27.92
ROW: 2, COL: 1, VALUE: -6.33
ROW: 3, COL: 1, VALUE: 22.25
ROW: 4, COL: 1, VALUE: 32.6
ROW: 5, COL: 1, VALUE: -7.17
ROW: 6, COL: 1, VALUE: 23.08
ROW: 7, COL: 1, VALUE: 12.87
ROW: 8, COL: 1, VALUE: 20.44
ROW: 9, COL: 1, VALUE: -7.17
ROW: 10, COL: 1, VALUE: 38.16
ROW: 11, COL: 1, VALUE: 1.53
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES - CLASS A
EQUITY INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
EQUITY -2.24% 23.23% 18.43% -14.28% 29.81% 14.68% 18.03% 6.46% 32.55% 14.47%
INCOME -
CLASS A
Lipper -2.18% 16.74% 22.18% -6.78% 26.86% 9.77% 13.66% -2.54% 30.17% 18.85%
Equity
Income
Funds
AverageC
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 17.44
ROW: 2, COL: 1, VALUE: -2.24
ROW: 3, COL: 1, VALUE: 23.23
ROW: 4, COL: 1, VALUE: 18.43
ROW: 5, COL: 1, VALUE: -14.28
ROW: 6, COL: 1, VALUE: 29.81
ROW: 7, COL: 1, VALUE: 14.68
ROW: 8, COL: 1, VALUE: 18.03
ROW: 9, COL: 1, VALUE: 6.46
ROW: 10, COL: 1, VALUE: 32.55
ROW: 11, COL: 1, VALUE: 14.47
(LARGE SOLID BOX) EQUITY INCOME - CLASS A
BALANCED - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
BALANCED - 20.89% 24.60% -2.94% 34.48% 9.20% 19.66% -5.09% 14.06% 8.31%
CLASS A
Lipper 12.34% 19.57% -0.57% 26.69% 7.07% 10.91% -2.50% 25.16% 13.76%
Balanced
Funds
AverageD
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 20.89
ROW: 4, COL: 1, VALUE: 24.6
ROW: 5, COL: 1, VALUE: -2.94
ROW: 6, COL: 1, VALUE: 34.48
ROW: 7, COL: 1, VALUE: 9.199999999999999
ROW: 8, COL: 1, VALUE: 19.66
ROW: 9, COL: 1, VALUE: -5.09
ROW: 10, COL: 1, VALUE: 14.06
ROW: 11, COL: 1, VALUE: 8.310000000000001
(LARGE SOLID BOX) BALANCED -
CLASS A
HIGH YIELD - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
HIGH YIELD 17.24% 3.64% 7.30% 34.94% 23.09% 20.45% -1.49% 19.27% 13.05%
- - CLASS A
Lipper High 12.89% -0.58% -10.13% 36.91% 17.51% 18.95% -3.85% 16.43% 13.67%
Current Yield
Funds
AverageE
Merrill 13.47% 4.23% -4.35% 34.58% 18.16% 17.18% -1.17% 19.91% 11.06%
Lynch High
Yield
Master
Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 17.24
ROW: 4, COL: 1, VALUE: 3.64
ROW: 5, COL: 1, VALUE: 7.3
ROW: 6, COL: 1, VALUE: 34.94
ROW: 7, COL: 1, VALUE: 23.09
ROW: 8, COL: 1, VALUE: 20.45
ROW: 9, COL: 1, VALUE: -1.49
ROW: 10, COL: 1, VALUE: 19.27
ROW: 11, COL: 1, VALUE: 13.05
(LARGE SOLID BOX) HIGH YIELD - CLASS A
STRATEGIC INCOME - CLASS A
Calendar year total returns+ 1995 1996
STRATEGIC INCOME - CLASS A 22.02% 12.81%
Lipper Multi-Sector Income Funds 16.92% 11.74%
AverageF
Merrill Lynch High Yield Master Index 19.91% 11.06%
Consumer Price Index 2.54% 3.32%
MORTGAGE SECURITIES - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
MORTGAGE 2.70% 6.72% 13.64% 10.36% 13.61% 5.45% 6.71% 1.94% 17.02% 5.43%
SECURITIES -
CLASS A
Lipper U.S. 2.53% 7.47% 12.71% 9.52% 15.00% 6.38% 7.58% -4.83% 16.29% 3.87%
Mortgage
Funds
AverageG
Salomon 4.06% 8.81% 15.16% 10.90% 15.64% 7.37% 7.04% -1.43% 16.77% 5.37%
Brothers
Mortgage
Index
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.7
ROW: 2, COL: 1, VALUE: 6.72
ROW: 3, COL: 1, VALUE: 13.64
ROW: 4, COL: 1, VALUE: 10.36
ROW: 5, COL: 1, VALUE: 13.61
ROW: 6, COL: 1, VALUE: 5.45
ROW: 7, COL: 1, VALUE: 6.71
ROW: 8, COL: 1, VALUE: 1.94
ROW: 9, COL: 1, VALUE: 17.02
ROW: 10, COL: 1, VALUE: 5.430000000000001
ROW: 11, COL: 1, VALUE: 0.0
(LARGE SOLID BOX) MORTGAGE SECURITIES -
CLASS A
GOVERNMENT INVESTMENT - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
GOVERNMEN 6.57% 11.75% 8.37% 13.45% 6.48% 9.36% -3.85% 17.65% 1.99%
T
INVESTMENT
- - CLASS A
Lipper 6.67% 12.46% 8.22% 14.44% 6.41% 9.42% -4.64% 17.34% 1.72%
General
U.S.
Governmen
t Bond
Funds
AverageH
Salomon 7.10% 14.24% 8.78% 15.33% 7.24% 10.74% -3.40% 18.39% 2.76%
Brothers
Treasury/Ag
ency Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.57
ROW: 4, COL: 1, VALUE: 11.75
ROW: 5, COL: 1, VALUE: 8.370000000000001
ROW: 6, COL: 1, VALUE: 13.45
ROW: 7, COL: 1, VALUE: 6.48
ROW: 8, COL: 1, VALUE: 9.360000000000001
ROW: 9, COL: 1, VALUE: -3.85
ROW: 10, COL: 1, VALUE: 17.65
ROW: 11, COL: 1, VALUE: 1.99
(LARGE SOLID BOX) GOVERNMENT INVESTMENT-CLASS A
INTERMEDIATE BOND - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
INTERMEDIAT 2.32% 7.84% 12.11% 7.91% 15.16% 7.13% 11.49% -2.47% 12.19% 3.16%
E BOND -
CLASS A
Lipper 2.13% 7.06% 11.67% 7.22% 15.63% 6.88% 9.52% -3.25% 16.62% 3.12%
Intermediat
e
Investment
Grade
Bond Funds
AverageI
Lehman 3.66% 6.67% 12.77% 9.16% 14.62% 7.17% 8.79% -1.93% 15.33% 4.05%
Brothers
Intermediat
e
Governmen
t/Corporate
Bond Index
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.33
ROW: 2, COL: 1, VALUE: 2.32
ROW: 3, COL: 1, VALUE: 7.84
ROW: 4, COL: 1, VALUE: 12.11
ROW: 5, COL: 1, VALUE: 7.91
ROW: 6, COL: 1, VALUE: 15.16
ROW: 7, COL: 1, VALUE: 7.13
ROW: 8, COL: 1, VALUE: 11.49
ROW: 9, COL: 1, VALUE: -2.47
ROW: 10, COL: 1, VALUE: 12.19
ROW: 11, COL: 1, VALUE: 3.16
(LARGE SOLID BOX) INTERMEDIATE BOND - CLASS A
SHORT FIXED-INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
SHORT 6.19% 10.31% 5.87% 13.37% 7.61% 9.49% -3.37% 9.81% 4.07%
FIXED-INCO
ME - CLASS
A
Lipper Short 6.86% 10.22% 7.87% 12.88% 5.97% 6.45% -0.44% 10.84% 4.64%
Investment
Grade
Bond
Funds
AverageJ
Lehman 6.34% 10.97% 9.69% 11.83% 6.35% 5.55% 0.55% 10.96% 5.14%
Brothers
1-3 Year
Governmen
t/Corporate
Bond Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.19
ROW: 4, COL: 1, VALUE: 10.31
ROW: 5, COL: 1, VALUE: 5.87
ROW: 6, COL: 1, VALUE: 13.37
ROW: 7, COL: 1, VALUE: 7.609999999999999
ROW: 8, COL: 1, VALUE: 9.49
ROW: 9, COL: 1, VALUE: -3.37
ROW: 10, COL: 1, VALUE: 9.810000000000001
ROW: 11, COL: 1, VALUE: 4.07
(LARGE SOLID BOX) SHORT FIXED-INCOME - CLASS A
HIGH INCOME MUNICIPAL - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
HIGH 11.80% 13.09% 10.29% 12.18% 11.11% 13.79% -8.05% 16.65% 2.99%
INCOME
MUNICIPAL -
CLASS A
Lipper High 11.28% 10.11% 5.13% 11.52% 8.51% 11.41% -4.67% 15.98% 4.17%
Yield
Municipal
Bond
Funds
AverageK
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 11.8
ROW: 4, COL: 1, VALUE: 13.09
ROW: 5, COL: 1, VALUE: 10.29
ROW: 6, COL: 1, VALUE: 12.18
ROW: 7, COL: 1, VALUE: 11.11
ROW: 8, COL: 1, VALUE: 13.79
ROW: 9, COL: 1, VALUE: -8.050000000000001
ROW: 10, COL: 1, VALUE: 16.65
ROW: 11, COL: 1, VALUE: 2.99
(LARGE SOLID BOX) HIGH INCOME MUNICIPAL - CLASS
A
MUNICIPAL BOND - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
MUNICIPAL -1.56% 12.30% 9.56% 6.91% 11.91% 8.93% 13.17% -8.49% 18.15% 3.88%
BOND -
CLASS A
Lipper -0.94% 11.53% 9.65% 6.05% 12.09% 8.79% 12.47% -6.50% 16.84% 3.30%
General
Municipal
Debt Funds
AverageL
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -1.56
ROW: 3, COL: 1, VALUE: 12.3
ROW: 4, COL: 1, VALUE: 9.560000000000001
ROW: 5, COL: 1, VALUE: 6.91
ROW: 6, COL: 1, VALUE: 11.91
ROW: 7, COL: 1, VALUE: 8.93
ROW: 8, COL: 1, VALUE: 13.17
ROW: 9, COL: 1, VALUE: -8.49
ROW: 10, COL: 1, VALUE: 18.15
ROW: 11, COL: 1, VALUE: 3.88
(LARGE SOLID BOX) MUNICIPAL BOND -
CLASS A
INTERMEDIATE MUNICIPAL INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
INTERMEDIAT 2.33% 7.38% 7.79% 6.37% 9.64% 7.31% 9.43% -5.68% 14.20% 3.78%
E MUNICIPAL
INCOME -
CLASS A
Lipper 1.32% 7.57% 8.26% 6.59% 10.52% 7.80% 10.18% -3.51% 12.89% 3.70%
Intermediat
e Municipal
Debt
Funds
AverageM
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 2.33
ROW: 3, COL: 1, VALUE: 7.38
ROW: 4, COL: 1, VALUE: 7.79
ROW: 5, COL: 1, VALUE: 6.37
ROW: 6, COL: 1, VALUE: 9.639999999999999
ROW: 7, COL: 1, VALUE: 7.31
ROW: 8, COL: 1, VALUE: 9.43
ROW: 9, COL: 1, VALUE: -5.68
ROW: 10, COL: 1, VALUE: 14.2
ROW: 11, COL: 1, VALUE: 3.78
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL INCOME -
CLASS A
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A
Calendar year total 1995 1996
returns+
SHORT-INTER 8.68% 3.53%
MEDIATE
MUNICIPAL
INCOME -
CLASS A
Lipper 7.43% 3.53%
Short-Inter
mediate
Municipal
Debt Funds
AverageN
Consumer 2.54% 3.32%
Price Index
NEW YORK MUNICIPAL INCOME - CLASS A
Calendar year total 1996
returns+
NEW YORK 3.50%
MUNICIPAL -
CLASS A
Lipper New 3.15%
York
Municipal
Debt Funds
AverageO
Consumer 3.32%
Price Index
EQUITY GROWTH - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
EQUITY -0.57% 15.57% 44.84% 6.93% 64.71% 9.89% 14.85% -0.89% 39.14% 16.24%
GROWTH -
CLASS T
Lipper 3.08% 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
Growth
Funds
AverageA
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.51
ROW: 2, COL: 1, VALUE: -0.5700000000000001
ROW: 3, COL: 1, VALUE: 15.57
ROW: 4, COL: 1, VALUE: 44.84
ROW: 5, COL: 1, VALUE: 6.930000000000001
ROW: 6, COL: 1, VALUE: 64.71000000000001
ROW: 7, COL: 1, VALUE: 9.890000000000001
ROW: 8, COL: 1, VALUE: 14.85
ROW: 9, COL: 1, VALUE: -0.8900000000000001
ROW: 10, COL: 1, VALUE: 39.14
ROW: 11, COL: 1, VALUE: 16.24
(LARGE SOLID BOX) EQUITY GROWTH - CLASS T
GROWTH OPPORTUNITIES - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
GROWTH 33.28% 24.14% -1.65% 42.68% 15.03% 22.17% 2.86% 33.04% 17.73%
OPPORTUNITI
ES - CLASS T
Lipper 14.79% 26.91% -4.49% 36.7 0 % 8.08% 10.63% -2.17% 30.79% 19.24%
Growth
Funds
AverageA
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 33.28
ROW: 4, COL: 1, VALUE: 24.14
ROW: 5, COL: 1, VALUE: -1.65
ROW: 6, COL: 1, VALUE: 42.68
ROW: 7, COL: 1, VALUE: 15.03
ROW: 8, COL: 1, VALUE: 22.17
ROW: 9, COL: 1, VALUE: 2.86
ROW: 10, COL: 1, VALUE: 33.04
ROW: 11, COL: 1, VALUE: 17.73
(LARGE SOLID BOX) GROWTH OPPORTUNITIES - CLASS T
STRATEGIC OPPORTUNITIES - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
STRATEGIC -6.33% 22.25% 32.60% -7.17% 23.08% 12.87% 20.44% -7.17% 38.16% 1.53%
OPPORTUNITI
ES - CLASS T
Lipper -0.03% 14.09% 26.60% -8.24% 39.91% 8.78% 15.68% -3.38% 30.34% 16.31%
Capital
Appreciatio
n FundsB
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 27.92
ROW: 2, COL: 1, VALUE: -6.33
ROW: 3, COL: 1, VALUE: 22.25
ROW: 4, COL: 1, VALUE: 32.6
ROW: 5, COL: 1, VALUE: -7.17
ROW: 6, COL: 1, VALUE: 23.08
ROW: 7, COL: 1, VALUE: 12.87
ROW: 8, COL: 1, VALUE: 20.44
ROW: 9, COL: 1, VALUE: -7.17
ROW: 10, COL: 1, VALUE: 38.16
ROW: 11, COL: 1, VALUE: 1.53
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES - CLASS T
EQUITY INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
EQUITY -2.24% 23.23% 18.43% -14.28% 29.81% 14.68% 18.03% 6.46% 32.55% 14.61%
INCOME -
CLASS T
Lipper -2.18% 16.74% 22.18% -6.78% 26.86% 9.77% 13.66% -2.54% 30.17% 18.85%
Equity
Income
Funds
AverageC
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 17.44
ROW: 2, COL: 1, VALUE: -2.24
ROW: 3, COL: 1, VALUE: 23.23
ROW: 4, COL: 1, VALUE: 18.43
ROW: 5, COL: 1, VALUE: -14.28
ROW: 6, COL: 1, VALUE: 29.81
ROW: 7, COL: 1, VALUE: 14.68
ROW: 8, COL: 1, VALUE: 18.03
ROW: 9, COL: 1, VALUE: 6.46
ROW: 10, COL: 1, VALUE: 32.55
ROW: 11, COL: 1, VALUE: 14.61
(LARGE SOLID BOX) EQUITY INCOME - CLASS T
BALANCED - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
BALANCED - 20.89% 24.60% -2.94% 34.48% 9.20% 19.66% -5.09% 14.06% 8.43%
CLASS T
Lipper 12.34% 19.57% -0.57% 26.69% 7.07% 10.91% -2.50% 25.16% 13.76%
Balanced
Funds
AverageD
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 20.89
ROW: 4, COL: 1, VALUE: 24.6
ROW: 5, COL: 1, VALUE: -2.94
ROW: 6, COL: 1, VALUE: 34.48
ROW: 7, COL: 1, VALUE: 9.199999999999999
ROW: 8, COL: 1, VALUE: 19.66
ROW: 9, COL: 1, VALUE: -5.09
ROW: 10, COL: 1, VALUE: 14.06
ROW: 11, COL: 1, VALUE: 8.43
(LARGE SOLID BOX) BALANCED -
CLASS T
HIGH YIELD - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
HIGH YIELD 17.24% 3.64% 7.30% 34.94% 23.09% 20.45% -1.49% 19.27% 13.26%
- - CLASS T
Lipper High 12.89% -0.58% -10.13% 36.91% 17.51% 18.95% -3.85% 16.43% 13.67%
Current Yield
Funds
AverageE
Merrill 13.47% 4.23% -4.35% 34.58% 18.16% 17.18% -1.17% 19.91% 11.06%
Lynch High
Yield
Master
Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 17.24
ROW: 4, COL: 1, VALUE: 3.64
ROW: 5, COL: 1, VALUE: 7.3
ROW: 6, COL: 1, VALUE: 34.94
ROW: 7, COL: 1, VALUE: 23.09
ROW: 8, COL: 1, VALUE: 20.45
ROW: 9, COL: 1, VALUE: -1.49
ROW: 10, COL: 1, VALUE: 19.27
ROW: 11, COL: 1, VALUE: 13.26
(LARGE SOLID BOX) HIGH YIELD - CLASS T
STRATEGIC INCOME - CLASS T
Calendar year total 1995 1996
returns+
STRATEGIC 22.02% 12.89%
INCOME -
CLASS T
Lipper 16.92% 11.74%
Multi-Sector
Income
Funds
AverageF
Merrill 19.91% 11.06%
Lynch High
Yield
Master
Index
Consumer 2.54% 3.32%
Price Index
MORTGAGE SECURITIES - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
MORTGAGE 2.70% 6.72% 13.64% 10.36% 13.61% 5.45% 6.71% 1.94% 17.02% 5.43%
SECURITIES -
CLASS T
Lipper U.S. 2.53% 7.47% 12.71% 9.52% 15.00% 6.38% 7.58% -4.83% 16.29% 3.87%
Mortgage
Funds
AverageG
Salomon 4.06% 8.81% 15.16% 10.90% 15.64% 7.37% 7.04% -1.43% 16.77% 5.37%
Brothers
Mortgage
Index
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.7
ROW: 2, COL: 1, VALUE: 6.72
ROW: 3, COL: 1, VALUE: 13.64
ROW: 4, COL: 1, VALUE: 10.36
ROW: 5, COL: 1, VALUE: 13.61
ROW: 6, COL: 1, VALUE: 5.45
ROW: 7, COL: 1, VALUE: 6.71
ROW: 8, COL: 1, VALUE: 1.94
ROW: 9, COL: 1, VALUE: 17.02
ROW: 10, COL: 1, VALUE: 5.430000000000001
ROW: 11, COL: 1, VALUE: 0.0
(LARGE SOLID BOX) MORTGAGE SECURITIES -
CLASS T
GOVERNMENT INVESTMENT - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
GOVERNMEN 6.57% 11.75% 8.37% 13.45% 6.48% 9.36% -3.85% 17.65% 2.12%
T
INVESTMENT
- - CLASS T
Lipper 6.67% 12.46% 8.22% 14.44% 6.41% 9.42% -4.64% 17.34% 1.72%
General
U.S.
Governmen
t Bond
Funds
AverageH
Salomon 7.10% 14.24% 8.78% 15.33% 7.24% 10.74% -3.40% 18.39% 2.76%
Brothers
Treasury/Ag
ency Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.57
ROW: 4, COL: 1, VALUE: 11.75
ROW: 5, COL: 1, VALUE: 8.370000000000001
ROW: 6, COL: 1, VALUE: 13.45
ROW: 7, COL: 1, VALUE: 6.48
ROW: 8, COL: 1, VALUE: 9.360000000000001
ROW: 9, COL: 1, VALUE: -3.85
ROW: 10, COL: 1, VALUE: 17.65
ROW: 11, COL: 1, VALUE: 2.12
(LARGE SOLID BOX) GOVERNMENT INVESTMENT - CLASS T
INTERMEDIATE BOND - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
INTERMEDIAT 2.32% 7.84% 12.11% 7.91% 15.16% 7.13% 11.49% -2.47% 12.19% 3.41%
E BOND -
CLASS T
Lipper 2.13% 7.06% 11.67% 7.22% 15.63% 6.88% 9.52% -3.25% 16.62% 3.12%
Intermediat
e
Investment
Grade
Bond Funds
AverageI
Lehman 3.66% 6.67% 12.77% 9.16% 14.62% 7.17% 8.79% -1.93% 15.33% 4.05%
Brothers
Intermediat
e
Governmen
t/Corporate
Bond Index
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.33
ROW: 2, COL: 1, VALUE: 2.32
ROW: 3, COL: 1, VALUE: 7.84
ROW: 4, COL: 1, VALUE: 12.11
ROW: 5, COL: 1, VALUE: 7.91
ROW: 6, COL: 1, VALUE: 15.16
ROW: 7, COL: 1, VALUE: 7.13
ROW: 8, COL: 1, VALUE: 11.49
ROW: 9, COL: 1, VALUE: -2.47
ROW: 10, COL: 1, VALUE: 12.19
ROW: 11, COL: 1, VALUE: 3.41
(LARGE SOLID BOX) INTERMEDIATE BOND - CLASS T
SHORT FIXED-INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
SHORT 6.19% 10.31% 5.87% 13.37% 7.61% 9.49% -3.37% 9.81% 4.57%
FIXED-INCO
ME - CLASS
T
Lipper Short 6.86% 10.22% 7.87% 12.88% 5.97% 6.45% -0.44% 10.84% 4.64%
Investment
Grade
Bond
Funds
AverageJ
Lehman 6.84% 10.97% 9.69% 11.83% 6.35% 5.55% 0.55% 10.96% 5.26%
Brothers
1-3 Year
Governmen
t/Corporate
Bond Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.19
ROW: 4, COL: 1, VALUE: 10.31
ROW: 5, COL: 1, VALUE: 5.87
ROW: 6, COL: 1, VALUE: 13.37
ROW: 7, COL: 1, VALUE: 7.609999999999999
ROW: 8, COL: 1, VALUE: 9.49
ROW: 9, COL: 1, VALUE: -3.37
ROW: 10, COL: 1, VALUE: 9.810000000000001
ROW: 11, COL: 1, VALUE: 4.57
(LARGE SOLID BOX) SHORT FIXED-INCOME - CLASS T
HIGH INCOME MUNICIPAL - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
HIGH 11.80% 13.09% 10.29% 12.18% 11.11% 13.79% -8.05% 16.65% 2.95%
INCOME
MUNICIPAL -
CLASS T
Lipper High 11.28% 10.11% 5.13% 11.52% 8.51% 11.41% -4.67% 15.98% 4.17%
Yield
Municipal
Bond
Funds
AverageK
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 11.8
ROW: 4, COL: 1, VALUE: 13.09
ROW: 5, COL: 1, VALUE: 10.29
ROW: 6, COL: 1, VALUE: 12.18
ROW: 7, COL: 1, VALUE: 11.11
ROW: 8, COL: 1, VALUE: 13.79
ROW: 9, COL: 1, VALUE: -8.050000000000001
ROW: 10, COL: 1, VALUE: 16.65
ROW: 11, COL: 1, VALUE: 2.95
(LARGE SOLID BOX) HIGH INCOME MUNICIPAL - CLASS T
MUNICIPAL BOND - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
MUNICIPAL -1.56% 12.30% 9.56% 6.91% 11.91% 8.93% 13.17% -8.49% 18.15% 3.88%
BOND -
CLASS T
Lipper -0.94% 11.53% 9.65% 6.05% 12.09% 8.79% 12.47% -6.50% 16.84% 3.30%
General
Municipal
Debt Funds
AverageL
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -1.56
ROW: 3, COL: 1, VALUE: 12.3
ROW: 4, COL: 1, VALUE: 9.560000000000001
ROW: 5, COL: 1, VALUE: 6.91
ROW: 6, COL: 1, VALUE: 11.91
ROW: 7, COL: 1, VALUE: 8.93
ROW: 8, COL: 1, VALUE: 13.17
ROW: 9, COL: 1, VALUE: -8.49
ROW: 10, COL: 1, VALUE: 18.51
ROW: 11, COL: 1, VALUE: 3.88
(LARGE SOLID BOX) MUNICIPAL BOND -
CLASS T
INTERMEDIATE MUNICIPAL INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
INTERMEDIAT 2.33% 7.38% 7.79% 6.37% 9.64% 7.31% 9.43% -5.68% 14.20% 3.89%
E MUNICIPAL
INCOME -
CLASS T
Lipper 1.32% 7.57% 8.26% 6.59% 10.52% 7.80% 10.18% -3.51% 12.89% 3.70%
Intermediat
e Municipal
Debt
Funds
AverageM
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 2.33
ROW: 3, COL: 1, VALUE: 7.38
ROW: 4, COL: 1, VALUE: 7.79
ROW: 5, COL: 1, VALUE: 6.37
ROW: 6, COL: 1, VALUE: 9.639999999999999
ROW: 7, COL: 1, VALUE: 7.31
ROW: 8, COL: 1, VALUE: 9.43
ROW: 9, COL: 1, VALUE: -5.68
ROW: 10, COL: 1, VALUE: 14.2
ROW: 11, COL: 1, VALUE: 3.89
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL INCOME -
CLASS T
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T
Calendar year total 1995 1996
returns+
SHORT-INTER 8.68% 3.64%
MEDIATE
MUNICIPAL
INCOME -
CLASS T
Lipper 7.43% 3.53%
Short-Inter
mediate
Municipal
Debt Funds
AverageN
Consumer 2.54% 3.32%
Price Index
NEW YORK MUNICIPAL INCOME - CLASS T
Calendar year total 1996
returns+
NEW YORK 3.50%
MUNICIPAL -
CLASS T
Lipper New 3.15%
York
Municipal
Debt Funds
AverageO
Consumer 3.32%
Price Index
EQUITY GROWTH - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
EQUITY -0.57% 15.57% 44.84% 6.93% 64.71% 9.89% 14.85% -0.89% 39.14% 15.69%
GROWTH -
CLASS B
Lipper 3.08% 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
Growth
Funds
AverageA
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -0.5700000000000001
ROW: 3, COL: 1, VALUE: 15.57
ROW: 4, COL: 1, VALUE: 44.84
ROW: 5, COL: 1, VALUE: 6.930000000000001
ROW: 6, COL: 1, VALUE: 64.71000000000001
ROW: 7, COL: 1, VALUE: 9.890000000000001
ROW: 8, COL: 1, VALUE: 14.85
ROW: 9, COL: 1, VALUE: -0.8900000000000001
ROW: 10, COL: 1, VALUE: 39.14
ROW: 11, COL: 1, VALUE: 15.69
(LARGE SOLID BOX) EQUITY GROWTH - CLASS B
GROWTH OPPORTUNITIES - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
GROWTH 33.28% 24.14% -1.65% 42.68% 15.03% 22.17% 2.86% 33.04% 17.73%
OPPORTUNITI
ES - CLASS
B
Lipper 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
Growth
Funds
AverageA
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 33.28
ROW: 4, COL: 1, VALUE: 24.14
ROW: 5, COL: 1, VALUE: -1.65
ROW: 6, COL: 1, VALUE: 42.68
ROW: 7, COL: 1, VALUE: 15.03
ROW: 8, COL: 1, VALUE: 22.17
ROW: 9, COL: 1, VALUE: 2.86
ROW: 10, COL: 1, VALUE: 33.04
ROW: 11, COL: 1, VALUE: 17.73
(LARGE SOLID BOX) GROWTH OPPORTUNITIES - CLASS B
STRATEGIC OPPORTUNITIES - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
STRATEGIC -6.33% 22.25% 32.60% -7.17% 23.08% 12.87% 20.44% -7.22% 37.35% 1.00%
OPPORTUNITI
ES - CLASS
B
Lipper -0.03% 14.09% 26.60% -8.24% 39.91% 8.78% 15.68% -3.38% 30.34% 16.31%
Capital
Appreciatio
n FundsB
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 27.92
ROW: 2, COL: 1, VALUE: -6.33
ROW: 3, COL: 1, VALUE: 22.25
ROW: 4, COL: 1, VALUE: 32.6
ROW: 5, COL: 1, VALUE: -7.17
ROW: 6, COL: 1, VALUE: 23.08
ROW: 7, COL: 1, VALUE: 12.87
ROW: 8, COL: 1, VALUE: 20.44
ROW: 9, COL: 1, VALUE: -7.22
ROW: 10, COL: 1, VALUE: 37.34999999999999
ROW: 11, COL: 1, VALUE: 1.0
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES - CLASS B
EQUITY INCOME - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
EQUITY -2.24% 23.23% 18.43% -14.28% 29.81% 14.68% 18.03% 6.39% 31.96% 14.00%
INCOME -
CLASS B
Lipper -2.18% 16.74% 22.18% -6.78% 26.86% 9.77% 13.66% -2.54% 30.17% 18.85%
Equity
Income
Funds
AverageC
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 17.44
ROW: 2, COL: 1, VALUE: -2.24
ROW: 3, COL: 1, VALUE: 23.23
ROW: 4, COL: 1, VALUE: 18.43
ROW: 5, COL: 1, VALUE: -14.28
ROW: 6, COL: 1, VALUE: 29.81
ROW: 7, COL: 1, VALUE: 14.68
ROW: 8, COL: 1, VALUE: 18.03
ROW: 9, COL: 1, VALUE: 6.39
ROW: 10, COL: 1, VALUE: 31.96
ROW: 11, COL: 1, VALUE: 14.0
(LARGE SOLID BOX) EQUITY INCOME - CLASS B
BALANCED - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
BALANCED - 20.89% 24.60% -2.94% 34.48% 9.20% 19.66% -5.09% 14.06% 8.29%
CLASS B
Lipper 12.34% 19.57% -0.57% 26.69% 7.07% 10.91% -2.50% 25.16% 13.76%
Balanced
Funds
AverageD
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 20.89
ROW: 4, COL: 1, VALUE: 24.6
ROW: 5, COL: 1, VALUE: -2.94
ROW: 6, COL: 1, VALUE: 34.48
ROW: 7, COL: 1, VALUE: 9.199999999999999
ROW: 8, COL: 1, VALUE: 19.66
ROW: 9, COL: 1, VALUE: -5.09
ROW: 10, COL: 1, VALUE: 14.06
ROW: 11, COL: 1, VALUE: 8.289999999999999
(LARGE SOLID BOX) BALANCED -
CLASS B
HIGH YIELD - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
HIGH YIELD 17.24% 3.64% 7.30% 34.94% 23.09% 20.45% -2.11% 18.34% 12.45%
- - CLASS B
Lipper High 12.89% -0.58% -10.13% 36.91% 17.51% 18.95% -3.85% 16.43% 13.67%
Current
Yield Funds
AverageE
Merrill 13.47% 4.23% -4.35% 34.58% 18.16% 17.18% -1.17% 19.91% 11.06%
Lynch High
Yield
Master
Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 17.24
ROW: 4, COL: 1, VALUE: 3.64
ROW: 5, COL: 1, VALUE: 7.3
ROW: 6, COL: 1, VALUE: 34.94
ROW: 7, COL: 1, VALUE: 23.09
ROW: 8, COL: 1, VALUE: 20.45
ROW: 9, COL: 1, VALUE: -2.11
ROW: 10, COL: 1, VALUE: 18.34
ROW: 11, COL: 1, VALUE: 12.45
(LARGE SOLID BOX) HIGH YIELD - CLASS B
STRATEGIC INCOME - CLASS B
Calendar year total 1995 1996
returns+
STRATEGIC 21.35% 12.14%
INCOME -
CLASS B
Lipper 16.92% 11.74%
Multi-Sector
Income
Funds
AverageF
Merrill 19.91% 11.06%
Lynch High
Yield
Master
Index
Consumer 2.54% 3.32%
Price Index
MORTGAGE SECURITIES - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
MORTGAGE 2.70% 6.72% 13.64% 10.36% 13.61% 5.45% 6.71% 1.94% 17.02% 5.43%
SECURITIES -
CLASS B
Lipper U.S. 2.53% 7.47% 12.71% 9.52% 15.00% 6.38% 7.58% -4.83% 16.29% 3.87%
Mortgage
Funds
AverageG
Salomon 4.06% 8.81% 15.16% 10.90% 15.64% 7.37% 7.04% -1.43% 16.77% 5.37%
Brothers
Mortgage
Index
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.7
ROW: 2, COL: 1, VALUE: 6.72
ROW: 3, COL: 1, VALUE: 13.64
ROW: 4, COL: 1, VALUE: 10.36
ROW: 5, COL: 1, VALUE: 13.61
ROW: 6, COL: 1, VALUE: 5.45
ROW: 7, COL: 1, VALUE: 6.71
ROW: 8, COL: 1, VALUE: 1.94
ROW: 9, COL: 1, VALUE: 17.02
ROW: 10, COL: 1, VALUE: 5.430000000000001
ROW: 11, COL: 1, VALUE: 0.0
(LARGE SOLID BOX) MORTGAGE SECURITIES -
CLASS B
GOVERNMENT INVESTMENT - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
GOVERNMEN 6.57% 11.75% 8.37% 13.45% 6.48% 9.36% -4.38% 16.92% 1.37%
T
INVESTMENT
- - CLASS B
Lipper 6.67% 12.46% 8.22% 14.44% 6.41% 9.42% -4.64% 17.34% 1.72%
General
U.S.
Governmen
t Bond
Funds
AverageH
Salomon 7.10% 14.24% 8.78% 15.33% 7.24% 10.74% -3.40% 18.39% 2.76%
Brothers
Treasury/Ag
ency Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.57
ROW: 4, COL: 1, VALUE: 11.75
ROW: 5, COL: 1, VALUE: 8.370000000000001
ROW: 6, COL: 1, VALUE: 13.45
ROW: 7, COL: 1, VALUE: 6.48
ROW: 8, COL: 1, VALUE: 9.360000000000001
ROW: 9, COL: 1, VALUE: -4.38
ROW: 10, COL: 1, VALUE: 16.92
ROW: 11, COL: 1, VALUE: 1.37
(LARGE SOLID BOX) GOVERNMENT INVESTMENT - CLASS B
INTERMEDIATE BOND - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
INTERMEDIAT 2.32% 7.84% 12.11% 7.91% 15.16% 7.13% 11.49% -3.12% 11.51% 2.63%
E BOND -
CLASS B
Lipper 2.13% 7.06% 11.67% 7.22% 15.63% 6.88% 9.52% -3.25% 16.62% 3.12%
Intermediat
e
Investment
Grade
Bond Funds
AverageI
Lehman 3.66% 6.67% 12.77% 9.16% 14.62% 7.17% 8.79% -1.93% 15.33% 4.05%
Brothers
Intermediat
e
Governmen
t/Corporate
Bond Index
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 14.33
ROW: 2, COL: 1, VALUE: 2.32
ROW: 3, COL: 1, VALUE: 7.84
ROW: 4, COL: 1, VALUE: 12.11
ROW: 5, COL: 1, VALUE: 7.91
ROW: 6, COL: 1, VALUE: 15.16
ROW: 7, COL: 1, VALUE: 7.13
ROW: 8, COL: 1, VALUE: 11.49
ROW: 9, COL: 1, VALUE: -3.1
ROW: 10, COL: 1, VALUE: 11.51
ROW: 11, COL: 1, VALUE: 2.63
(LARGE SOLID BOX) INTERMEDIATE BOND - CLASS B
HIGH INCOME MUNICIPAL - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
HIGH 11.80% 13.09% 10.29% 12.18% 11.11% 13.79% -8.54% 15.60% 2.28%
INCOME
MUNICIPAL -
CLASS B
Lipper High 11.28% 10.11% 5.13% 11.52% 8.51% 11.41% -4.67% 15.98% 4.17%
Yield
Municipal
Bond
Funds
AverageK
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 11.8
ROW: 4, COL: 1, VALUE: 13.09
ROW: 5, COL: 1, VALUE: 10.29
ROW: 6, COL: 1, VALUE: 12.18
ROW: 7, COL: 1, VALUE: 11.11
ROW: 8, COL: 1, VALUE: 13.79
ROW: 9, COL: 1, VALUE: -8.52
ROW: 10, COL: 1, VALUE: 15.6
ROW: 11, COL: 1, VALUE: 2.28
(LARGE SOLID BOX) HIGH INCOME MUNICIPAL - CLASS B
MUNICIPAL BOND - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
MUNICIPAL -1.56% 12.30% 9.56% 6.91% 11.91% 8.93% 13.17% -8.49% 18.15% 3.69%
BOND -
CLASS B
Lipper -0.94% 11.53% 9.65% 6.05% 12.09% 8.79% 12.47% -6.50% 16.84% 3.30%
General
Municipal
Debt Funds
AverageL
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -1.56
ROW: 3, COL: 1, VALUE: 12.3
ROW: 4, COL: 1, VALUE: 9.560000000000001
ROW: 5, COL: 1, VALUE: 6.91
ROW: 6, COL: 1, VALUE: 11.91
ROW: 7, COL: 1, VALUE: 8.93
ROW: 8, COL: 1, VALUE: 13.17
ROW: 9, COL: 1, VALUE: -8.49
ROW: 10, COL: 1, VALUE: 18.51
ROW: 11, COL: 1, VALUE: 3.69
(LARGE SOLID BOX) MUNICIPAL BOND -
CLASS B
INTERMEDIATE MUNICIPAL INCOME - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
INTERMEDIAT 2.33% 7.38% 7.79% 6.37% 9.64% 7.32% 9.43% -6.13% 13.22% 3.23%
E MUNICIPAL
INCOME -
CLASS B
Lipper 1.32% 7.57% 8.26% 6.59% 10.52% 7.80% 10.18% -3.51% 12.89% 3.70%
Intermediat
e Municipal
Debt
Funds
AverageM
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 13.71
ROW: 2, COL: 1, VALUE: 2.33
ROW: 3, COL: 1, VALUE: 7.38
ROW: 4, COL: 1, VALUE: 7.79
ROW: 5, COL: 1, VALUE: 6.37
ROW: 6, COL: 1, VALUE: 9.639999999999999
ROW: 7, COL: 1, VALUE: 7.319999999999999
ROW: 8, COL: 1, VALUE: 9.43
ROW: 9, COL: 1, VALUE: -6.119999999999999
ROW: 10, COL: 1, VALUE: 13.22
ROW: 11, COL: 1, VALUE: 2.84
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL INCOME -
CLASS B
NEW YORK MUNICIPAL INCOME - CLASS B
Calendar year total 1996
returns+
NEW YORK 2.84%
MUNICIPAL
INCOME -
CLASS B
Lipper New 3.15%
York
Municipal
Debt Funds
AverageO
Consumer 3.32%
Price Index
EQUITY GROWTH - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
EQUITY -0.57% 15.57% 44.84% 6.93% 64.71% 9.89% 14.85% -0.89% 39.14% 15.69%
GROWTH -
CLASS C
Lipper 3.08% 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
Growth
Funds
AverageA
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -0.5700000000000001
ROW: 3, COL: 1, VALUE: 15.57
ROW: 4, COL: 1, VALUE: 44.84
ROW: 5, COL: 1, VALUE: 6.930000000000001
ROW: 6, COL: 1, VALUE: 64.71000000000001
ROW: 7, COL: 1, VALUE: 9.890000000000001
ROW: 8, COL: 1, VALUE: 14.85
ROW: 9, COL: 1, VALUE: -0.8900000000000001
ROW: 10, COL: 1, VALUE: 39.14
ROW: 11, COL: 1, VALUE: 15.69
(LARGE SOLID BOX) EQUITY GROWTH - CLASS C
GROWTH OPPORTUNITIES - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
GROWTH 33.28% 24.14% -1.65% 42.68% 15.03% 22.17% 2.86% 33.04% 17.73%
OPPORTUNITI
ES - CLASS
C
Lipper 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
Growth
Funds
AverageA
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 33.28
ROW: 4, COL: 1, VALUE: 24.14
ROW: 5, COL: 1, VALUE: -1.65
ROW: 6, COL: 1, VALUE: 42.68
ROW: 7, COL: 1, VALUE: 15.03
ROW: 8, COL: 1, VALUE: 22.17
ROW: 9, COL: 1, VALUE: 2.86
ROW: 10, COL: 1, VALUE: 33.04
ROW: 11, COL: 1, VALUE: 17.73
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES - CLASS C
EQUITY INCOME - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
EQUITY -2.24% 23.23% 18.43% -14.28% 29.81% 14.68% 18.03% 6.39% 31.96% 14.00%
INCOME -
CLASS C
Lipper -2.18% 16.74% 22.18% -6.78% 26.86% 9.77% 13.66% -2.54% 30.17% 18.85%
Equity
Income
Funds
AverageC
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: -2.24
ROW: 3, COL: 1, VALUE: 23.23
ROW: 4, COL: 1, VALUE: 18.43
ROW: 5, COL: 1, VALUE: -14.28
ROW: 6, COL: 1, VALUE: 29.81
ROW: 7, COL: 1, VALUE: 14.68
ROW: 8, COL: 1, VALUE: 18.03
ROW: 9, COL: 1, VALUE: 6.39
ROW: 10, COL: 1, VALUE: 31.96
ROW: 11, COL: 1, VALUE: 14.0
(LARGE SOLID BOX) EQUITY INCOME - CLASS C
BALANCED - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
BALANCED - 20.89% 24.60% -2.94% 34.48% 9.20% 19.66% -5.09% 14.06% 8.29%
CLASS C
Lipper 12.34% 19.57% -0.57% 26.69% 7.07% 10.91% -2.50% 25.16% 13.76%
Balanced
Funds
AverageD
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 20.89
ROW: 4, COL: 1, VALUE: 24.6
ROW: 5, COL: 1, VALUE: -2.94
ROW: 6, COL: 1, VALUE: 34.48
ROW: 7, COL: 1, VALUE: 9.199999999999999
ROW: 8, COL: 1, VALUE: 19.66
ROW: 9, COL: 1, VALUE: -5.09
ROW: 10, COL: 1, VALUE: 14.06
ROW: 11, COL: 1, VALUE: 8.289999999999999
(LARGE SOLID BOX) BALANCED -
CLASS C
HIGH YIELD - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
HIGH YIELD 17.24% 3.64% 7.30% 34.94% 23.09% 20.45% -2.11% 18.34% 12.45%
- CLASS C
Lipper High 12.89% -0.58% -10.13% 36.91% 17.51% 18.95% -3.85% 16.43% 13.67%
Current Yield
Funds
AverageE
Merrill 13.47% 4.23% -4.35% 34.58% 18.16% 17.18% -1.17% 19.91% 11.06%
Lynch High
Yield
Master
Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 17.24
ROW: 4, COL: 1, VALUE: 3.64
ROW: 5, COL: 1, VALUE: 7.3
ROW: 6, COL: 1, VALUE: 34.94
ROW: 7, COL: 1, VALUE: 23.09
ROW: 8, COL: 1, VALUE: 20.45
ROW: 9, COL: 1, VALUE: -2.11
ROW: 10, COL: 1, VALUE: 18.34
ROW: 11, COL: 1, VALUE: 12.45
(LARGE SOLID BOX) HIGH YIELD - CLASS C
STRATEGIC INCOME - CLASS C
Calendar year total 1995 1996
returns+
STRATEGIC 21.35% 12.14%
INCOME -
CLASS C
Lipper 16.92% 11.74%
Multi-Sector
Income
Funds
AverageF
Merrill 19.91% 11.06%
Lynch High
Yield
Master
Index
Consumer 2.54% 3.32%
Price Index
GOVERNMENT INVESTMENT - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
GOVERNMEN 6.57% 11.75% 8.37% 13.45% 6.48% 9.36% -4.38% 16.92% 1.37%
T
INVESTMENT
- CLASS C
Lipper 6.67% 12.46% 8.22% 14.44% 6.41% 9.42% -4.64% 17.34% 1.72%
General
U.S.
Governmen
t Bond
Funds
AverageH
Salomon 7.10% 14.24% 8.78% 15.33% 7.24% 10.74% -3.40% 18.39% 2.76%
Brothers
Treasury/Ag
ency Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.57
ROW: 4, COL: 1, VALUE: 11.75
ROW: 5, COL: 1, VALUE: 8.370000000000001
ROW: 6, COL: 1, VALUE: 13.45
ROW: 7, COL: 1, VALUE: 6.48
ROW: 8, COL: 1, VALUE: 9.360000000000001
ROW: 9, COL: 1, VALUE: -4.38
ROW: 10, COL: 1, VALUE: 16.92
ROW: 11, COL: 1, VALUE: 1.37
(LARGE SOLID BOX) GOVERNMENT INVESTMENT -
CLASS C
INTERMEDIATE BOND - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
INTERMEDIAT 2.32% 7.84% 12.11% 7.91% 15.16% 7.13% 11.49% -3.12% 11.51% 2.63%
E BOND -
CLASS C
Lipper 2.13% 7.06% 11.67% 7.22% 15.63% 6.88% 9.52% -3.25% 16.62% 3.12%
Intermediat
e
Investment
Grade
Bond Funds
AverageI
Lehman 3.66% 6.67% 12.77% 9.16% 14.62% 7.17% 8.79% -1.93% 15.33% 4.05%
Brothers
Intermediat
e
Governmen
t/Corporate
Bond Index
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 2.32
ROW: 3, COL: 1, VALUE: 7.84
ROW: 4, COL: 1, VALUE: 12.11
ROW: 5, COL: 1, VALUE: 7.91
ROW: 6, COL: 1, VALUE: 15.16
ROW: 7, COL: 1, VALUE: 7.13
ROW: 8, COL: 1, VALUE: 11.49
ROW: 9, COL: 1, VALUE: -3.12
ROW: 10, COL: 1, VALUE: 11.51
ROW: 11, COL: 1, VALUE: 2.63
(LARGE SOLID BOX) INTERMEDIATE BOND - CLASS C
SHORT FIXED-INCOME - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
SHORT 6.19% 10.31% 5.87% 13.37% 7.61% 9.49% -3.37% 9.81% 4.57%
FIXED-INCO
ME - CLASS
C
Lipper Short 6.86% 10.22% 7.87% 12.88% 5.97% 6.45% -0.44% 10.84% 4.64%
Investment
Grade
Bond
Funds
AverageJ
Lehman 6.84% 10.97% 9.69% 11.83% 6.35% 5.55% 0.55% 10.96% 5.26%
Brothers
1-3 Year
Governmen
t/Corporate
Bond Index
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%) >
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 6.19
ROW: 4, COL: 1, VALUE: 10.31
ROW: 5, COL: 1, VALUE: 5.87
ROW: 6, COL: 1, VALUE: 13.37
ROW: 7, COL: 1, VALUE: 7.609999999999999
ROW: 8, COL: 1, VALUE: 9.49
ROW: 9, COL: 1, VALUE: -3.37
ROW: 10, COL: 1, VALUE: 9.810000000000001
ROW: 11, COL: 1, VALUE: 4.57
(LARGE SOLID BOX) SHORT FIXED-INCOME - CLASS C
HIGH INCOME MUNICIPAL - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
HIGH 11.80% 13.09% 10.29% 12.18% 11.11% 13.79% -8.54% 15.60% 2.28%
INCOME
MUNICIPAL -
CLASS C
Lipper High 11.28% 10.11% 5.13% 11.52% 8.51% 11.41% -4.67% 15.98% 4.17%
Yield
Municipal
Bond
Funds
AverageK
Consumer 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: 11.8
ROW: 4, COL: 1, VALUE: 13.09
ROW: 5, COL: 1, VALUE: 10.29
ROW: 6, COL: 1, VALUE: 12.18
ROW: 7, COL: 1, VALUE: 11.11
ROW: 8, COL: 1, VALUE: 13.79
ROW: 9, COL: 1, VALUE: -8.539999999999999
ROW: 10, COL: 1, VALUE: 15.6
ROW: 11, COL: 1, VALUE: 2.28
(LARGE SOLID BOX) HIGH INCOME MUNICIPAL - CLASS C
INTERMEDIATE MUNICIPAL INCOME - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
returns+
INTERMEDIAT 2.33% 7.38% 7.79% 6.37% 9.64% 7.32% 9.43% -6.13% 13.22% 3.23%
E MUNICIPAL
INCOME -
CLASS C
Lipper 1.32% 7.57% 8.26% 6.59% 10.52% 7.80% 10.18% -3.51% 12.89% 3.70%
Intermediat
e Municipal
Debt
Funds
AverageM
Consumer 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
Price Index
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 2.33
Row: 3, Col: 1, Value: 7.38
Row: 4, Col: 1, Value: 7.79
Row: 5, Col: 1, Value: 6.37
Row: 6, Col: 1, Value: 9.639999999999999
Row: 7, Col: 1, Value: 7.319999999999999
Row: 8, Col: 1, Value: 9.43
Row: 9, Col: 1, Value: -6.13
Row: 10, Col: 1, Value: 13.22
Row: 11, Col: 1, Value: 3.23
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL INCOME -
CLASS C
+ RETURNS DO NOT INCLUDE THE EFFECT OF PAYING CLASS A OR CLASS T'S
MAXIMUM FRONT-END SALES CHARGE OR CLASS B AND CLASS C'S APPLICABLE
CONTINGENT DEFERRED SALES CHARGE.
INITIAL OFFERING OF CLASS A FOR EACH FUND (EXCEPT MORTGAGE
SECURITIES AND MUNICIPAL BOND) TOOK PLACE ON SEPTEMBER 3, 1996. CLASS
A RETURNS PRIOR TO SEPTEMBER 3, 1996 (EXCEPT FOR EQUITY GROWTH, EQUITY
INCOME, INTERMEDIATE BOND, AND INTERMEDIATE MUNICIPAL INCOME) ARE
THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO
JANUARY 1, 1996) FOR EQUITY FUNDS AND 0.15% FOR SHORT-TERM BOND FUNDS.
IF CLASS A'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO
SEPTEMBER 3, 1996 FOR THE EQUITY FUNDS WOULD HAVE BEEN HIGHER.
FOR EQUITY GROWTH, EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME, RETURNS FROM SEPTEMBER 3, 1996 THROUGH
SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.50% (0.65% PRIOR TO JANUARY 1, 1996) FOR EQUITY GROWTH AND EQUITY
INCOME AND 0.25% FOR INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL
INCOME. CLASS A RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF
INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS A'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996 THROUGH
SEPTEMBER 10, 1992 WOULD HAVE BEEN HIGHER AND TOTAL RETURNS PRIOR TO
SEPTEMBER 10, 1992 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS A, CLASS T, AND CLASS B OF MORTGAGE
SECURITIES TOOK PLACE ON MARCH 3, 1997. CLASS A, CLASS T, AND CLASS B
RETURNS ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS
A'S, CLASS T'S, AND CLASS B'S RESPECTIVE 12B-1 FEES HAD BEEN
REFLECTED, TOTAL RETURNS WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS A OF MUNICIPAL BOND TOOK PLACE ON MARCH
3, 1997. CLASS A RETURNS PRIOR TO AND INCLUDING DECEMBER 31, 1996
THROUGH JULY 1, 1996 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.25%. CLASS A RETURNS PRIOR TO JULY 1, 1996 ARE THOSE OF INITIAL
CLASS WHICH HAS NO 12B-1 FEE. IF CLASS A'S 12B-1 FEE HAD BEEN
REFLECTED, TOTAL RETURNS PRIOR TO AND INCLUDING DECEMBER 31, 1996
THROUGH JULY 1, 1996 WOULD HAVE BEEN HIGHER AND TOTAL RETURNS PRIOR TO
JULY 1, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS T AND CLASS B OF MUNICIPAL BOND TOOK
PLACE ON JULY 1, 1996. CLASS T AND CLASS B RETURNS PRIOR TO JULY 1,
1996 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS T'S
AND CLASS B'S RESPECTIVE 12B-1 FEES HAD BEEN REFLECTED, TOTAL RETURNS
PRIOR TO JULY 1, 1996 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS T OF EQUITY GROWTH, EQUITY INCOME,
INTERMEDIATE BOND, AND INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON
SEPTEMBER 10, 1992. CLASS T RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE
THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1 FEE. IF CLASS T'S
12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO SEPTEMBER 10,
1992 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF EQUITY GROWTH TOOK PLACE ON
DECEMBER 31, 1996. CLASS B RETURNS FROM DECEMBER 31, 1996 THROUGH
SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.50% (0.65% PRIOR TO JANUARY 1, 1996). CLASS B RETURNS PRIOR TO
SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1
FEE. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS WOULD
HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF BALANCED TOOK PLACE ON DECEMBER 31,
1996. CLASS B RETURNS PRIOR TO DECEMBER 31, 1996 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996).
IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS WOULD HAVE
BEEN LOWER.
INITIAL OFFERING OF CLASS B OF GROWTH OPPORTUNITIES TOOK PLACE ON
MARCH 3, 1997. CLASS B RETURNS ARE THOSE OF CLASS T WHICH REFLECT A
12B-1 FEE OF 0.50%(0.65% PRIOR TO JANUARY 1, 1996). IF CLASS B'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF EQUITY INCOME, INTERMEDIATE BOND,
AND INTERMEDIATE MUNICIPAL INCOME TOOK PLACE ON JUNE 30, 1994. CLASS B
RETURNS PRIOR TO JUNE 30, 1994 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF
CLASS T WHICH REFLECT A 12B-1 FEE OF 0.65% FOR EQUITY INCOME, AND
0.25% FOR INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS B
RETURNS PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL CLASS
WHICH HAS NO 12B-1 FEE. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
INITIAL OFFERING OF CLASS B OF STRATEGIC OPPORTUNITIES TOOK PLACE
ON JUNE 30, 1994. CLASS B RETURNS PRIOR TO JUNE 30, 1994 ARE THOSE OF
CLASS T WHICH REFLECT A 12B-1 FEE OF 0.65%. IF CLASS B'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN
LOWER.
INITIAL OFFERING OF CLASS B OF HIGH YIELD, GOVERNMENT INVESTMENT,
AND HIGH INCOME MUNICIPAL TOOK PLACE ON JUNE 30, 1994. CLASS B RETURNS
PRIOR TO JUNE 30, 1994 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE
OF 0.25%. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS
PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
CLASS C OF EACH FUND (EXCEPT STRATEGIC OPPORTUNITIES, MORTGAGE
SECURITIES, MUNICIPAL BOND, SHORT-INTERMEDIATE MUNICIPAL INCOME,
CALIFORNIA MUNICIPAL INCOME, AND NEW YORK MUNICIPAL INCOME) IS
EXPECTED TO COMMENCE OPERATIONS ON OR ABOUT NOVEMBER 3, 1997.
CLASS C RETURNS FOR STRATEGIC INCOME ARE THOSE OF CLASS B WHICH
REFLECT A 12B-1 FEE OF 0.90%(1.00% PRIOR TO JANUARY 1, 1996). IF CLASS
C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS AFTER DECEMBER 31,
1995 WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR EQUITY GROWTH FROM DECEMBER 31, 1996 THROUGH
SEPTEMBER 10, 1992 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.50% (0.65% PRIOR TO JANUARY 1, 1996). CLASS C RETURNS PRIOR TO
SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS NO 12B-1
FEE. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS WOULD
HAVE BEEN LOWER.
CLASS C RETURNS FOR GROWTH OPPORTUNITIES ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996).
IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS WOULD HAVE
BEEN LOWER.
CLASS C RETURNS FOR BALANCED ARE THOSE OF CLASS T WHICH REFLECT A
12B-1 FEE OF 0.50% (0.65% PRIOR TO JANUARY 1, 1996). IF CLASS C'S
12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR HIGH YIELD, GOVERNMENT INVESTMENT, AND HIGH
INCOME MUNICIPAL FROM DECEMBER 31, 1996 THROUGH JUNE 30, 1994 ARE
THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 0.90% (1.00% PRIOR TO
JANUARY 1, 1996). CLASS C RETURNS PRIOR TO JUNE 30, 1994 ARE THOSE OF
CLASS T WHICH REFLECT A 12B-1 FEE OF 0.25%. IF CLASS C'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS FROM DECEMBER 31, 1996 THROUGH DECEMBER
31, 1995 AND PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR SHORT FIXED-INCOME ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.15%. IF CLASS C'S 12B-1 FEE HAD BEEN
REFLECTED, TOTAL RETURNS WOULD HAVE BEEN LOWER.
CLASS C RETURNS FOR EQUITY INCOME, INTERMEDIATE BOND, AND
INTERMEDIATE MUNICIPAL INCOME FROM DECEMBER 31, 1996 THROUGH JUNE 30,
1994 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00% FOR
EQUITY INCOME AND 0.90% (1.00% PRIOR TO JANUARY 1, 1996) FOR
INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS C RETURNS
PRIOR TO JUNE 30, 1994 THROUGH SEPTEMBER 10, 1992 ARE THOSE OF CLASS T
WHICH REFLECT A 12B-1 FEE OF 0.65% FOR EQUITY INCOME AND 0.25% FOR
INTERMEDIATE BOND AND INTERMEDIATE MUNICIPAL INCOME. CLASS C RETURNS
PRIOR TO SEPTEMBER 10, 1992 ARE THOSE OF INSTITUTIONAL CLASS WHICH HAS
NO 12B-1 FEE. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS
FOR EQUITY INCOME PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN LOWER. IF
CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS FOR INTERMEDIATE
BOND AND INTERMEDIATE MUNICIPAL INCOME FROM DECEMBER 31, 1996 THROUGH
DECEMBER 31, 1995 AND PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN
LOWER.
[A] THE LIPPER GROWTH FUNDS AVERAGE CURRENTLY REFLECTS THE PERFORMANCE
OF OVER 669 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[B] THE LIPPER CAPITAL APPRECIATION FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 189 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[C] THE LIPPER EQUITY INCOME FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 160 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[D] THE LIPPER BALANCED FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 272 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[E] THE LIPPER HIGH CURRENT YIELD FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 148 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[F] THE LIPPER MULTI-SECTOR INCOME FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 51 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[G] THE LIPPER U.S. MORTGAGE FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 59 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[H] THE LIPPER GENERAL U.S. GOVERNMENT BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 170 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[I] THE LIPPER INTERMEDIATE INVESTMENT GRADE BOND FUNDS AVERAGE
CURRENTLY REFLECTS THE PERFORMANCE OF OVER 176 MUTUAL FUNDS WITH
SIMILAR OBJECTIVES.
[J] THE LIPPER SHORT INVESTMENT GRADE BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 95 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[K] THE LIPPER HIGH YIELD MUNICIPAL BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 43 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[L] THE LIPPER GENERAL MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 225 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[M] THE LIPPER INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 136 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[N] THE LIPPER SHORT-INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE
CURRENTLY REFLECTS THE PERFORMANCE OF OVER 28 MUTUAL FUNDS WITH
SIMILAR OBJECTIVES.
[O] THE LIPPER NEW YORK MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 96 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
TECHNOQUANT IS A TRADEMARK OF FMR CORP.
FIDELITY ADVISOR FUNDS INSTITUTIONAL CLASS PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b,c .............................. Who May Want to Invest
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance, Appendix B
d .............................. Cover Page; Performance
4 a i............................. Charter
ii........................... Investment Principles and Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Cover Page; Charter
ii........................... Charter; Breakdown of Expenses
iii.......................... Expenses; Breakdown of Expenses
c .............................. Charter
d .............................. Charter; Breakdown of Expenses
e .............................. Charter; Breakdown of Expenses
f .............................. Expenses
g .............................. Charter
5A .............................. Performance
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions
iii.......................... Charter
b ............................. Charter
c .............................. Transactions Details; Exchange Restrictions
d .............................. Who May Want to Invest
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Exchange Restrictions
f, g .............................. Dividends, Capital Gains, and Taxes
h .............................. Who May Want to Invest
7 a .............................. Cover Page; Charter
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. Breakdown of Expenses; Transaction Details
f .............................. Expenses; Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY ADVISOR FUNDS
INSTITUTIONAL CLASS
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of a fund's most recent financial report and portfolio listing or
a copy of the Statement of Additional Information (SAI) dated October
31, 1997. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is available along with other related materials
on the SEC's Internet Web site (http://www.sec.gov). The SAI is
incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity
Distributors Corporation (FDC), 82 Devonshire Street, Boston, MA
02109, or your investment professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
HIGH YIELD AND STRATEGIC INCOME MAY INVEST SIGNIFICANTLY IN
LOWER-QUALITY DEBT SECURITIES, SOMETIMES CALLED "JUNK BONDS." THESE
SECURITIES CARRY GREATER RISKS, SUCH AS THE RISK OF DEFAULT, THAN
OTHER DEBT SECURITIES.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
ACOMI-PRO-0297-01
GROWTH FUNDS:
Fidelity Advisor TechnoQuantTM Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS:
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS:
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS:
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS:
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
PROSPECTUS
OCTOBER 31, 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON,
MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES INSTITUTIONAL CLASS'S YEARLY OPERATING EXPENSES.
FINANCIAL HIGHLIGHTS A SUMMARY OF EACH FUND'S FINANCIAL DATA.
PERFORMANCE HOW EACH FUND HAS DONE OVER TIME.
THE FUNDS IN DETAIL CHARTER HOW EACH FUND IS ORGANIZED.
INVESTMENT PRINCIPLES AND RISKS EACH FUND'S OVERALL APPROACH
TO INVESTING.
BREAKDOWN OF EXPENSES HOW OPERATING COSTS ARE CALCULATED
AND WHAT THEY INCLUDE.
YOUR ACCOUNT TYPES OF ACCOUNTS DIFFERENT WAYS TO SET UP YOUR ACCOUNT,
INCLUDING TAX-SHELTERED RETIREMENT PLANS.
HOW TO BUY SHARES OPENING AN ACCOUNT AND MAKING ADDITIONAL
INVESTMENTS.
HOW TO SELL SHARES TAKING MONEY OUT AND CLOSING YOUR ACCOUNT.
INVESTOR SERVICES SERVICES TO HELP YOU MANAGE YOUR ACCOUNT.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS SHARE PRICE CALCULATIONS AND THE TIMING OF
PURCHASES AND REDEMPTIONS.
EXCHANGE RESTRICTIONS
APPENDIX A
APPENDIX B
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Institutional Class shares are offered to accounts managed (i) by a
bank trust department and other trust institutions, (ii) by a
broker-dealer , and (iii) by a registered investment advisor
(RIA) on a discretionary basis (collectively, eligible
intermediaries). Institutional Class shares are available through
eligible intermediaries that have signed a participation agreement
with FDC. The participation agreement specifies certain aggregate
asset minimums and asset qualifications, trading guidelines, marketing
restrictions, and program requirements. In addition, Institutional
Class shares are available through certain eligible intermediaries
that meet qualifications established by FDC but have not signed a
participation agreement.
Institutional Class shares are also offered to insurance company
separate accounts used to fund annuity contracts for employee benefit
plans which, in the aggregate, have more than 200 eligible employees
or a minimum of $1 million in plan assets invested in Fidelity Advisor
funds.
Investors (including employee benefit plans) and intermediaries (other
than eligible intermediaries) that established Institutional Class
accounts prior to June 30, 1995, may continue to purchase
Institutional Class shares.
TechnoQuant(Trademark) Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth & Income,
Equity Income, Balanced, High Yield, Mortgage Securities, Government
Investment, Intermediate Bond, Short Fixed-Income, High Income
Municipal, Municipal Bond, and Intermediate Municipal Income are
diversified funds.
Strategic Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income are non-diversified
funds. Non-diversified funds may invest a greater portion of their
assets in securities of individual issuers than diversified funds. As
a result, changes in the market value of a single issuer could cause
greater fluctuations in share value than would occur in a more
diversified fund.
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
and Balanced are designed for investors who are willing to ride out
stock market fluctuations in pursuit of potentially high long-term
returns. TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, and Large Cap are designed for
investors who want to be invested in the stock market for its
long-term growth potential. These funds invest for growth and do not
pursue income. Growth & Income, Equity Income, and Balanced are
designed for those investors who seek a combination of growth and
income from equity and some bond investments.
TechnoQuant Growth is designed to provide an alternative to more
traditional styles of investing for growth-oriented investors. The
fund utilizes computer-aided quantitative analysis emphasizing
technical factors, such as historical price and volume relationships.
High Yield and Strategic Income are designed for investors who want
high current income with some potential for capital growth from a
portfolio of debt instruments with a focus on lower-quality debt
securities and income-producing equity securities. These funds may be
appropriate for long-term, aggressive investors who understand the
potential risks and rewards of investing in lower-quality debt
securities, including defaulted securities.
Strategic Income may also be appropriate for investors who want to
pursue their investment goals in markets outside of the United States.
By including international investments in your portfolio, you can
achieve additional diversification and participate in growth
opportunities around the world.
Mortgage Securities is designed for investors who seek high current
income from a portfolio of mortgage-related securities of all types.
Government Investment is designed for investors who seek high current
income from a portfolio of U.S. Government securities in a manner
consistent with preserving principal.
Intermediate Bond and Short Fixed-Income are designed for investors
who seek high current income from a portfolio of investment-grade debt
securities consistent with capital preservation.
High Income Municipal, Municipal Bond, Intermediate Municipal Income,
and Short-Intermediate Municipal Income are designed for investors in
higher tax brackets who seek high current income that is free from
federal income tax. Municipal Bond, Intermediate Municipal Income, and
Short-Intermediate Municipal Income also invest consistent with
consideration of capital preservation. High Income Municipal may
invest in lower-quality municipal securities which involve greater
risk than investment-grade securities.
California Municipal Income is designed for investors in higher tax
brackets who seek high current income that is free from federal and
California personal income taxes. New York Municipal Income is
designed for investors in higher tax brackets who seek high current
income that is free from federal and New York State and City personal
income taxes.
The value of each fund's investments and, as applicable, the income
they generate, will vary from day to day, and generally reflect
changes in market conditions, interest rates and other company,
political, and economic news. In the short term, stock prices can
fluctuate dramatically in response to these factors. The securities of
small, less well-known companies may be more volatile than those of
larger companies. Bond values fluctuate based on changes in interest
rates and the credit quality of the issuer, and may be subject to
prepayment risk, which can limit their price appreciation potential in
periods of declining interest rates. Over time, however, stocks,
although more volatile, have shown greater growth potential than other
types of securities. Investments in foreign securities may involve
risks in addition to those of U.S. investments, including increased
political and economic risk, as well as exposure to currency
fluctuations.
Each fund is not in itself a balanced investment plan. You should
consider your investment objective and tolerance for risk when making
an investment decision. When you sell your fund shares, they may be
worth more or less than what you paid for them.
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
Each fund offers Institutional Class shares, Class A shares, and
Class T shares. Certain of the funds also offer Class B shares and
Class C shares. Class A and Class T shares have a front-end sales
charge and pay a 12b-1 fee. Class A and Class T shares may be subject
to a contingent deferred sales charge (CDSC). Class B and Class C
shares do not have a front-end sales charge, but do have a CDSC, and
pay a 12b-1 fee. You may obtain more information about Class A, Class
T, Class B, and Class C shares, which are not offered through this
prospectus, by calling 1-800-843-3001 or from your investment
professional.
The performance of one class of shares of a fund may be different from
the performance of another class of shares of the same fund because of
different sales charges and class expenses. For example, because
Institutional Class shares have no sales charge, and do not pay a
12b-1 fee, Institutional Class shares are expected to have a higher
total return than Class A, Class T, Class B, and Class C
shares.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell Institutional Class shares of a fund. In addition, you may be
charged an annual account maintenance fee if your account balance
falls below $2,500. See "Transaction Details," page , for an
explanation of how and when these charges apply.
INSTITUTIONAL CLASS
SALES CHARGE ON PURCHASES AND REINVESTED DISTRIBUTIONS NONE
DEFERRED SALES CHARGE ON REDEMPTIONS NONE
ANNUAL ACCOUNT MAINTENANCE FEE (FOR ACCOUNTS UNDER $2,500) $12.00
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to Fidelity Management & Research Company
(FMR) that, for Growth Opportunities and Strategic Opportunities,
varies based on performance. Each fund also incurs other expenses for
services such as maintaining shareholder records and furnishing
shareholder statements and financial reports.
Institutional Class's expenses are factored into its share price or
dividends and are not charged directly to shareholder accounts (see
"Breakdown of Expenses" on page ).
The following figures are based on estimated or historical expenses,
adjusted to reflect current fees, of the Institutional Class of each
fund and are calculated as a percentage of average net assets of the
Institutional Class of each fund.
EXPENSE TABLE EXAMPLE: You would pay the following amount in total
expenses on a $1,000 investment in Institutional Class shares
of a fund , assuming a 5% annual return and full redemption at the
end of each time period . Total expenses shown on the next page
include any shareholder transaction expenses and Institutional Class's
annual operating expenses.
EQUITY FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
OPERATING EXPENSES EXAMPLES
TECHNOQUANT GROWTH MANAGEMENT FEE 0.60%[A] 1 YEAR $ 15
12B-1 FEE NONE 3 YEARS $ 47
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.90%[A]
TOTAL OPERATING EXPENSES 1.50%
MID CAP MANAGEMENT FEE 0.60% 1 YEAR $ 15
12B-1 FEE NONE 3 YEARS $ 47
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.90% 5 YEARS $ 82
TOTAL OPERATING EXPENSES 1.50% 10 YEARS $ 179
EQUITY GROWTH MANAGEMENT FEE 0.61% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 25
OTHER EXPENSES 0.18% 5 YEARS $ 44
TOTAL OPERATING EXPENSES 0.79% 10 YEARS $ 98
GROWTH OPPORTUNITIES MANAGEMENT FEE 0.61% 1 YEAR $ 9
12B-1 FEE NONE 3 YEARS $ 27
OTHER EXPENSES 0.24% 5 YEARS $ 47
TOTAL OPERATING EXPENSES 0.85% 10 YEARS $ 105
STRATEGIC OPPORTUNITIES MANAGEMENT FEE 0.4 8 % 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 25
OTHER EXPENSES 0. 30 % 5 YEARS $ 43
TOTAL OPERATING EXPENSES 0.78 % 10 YEARS $ 97
LARGE CAP MANAGEMENT FEE 0.60% 1 YEAR $ 15
12B-1 FEE NONE 3 YEARS $ 47
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.90% 5 YEARS $ 82
TOTAL OPERATING EXPENSES 1.50% 10 YEARS $ 179
GROWTH & INCOME MANAGEMENT FEE 0.50%[A] 1 YEAR $ 13
12B-1 FEE NONE 3 YEARS $ 40
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.75%[A]
TOTAL OPERATING EXPENSES 1.25%
EQUITY INCOME MANAGEMENT FEE 0.50% 1 YEAR $ 7
12B-1 FEE NONE 3 YEARS $ 23
OTHER EXPENSES 0.21% 5 YEARS $ 40
TOTAL OPERATING EXPENSES 0.71% 10 YEARS $ 88
BALANCED MANAGEMENT FEE 0.45% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 26
OTHER EXPENSES (AFTER REIMBURSEMENT) 0. 35 % 5 YEARS $ 44
TOTAL OPERATING EXPENSES 0.80 % 10 YEARS $ 99
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
TAXABLE INCOME FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
OPERATING EXPENSES EXAMPLES
HIGH YIELD MANAGEMENT FEE 0.60% 1 YEAR $ 11
12B-1 FEE NONE 3 YEARS $ 35
OTHER EXPENSES 0.50% 5 YEARS $ 61
TOTAL OPERATING EXPENSES 1.10% 10 YEARS $ 134
STRATEGIC INCOME MANAGEMENT FEE 0. 59 % 1 YEAR $ 11
12B-1 FEE NONE 3 YEARS $ 35
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.5 1 % 5 YEARS $ 61
TOTAL OPERATING EXPENSES 1.10% 10 YEARS $ 134
MORTGAGE SECURITIES MANAGEMENT FEE 0.4 4 % [A] 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER
REIMBURSEMENT) 0.3 1 % [A] 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0.75% 10 YEARS $ 93
GOVERNMENT INVESTMENT MANAGEMENT FEE 0.45% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.30% 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0.75% 10 YEARS $ 93
INTERMEDIATE BOND MANAGEMENT FEE 0.45% 1 YEAR $ 7
12B-1 FEE NONE 3 YEARS $ 21
OTHER EXPENSES 0.21% 5 YEARS $ 37
TOTAL OPERATING EXPENSES 0.66% 10 YEARS $ 82
SHORT FIXED-INCOME MANAGEMENT FEE 0.45% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.3 0 % 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0. 75 % 10 YEARS $ 93
</TABLE>
MUNICIPAL FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
OPERATING EXPENSES EXAMPLES
HIGH INCOME MUNICIPAL MANAGEMENT FEE 0.40% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35% 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0.75% 10 YEARS $ 93
MUNICIPAL BOND MANAGEMENT FEE 0.40% [A] 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35%[A] 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0.75% 10 YEARS $ 93
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
OPERATING EXPENSES EXAMPLES
INTERMEDIATE MUNICIPAL INCOME MANAGEMENT FEE 0.40% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35% 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0.75% 10 YEARS $ 93
SHORT-INTERMEDIATE MUNICIPAL
INCOME MANAGEMENT FEE 0.40% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35% 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0.75% 10 YEARS $ 93
</TABLE>
STATE MUNICIPAL FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
OPERATING EXPENSES EXAMPLES
CALIFORNIA MUNICIPAL INCOME MANAGEMENT FEE 0.40% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35% 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0.75% 10 YEARS $ 93
NEW YORK MUNICIPAL INCOME MANAGEMENT FEE 0.40% 1 YEAR $ 8
12B-1 FEE NONE 3 YEARS $ 24
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.35% 5 YEARS $ 42
TOTAL OPERATING EXPENSES 0.75% 10 YEARS $ 93
</TABLE>
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED EXPENSES OR RETURNS, ALL OF WHICH
MAY VARY.
A portion of the brokerage commissions that certain of the funds pay
is used to reduce fund expenses. In addition, certain funds have
entered into arrangements with their custodian and transfer agent
whereby credits realized as a result of uninvested cash balances are
used to reduce custodian and transfer agent expenses. Including these
reductions, the total Institutional Class operating expenses presented
in the preceding table s would have been:
INSTITUTIONAL CLASS
EQUITY GROWTH 0.77%
GROWTH OPPORTUNITIES 0.84%
STRATEGIC OPPORTUNITIES 0.76 %
LARGE CAP 1.48%
EQUITY INCOME 0.70%
BALANCED 0. 77 %
HIGH YIELD 1.05%
MORTGAGE SECURITIES 0.70%
INTERMEDIATE MUNICIPAL INCOME 0.74%
SHORT-INTERMEDIATE MUNICIPAL INCOME 0.74%
CALIFORNIA MUNICIPAL INCOME 0.72%
NEW YORK MUNICIPAL INCOME 0.68%
FMR has voluntarily agreed to reimburse the Institutional Class of
each fund to the extent that total operating expenses, as a percentage
of their respective average net assets, exceed the following rates:
<TABLE>
<CAPTION>
<S> <C> <C>
EFFECTIVE
DATE
TECHNOQUANT GROWTH 1.50% 12/31/96
MID CAP 1.50% 2/20/96
EQUITY GROWTH 0.95 % 1 1 /1/97
GROWTH OPPORTUNITIES 0.85 % 11 /1/97
STRATEGIC OPPORTUNITIES 1.50% 3/1/97
LARGE CAP 1.50% 2/20/96
GROWTH & INCOME 1.25% 12/31/96
EQUITY INCOME 0.85 % 11 /1/97
BALANCED 0.80 % 1 1 / 1 /9 7
HIGH YIELD 1.10% 7/1/95
STRATEGIC INCOME 1.10% 7/1/95
MORTGAGE SECURITIES 0.75% 3/1/97
GOVERNMENT INVESTMENT 0.75% 7/1/95
INTERMEDIATE BOND 0.75% 7/1/95
SHORT FIXED INCOME 0.75% 8/30/96
HIGH INCOME MUNICIPAL 0.75% 7/1/95
MUNICIPAL BOND 0.75% 7/1/96
INTERMEDIATE MUNICIPAL INCOME 0.75% 7/1/95
SHORT-INTERMEDIATE MUNICIPAL INCOME 0.75% 7/1/95
CALIFORNIA MUNICIPAL INCOME 0.75% 8/1/95
NEW YORK MUNICIPAL INCOME 0.75% 8/1/95
</TABLE>
If these agreements were not in effect, other expenses and total
operating expenses of the Institutional Class of each fund, as a
percentage of average net assets, would have been the following
amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
OTHER EXPENSES TOTAL OPERATING EXPENSES
TECHNOQUANT GROWTH [A] 7.03% 7.63%
MID CAP 2.64% 3.24%
LARGE CAP 1.94% 2.54%
GROWTH & INCOME [A] 0.78% 1.28%
BALANCED 0.56% 1.01%
STRATEGIC INCOME 0.9 6 % 1.55%
MORTGAGE SECURITIES [A] 4.1 3 % 4.57%
GOVERNMENT INVESTMENT 0.38% 0.83%
SHORT FIXED-INCOME 0.55% 1.00%
HIGH INCOME MUNICIPAL 3.86% 4.26%
MUNICIPAL BOND [A] 1.14% 1.54%
INTERMEDIATE MUNICIPAL INCOME 0.44% 0.84%
SHORT-INTERMEDIATE MUNICIPAL INCOME 13.15% 13.55%
CALIFORNIA MUNICIPAL INCOME 0.45% 0.85%
NEW YORK MUNICIPAL INCOME 3.43% 3.83%
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, and extraordinary expenses.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow for certain funds contain
annual information which has been audited by Coopers & Lybrand,
L.L.P., independent accountants. The financial highlights tables
that follow for Mortgage Securities have been audited by Price
Waterhouse LLP , independent accountants. The funds' financial
highlights, financial statements, and reports of the auditors are
included in each fund's Annual Report, and are incorporated by
reference into (are legally a part of) the funds' SAI. Contact FDC or
your investment professional for a free copy of an Annual Report or
the SAI.
TECHNOQUANT - INSTITUTIONAL CLASS
1.
2.SELECTED PER-SHARE DATA AND RATIOSD 1997G
3.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
4.INCOME FROM INVESTMENT OPERATIONS
5. NET INVESTMENT INCOME (LOSS) .00
6. NET REALIZED AND UNREALIZED GAIN (LOSS) .00
7. TOTAL FROM INVESTMENT OPERATIONS .00
8.NET ASSET VALUE, END OF PERIOD $ 10.00
9.TOTAL RETURNB,C 0.00%
10.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,223
11.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.50%A,E
12.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.07)%A
ASSETS
13.PORTFOLIO TURNOVER 398%A
14.AVERAGE COMMISSION RATEF $ .0281
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO MAY 31, 1997 (UNAUDITED) .
MID CAP - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
15. YEAR ENDED
NOVEMBER 30
16.SELECTED PER-SHARE DATA AND RATIOSD 1997I 1996H
17.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.70 $ 10.00
18.INCOME FROM INVESTMENT OPERATIONS
19. NET INVESTMENT INCOME (LOSS) .02 (.02)
20. NET REALIZED AND UNREALIZED GAIN (LOSS) .69 1.72
21. TOTAL FROM INVESTMENT OPERATIONS .71 1.70
22.LESS DISTRIBUTIONS
23. FROM NET INVESTMENT INCOME (.02) --
24. FROM NET REALIZED GAIN (.20) --
25. TOTAL DISTRIBUTIONS (.22) --
26.NET ASSET VALUE, END OF PERIOD $ 12.19 $ 11.70
27.TOTAL RETURNB,C 6.23% 17.00%
28.NET ASSETS, END OF PERIOD (000 OMITTED) $ 55,233 $ 3,600
29.RATIO OF EXPENSES TO AVERAGE NET ASSETS .91%A 1.50%A,E
30.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .81%A,F 1.50%A
REDUCTIONS
31.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET .29%A (.27)%A
ASSETS
32.PORTFOLIO TURNOVER 229%A 101%A
33.AVERAGE COMMISSION RATEG $ .0388 A $ .0382
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
H FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO NOVEMBER 30, 1996.
I SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
EQUITY GROWTH - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
34. YEARS ENDED NOVEMBER 30
35.SELECT
ED 1997J 1996 1995 1994E 1993 1992 1991 1990 1989 1988 1987
PER-SHARE
DATA AND
RATIOS
36.NET
ASSET $ 45.52 $ 40.39 $ 28.90 $ 29.74 $ 26.37 $ 24.28 $ 15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18
VALUE,
BEGINNING OF
PERIOD
37.INCOME
FROM
INVESTMENT
OPERATIONS
38. NET .03D .45D .28 .30 .19D .17 .04 .01 .06 .28I .00 D
INVESTMENT
INCOME
39. NET 2.92 7.00 11.69 .42 3.78 4.55 8.69 .34 5.50 2.59 (2.03)
REALIZED AND
UNREALIZED
GAIN (LOSS)
40. TOTAL 2.95 7.45 11.97 .72 3.97 4.72 8.73 .35 5.56 2.87 (2.03)
FROM
INVESTMENT
OPERATIONS
41.LESS
DISTRIBUTIONS
42. FROM (.37) (.21)F (.27) (.11) (.10) (.03) -- (.08) (.26) (.01) (.01)
NET
INVESTMENT
INCOME
43. FROM (1.23) (2.11)F (.16) (1.45) (.50) (2.60) -- (2.04) -- (.76) (1.22)
NET REALIZED
GAIN
44. IN -- -- (.05) -- -- -- -- -- -- -- --
EXCESS OF NET
REALIZED GAIN
45. TOTAL (1.60) (2.32) (.48) (1.56) (.60) (2.63) -- (2.12) (.26) (.77) (1.23)
DISTRIBUTIONS
46.NET
ASSET $ 46.87 $ 45.52 $ 40.39 $ 28.90 $ 29.74 $ 26.37 $ 24.28 $ 15.55 $ 17.32 $ 12.02 $ 9.92
VALUE,
END OF PERIOD
47.TOTAL 6.81% 19.68% 42.15% 2.46% 15.36% 21.14% 56.14% 2.75% 47.18% 29.77% (17.12)%
RETURNB,C
48.NET $ 1,106,643 $ 1,323,526 $ 791,074 $ 410,450 $ 296,466 $ 179,325 $ 68,766 $ 27,473 $ 24,523 $ 20,182 $ 43,537
ASSETS, END
OF PERIOD
(000
OMITTED)
49.RATIO
OF .78%A .79% .83% .86% .95% .98% 1.13% 1.74% 1.60% 1.47% 1.11%
EXPENSES
TO AVERAGE
NET ASSETS
50.RATIO
OF .75%A,G .77%G .83% .84%G .94%G .98% 1.13% 1.74% 1.60% 1.47% 1.11%
EXPENSES
TO AVERAGE
NET ASSETS
AFTER
EXPENSE
REDUCTIONS
51.RATIO
OF .44%A 1.11% .92% 1.00% .66% .73% .25% .07% .38% 1.20% .00%
NET
INVESTMENT
INCOME
TO AVERAGE
NET ASSETS
52.PORTFO
LIO 139%A 76% 97% 137% 160% 240% 254% 262% 269% 331% 226%
TURNOVER
53.AVERAGE $ .0425 $ .0414
COMMISSION
RATEH
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
F THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
AND TAX DIFFERENCES.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS AR CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
I DURING THE PERIOD, A SIGNIFICANT SHAREHOLDER REDEMPTION CAUSED AN
UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
J SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
54. YEARS ENDED OCTOBER 31
55.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996 1995E
56.NET ASSET VALUE, BEGINNING OF PERIOD $ 35.47 $ 30.97 $ 29.04
57.INCOME FROM INVESTMENT OPERATIONS
58. NET INVESTMENT INCOME .38D .77D .12
59. NET REALIZED AND UNREALIZED GAIN (LOSS) 3.39 4.74 1.81
60. TOTAL FROM INVESTMENT OPERATIONS 3.77 5.51 1.93
61.LESS DISTRIBUTIONS
62. FROM NET INVESTMENT INCOME (.71) (.61) --
63. FROM NET REALIZED GAIN (1.44) (.40) --
64. TOTAL DISTRIBUTIONS (2.15) (1.01) --
65.NET ASSET VALUE, END OF PERIOD $ 37.09 $ 35.47 $ 30.97
66.TOTAL RETURNB,C 10.86% 18.25% 6.65%
67.NET ASSETS, END OF PERIOD (000 OMITTED) $ 290,567 $ 250,283 $ 71,953
68.RATIO OF EXPENSES TO AVERAGE NET ASSETS .69%A .85% .82%A
69.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .68%A,F .84%F .81%A,F
REDUCTIONS
70.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 2.13%A 2.38% 2.33%A
71.PORTFOLIO TURNOVER 38%A 33% 39%
72.AVERAGE COMMISSION RATEG $ .0471 $ .0401
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
73. YEARS ENDED DECEMBER 31
74.SELECTED PER-SHARE DATA AND RATIOS 1997I 1996 1995E
75.NET ASSET VALUE, BEGINNING OF PERIOD $ 22.57 $ 24.80 $ 22.35
76.INCOME FROM INVESTMENT OPERATIONS
77. NET INVESTMENT INCOME (LOSS) (.04)D .29D .55
78. NET REALIZED AND UNREALIZED GAIN (LOSS) 2.86 .17 3.00
79. TOTAL FROM INVESTMENT OPERATIONS 2.82 .46 3.55
80.LESS DISTRIBUTIONS
81. FROM NET INVESTMENT INCOME -- (.34) (.55)
82. FROM NET REALIZED GAIN (.87) (2.35) (.55)
83. TOTAL DISTRIBUTIONS (.87) (2.69) (1.10)
84.NET ASSET VALUE, END OF PERIOD $ 24.52 $ 22.57 $ 24.80
85.TOTAL RETURNB,C 12.85% 1.99% 15.96%
86.NET ASSETS, END OF PERIOD (000 OMITTED) $ 3,960 $ 41,832 $ 20,429
87.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.24%A,F .78% .97%A
88.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.23%A,G .76%G .96%A,G
REDUCTIONS
89.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET (.30)%A 1.21% 2.55%A
ASSETS
90.PORTFOLIO TURNOVER 41%A 151% 142%
91.AVERAGE COMMISSION RATEH $ .0420 $ .0409
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO DECEMBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
I SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
LARGE CAP - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
92. YEAR ENDED
NOVEMBER 30
93.SELECTED PER-SHARE DATA AND RATIOSD 1997I 1996H
94.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.86 $ 10.00
95.INCOME FROM INVESTMENT OPERATIONS
96. NET INVESTMENT INCOME .03 .03
97. NET REALIZED AND UNREALIZED GAIN (LOSS) .75 1.83
98. TOTAL FROM INVESTMENT OPERATIONS .78 1.86
99.LESS DISTRIBUTIONS
100. FROM NET REALIZED GAIN (.09) --
101.NET ASSET VALUE, END OF PERIOD $ 12.55 $ 11.86
102.TOTAL RETURNB,C 6.64% 18.60%
103.NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,733 $ 9,144
104.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.10%A 1.50%A,E
105.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.07%A,F 1.48%A,F
REDUCTIONS
106.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .46%A .38%A
107.PORTFOLIO TURNOVER 101%A 59%A
108.AVERAGE COMMISSION RATEG $ .0371 $ .0306
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
H FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO NOVEMBER 30, 1996.
I SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
GROWTH & INCOME - INSTITUTIONAL CLASS
109.
110.SELECTED PER-SHARE DATA AND RATIOSD 1997G
111.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
112.INCOME FROM INVESTMENT OPERATIONS
113. NET INVESTMENT INCOME .05
114. NET REALIZED AND UNREALIZED GAIN (LOSS) .86
115. TOTAL FROM INVESTMENT OPERATIONS .91
116.LESS DISTRIBUTIONS
117. FROM NET INVESTMENT INCOME (.02)
118.NET ASSET VALUE, END OF PERIOD $ 10.89
119.TOTAL RETURNB,C 9.11%
120.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,240
121.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.25%A,E
122.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 1.17%A
123.PORTFOLIO TURNOVER 93%A
124.AVERAGE COMMISSION RATEF $ .0275
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE
FOR SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
G FOR THE PERIOD DECEMBER 31, 1996 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO MAY 31, 1997 (UNAUDITED).
EQUITY INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
125. YEARS ENDED NOVEMBER 30
126.SELECTED PER-SHARE DATA AND
RATIOS 1997H 1996 1995 1994D 1993 1992
127.NET ASSET VALUE, BEGINNING
OF PERIOD $ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08
128.INCOME FROM INVESTMENT OPERATIONS
129. NET INVESTMENT INCOME .21C .42C .45 .41C .39 .49
130. NET REALIZED AND UNREALIZED
GAIN (LOSS) 1.89 .3.37 4.28 1.05 2.02 1.79
131. TOTAL FROM INVESTMENT
OPERATIONS 2.10 3.79 4.73 1.46 2.41 2.28
132.LESS DISTRIBUTIONS
133. FROM NET INVESTMENT
INCOME (.21) (.42) (.43) (.32) (.36) (.48)
134. FROM NET REALIZED GAIN (.59) (.46) (.28) -- -- --
135. TOTAL DISTRIBUTIONS (.80) (.88) (.71) (.32) (.36) (.48)
136.NET ASSET VALUE, END OF
PERIOD $ 24.30 $ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88
137.TOTAL RETURNB,I 9.47% 19.54% 30.43% 9.82% 18.90% 20.91%
138.NET ASSETS, END OF PERIOD
(000 OMITTED) $ 464,643 $ 343,867 $ 297,453 $ 197,533 $ 191,138 $ 139,391
139.RATIO OF EXPENSES TO
AVERAGE NET ASSETS .71%A .71% .74% .73% .80% .71%F
140.RATIO OF EXPENSES TO AVERAGE
NET ASSETS AFTER EXPENSE .68%A,E .70%E .73%E .71%E .79%E .71%
REDUCTIONS
141.RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 1.85%A 2.02% 2.52% 2.62% 3.00% 3.77%
142.PORTFOLIO TURNOVER 50%A 78% 80% 140% 120% 51%
143.AVERAGE COMMISSION RATEG $ .0423 $ .0424
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
I TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
BALANCED - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
144. YEARS ENDED OCTOBER 31
145. SELECTED PER-SHARE DATA AND RATIOS 1997I 1996 1995D
146. NET ASSET VALUE, BEGINNING OF PERIOD $ 16.11 $ 15.40 $ 15.23
147. INCOME FROM INVESTMENT OPERATIONS
148. NET INVESTMENT INCOME .28H .54H .25
149. NET REALIZED AND UNREALIZED GAIN
(LOSS) 1.26 .87 .09
150. TOTAL FROM INVESTMENT OPERATIONS 1.54 1.41 .34
151. LESS DISTRIBUTIONS
152. FROM NET INVESTMENT INCOME (.32) (.67) (.17)
153. FROM NET REALIZED GAIN (.11) (.03) --
154. TOTAL DISTRIBUTIONS (.43) (.70) (.17)
155. NET ASSET VALUE, END OF PERIOD $ 17.22 $ 16.11 $ 15.40
156. TOTAL RETURNB,C 9.67% 9.41% 2.22%
157. NET ASSETS, END OF PERIOD (000
OMITTED) $ 25,190 $ 21,819 $ 993
158. RATIO OF EXPENSES TO AVERAGE NET
ASSETS .78%A 1.06% .92A,E
159. RATIO OF EXPENSES TO AVERAGE NET ASSETS
AFTER EXPENSE .78%A 1.03%F .91%A,F
REDUCTIONS
160. RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 3.45%A 3.54% 4.54%A
161. PORTFOLIO TURNOVER 75%A 223% 297%
162. AVERAGE COMMISSION RATEG $ .0452 $ .0106
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF
INSTITUTIONAL CLASS SHARES) TO OCTOBER 31, 1995.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS'
EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND
IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
I SIX MONTHS ENDED APRIL 30, 1997
HIGH YIELD - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
163. YEARS ENDED OCTOBER 31
164.SELECTED PER-SHARE DATA AND RATIOS H 1997G 1996 1995 D
165.NET ASSET VALUE, BEGINNING OF PERIOD $ 12.120 $ 11.760 $ 11.560
166.INCOME FROM INVESTMENT OPERATIONS
167. NET INVESTMENT INCOME .537 1.070 .390
168. NET REALIZED AND UNREALIZED GAIN (LOSS) (.117) .368 .193
169. TOTAL FROM INVESTMENT OPERATIONS .420 1.438 .583
170.LESS DISTRIBUTIONS
171. FROM NET INVESTMENT INCOME (.660) (1.078) (.383)
172. FROM NET REALIZED GAIN (.060) -- --
173. TOTAL DISTRIBUTIONS (.720) (1.078) (.383)
174.NET ASSET VALUE, END OF PERIOD $ 11.820 $ 12.120 $ 11.760
175.TOTAL RETURNB,C 3.51% 12.81% 5.07%
176.NET ASSETS, END OF PERIOD (000 OMITTED) $ 51,119 $ 37,632 $ 126
177.RATIO OF EXPENSES TO AVERAGE NET ASSETS .88%A 1.10% .70%A
178.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .87%A,E 1.05%E .70%A
REDUCTIONS
179.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 9.02%A 9.26% 8.77%A
180.PORTFOLIO TURNOVER 94%A 121% 112%
181.AVERAGE COMMISSION RATEF $ .0369 $ .0388
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
G SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED USING AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
STRATEGIC INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
182. YEARS ENDED DECEMBER 31
183.SELECTED PER-SHARE DATA AND RATIOS 1997H 1996 1995E
184.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.300 $ 11.030 $ 10.890
185.INCOME FROM INVESTMENT OPERATIONS
186. NET INVESTMENT INCOME .417D .826D .456
187. NET REALIZED AND UNREALIZED GAIN (LOSS) .083 .548 .340
188. TOTAL FROM INVESTMENT OPERATIONS .500 1.374 .796
189.LESS DISTRIBUTIONS
190. FROM NET INVESTMENT INCOME (.380) (.804) (.426)
191. FROM NET REALIZED GAIN (.060) (.300) (.230)
192. TOTAL DISTRIBUTIONS (.440) (1.104) (.656)
193.NET ASSET VALUE, END OF PERIOD $ 11.360 $ 11.300 $ 11.030
194.TOTAL RETURNB,C 4.54% 13.04% 7.47%
195.NET ASSETS, END OF PERIOD (000 OMITTED) $ 6,318 $ 6,107 $ 107
196.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.10%A,F 1.10%F 1.10%A,F
197.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE 1.09%A,G 1.10% 1.10%A
REDUCTIONS
198.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 7.49%A 7.47% 7.53%A
199.PORTFOLIO TURNOVER 139%A 119% 193%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO DECEMBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
MORTGAGE SECURITIES - INSTITUTIONAL CLASS
200. YEAR ENDED
JULY 31
201.SELECTED PER-SHARE DATA AND RATIOS F 1997E
202.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.830
203.INCOME FROM INVESTMENT OPERATIONS
204. NET INVESTMENT INCOME .263
205. NET REALIZED AND UNREALIZED GAIN (LOSS) .226
206. TOTAL FROM INVESTMENT OPERATIONS .489
207.LESS DISTRIBUTIONS
208. FROM NET INVESTMENT INCOME (.279)
209.NET ASSET VALUE, END OF PERIOD $ 11.040
210.TOTAL RETURNB,C 4. 59 %
211.NET ASSETS, END OF PERIOD (000 OMITTED) $ 13,17 7
212.RATIO OF EXPENSES TO AVERAGE NET ASSETS .75%A,D
213.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .70%A,G
REDUCTIONS
214.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.29%A
215.PORTFOLIO TURNOVER 149%
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FOR THE PERIOD MARCH 3, 1997 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO JULY 31, 1997.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
216. YEARS ENDED OCTOBER 31
217.SELECTED PER-SHARE DATA AND RATIOS 1997G 1996 1995E
218.NET ASSET VALUE, BEGINNING OF PERIOD $ 9.480 $ 9.670 $ 9.560
219.INCOME FROM INVESTMENT OPERATIONS
220. NET INVESTMENT INCOME .287D .604D .197
221. NET REALIZED AND UNREALIZED GAIN (LOSS) (.178) (.180) .108
222. TOTAL FROM INVESTMENT OPERATIONS .109 .424 .305
223.LESS DISTRIBUTIONS
224. FROM NET INVESTMENT INCOME (.289) (.614) (.195)
225.NET ASSET VALUE, END OF PERIOD $ 9.300 $ 9.480 $ 9.670
226.TOTAL RETURNB,C 1.16% 4.58% 3.23%
227.NET ASSETS, END OF PERIOD (000 OMITTED) $ 20,600 $ 27,660 $ 14,588
228.RATIO OF EXPENSES TO AVERAGE NET ASSETS .75%A,F .75%F .75%A,F
229.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.14%A 6.43% 6.48%A
230.PORTFOLIO TURNOVER 160%A 153% 261%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
INTERMEDIATE BOND - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
231. YEARS ENDED NOVEMBER 30
232.SELECTED 1997G 1996 1995 1994E 1993 1992 1991 1990 1989 1988 1987
PER-SHARE
DATA AND
RATIOS
233.NET $ 10.620 $ 10.770 $ 10.270 $ 11.160 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180 $ 10.250 $ 11.240
ASSET VALUE,
BEGINNING OF
PERIOD
234.INCOME
FROM
INVESTMENT
OPERATIONS
235. NET .334D .705D .671 .602 .832 .840 .884 .901 .937 .944 .953
INVESTMENT
INCOME
236. NET (.220) (.151) .499 (.833) .531 .102 .411 (.270) .230 (.070) (.770)
REALIZED AND
UNREALIZED
GAIN (LOSS)
237. TOTAL .114 .554 1.170 (.231) 1.363 .942 1.295 .631 1.167 .874 .183
FROM
INVESTMENT
OPERATIONS
238.LESS
DISTRIBUTIONS
239. FROM (.334) (.704) (.670) (.597) (.843) (.852) (.885) (.901) (.937) (.944) (.953)
NET
INVESTMENT
INCOME
240. FROM -- -- -- -- -- -- -- -- -- -- (.220)
NET REALIZED
GAIN
241. FROM -- -- -- (.062) -- -- -- -- -- -- --
RETURN OF
CAPITAL
242. TOTAL (.334) (.704) (.670) (.659) (.843) (.852) (.885) (.901) (.937) (.944) (1.173)
DISTRIBUTIONS
243.NET $ 10.400 $ 10.620 $ 10.770 $ 10.270 $ 11.160 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180 $ 10.250
ASSET VALUE,
END OF PERIOD
244.TOTAL 1.10% 5.40% 11.73% (2.10)% 13.17% 9.21% 13.35% 6.46% 12.03% 8.81% 1.78%
RETURNB,C
245.NET $ 191,827 $ 211,866 $ 208,861 $ 172,122 $ 183,790 $ 160,156 $ 327,756 $ 356,564 $ 426,832 $ 418,929 $ 407,228
ASSETS, END
OF PERIOD
(000
OMITTED)
246.RATIO OF .67%A .66% .67%F .61% .64% .57% .57% .58% .54% .54% .53%
EXPENSES TO
AVERAGE NET
ASSETS
247.RATIO OF 6.45%A 6.69% 6.47% 6.45% 7.41% 7.96% 8.59% 8.90% 9.16% 9.16% 9.03%
NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS
248.PORTFOLI 121%A 200% 189% 68% 59% 7% 60% 59% 87% 48% 92%
O TURNOVER
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
SHORT FIXED-INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
249. YEARS ENDED OCTOBER 31
250.SELECTED PER-SHARE DATA AND RATIOS 1997G 1996 1995E
251.NET ASSET VALUE, BEGINNING OF PERIOD $ 9.370 $ 9.470 $ 9.450
252.INCOME FROM INVESTMENT OPERATIONS
253. NET INVESTMENT INCOME .293D .598D .137
254. NET REALIZED AND UNREALIZED GAIN (LOSS) (.090) (.098) .067
255. TOTAL FROM INVESTMENT OPERATIONS .203 .500 .204
256.LESS DISTRIBUTIONS
257. FROM NET INVESTMENT INCOME (.293) (.600) (.136)
258. FROM RETURN OF CAPITAL -- -- (.048)
259. TOTAL DISTRIBUTIONS (.293) (.600) (.184)
260.NET ASSET VALUE, END OF PERIOD $ 9.280 $ 9.370 $ 9.470
261.TOTAL RETURNB,C 2.20% 5.45% 2.18%
262.NET ASSETS, END OF PERIOD (000 OMITTED) $ 4,604 $ 9,200 $ 9,827
263.RATIO OF EXPENSES TO AVERAGE NET ASSETS .75%A,F .80%F .85%A,F
264.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 6.30%A 6.37% 6.10%A
265.PORTFOLIO TURNOVER 107%A 124% 179%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
HIGH INCOME MUNICIPAL - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
266. YEARS ENDED OCTOBER 31
267.SELECTED PER-SHARE DATA AND RATIOS 1997F 1996 1995H
268.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.720 $ 11.880 $ 11.700
269.INCOME FROM INVESTMENT OPERATIONS
270. NET INTEREST INCOME .313E .707E,G .232
271. NET REALIZED AND UNREALIZED GAIN (LOSS) .002 (.197) .180
272. TOTAL FROM INVESTMENT OPERATIONS .315 .510 .412
273.LESS DISTRIBUTIONS
274. FROM NET INTEREST INCOME (.353)G (.670) (.232)
275. IN EXCESS OF NET INTEREST INCOME (.002)I -- --
276. TOTAL DISTRIBUTIONS (.355) (.670) (.232)
277.NET ASSET VALUE, END OF PERIOD $ 11.680 $ 11.720 $ 11.880
278.TOTAL RETURNB,C 2.70% 4.41% 3.55%
279.NET ASSETS, END OF PERIOD (000 OMITTED) $ 774 $ 927 $ 154
280.RATIO OF EXPENSES TO AVERAGE NET ASSETS .75%A,D .75%D .75%A,D
281.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 5.36%A 5.88% 5.89%A
282.PORTFOLIO TURNOVER 44%A 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
G NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
H FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
I THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
MUNICIPAL BOND - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
283. YEAR ENDED
DECEMBER 31
284.SELECTED PER-SHARE DATA AND RATIOS 1997F 1996E
285.NET ASSET VALUE, BEGINNING OF PERIOD $ 8.190 $ 7.990
286.INCOME FROM INVESTMENT OPERATIONS
287. NET INTEREST INCOME .192 .196
288. NET REALIZED AND UNREALIZED GAIN (LOSS) .040 .200
289. TOTAL FROM INVESTMENT OPERATIONS .232 .396
290.LESS DISTRIBUTIONS
291. FROM NET INTEREST INCOME (.192) (.196)
292.NET ASSET VALUE, END OF PERIOD $ 8.230 $ 8.190
293.TOTAL RETURNB,C 2.88% 5.00%
294.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,133 $ 846
295.RATIO OF EXPENSES TO AVERAGE NET ASSETS .75%A,D .75%A,D
296.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.77%A 4.88%A
297.PORTFOLIO TURNOVER 34%A 35%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FOR THE PERIOD JULY 1, 1996 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO DECEMBER 31, 1996.
F SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
298. YEARS ENDED NOVEMBER 30
299.SELECTED 1997D 1996 1995 1994E 1993 1992 1991 1990 1989 1988 1987
PER-SHARE
DATA AND
RATIOS
300.NET $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080 $ 10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990
ASSET VALUE,
BEGINNING OF
PERIOD
301.INCOME
FROM
INVESTMENT
OPERATIONS
302. NET .238 .487 .477 .481 .536 .666 .682 .689 .674 .650 .641
INTEREST
INCOME
303. NET (.079) .050 .950 (1.030) .260 .280 .160 .030 .090 .140 (.540)
REALIZED AND
UNREALIZED
GAIN (LOSS)
304. TOTAL .159 .537 1.427 (.549) .796 .946 .842 .719 .764 .790 .101
FROM
INVESTMENT
OPERATIONS
305.LESS
DISTRIBUTIONS
306. FROM (.238) (.487) (.477) (.481) (.536) (.666) (.682) (.689) (.674) (.650) (.641)
NET INTEREST
INCOME
307. FROM (.001) -- -- -- (.880) -- -- -- -- -- (.070)
NET REALIZED
GAIN
308. IN -- -- -- (.020) -- -- -- -- -- -- --
EXCESS OF
NET REALIZED
GAIN
309. TOTAL (.239) (.487) (.477) (.501) (1.416) (.666) (.682) (.689) (.674) (.650) (.711)
DISTRIBUTIONS
310.NET $ 10.330 $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080 $ 10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380
ASSET VALUE,
END OF PERIOD
311.TOTAL 1.56% 5.36% 15.44% (5.43)% 8.01% 9.01% 8.15% 7.04% 7.50% 7.77% .97%
RETURNB,C
312.NET $ 7,468 $ 6,455 $ 11,085 $ 11,702 $ 15,076 $ 28,428 $ 100,294 $ 111,506 $ 121,418 $ 132,443 $ 162,857
ASSETS, END
OF PERIOD
(000
OMITTED)
313.RATIO OF .75%A,F .75%F .70%F .65%F .65%F .66%F .61% .62% .65% .63% .59%
EXPENSES TO
AVERAGE NET
ASSETS
314.RATIO OF .75%A .74%G .70% .65% .65% .66% .61% .62% .65% .63% .59%
EXPENSES TO
AVERAGE NET
ASSETS
AFTER
EXPENSE
REDUCTIONS
315.RATIO OF 4.64%A 4.68% 4.96% 4.75% 5.01% 6.05% 6.40% 6.53% 6.45% 6.20% 6.01%
NET INTEREST
INCOME TO
AVERAGE NET
ASSETS
316.PORTFOLI 21%A 35% 53% 53% 46% 36% 20% 32% 31% 24% 43%
O TURNOVER
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
E EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
SHORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
317. YEARS ENDED NOVEMBER 30
318.SELECTED PER-SHARE DATA AND RATIOS 1997G 1996 1995D
319.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.210 $ 10.230 $ 10.070
320.INCOME FROM INVESTMENT OPERATIONS
321. NET INTEREST INCOME .209 .407 .178
322. NET REALIZED AND UNREALIZED GAIN (LOSS) (.070) .010 .160
323. TOTAL FROM INVESTMENT OPERATIONS .139 .417 .338
324.LESS DISTRIBUTIONS
325. FROM NET INTEREST INCOME (.209) (.407) (.178)
326. FROM NET REALIZED GAIN (.030) (.030) --
327. TOTAL DISTRIBUTIONS (.239) (.437) (.178)
328.NET ASSET VALUE, END OF PERIOD $ 10.110 $ 10.210 $ 10.230
329.TOTAL RETURNB,C 1.38% 4.19% 3.37%
330.NET ASSETS, END OF PERIOD (000 OMITTED) $ 457 $ 487 $ 134
331.RATIO OF EXPENSES TO AVERAGE NET ASSETS .75%A,E .75%E .75%A,E
332.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .75%A .74%F .75%A
REDUCTIONS
333.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.15%A 4.03% 4.18%A
334.PORTFOLIO TURNOVER 35%A 62% 80%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO NOVEMBER 3 0 , 1995.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G SIX MONTHS ENDED MAY 31, 199 7 (UNAUDITED)
CALIFORNIA MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C>
335. YEAR ENDED
OCTOBER 31
336.SELECTED PER-SHARE DATA AND RATIOS 1997F 1996G
337.NET ASSET VALUE, BEGINNING OF PERIOD $ 9.910 $ 10.000
338.INCOME FROM INVESTMENT OPERATIONS
339. NET INTEREST INCOME .217 .307
340. NET REALIZED AND UNREALIZED GAIN (LOSS) (.100) (.090)
341. TOTAL FROM INVESTMENT OPERATIONS .117 .217
342.LESS DISTRIBUTIONS
343. FROM NET INTEREST INCOME (.217) (.307)
344.NET ASSET VALUE, END OF PERIOD $ 9.810 $ 9.910
345.TOTAL RETURNB,C 1.18% 2.27%
346.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,889 $ 1,841
347.RATIO OF EXPENSES TO AVERAGE NET ASSETS .75%A,D .75%A,D
348.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .74%A,E .72%A,E
REDUCTIONS
349.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.48%A 4.51%A
350.PORTFOLIO TURNOVER 13%A 21%A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN S WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
G FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996.
NEW YORK MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
351. YEARS ENDED OCTOBER 31
352.SELECTED PER-SHARE DATA AND RATIOS 1997G 1996 1995F
353.NET ASSET VALUE, BEGINNING OF PERIOD $ 10.470 $ 10.400 $ 10.000
354.INCOME FROM INVESTMENT OPERATIONS
355. NET INTEREST INCOME .239 .468 .095
356. NET REALIZED AND UNREALIZED GAIN (LOSS) (.040) .070 .400
357. TOTAL FROM INVESTMENT OPERATIONS .199 .538 .495
358.LESS DISTRIBUTIONS
359. FROM NET INTEREST INCOME (.239) (.468) (.095)
360. FROM NET REALIZED GAIN (.060) -- --
361. TOTAL DISTRIBUTIONS (.299) (.468) (.095)
362.NET ASSET VALUE, END OF PERIOD $ 10.370 $ 10.470 $ 10.400
363.TOTAL RETURNB,C 1.91% 5.28% 4.96%
364.NET ASSETS, END OF PERIOD (000 OMITTED) $ 732 $ 718 $ 683
365.RATIO OF EXPENSES TO AVERAGE NET ASSETS .75%A,D .75%D .75%A,D
366.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE .74%A,E .68%E .75%A
REDUCTIONS
367.RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.53%A 4.53% 4.75%A
368.PORTFOLIO TURNOVER 18%A 17% 0%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FOR THE PERIOD AUGUST 21, 1995 (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1995.
G SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or
YIELD.
For Growth Opportunities, Balanced, High Yield, Government Investment,
Short Fixed-Income, High Income Municipal, California Municipal
Income, and New York Municipal Income, the fiscal year runs from
November 1 to October 31. For TechnoQuant Growth, Mid Cap, Equity
Growth, Large Cap, Growth & Income, Equity Income, Intermediate Bond,
Intermediate Municipal Income, and Short-Intermediate Municipal
Income, the fiscal year runs from December 1 to November 30. For
Strategic Opportunities, Strategic Income, and Municipal Bond, the
fiscal year runs from January 1 to December 31. For Mortgage
Securities, the fiscal year runs from August 1 to July 31. The tables
below show the performance of Institutional Class of each fund (except
Mortgage Securities) over past fiscal periods ended April 30, 1997,
May 31, 1997, or June 30, 1997, as indicated. The performance of
Institutional Class of Mortgage Securities over past fiscal years is
shown in the tables below. The charts in Appendix B, beginning on page
, present Institutional Class's calendar year performance
compared to different measures, including a competitive funds average.
GROWTH FUNDS - INSTITUTIONAL CLASS
AVERAGE ANNUAL TOTAL RETURN* CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
TECHNOQUANT
GROWTH[B] N/A N/A N/A N/A N/A N/A 0.00%
MID CAP[B] 10.38% N/A 18.53% 6.23% 10.38% N/A 24.28%
EQUITY
GROWTH[B] 15.48% 19.12% 19.27% 6.81% 15.48% 139.86% 482.76%
GROWTH
OPPORTUNITIES[A] 20.95% 17.63% 20.88% 10.86% 20.95% 125.23% 500.82%
STRATEGIC
OPPORTUNITIES[C] 14.89% 14.15% 12.23% 12.85% 14.89% 93.80% 217.10
LARGE CAP[B] 22.20% N/A 20.16% 6.64% 22.20% N/A 26.48%
GROWTH &
INCOME[B] N/A N/A N/A N/A N/A N/A 9.11%
EQUITY INCOME[B] 20.41% 18.47% 13.36% 9.47% 20.41% 133.37% 250.57%
BALANCED[A] 16.81% 9.70% 11.33% 9.67% 16.81% 58.84% 192.37%
TAXABLE INCOME FUNDS - INSTITUTIONAL CLASS
AVERAGE ANNUAL TOTAL RETURN* CUMULATIVE TOTAL RETURN*
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH YIELD [A] 9.78% 11.90% 13.22% 3.51% 9.78% 75.47% 246.14 %
STRATEGIC
INCOME [C] 13.97% N/A 14.90% 4.54% 13.97% N/A 44.87 %
MORTGAGE
SECURITIES [D] 10.22% 7.65% 8.79% N/A 10.22% 44.56% 132.27 %
GOVERNMENT
INVESTMENT [A] 6.03% 6.49% 7.45% 1.16% 6.03% 36.95% 105.23 %
INTERMEDIATE
BOND [B] 6.89% 6.70% 8.11% 1.10% 6.89% 38.31% 118.19 %
SHORT FIXED-
INCOME [A] 5.82% 5.36% 7.01% 2.20% 5.82% 29.84% 92.06 %
MUNICIPAL FUNDS - INSTITUTIONAL CLASS
AVERAGE ANNUAL TOTAL RETURN* CUMULATIVE TOTAL RETURN*
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
HIGH INCOME
MUNICIPAL [A] 6.46% 6.55% 8.92% 2.70% 6.46% 37.32% 127.72%
MUNICIPAL
BOND[C] 7.89% 6.47% 7.85% 2.88% 7.89% 36.83% 112.99%
INTERMEDIATE
MUNICIPAL 7.09% 5.76% 6.65% 1.56% 7.09% 32.33% 90.41%
INCOME [B]
SHORT-INTERMEDIATE
MUNICIPAL 4.72% N/A 4.67% 1.38% 4.72% N/A 15.80%
INCOME [B]
STATE MUNICIPAL FUNDS - INSTITUTIONAL CLASS
AVERAGE ANNUAL TOTAL RETURN* CUMULATIVE TOTAL RETURN
PAST 1 YEAR PAST 5 YEARS 10 YEARS/ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS 10 YEARS/
LIFE OF FUND+ LIFE OF FUND+
CALIFORNIA
MUNICIPAL 6.50% N/A 2.91% 1.18% 6.50% N/A 3.48%
INCOME[A]
NEW YORK MUNICIPAL
INCOME [A] 6.29% N/A 7.25% 1.91% 6.29% N/A 12.61%
</TABLE>
[A] PERIOD ENDED APRIL 30, 1997.
[B] PERIOD ENDED MAY 31, 1997.
[C] PERIOD ENDED JUNE 30, 1997.
[D] PERIOD ENDED JULY 31, 1997.
+ LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS (NOVEMBER
18, 1987 FOR GROWTH OPPORTUNITIES; OCTOBER 31, 1994 FOR STRATEGIC
INCOME; SEPTEMBER 16, 1987 FOR SHORT FIXED-INCOME AND HIGH INCOME
MUNICIPAL; MARCH 16, 1994 FOR SHORT-INTERMEDIATE MUNICIPAL INCOME;
AUGUST 21, 1995 FOR NEW YORK MUNICIPAL INCOME; FEBRUARY 20, 1996 FOR
MID CAP, LARGE CAP, AND CALIFORNIA MUNICIPAL INCOME; AND DECEMBER 31,
1996 FOR TECHNOQUANT GROWTH AND GROWTH & INCOME) THROUGH THE
SEMIANNUAL PERIODS ENDED 1997 (THROUGH THE ANNUAL PERIOD ENDED 1997
FOR MORTGAGE SECURITIES).
* INITIAL OFFERING OF INSTITUTIONAL CLASS OF GROWTH OPPORTUNITIES,
BALANCED, HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, SHORT
FIXED-INCOME, HIGH INCOME MUNICIPAL, AND SHORT-INTERMEDIATE MUNICIPAL
INCOME TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS PRIOR
TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.65% FOR GROWTH OPPORTUNITIES, STRATEGIC OPPORTUNITIES, AND BALANCED,
0.25% FOR HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, AND
HIGH INCOME MUNICIPAL, AND 0.15% FOR SHORT FIXED-INCOME AND
SHORT-INTERMEDIATE MUNICIPAL INCOME. TOTAL RETURNS FOR INSTITUTIONAL
CLASS PRIOR TO JULY 3, 1995 WOULD HAVE BEEN HIGHER IF CLASS T'S 12B-1
FEE HAD NOT BEEN REFLECTED.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF STRATEGIC OPPORTUNITIES
TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS PRIOR TO JULY
3, 1995 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF MUNICIPAL BOND TOOK
PLACE ON JULY 1, 1996. INSTITUTIONAL CLASS RETURNS PRIOR TO JULY 1,
1996 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF MORTGAGE SECURITIES
TOOK PLACE ON MARCH 3, 1997. INSTITUTIONAL CLASS RETURNS PRIOR TO
MARCH 3, 1997 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
If FMR had not reimbursed certain class expenses during these periods,
total returns would have been lower.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
Average annual total returns covering periods of less than one year
assume that performance will remain constant for the rest of the year.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields
are calculated according to a standard that is required for all stock
and bond funds. Because this differs from other accounting methods,
the quoted yield may not equal the income actually paid to
shareholders.
This difference may be significant for funds whose investments are
denominated in foreign securities.
In calculating yield, a fund may from time to time use a security's
coupon rate instead of its yield to maturity in order to reflect the
risk premium on that security. This practice will have the effect of
reducing a fund's yield.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn
before taxes to equal a tax-free yield.
THE COMPETITIVE FUNDS AVERAGE is each fund's applicable Lipper Funds
Average, which reflects the performance of mutual funds with similar
investment objectives. These averages, published by Lipper Analytical
Services, Inc., exclude the effect of sales loads.
STANDARD & POOR'S 500 INDEX (S&P 500(registered trademark)) is a
widely recognized, unmanaged index of common stocks.
STANDARD & POOR'S MIDCAP 400 INDEX is a widely recognized, unmanaged
index of 400 medium-capitalization stocks.
MERRILL LYNCH HIGH YIELD MASTER INDEX is a market capitalization
weighted index of all domestic and yankee high-yield bonds. Issues
included in the index have maturities of at least one year and have a
credit rating lower than BBB-/Baa3, but are not in default.
LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX is a market
value weighted performance benchmark for government and corporate
fixed-rate debt issues with maturities between one and three years.
SALOMON BROTHERS MORTGAGE INDEX is a market capitalization weighted
index of 15- and 30-year fixed-rate securities backed by mortgage
pools of the Government National Mortgage Association (GNMA), Fannie
Mae and Federal Home Loan Mortgage Corporation (FHLMC), and Fannie Mae
and FHLMC balloon mortgages with fixed-rate coupons.
SALOMON BROTHERS TREASURY/AGENCY INDEX is a market capitalization
weighted index of U.S. Treasury and U.S. government agency securities
with fixed-rate coupons and weighted average lives of at least one
year.
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is a
market value weighted performance benchmark for government and
corporate fixed-rate debt issues with maturities between one and 10
years.
Unlike Institutional Class's returns, the total returns of each
comparative index do not include the effect of any brokerage
commissions, transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
The Institutional Class of each equity fund may quote its adjusted net
asset value including all distributions paid. This value may be
averaged over specified periods and may be used to calculate a class's
moving average.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please contact your
investment professional , or call 1-800-843-3001.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. TechnoQuant Growth,
Equity Growth, Mid Cap, Large Cap, and Growth & Income are diversified
funds of Fidelity Advisor Series I, a Massachusetts business trust
organized on June 24, 1983. Growth Opportunities, Balanced, High
Yield, Government Investment, and Short Fixed-Income are diversified
funds and Strategic Income is a non-diversified fund of Fidelity
Advisor Series II, a Massachusetts business trust organized on April
23, 1986. Equity Income is a diversified fund of Fidelity Advisor
Series III, a Massachusetts business trust organized on May 17, 1982.
Intermediate Bond is a diversified fund of Fidelity Advisor Series IV,
a Massachusetts business trust organized on May 6, 1983. High Income
Municipal is a diversified fund and California Municipal Income and
New York Municipal Income are non-diversified funds of Fidelity
Advisor Series V, a Massachusetts business trust organized on April
23, 1986. Intermediate Municipal Income is a diversified fund and
Short-Intermediate Municipal Income is a non-diversified fund of
Fidelity Advisor Series VI, a Massachusetts business trust organized
on June 1, 1983. Strategic Opportunities is a diversified fund of
Fidelity Advisor Series VIII, a Massachusetts business trust organized
on September 22, 1983. Mortgage Securities is a diversified fund of
Fidelity Income Fund, a Massachusetts business trust organized on
August 7, 1984. Municipal Bond is a diversified fund of Fidelity
Municipal Trust, a Massachusetts business trust organized on June 22,
1984. Each trust is an open-end management investment company. There
is a remote possibility that one fund might become liable for a
misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
funds' activities, review contractual arrangements with companies that
provide services to the funds, and review the funds' performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. The transfer agent will mail proxy
materials in advance, including a voting card and information about
the proposals to be voted on. The number of votes you are entitled to
is based upon the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust,
respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business
address at 82 Devonshire Street, Boston, Massachusetts 02109. It
includes a number of different subsidiaries and divisions which
provide a variety of financial services and products. The funds employ
various Fidelity companies to perform activities required for their
operation.
The funds are managed by FMR, which chooses each fund's investments
and handles its business affairs. FMR chooses investments with the
assistance of foreign affiliates for all funds except Government
Investment, High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income.
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for TechnoQuant
Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, Balanced,
High Yield, Strategic Income, Mortgage Securities, Intermediate Bond,
and Short Fixed-Income.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan, serves as a sub-adviser for TechnoQuant
Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, Balanced,
High Yield, Strategic Income, Mortgage Securities, Intermediate Bond,
and Short Fixed-Income.
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda, serves as a sub-adviser for Strategic
Income.
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIA(U.K.)L), in London, England, serves as a sub-adviser for
Strategic Income.
(small solid bullet) Fidelity Investment Japan Limited (FIJ), in
Tokyo, Japan , serves as a sub-adviser for Strategic Income.
As of September 30, 1997, FMR advised funds having approximately 33
million shareholder accounts with a total value of more than $521
billion.
John Avery is associate manager of Advisor Balanced, which he has
managed since September 1997. He also manages another Fidelity fund.
Mr. Avery joined Fidelity as an analyst in 1995. Previously, he was an
analyst for Putnam Investments from 1993 to 1994. Mr. Avery received
his MBA from The Wharton School at the University of Pennsylvania in
1993.
John Carlson is Vice President and lead manager of Advisor
Strategic Income, which he has managed since August 1995. He also
manages several other Fidelity funds. Prior to joining Fidelity in
1995, Mr. Carlson was Executive Director of emerging markets at Lehman
Brothers International from 1992 through 1995.
Robert Chow is manager of Advisor Equity Income, which he has managed
since March 1996. Previously, he managed other Fidelity funds. Since
joining Fidelity in 1989, Mr. Chow has worked as an analyst, portfolio
assistant , and manager.
Katherine Collins is manager of Advisor Mid Cap, which she has managed
since January 1997. She also manages another Fidelity fund. Since
joining Fidelity in 1990, Ms. Collins has worked as an analyst and
manager.
Bettina Doulton is Vice President and lead manager of Advisor
Balanced, which she has managed since March 1996. She also manages
other Fidelity funds. Since joining Fidelity in 1986, Ms. Doulton has
worked as a research assistant, analyst , and manager.
Andrew Dudley is manager of Advisor Short Fixed-Income, which he has
managed since February 1997. Prior to joining Fidelity as a manager
in 1996, Mr. Dudley was a portfolio manager with Putnam
Investments from 1991 to 1996.
Margaret Eagle is Vice President and manager of Advisor High Yield and
Advisor Strategic Income , which she has managed since January
1987 and January 1996, respectively. Ms. Eagle manages the high
yield investments for Advisor Strategic Income. In addition , she
is a Senior Vice President of Fidelity Trust Company. Ms. Eagle joined
Fidelity in 1980.
* George Fischer is Vice President and manager of Advisor
Municipal Bond and Advisor High Income Municipal, which he has managed
since October 1995 and April 1997, respectively. He also manages
several other Fidelity funds. Since joining Fidelity in 1989, Mr.
Fischer has worked as an analyst and manager.
Kevin Grant is Vice President and manager of Advisor Intermediate Bond
and Advisor Balanced , which he has managed since October 1995
and March 1996, respectively. Mr. Grant manages the fixed-income
investments for Advisor Balanced. He also manages several other
Fidelity funds. Prior to joining Fidelity in 1993, Mr. Grant was a
vice president and chief mortgage strategist at Morgan Stanley for
three years.
Brian Hogan is manager of Advisor Strategic Income 's emerging
market securities , which he has managed since September 1997 .
Since joining Fidelity in 1994, Mr. Hogan has worked as a fixed-income
analyst, research analyst , and manager. Previously, he worked
as an analyst for Conseco Capital Management from 1993 to 1994 and
Aegon USA Investment Management from 1990 to 1993.
Curt Hollingsworth is Vice President and manager of Advisor Government
Investment and Advisor Strategic Incom e, both of which he has
managed since February 1997. Mr. Hollingsworth manages the domestic
investment grade and U.S. Government investments for Advisor Strategic
Income . He also manages several other Fidelity funds. Since
joining Fidelity in 1983, Mr. Hollingsworth has worked as a
fixed-income trader and portfolio manager.
Jonathan Kelly is manager of Advisor Strategic Income's foreign bond
investments in developed markets, which he has managed since January
1996. Previously, he managed other Fidelity funds. Since joining
Fidelity in 1991, Mr. Kelly has worked as a foreign bond analyst and
manager.
Tim Krochuk is manager of Advisor TechnoQuant Growth, which he has
managed since inception. He also manages another Fidelity fund.
Previously, he was a quantitative analyst. Mr. Krochuk joined Fidelity
as a research associate in 1992, after receiving a bachelor of arts
degree in economics/pre-med from Harvard University.
Harris Leviton is Vice President and manager of Advisor Strategic
Opportunities, which he has managed since March 1996. Previously, he
managed other Fidelity funds. Since joining Fidelity in 1986, he has
worked as an analyst and manager.
Norm Lind is Vice President and manager of Advisor New York Municipal
Income and Advisor Short-Intermediate Municipal Income, which he has
managed since August 1995 and October 1995, respectively. He also
manages several other Fidelity funds. Since joining Fidelity in
1986, Mr. Lind has worked as an analyst and manager.
David Murphy is Vice President and manager of Advisor Intermediate
Municipal Income, which he has managed since March 1995. He also
manages several other Fidelity funds. Mr. Murphy joined Fidelity as a
portfolio manager in 1989.
Jonathan Short is Vice President and manager of Advisor California
Municipal Income, which he has managed since inception. He also
manages several other Fidelity funds. Since joining Fidelity in 1990,
Mr. Short has worked as an analyst and manager.
Thomas Silvia is manager of Advisor Mortgage Securities . He
has been a co-manager of the fund since February 1997. Mr.
Silvia joined Fidelity as a senior mortgage trader in 1993.
Previously, he was a quantitative analyst with Donaldson, Lufkin &
Jenrette in New York from 1990 to 1993.
Thomas Sprague is Vice President and manager of Advisor Large Cap,
which he has managed since March 1996. He also manages another
Fidelity fund. Since joining Fidelity in 1989, he has worked as an
analyst and manager.
Beth Terrana is Vice President and manager of Advisor Growth & Income,
which she has managed since inception. She also manages other Fidelity
funds. Since joining Fidelity in 1983, Ms. Terrana has worked as an
analyst, portfolio assistant , and manager.
Jennifer Uhrig is Vice President and manager of Advisor Equity Growth,
which she has managed since January 1997. She also manages another
Fidelity fund. Since joining Fidelity in 1987, Ms. Uhrig has worked as
an analyst and manager.
George Vanderheiden is Vice President and manager of Advisor Growth
Opportunities, which he has managed since November 1987. He also
manages several other Fidelity funds. Mr. Vanderheiden joined Fidelity
in 1971.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services.
Fidelity Investments Institutional Operations Company, Inc. (FIIOC)
performs transfer agent servicing functions for the Institutional
Class of the Equity Funds, High Yield, Strategic Income, Mortgage
Securities, Government Investment, Intermediate Bond, and Short
Fixed-Income. UMB Bank, n.a. (UMB) is the transfer agent for High
Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and
New York Municipal Income, although it employes FIIOC to perform these
functions for the Institutional Class of each fund. UMB is
located at 1010 Grand Avenue, Kansas City, Missouri.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant
owners of a class of shares of common stock representing approximately
49% of the voting power of FMR Corp. Under the Investment Company Act
of 1940 (the 1940 Act), control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company; therefore, the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to FMR
Corp.
Fidelity International Limited (FIL), is the parent company of FIIA,
FIJ, and FIIA(U.K.)L. The Johnson family group also owns, directly or
indirectly, more than 25% of the voting common stock of FIL.
As of September 30, 1997, approximately 41.85 % and 29.83% of
each of California Municipal Income's and New York Municipal Income's
total outstanding shares , respectively, were held by an
FMR affiliate.
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out a fund's transactions, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The value of each fund's domestic and foreign investments
varies in response to many factors. Stock values fluctuate in response
to the activities of individual companies and general market and
economic conditions. Bond values fluctuate based on changes in
interest rates, market conditions, other economic and political news,
and on their quality and maturity. In general, bond prices rise when
interest rates fall, and fall when interest rates rise. This effect is
more pronounced for longer-term securities. Lower-quality securities
offer higher yields, but also carry more risk.
Funds which invest in foreign securities have increased economic and
political risks as they are exposed to events and factors in the
various world markets. This is especially true for funds that invest
in emerging markets. Also, because many of the funds' investments are
denominated in foreign currencies, changes in the value of foreign
currencies can significantly affect a fund's share price. FMR may use
a variety of investment techniques to either increase or decrease a
fund's investment exposure to any currency.
The total return from a bond includes both income and price gains or
losses. In selecting investments for a bond fund, FMR considers a
bond's expected income together with its potential for price gains or
losses. While income is generally the most important component of bond
returns over time, a bond fund's emphasis on income does not mean the
fund invests only in the highest-yielding bonds available, or that it
can avoid losses of principal.
FMR generally focuses on assembling a portfolio of bonds that it
believes will provide the best balance between risk and return within
the range of eligible investments for the fund. FMR's evaluation of a
potential investment includes an analysis of the credit quality of the
issuer, its structural features, its current price compared to FMR's
estimate of its long-term value, and any short-term trading
opportunities resulting from market inefficiencies.
FMR may use various investment techniques to hedge a portion of the
funds' risks, but there is no guarantee that these strategies will
work as FMR intends. When you sell your shares, they may be worth more
or less than what you paid for them.
TECHNOQUANT GROWTH FUND seeks growth of capital by investing mainly in
common stocks. However, the fund has the flexibility to invest in
other types of equity securities and debt securities as well. The
fund's security selection process utilizes computer-aided,
quantitative analysis. FMR's computer models use many types of data,
but emphasize technical factors such as historical price and volume
relationships. Fundamental criteria, such as earnings estimates, and
dividend yield may also be considered.
FMR's emphasis on technical analysis can result in the fund holding
different types of stocks at different times. For example, the fund
may hold stocks of companies with large or small market capitalization
or high or low price/earnings ratios. The fund's focus may change
rapidly based on FMR's analysis of the most current information. At
times, the fund may be concentrated in a small number of market
sectors or securities.
MID CAP FUND seeks long-term growth of capital by investing primarily
in equity securities of companies with medium market capitalizations.
FMR normally invests at least 65% of the fund's total assets in these
securities. The fund has the flexibility, however, to invest the
balance in other market capitalizations and security types.
Medium market capitalization companies are those whose market
capitalization falls within the capitalization range of the S&P MidCap
400 at the time of the fund's investment. The S&P MidCap 400 Index is
an unmanaged index of medium-capitalization stocks. Companies whose
capitalization falls outside this range after purchase continue to be
considered medium-capitalized for purposes of the 65% policy. As of
December 31, 1996, the S&P MidCap 400 included companies with
capitalizations of between $192 million and $6.5 billion.
Investing in medium capitalization stocks may involve greater risk
than investing in large capitalization stocks, since they can be
subject to more abrupt or erratic movements. However, they tend to
involve less risk than stocks of small capitalization companies.
EQUITY GROWTH FUND seeks capital appreciation by investing primarily
in common and preferred stock and securities convertible into the
common stock of companies with above-average growth characteristics.
FMR normally invests at least 65% of the fund's total assets in common
and preferred stock. The fund looks for domestic and foreign companies
with above-average growth characteristics compared to the average of
the companies included in the S&P 500. The S&P 500 is a registered
trademark of Standard & Poor's.
Growth may be measured by factors such as earnings or gross sales.
Companies with strong growth potential often have new products,
technologies, distribution channels, or other opportunities. As a
general rule, these companies may include smaller, less well-known
companies, and companies whose stocks have higher than average
price/earnings (P/E) ratios. The market prices of these stocks may be
particularly sensitive to economic, market, or company news. FMR may
also pursue growth in larger or revitalized companies or companies
that hold a strong position in the market. These growth
characteristics may be found in mature or declining industries.
GROWTH OPPORTUNITIES FUND seeks capital growth by investing primarily
in common stocks and securities convertible into common stocks. FMR
normally invests at least 65% of the fund's total assets in securities
of companies that FMR believes have long-term growth potential.
Although the fund invests primarily in common stock and securities
convertible into common stock, it has the ability to purchase other
securities, such as preferred stock and bonds, that may produce
capital growth. The fund may invest in foreign securities without
limitation.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a
"special situation." FMR normally invests at least 65% of the fund's
total assets in these securities. The term "special situation" refers
to FMR's identification of an unusual, and possibly non-repetitive,
development taking place in a company or a group of companies in an
industry.
A special situation may involve one or more of the following
characteristics:
(small solid bullet) A technological advance or discovery, the
offering of a new or unique product or service, or changes in consumer
demand or consumption forecasts.
(small solid bullet) Changes in the competitive outlook or growth
potential of an industry or a company within an industry, including
changes in the scope or nature of foreign competition or the
development of an emerging industry.
(small solid bullet) New or changed management, or material changes in
management policies or corporate structure.
(small solid bullet) Significant economic or political occurrences
abroad, including changes in foreign or domestic import and tax laws
or other regulations.
(small solid bullet) Other events, including natural disasters,
favorable litigation settlements, or a major change in demographic
patterns.
"Special situations" often involve breaks with past experience. They
can be relatively aggressive investments. In seeking capital
appreciation, the fund also may invest in securities of companies not
involving a special situation, but which are companies with valuable
fixed assets and whose securities are believed by FMR to be
undervalued in relation to the companies' assets, earnings, or growth
potential. FMR intends to invest primarily in common stocks and
securities that are convertible into common stocks; however, it also
may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital
appreciation. The fund may invest up to 30% of its assets in foreign
investments.
LARGE CAP FUND seeks long-term growth of capital by investing
primarily in equity securities of companies with large market
capitalizations. FMR normally invests at least 65% of the fund's total
assets in these securities. The fund has the flexibility, however, to
invest the balance in other market capitalizations and security types.
FMR defines large market capitalization companies as those with market
capitalizations of $1 billion or more at the time of the fund's
investment. Companies whose capitalization falls below this level
after purchase continue to be considered large-capitalized for
purposes of the 65% policy.
Companies with large market capitalizations typically have a large
number of publicly held shares and a high trading volume, resulting in
a high degree of liquidity. These tend to be quality companies with
strong management organizations. However, large capitalization
companies may have less growth potential than smaller companies and
may be able to react less quickly to changes in the marketplace.
GROWTH & INCOME FUND seeks high total return through a combination of
current income and capital appreciation. The fund invests mainly in
equity securities. The fund expects to invest the majority of its
assets in domestic and foreign equity securities, with a focus on
those that pay current dividends and show potential earnings growth.
However, the fund may buy debt securities as well as equity securities
that are not currently paying dividends, but offer prospects for
capital appreciation or future income.
EQUITY INCOME FUND seeks a yield which exceeds the composite dividend
yield of securities comprising the S&P 500. In addition, consistent
with the primary objective of obtaining income, the fund will consider
the potential for achieving capital appreciation. FMR normally invests
at least 65% of the fund's total assets in income-producing equity
securities. For purposes of this policy, equity securities are defined
as common and preferred stocks. The balance of the fund's assets will
tend to be invested in debt securities, a high percentage of which are
expected to be convertible into common stocks.
The fund seeks to achieve a yield that beats that of the S&P 500. The
fund does not intend to invest in securities of issuers without proven
earnings and/or credit histories. Because the fund invests for income,
as well as capital appreciation, investors should not expect capital
appreciation comparable with funds which seek only capital
appreciation. The yield on the fund's assets generally will increase
or decrease from year to year in accordance with market conditions and
in relation to the changes in yields of the stocks included in the S&P
500.
BALANCED FUND seeks both income and growth of capital by investing in
a diversified portfolio of equity and fixed-income securities with
income, growth of income, and capital appreciation potential. FMR
manages the fund to maintain a balance between stocks and bonds. When
FMR's outlook is neutral, it will invest approximately 60% of the
fund's assets in stocks and other equity securities and the remainder
in bonds and other fixed-income securities. FMR may vary from this
target if it believes stocks or bonds offer more favorable
opportunities, but will always invest at least 25% of the fund's total
assets in fixed-income senior securities (including debt securities
and preferred stock).
The fund may buy securities that are not currently paying income but
offer prospects for future income. The fund may invest in securities
of foreign issuers. In selecting investments for the fund, FMR will
consider such factors as the issuer's financial strength, its outlook
for increased dividend or interest payments, and the potential for
capital gains.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible
securities and preferred stocks. FMR normally invests at least 65% of
the fund's total assets in these securities.
The fund may also invest in securities issued or guaranteed by the
U.S. Government, any state or any of their respective subdivisions,
agencies or instrumentalities, and securities of foreign issuers,
including securities of foreign governments. The fund may invest up to
35% of its total assets in equity securities, including common stocks,
warrants, and rights.
STRATEGIC INCOME FUND seeks a high level of current income by
investing primarily in debt securities. The fund may also seek capital
appreciation.
The fund invests primarily in fixed-income securities, allocated among
four general investment categories: high yield securities, U.S.
Government and investment-grade securities, emerging market
securities, and foreign developed market securities. The fund's
neutral mix, or the benchmark for its combination of investments in
each category over time, is approximately 40% high yield, 30% U.S.
Government and investment-grade, 15% emerging markets and 15% foreign
developed markets.
FMR regularly reviews the fund's allocation and makes changes
gradually over time to favor investments that it believes provide the
most favorable outlook for achieving the fund's objective. In normal
market environments, FMR expects the fund's asset allocation to
approximate the neutral mix within a range of plus or minus 10% of
assets per category. There are no absolute limits on the percent of
assets invested in each category, however, and FMR reserves the right
to change the neutral mix from time to time.
The HIGH YIELD category includes high-yielding, lower-quality debt
securities consisting mainly of U.S. securities of a quality grade
lower than BBB. The U.S. GOVERNMENT AND INVESTMENT-GRADE category
includes mortgage securities, U.S. Government securities, government
agency securities and other U.S. dollar-denominated securities of
investment-grade quality. The EMERGING MARKET category includes
corporate and governmental debt securities of issuers located in
emerging markets. The FOREIGN DEVELOPED MARKET category includes
corporate and governmental debt securities of issuers located in
developed foreign markets. These investment categories are only
general guidelines, and FMR may use its judgment as to which category
an investment falls within. The fund may also make investments that do
not fall within these categories.
By allocating its investments across different types of fixed-income
securities, the fund attempts to moderate the significant risks of
each investment category through diversification. Diversification,
when successful, can mean higher returns with decreased volatility.
However, each of the fund's four investment categories may experience
periods of volatile returns, and it is possible for all investment
categories to decline at the same time.
MORTGAGE SECURITIES FUND seeks high current income, consistent with
prudent investment risk, by investing primarily in mortgage-related
securities. When consistent with its goal, the fund may also consider
the potential for capital gain. FMR normally invests at least 65% of
the fund's total assets in mortgage-related securities. The fund may
also invest in U.S. Government securities and instruments related to
U.S. Government securities. Instruments related to U.S. Government
securities may include futures or options on U.S. Government
securities or interests in U.S. Government securities that have been
repackaged by dealers or other third parties.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to government bonds with maturities between two and 10
years. However, the reaction of mortgage securities to changes in
interest rates can be difficult to predict since mortgage securities
are subject to prepayment of principal and can be structured in a
complex manner. As of July 31, 1997, the fund's dollar-weighted
average maturity was approximately 5.8 years.
GOVERNMENT INVESTMENT FUND seeks high current income by investing in
U.S. Government securities and instruments related to U.S. Government
securities under normal conditions. FMR normally invests the fund's
assets only in U.S. Government securities, repurchase agreements, and
other instruments related to U.S. Government securities. Under normal
conditions, FMR invests at least 65% of the fund's total assets in
U.S. Government securities and repurchase agreements for U.S.
Government securities. Other instruments may include futures or
options on U.S. Government securities or interests in U.S. Government
securities that have been repackaged by dealers or other third
parties. It is important to note that neither the fund nor its yield
is guaranteed by the U.S. Government.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to government bonds with maturities between five and
12 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 8.5 years.
INTERMEDIATE BOND FUND seeks high current income by investing in U.S.
dollar-denominated investment-grade debt securities under normal
conditions. When consistent with its primary objective, the fund may
also seek capital appreciation. Although the fund can invest in
securities of any maturity, the fund normally maintains a
dollar-weighted average maturity between three and 10 years.
In determining a security's maturity for purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This can be substantially shorter
than its stated final maturity. As of November 30, 1996, the fund's
dollar-weighted average maturity was approximately 5.7 years.
SHORT FIXED-INCOME FUND seeks high current income, consistent with the
preservation of capital, by investing in U.S. dollar-denominated
investment-grade debt securities under normal conditions. Where
appropriate the fund will take advantage of opportunities to realize
capital appreciation. FMR normally invests at least 65% of the fund's
total assets in fixed-income securities of all types which may include
convertible and zero coupon securities.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of three years or less
under normal conditions. In determining a security's maturity for
purposes of calculating the fund's average maturity, an estimate of
the average time for its principal to be paid may be used. This can be
substantially shorter than its stated final maturity. As of October
31, 1996, the fund's dollar-weighted average maturity was
approximately 2.2 years.
HIGH INCOME MUNICIPAL FUND seeks high current income that is free from
federal income tax by investing primarily in investment-grade
municipal securities. The fund may also invest up to 35% of its assets
in below investment-grade securities. FMR normally invests so that at
least 80% of the fund's assets is invested in municipal securities
whose interest is free from federal income tax. In addition, FMR may
invest all of the fund's assets in municipal securities issued to
finance private activities. The interest from these securities is a
tax preference item for the purposes of the federal alternative
minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 16.4 years.
MUNICIPAL BOND FUND seeks a high level of current income that is free
from federal income tax, consistent with preservation of capital, by
investing in investment-grade municipal securities under normal
conditions. FMR normally invests so that at least 80% of the fund's
assets is invested in municipal securities whose interest is free from
federal income tax. In addition, FMR may invest all of the fund's
assets in municipal securities issued to finance private activities.
The interest from these securities is a tax preference item for
purposes of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years. As of December 31, 1996, the fund's dollar-weighted average
maturity was approximately 12.4 years.
INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income that is
free from federal income tax, consistent with the preservation of
capital, by investing in investment-grade municipal securities under
normal conditions. FMR normally invests so that at least 80% of the
fund's assets is invested in municipal securities whose interest is
free from federal income tax. In addition, FMR may invest all of the
fund's assets in municipal securities issued to finance private
activities. The interest from these securities is a tax preference
item for the purposes of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of between three and 10
years under normal conditions. FMR seeks to manage the fund so that it
generally reacts to changes in interest rates similarly to municipal
bonds with maturities between seven and 10 years. As of November 30,
1996, the fund's dollar-weighted average maturity was approximately
8.6 years.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income
that is free from federal income tax, consistent with preservation of
capital, by investing in investment-grade municipal securities under
normal conditions. FMR normally invests so that at least 80% of the
fund's assets is invested in municipal securities whose interest is
free from federal income tax. In addition, FMR may invest all of the
fund's assets in municipal securities issued to finance private
activities. The interest from these securities is a tax preference
item for the purposes of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of between two and five
years under normal conditions. As of November 30, 1996, the fund's
dollar-weighted average maturity was approximately 3.4 years.
CALIFORNIA MUNICIPAL INCOME FUND seeks high current income that is
free from federal income tax and California state personal income tax
by investing in investment-grade municipal securities under normal
conditions. FMR normally invests so that at least 80% of the fund's
assets is invested in securities whose interest is free from federal
and California income taxes. In addition, FMR may invest all of the
fund's assets in municipal securities issued to finance private
activities. The interest from these securities is a tax preference
item for the purposes of the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 14.4 years.
The performance of California Municipal Income is affected by the
economic and political conditions within the state of California.
California suffered a severe economic recession between 1990-1993,
which resulted in broad-based revenue shortfalls for the State and
many local governments. California's fiscal condition has improved as
its economy has been in a sustained recovery since 1994. During the
recession, the State substantially reduced local assistance, and
further reductions could adversely affect the financial condition of
cities, counties and other government agencies facing constraints in
their own revenue collections. California's long-term credit rating
stabilized after having been reduced in the past several years.
California voters in the past have passed amendments to the California
Constitution and other measures that limit the taxing and spending
authority of California governmental entities, and future voter
initiatives could result in adverse consequences affecting California
municipal bonds.
NEW YORK MUNICIPAL INCOME FUND seeks high current income that is free
from federal income tax and New York State and City personal income
taxes by investing in investment-grade municipal securities under
normal conditions. FMR normally invests so that at least 80% of the
fund's assets is invested in securities whose interest is free from
federal and New York State and City personal income taxes. In
addition, FMR may invest all of the fund's assets in municipal
securities issued to finance private activities. The interest from
these securities is a tax preference item for the purposes of the
federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks
to manage the fund so that it generally reacts to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 13.3 years.
The performance of New York Municipal Income is affected by the
economic and political conditions within the state of New York. Both
New York City and State have recently experienced significant
financial difficulty, and both the City's and the State's credit
ratings are among the lowest in the country.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets
according to its investment strategy.
Each of the Equity Funds, High Yield, and Strategic Income reserves
the right to invest without limitation in preferred stocks and
investment-grade debt instruments for temporary, defensive purposes.
Each of Mortgage Securities, Government Investment, Intermediate Bond,
and Short Fixed-Income reserves the right to invest without limitation
in investment-grade money market or short-term debt instruments for
temporary, defensive purposes.
Each of High Income Municipal, Municipal Bond, Intermediate Municipal
Income, and Short-Intermediate Municipal Income do not expect to
invest in federally taxable obligations. California Municipal Income
and New York Municipal Income do not expect to invest in federally or
state taxable obligations. Each of High Income Municipal, Municipal
Bond, Intermediate Municipal Income, Short-Intermediate Municipal
Income, California Municipal Income, and New York Municipal Income,
reserves the right to invest without limitation in short-term
instruments, to hold a substantial amount of uninvested cash, or to
invest more than normally permitted in taxable obligations for
temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in
the funds' SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a fund's
investment objective and policies and that doing so will help a fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
your investment professional.
EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's
financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of its total assets, each of the
Equity Funds, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal,
Municipal Bond, and Intermediate Municipal Income may not purchase
more than 10% of the outstanding voting securities of a single issuer.
For TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, and Growth & Income, this
limitation does not apply to securities of other investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes. In addition, bond prices are also
affected by the credit quality of the issuer.
Lower-quality debt securities are considered to have speculative
characteristics, and involve greater risk of default or price changes
due to changes in the issuer's creditworthiness, or they may already
be in default. The market prices of these securities may fluctuate
more than higher-quality securities and may decline significantly in
periods of general or regional economic difficulty. Lower-quality
securities may be thinly traded, making them difficult to sell
promptly at an acceptable price. Adverse publicity and changing
investor perceptions may affect the ability to obtain prices for, or
to sell these securities.
The default rate of lower-quality debt securities is likely to be
higher when issuers have difficulty meeting projected goals or
obtaining additional financing. This could occur during economic
recessions or periods of high interest rates. If an issuer defaults,
the fund may try to protect the interests of security holders if it
determines such action to be in the interest of its shareholders.
The table on the following page provides a summary of ratings assigned
to debt holdings (not including money market instruments) in the
funds' portfolios. These figures are dollar-weighted averages of
month-end portfolio holdings during the fiscal year ended 1996, and
are presented as a percentage of total security investments. These
percentages are historical and do not necessarily indicate a fund's
current or future debt holdings.
RESTRICTIONS: For all of the Equity Funds, purchase of a debt security
is consistent with a fund's debt quality policy if it is rated at or
above the stated level by Moody's Investors Service (Moody's) or rated
in the equivalent categories by Standard & Poor's (S&P), or is unrated
but judged to be of equivalent quality by FMR.
Each of Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, and Balanced
currently intends to limit its investments in lower than Baa-quality
debt securities to less than 35% of its assets.
TechnoQuant Growth currently intends to limit its investments in lower
than Baa-quality debt securities to 5% of its assets.
Each of Mortgage Securities, Short Fixed-Income, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income normally invests in
investment-grade securities, but reserves the right to invest up to 5%
of its assets in below investment-grade securities. A security is
considered to be investment-grade if it is rated investment-grade by
Moody's, S&P, Duff & Phelps Credit Rating Co. (Duff & Phelps), or
Fitch Investors Service, L.P. (Fitch), or is unrated but judged by FMR
to be of equivalent quality.
Intermediate Bond invests only in investment-grade securities, and
will limit its investments in medium quality securities to 5% of its
assets. A security is considered to be investment-grade or medium
quality if it is rated investment-grade or medium quality,
respectively, by Moody's, S&P, Duff & Phelps, or Fitch, or is unrated
but judged by FMR to be of equivalent quality.
High Income Municipal currently intends to limit its investment in
below investment-grade securities to less than 35% of its assets and
does not currently intend to invest more than 10% of its total assets
in bonds that are in default. A security is considered to be
investment-grade if it is rated investment-grade by Moody's, S&P, Duff
& Phelps, or Fitch, or is unrated but judged by FMR to be of
equivalent quality.
Municipal Bond invests only in investment-grade securities. A security
is considered to be investment-grade if it is judged by FMR to be of
equivalent quality to securities rated Baa or BBB or higher by Moody's
or S&P, respectively. However, the fund will limit its investments in
medium quality securities as judged by FMR to one-third of its total
assets; will not purchase securities rated below Baa or BBB by Moody's
or S&P, respectively; and will not invest more than 20% of its total
assets in securities not rated by Moody's and S&P.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of
the U.S. Government. Not all U.S. Government securities are backed by
the full faith and credit of the United States. For example, U.S.
Government securities such as those issued by Fannie Mae are supported
by the instrumentality's right to borrow money from the U.S. Treasury
under certain circumstances. Other U.S. Government securities, such as
those issued by the Federal Farm Credit Banks Funding Corporation, are
supported only by the credit of the entity that issued them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
or private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities.
They may be fully or partially backed by the local government, or by
the credit of a private issuer or the current or anticipated revenues
from specific projects or assets. Because many municipal securities
are issued to finance similar types of projects, especially those
relating to education, health care, housing, transportation, and
utilities, the municipal markets can be affected by conditions in
those sectors. In addition, all municipal securities may be affected
by uncertainties regarding their tax status, legislative changes, or
rights of municipal securities holders. A municipal security may be
owned directly or through a participation interest.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms of
credit and liquidity enhancement, including letters of credit,
guarantees, puts and demand features, and insurance, provided by
foreign or domestic entities such as banks and other financial
institutions. These arrangements expose a fund to the credit risk of
the entity providing the credit or liquidity support. Changes in the
credit quality of the provider could affect the value of the security
and the fund's share price.
STATE MUNICIPAL SECURITIES include municipal obligations issued by the
state of California or New York or their respective counties,
municipalities, authorities, or other subdivisions. The ability of
issuers to repay their debt can be affected by many factors that
impact the economic vitality of either the state or a region within
the state.
FISCAL YEAR ENDED 1996 DEBT HOLDINGS (AS A % OF INVESTMENTS), BY
RATING
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid Equity Growth Strat Large Equity Balan High Strategic High Income
S&P RATING Cap** Growth** Opport egic
unities* Opport
unities
*** Cap** Income** ced* Yield* Income*** Municipal*
(Average of total investments)
INVESTMENT GRADE
Highest
quality AAA
High
quality AA -- -- 15.44% 6.43% 2.80% 31.90% -- 40.55% 27.16%
Upper-medium
grade A
Medium
grade BBB -- -- -- -- -- -- 3.26% 0.30% 0.57% 22.24%
LOWER QUALITY
Moderately
speculative BB -- -- -- -- -- 0.45% 0.56% 11.90% 8.33% 9.89%
Speculative B 0.06% -- -- -- -- 0.06% 1.96% 47.80% 27.31% 0.53%
Highly
speculative CCC -- -- -- -- -- 0.25% 5.40% 2.20% --
Poor quality CC -- -- -- -- -- -- -- -- -- --
Lowest
quality,
no interest C
In default,
in arrears D -- -- -- -- -- -- -- 0.10% -- 0.38%
Mid Equity Growth Strat Large Equity Balan High Strategic High Income
Moody's RATING Cap Growth Opport egic
unities Opport
unities
Cap Income ced Yield Income Municipal
(Average of total investments)
INVESTMENT GRADE
Highest
quality Aaa
High quality Aa -- -- 15.44% 6.43% -- 2.80% 33.87% -- 39.06% 26.58%
Upper-medium
grade A
Medium
grade Baa -- -- -- -- -- 0.02% 2.29% 0.10% 0.18% 22.72%
LOWER QUALITY
Moderately
speculative Ba -- -- -- -- -- 0.25% 0.94% 8.60% 7.21% 9.19%
Speculative B -- -- -- 0.21% -- 0.26% 2.29% 48.90% 21.31% 0.18%
Highly
speculative Caa -- -- -- -- -- -- 0.12% 9.70% 3.23% 0.60%
Poor quality Ca -- -- -- -- -- -- -- 0.03% 0.02% --
Lowest
quality,
no interest C -- -- -- -- -- -- -- -- -- --
In default,
in
arrear -- -- -- -- -- -- -- -- -- -- --
</TABLE>
* FISCAL Y EAR ENDED OCTOBER 31, 1996 .
** FISCAL Y EAR ENDED NOVEMBER 30, 1996 .
*** FISCAL YEAR ENDED DECEMBER 31, 1996 .
REFER TO THE APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.
THE FUNDS DO NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P
TO DETERMINE COMPLIANCE WITH THEIR DEBT QUALITY POLICIES. SECURITIES
NOT RATED BY MOODY'S AND S&P AMOUNTED TO
0.76% OF BALANCED'S INVESTMENTS, 1.02% OF STRATEGIC OPPORTUNITIES'
INVESTMENTS, 7.68% OF HIGH YIELD'S INVESTMENTS, 8.98% OF STRATEGIC
INCOME'S INVESTMENTS, AND 27.02% OF HIGH
INCOME MUNICIPAL'S INVESTMENTS. THESE PERCENTAGES MAY INCLUDE
SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATIONS, AS WELL AS UNRATED SECURITIES. UNRATED
LOWER-QUALITY SECURITIES AMOUNTED TO 0.76% OF BALANCED'S
INVESTMENTS, 1.02% OF STRATEGIC OPPORTUNITIES' INVESTMENTS, 7.68% OF
HIGH YIELD'S INVESTMENTS, 8.97% OF STRATEGIC
INCOME'S INVESTMENTS, AND 24.84% FOR HIGH INCOME MUNICIPAL'S
INVESTMENTS.
FOR FOREIGN GOVERNMENT OBLIGATIONS NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE
RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
Other state municipal securities include obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, Puerto
Rico, and their political subdivisions and public corporations. The
economy of Puerto Rico is closely linked to the U.S. economy and will
be affected by the strength of the U.S. dollar, interest rates, the
price stability of oil imports, and the continued existence of
favorable tax incentives.
OTHER INSTRUMENTS may include securities of closed-end investment
companies.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve additional risks and considerations. These
include risks relating to political or economic conditions in foreign
countries, fluctuations in foreign currencies, withholding or other
taxes, operational risks, increased regulatory burdens, and the
potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile than U.S.
investments.
ASSET-BACKED SECURITIES include interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities, debt securities, or consumer loans. The value of these
securities depends on many factors, including changes in interest
rates, the availability of information concerning the pool and its
structure, the credit quality of the underlying assets, the market's
perception of the servicer of the pool, and any credit enhancement
provided. In addition, these securities may be subject to prepayment
risk.
MORTGAGE SECURITIES include interests in pools of commercial or
residential mortgages, and may include complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed
securities. Mortgage securities may be issued by agencies or
instrumentalities of the U.S. Government or by private entities.
The price of a mortgage security may be significantly affected by
changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other
factors difficult to predict, making their price highly volatile.
Also, mortgage securities, especially stripped mortgage-backed
securities, are subject to prepayment risk. Securities subject to
prepayment risk generally offer less potential for gains during a
declining interest rate environment, and similar or greater potential
for loss in a rising interest rate environment.
RESTRICTIONS: Government Investment does not currently intend to
invest more than 40% of its assets in mortgage securities.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a
benchmark rate changes. Inverse floaters have interest rates that move
in the opposite direction from a benchmark, making the security's
market value more volatile.
STRIPPED SECURITIES are the separate income or principal components of
a debt security. The risks associated with stripped securities are
similar to those of other debt securities, although stripped
securities may be more volatile, and the value of certain types of
stripped securities may move in the same direction as interest rates.
U.S. Treasury securities that have been stripped by a Federal Reserve
Bank are obligations issued by the U.S. Treasury.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a
security at one price and simultaneously agrees to sell it back at a
higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund temporarily transfers possession of a portfolio instrument to
another party in return for cash. This could increase the risk of
fluctuation in the fund's yield or in the market value of its assets.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire
land, equipment, or facilities. If the municipality stops making
payments or transfers its obligations to a private entity, the
obligation could lose value or become taxable.
PUT FEATURES entitle the holder to put (sell back) an instrument to
the issuer or another party. In exchange for this benefit, a fund may
accept a lower interest rate. Demand features and standby commitments
are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For
example, industrial revenue bonds are backed by private entities, and
resource recovery bonds often involve private corporations. The
viability of a project or tax incentives could affect the value and
credit quality of these securities.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors
such as changes in real estate values and property taxes, interest
rates, cash flow of underlying real estate assets, overbuilding, and
the management skill and creditworthiness of the issuer. Real
estate-related instruments may also be affected by tax and regulatory
requirements, such as those relating to the environment.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap
agreements, purchasing indexed securities, and selling securities
short.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other
borrower. They have additional risks beyond conventional debt
securities because they may entail less legal protection for a fund,
or there may be a requirement that the fund supply additional cash to
a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: Each fund (except High Yield and Strategic Income) may
not purchase a security if, as a result, more than 10% of its assets
would be invested in illiquid securities.
Each of High Yield and Strategic Income may not purchase a security
if, as a result, more than 15% of its assets would be invested in
illiquid securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading
practices in which payment and delivery for the security take place at
a later date than is customary for that type of security. The market
value of the security could change during this period.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income (exempt from federal income tax in
the case of a municipal money market fund) while maintaining a stable
$1.00 share price. A major change in interest rates or a default on
the money market fund's investments could cause its share price to
change.
RESTRICTIONS: California Municipal Income and New York Municipal
Income do not currently intend to invest in a money market fund. High
Income Municipal, Municipal Bond, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, California Municipal Income,
and New York Municipal Income do not currently intend to invest
in repurchase agreements.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: With respect to 75% of its total assets, each of the
Equity Funds, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal,
Municipal Bond, and Intermediate Municipal Income may not purchase a
security if, as a result, more than 5% would be invested in the
securities of any issuer. This limitation does not apply to U.S.
Government securities or, for TechnoQuant Growth, Mid Cap, Equity
Growth, Growth Opportunities, Strategic Opportunities, Large Cap, and
Growth & Income, to securities of other investment companies.
Strategic Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income are considered
non-diversified. Generally, to meet federal tax requirements at the
close of each quarter, each fund does not invest more than 25% of its
total assets in any issuer and, with respect to 50% of total assets,
does not invest more than 5% of its total assets in any issuer. These
limitations do not apply to U.S. Government securities or to
securities of other investment companies.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each of High Income Municipal, Municipal Bond, Intermediate Municipal
Income, Short-Intermediate Municipal Income, California Municipal
Income, and New York Municipal Income may invest more than 25% of its
total assets in tax-free securities that finance similar types of
projects.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If a fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a
delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a
fund's total assets; however, Government Investment, High Income
Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and
New York Municipal Income do not currently intend to make loans.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
TECHNOQUANT GROWTH FUND seeks capital growth.
MID CAP FUND seeks long-term growth of capital.
EQUITY GROWTH FUND seeks to achieve capital appreciation by investing
primarily in common and preferred stock and securities convertible
into the common stock of companies with above-average growth
characteristics.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common
stocks.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a
"special situation." Under normal conditions, the fund will invest at
least 65% of its total assets in companies involving a special
situation. FMR intends to invest primarily in common stocks and
securities that are convertible into common stocks; however, it also
may invest in debt securities of all types and quality if FMR believes
that investing in these securities will result in capital
appreciation. The fund may invest up to 30% of its assets in foreign
investments.
LARGE CAP FUND seeks long-term growth of capital.
GROWTH & INCOME FUND seeks high total return through a combination of
current income and capital appreciation.
EQUITY INCOME FUND seeks a yield from dividend and interest income
which exceeds the composite dividend yield on securities comprising
the S&P 500. In addition, consistent with the primary objective of
obtaining dividend and interest income, the fund will consider the
potential for achieving capital appreciation.
BALANCED FUND seeks both income and growth of capital by investing in
a diversified portfolio of equity and fixed-income securities with
income, growth of income, and capital appreciation potential.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible
securities and preferred stocks.
STRATEGIC INCOME FUND seeks a high level of current income by
investing primarily in debt securities. The fund may also seek capital
appreciation.
MORTGAGE SECURITIES FUND seeks a high level of current income,
consistent with prudent investment risk, by investing primarily in
mortgage-related securities. In seeking current income, the fund may
also consider the potential for capital gain.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by
investing primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
INTERMEDIATE BOND FUND seeks to provide a high rate of income through
investment primarily in investment-grade fixed-income obligations.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current
income, consistent with the preservation of capital, by investing
primarily in a broad range of investment-grade fixed-income
securities. Where appropriate the fund will take advantage of
opportunities to realize capital appreciation.
HIGH INCOME MUNICIPAL FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
MUNICIPAL BOND FUND seeks to provide as high a level of interest
income exempt from federal income tax as is consistent with
preservation of capital.
The fund invests in a diversified portfolio of municipal bonds. The
fund will invest primarily in municipal bonds judged by FMR to be of
high-grade or upper-medium-grade quality, although it may invest up to
one-third of its total assets in bonds judged to be of medium-grade
quality if they are suitable for achieving its investment objective.
The fund's standards for high-grade, upper-medium-grade, and
medium-grade obligations are essentially the same as Moody's and S&P's
four highest categories of Baa or BBB and above. The fund will not
invest in any bond rated lower than Baa by Moody's or BBB by S&P, but
may invest up to 20% of its total assets in bonds not rated by either
of these rating services if FMR judges them to meet the fund's quality
standards. The fund will normally invest at least 80% of its assets in
municipal securities whose interest is exempt from federal income tax.
INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of income
exempt from federal income taxes that can be obtained consistent with
the preservation of capital. The fund normally invests at least 80% of
its assets in securities whose interest is free from federal income
tax.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks as high a level of
current income, exempt from federal income tax, as is consistent with
preservation of capital. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
CALIFORNIA MUNICIPAL INCOME FUND seeks a high level of current income
free from federal income tax and California state personal income tax
by investing primarily in municipal securities. The fund normally
invests at least 80% of its assets in securities whose interest is
free from federal and California income taxes.
NEW YORK MUNICIPAL INCOME FUND seeks a high level of current income
free from federal income tax and New York State and City personal
income taxes by investing primarily in municipal securities. The fund
normally invests at least 80% of its assets in securities whose
interest is free from federal and New York State and City personal
income taxes.
With respect to 75% of its total assets, each of the Equity Funds,
High Yield, Mortgage Securities, Government Investment, Intermediate
Bond, Short Fixed-Income, High Income Municipal, Municipal Bond, and
Intermediate Municipal Income may not purchase a security if, as a
result, more than 5% would be invested in the securities of any one
issuer and may not purchase more than 10% of the outstanding voting
securities of a single issuer. These limitations do not apply to
U.S. Government securities or, for TechnoQuant Growth, Mid Cap, Equity
Growth, Growth Opportunities, Strategic Opportunities, Large Cap, and
Growth & Income, to securities of other investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in
that class's share price or dividends; they are neither billed
directly to shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services for certain of the funds. Each fund
also pays OTHER EXPENSES, which are explained on page .
FMR may, from time to time, agree to reimburse a fund for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a fund if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be terminated at any time without notice, can decrease a
fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Equity
Income pays a monthly management fee at an annual rate of 0.50% of its
average net assets. For each of TechnoQuant Growth, Mid Cap, Equity
Growth, Large Cap, Growth & Income, Balanced, High Yield, Strategic
Income, Mortgage Securities, Government Investment, Intermediate Bond,
Short Fixed-Income, High Income Municipal, Municipal Bond,
Intermediate Municipal Income, Short-Intermediate Municipal Income,
California Municipal Income, and New York Municipal Income, the fee is
calculated by adding a group fee rate to an individual fund fee rate,
and multiplying the result by the fund's average net assets. For
Growth Opportunities and Strategic Opportunities, the fee is
calculated by taking a basic fee and then applying a performance
adjustment. The performance adjustment either increases or decreases
the management fee, depending on how well each fund has performed
relative to the S&P 500.
The basic fee rate (calculated monthly) is calculated by adding a
group fee rate to an individual fund fee rate, and multiplying the
result by the fund's average net assets.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52% for
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, and Balanced or
0.37% for High Yield, Strategic Income, Mortgage Securities,
Government Investment, Intermediate Bond, Short Fixed-Income, High
Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and
New York Municipal Income, and it drops as total assets under
management increase.
The performance adjustment rate is calculated monthly by comparing
Growth Opportunities' and Strategic Opportunities' performance to that
of the S&P 500 over the most recent 36-month period. The difference is
translated into a dollar amount that is added to or subtracted from
the basic fee. The maximum annualized performance adjustment rate is
(plus/minus) 0.20% of a fund's average net assets over the performance
period.
For purposes of calculating the performance adjustment for each of
Growth Opportunities and Strategic Opportunities, the fund's
investment performance will be based on the average performance of all
classes of the fund weighted according to their average assets for
each month in the performance period.
The following table states the management fee rate for each fund for
its most recent fiscal year end:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP INDIVIDUAL TOTAL MANAGEMENT
FEE RATE FUND FEE FEE RATE
RATE
TECHNOQUANT GROWTH [A] 0.30% 0.30% 0.60%
MID CAP 0.30% 0.30% 0.60%
EQUITY GROWTH 0.30% 0.30% 0.61%
GROWTH OPPORTUNITIES [ B ] 0.30% 0.30% 0.61%
STRATEGIC OPPORTUNITIES [ B ] 0.30% 0.30% 0.48%
LARGE CAP 0.30% 0.30% 0.60%
GROWTH & INCOME [A] 0.30% 0.20% 0.50%
EQUITY INCOME N/A N/A 0.50%
BALANCED 0.30% 0.15%[ C ] 0.50%
HIGH YIELD 0.14% 0.45% 0.60%
STRATEGIC INCOME 0.14% 0.45% 0.59%
MORTGAGE SECURITIES 0.1 4 % 0.30% 0.4 4 %
GOVERNMENT INVESTMENT 0.14% 0.30% 0.45%
</TABLE>
INTERMEDIATE BOND 0.14% 0.30% 0.45%
SHORT FIXED-INCOME 0.14% 0.30% 0.45%
HIGH INCOME MUNICIPAL FUND 0.14% 0.25% 0.40%
MUNICIPAL BOND FUND 0.14% 0.25% 0.40%
INTERMEDIATE MUNICIPAL INCOME 0.14% 0.25% 0.40%
SHORT-INTERMEDIATE MUNICIPAL INCOME 0.14% 0.25% 0.40%
CALIFORNIA MUNICIPAL INCOME[A] 0.14% 0.25% 0.40%
NEW YORK MUNICIPAL INCOME 0.14% 0.25% 0.40%
[A] ESTIMATED
[ B ] THE BASIC FEE RATE FOR THE FISCAL YEAR ENDED 1996 WAS 0.61%
FOR GROWTH OPPORTUNITIES AND 0.61% FOR STRATEGIC OPPORTUNITIES.
[ C ] EFFECTIVE AUGUST 1, 1996, FMR VOLUNTARILY AGREED TO REDUCE
THE FUND'S INDIVIDUAL FUND FEE RATE FROM 0.20% TO 0.15%. IF THIS
REDUCTION WAS NOT IN EFFECT, THE TOTAL FEE WOULD HAVE BEEN
0.5 0 %.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR
Far East, FIJ , and FIIA. FIIA in turn has a sub-advisory
agreement with FIIA(U.K.)L. These sub-advisers are compensated for
providing FMR with investment research and advice on issuers based
outside the United States. FMR pays FMR U.K. and FMR Far East fees
equal to 110% and 105%, respectively, of the costs of providing these
services. FMR pays FIJ and FIIA a fee equal to 30% of its management
fee rate associated with investments for which the sub-adviser
provided investment advice.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to
50% of its management fee rate with respect to a fund's investments
that the sub-adviser manages on a discretionary basis. FIIA pays
FIIA(U.K.)L a fee equal to 110% of the cost of providing these
services.
For the fiscal year ended 1996, FMR, on behalf of each fund with
sub-advisory agreements paid FMR U.K., FMR Far East, FIJ, and FIIA
fees equal to less than 0.01%, of each fund's average net assets.
OTHER EXPENSES
While the management fee is a significant component of each fund's
annual operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for the Institutional Class of the Equity Funds,
High Yield, Strategic Income, Mortgage Securities, Government
Investment, Intermediate Bond, and Short Fixed-Income (the Taxable
Funds). Fidelity Service Company, Inc. (FSC) calculates the net asset
value per share (NAV) and dividends for the Institutional Class of the
Taxable Funds, and maintains the general accounting records and
administers the securities lending program for the Taxable Funds.
For the fiscal year ended 1997, transfer agency fees (as a percentage
of average net assets) for Institutional Class of Mortgage Securities
amounted to 0.21 %. Pricing and bookkeeping fees (as a
percentage of average net assets) for Mortgage Securities amounted to
0.04 %. These amounts are before expense reductions, if any.
For the fiscal year ended 1996, transfer agency and pricing and
bookkeeping fees (as a percentage of average net assets) amounted to
the following. These amounts are before expense reductions, if any.
TRANSFER AGENCY PRICING AND
FEES PAID BOOKKEEPING
FEES PAID
MID CAP 0.16% 0.05%
EQUITY GROWTH 0.14% 0.02%
GROWTH OPPORTUNITIES 0.14% 0.01%
STRATEGIC OPPORTUNITIES 0.16% 0.05%
LARGE CAP 0.16% 0.22%
EQUITY INCOME 0.14% 0.04%
BALANCED 0.15% 0.02%
HIGH YIELD 0.16% 0.04%
STRATEGIC INCOME 0.17% 0.06%
GOVERNMENT INVESTMENT 0.16% 0.04%
INTERMEDIATE BOND 0.14% 0.04%
SHORT FIXED-INCOME 0.15% 0.04%
UMB is the transfer and service agent for High Income Municipal,
Municipal Bond, Intermediate Municipal Income, Short-Intermediate
Municipal Income, California Municipal Income , and New York
Municipal Income (the Municipal Funds). UMB has entered into a
sub-agreement with FIIOC. FIIOC performs transfer agency, dividend
disbursing and shareholder servicing functions for the Institutional
Class of the Municipal Funds. UMB has also entered into a
sub-agreement with FSC. FSC calculates the NAV and dividends for the
Institutional Class of the Municipal Funds, and maintains the general
accounting records for each fund. Under the terms of the
sub-agreements, FIIOC and FSC receive all related fees paid to UMB by
the Institutional Class.
For the fiscal year ended 1996, transfer agency and pricing and
bookkeeping fees paid (as a percentage of average net assets) amounted
to the following. These amounts are before expense reductions, if any.
TRANSFER AGENCY PRICING AND
FEES PAID BOOKKEEPING
FEES PAID
HIGH INCOME MUNICIPAL 0.20% 0.04%
MUNICIPAL BOND 0.31% 0.03%
INTERMEDIATE MUNICIPAL INCOME 0.17% 0.08%
SHORT-INTERMEDIATE MUNICIPAL INCOME 0.33% 0.20%
CALIFORNIA MUNICIPAL INCOME 0.13% 0.18%
NEW YORK MUNICIPAL INCOME 0.10% 0.10%
The Institutional Class of each fund has adopted a DISTRIBUTION AND
SERVICE PLAN. Each plan recognizes that FMR may use its management fee
revenues, as well as its past profits or its resources from any other
source, to pay FDC for expenses incurred in connection with the
distribution of Institutional Class shares. FMR directly, or through
FDC, may make payments to third parties, such as banks or
broker-dealers, that engage in the sale of, or provide shareholder
support services for, Institutional Class shares. Currently, the Board
of Trustees of each fund has authorized such payments.
Each fund also pays other expenses, such as legal, audit, and
custodian fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
The portfolio turnover rate for TechnoQuant Growth is projected to
exceed 200% for its first fiscal period ending November 30, 1997. The
portfolio turnover rate for Growth & Income is not expected to exceed
200% for its first fiscal period ending November 30, 1997. These rates
will vary from year to year.
The portfolio turnover rate for the fiscal year ended 1997 was
149 % for Mortgage Securities.
The portfolio turnover rate for the fiscal year ended 1996 was 101%
for Mid Cap, 76% for Equity Growth, 33% for Growth Opportunities, 151%
for Strategic Opportunities, 59% for Large Cap, 78% for Equity Income,
223% for Balanced, 121% for High Yield, 119% for Strategic Income,
153% for Government Investment, 200% for Intermediate Bond, 124% for
Short Fixed-Income, 49% for High Income Municipal, 35% for Municipal
Bond, 35% for Intermediate Municipal Income, 62% for
Short-Intermediate Municipal Income, 21% for California Municipal
Income, and 17% for New York Municipal Income.
Portfolio turnover rates vary from year to year. High turnover
rates increase transaction costs and may increase taxable capital
gains. FMR considers these effects when evaluating the anticipated
benefits of short-term investing.
YOUR ACCOUNT
TYPES OF ACCOUNTS
When you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of
fund shares. Read your investment professional's program materials in
conjunction with this prospectus for additional service features or
fees that may apply. Certain features of the funds, such as minimum
initial or subsequent investment amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed at right .
The account guidelines that follow may not apply to certain funds or
to certain retirement accounts. For instance, municipal funds are not
available for purchase in retirement accounts. If you are investing
through a retirement account or if your employer offers a fund through
a retirement program, you may be subject to additional fees. For more
information, please refer to your program materials, contact your
employer, or call your retirement benefits number or your investment
professional directly, as appropriate.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have
two or more owners (tenants).
RETIREMENT (THE FOLLOWING OPTIONS ARE AVAILABLE ONLY FOR TAXABLE
FUNDS)
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of
legal age and under 70 1/2 (checkmark)(solid club) with earned income
to invest up to $2,000 per tax year. Individuals can also invest in a
spouse's IRA if the spouse has earned income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) 401(K) PLANS allow employees of corporations of all
sizes to contribute a percentage of their wages on a tax-deferred
basis. These accounts need to be established by the trustee of the
plan.
(solid bullet) MONEY PURCHASE/PROFIT SHARING PLANS (KEOGH PLANS) are
tax-deferred pension accounts designated for employees of
unincorporated businesses or for persons who are self-employed.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide
small business owners or those with self-employed income (and their
eligible employees) with many of the same advantages as a Keogh, but
with fewer administrative requirements.
(solid bullet) SIMPLE IRAS provide small business owners and those
with self-employed income (and their eligible employees) with many of
the advantages of a 401(k) plan, but with fewer administrative
requirements.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you
can set up a custodial account under the Uniform Gifts to Minors Act
(UGMA) or the Uniform Transfers to Minors Act (UTMA). Contact your
investment professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
Contact your investment professional.
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of Institutional Class is the class's
net asset value per share (NAV). Institutional Class's shares are sold
without a sales charge.
Your s hares will be purchased at the next NAV calculated
after your order is received and accepted. Institutional Class's
NAV is normally calculated each business day at 4:00 p.m.
Eastern time.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Fidelity must receive payment within three business days after an
order for shares is placed; otherwise your purchase order may be
canceled and you could be held liable for resulting fees and/or
losses.
Share certificates are not available for Institutional Class shares.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an
account application and mail it along with your check. You may also
open your account by wire as described on page . If there is no
account application accompanying this prospectus, call
1-800-843-3001 or your invest ment professional.
If you are investing through a tax-sheltered retirement plan, such as
an IRA, for the first time, you will need a special application.
Contact your investment professional for more information and a
retirement account application.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you
can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place an order and wire money into your account,
(small solid bullet) Open your account by exchanging from the same
class of another Fidelity Advisor fund or from another Fidelity fund,
or
(small solid bullet) Contact your investment professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and Keogh accounts
$500
Through regular investment plans* $1,000
TO ADD TO AN ACCOUNT $250
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and Keogh accounts
$100
Through regular investment plans* $100
MINIMUM BALANCE $1,000
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and Keogh accounts
None
*AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $1,000, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED. FOR MORE INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE
REFER TO "INVESTOR SERVICES," PAGE .
There is no minimum account balance or initial or subsequent
investment minimum for certain retirement accounts funded through
salary deduction, or accounts opened with the proceeds of
distributions from such Fidelity retirement accounts. Refer to the
program materials for details.
For further information on opening an account, please consult your
investment professional or refer to the account application.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE (small solid bullet) Exchange from the same
class of another Fidelity Advisor fund or (small solid bullet) Exchange from the same class of another
Fidelity Advisor fund or
1-800-843-3001
OR YOUR from another Fidelity fund account with the
same registration, from another Fidelity fund account with the same registration,
INVESTMENT
PROFESSIONAL including name, address, and taxpayer ID
number. including name, address, and taxpayer ID number.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail
(mail_graphic) (small solid bullet) Complete and sign the
account application. Make your check (small solid bullet) Make your check payable to the complete name
of the fund of your
payable to the complete name of the fund
of your choice and note choice and note the applicable class. Indicate your fund account
the applicable class. Mail to the address
indicated on the number on your check and mail to the address printed on your
application. account statement.
(small solid bullet) Exchange by mail: call 1-800-843-3001 or your
investment professional
for instructions.
In Person
(hand_graphic) (small solid bullet) Bring your account
application and check to your investment (small solid bullet) Bring your check to your investment
professional.
professional.
</TABLE>
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<CAPTION>
<S> <C> <C>
Wire
(wire_graphic) (small solid bullet) Call 1-800-843-3001
to set up your account and to arrange a
wire (small solid bullet) Not available for retirement accounts.
transaction. Not available for retirement
accounts. (small solid bullet) Wire to:
(small solid bullet) Wire to: Banker's Trust Co.
Banker's Trust Co. Routing # 021001033
Routing # 021001033 Fidelity DART Depository
Fidelity DART Depository Account # 00159759
Account #00159759 FBO: (account name)
FBO: (account name) (account number)
(account number)
Specify the complete name of the fund of your choice, note the
Specify the complete name of the fund of
your choice, note the applicable class and include your account number and your name.
applicable class and include your new
account number and your
name.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Automatically
(automatic_
graphic) (small solid bullet) Not available. (small solid bullet) Use Fidelity Advisor Systematic Investment
Program. Sign up for this
service when opening your account, or call your investment
professional to begin the program.
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of Institutional Class is the class's
NAV.
Your shares will be sold at the next NAV calculated after your
order is received and accepted. Instistutional Class's NAV is normally
calculated each business day at 4:00 p.m. Eastern time.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the
methods described on these two pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request
must be made in writing, except for exchanges to shares of the same
class of another Fidelity Advisor fund or shares of other Fidelity
funds, which can be requested by phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least
$1,000 worth of shares in the account to keep it open (account minimum
balances do not apply to retirement and Fidelity Defined Trust
accounts).
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service
in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner,
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity Advisor account with a different registration,
(small solid bullet) You wish to set up the bank wire feature, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, and
(small solid bullet) Any other applicable requirements listed in the
table on page .
Deliver your letter to your investment professional, or mail it to the
following address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
Unless otherwise instructed, Fidelity will send a check to the record
address.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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PHONE All account types except retirement (small solid bullet) Maximum check request: $100,000.
1-800-843-3001
OR YOUR All account types (small solid bullet) You may exchange to the same class of other Fidelity
Advisor funds
INVESTMENT
PROFESSIONAL or to other Fidelity funds if both accounts are registered with the
same name(s), address, and taxpayer ID number.
Mail or in
Person
(mail_graphic)
(hand_graphic) Individual, Joint Tenant, Sole
Proprietorship, UGMA, UTMA (small solid bullet) The letter of instruction must be signed by all
persons required to
sign for transactions, exactly as their names appear on the account.
Retirement account (small solid bullet) The account owner should complete a retirement
distribution form. Call
1-800-843-3001 or your investment professional to request one.
Trust (small solid bullet) The trustee must sign the letter indicating capacity
as trustee. If the
trustee's name is not in the account registration, provide a copy of the
trust document certified within the last 60 days.
Business or Organization (small solid bullet) At least one person authorized by corporate
resolution to act on
the account must sign the letter.
Executor, Administrator,
Conservator/Guardian (small solid bullet) Call 1-800-843-3001 or your investment
professional for
instructions.
Wire
(wire_graphic) All account types except retirement (small solid bullet) You must sign up for the wire feature before
using it. To verify that
it is in place, call 1-800-843-3001. Minimum wire: $500.
(small solid bullet) Your wire redemption request must be received
and accepted by the
transfer agent before 4:00 p.m. Eastern time for money to be wired
on the next business day.
</TABLE>
INVESTOR SERVICES
Fidelity Advisor funds provide a variety of services to help you
manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements after certain
transactions
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
the fund. Call your investment professional if you need additional
copies of financial reports and prospectuses.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your Institutional Class shares and
buy Institutional Class shares of other Fidelity Advisor funds or
shares of other Fidelity funds, by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see "Exchange Restrictions," page .
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM lets you set up
periodic redemptions from your account. Accounts with a value of
$10,000 or more in Institutional Class shares are eligible for this
program.
One easy way to pursue your financial goals is to invest money
regularly. Fidelity Advisor funds offer convenient services that let
you transfer money into your fund account, or between fund accounts,
automatically. While regular investment plans do not guarantee a
profit and will not protect you against loss in a declining market,
they can be an excellent way to invest for retirement, a home,
educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call your investment
professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY ADVISOR FUND
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MINIMUM MINIMUM FREQUENCY SETTING UP OR CHANGING
INITIAL ADDITIONAL
$1,000 $100 Monthly, bimonthly,
quarterly, (small solid bullet) For a new account, complete the appropriate section on the
application.
or semi-annually (small solid bullet) For existing accounts, call your investment professional
for an application.
(small solid bullet) To change the amount or frequency of your investment,
contact your investment professional directly or, call
1-800-843-3001. Call at least 10 business days prior to your next scheduled
investment date.
</TABLE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital
gains to shareholders each year. Each fund pays capital gains, if any,
in December and may pay additional capital gains after the close of
its fiscal year. Normally, dividends for Growth & Income, Equity
Income, and Balanced are distributed in March, June, September and
December; dividends for TechnoQuant Growth, Mid Cap, Equity Growth,
and Large Cap are distributed in December and January ;
dividends for Growth Opportunities are distributed in December;
dividends for Strategic Opportunities are distributed in December and
February; dividends for Strategic Income, High Yield, Mortgage
Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California
Municipal Income, and New York Municipal Income are declared daily and
paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you
want to receive your distributions. The funds offer four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
4. DIRECTED DIVIDENDS(registered trademark) PROGRAM. Your dividend
distributions will be automatically invested in the same class of
shares of another identically registered Fidelity Advisor fund. You
will be sent a check for your capital gain distributions or your
capital gain distributions will be automatically reinvested in
additional shares of the same class of the fund.
If you select distribution option 2, 3, or 4 and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed
for six months, those checks will be reinvested in your account at the
current NAV and your election may be converted to the Reinvestment
Option. To change your distribution option, call your investment
professional directly or call 1-800-843-3001.
For retirement accounts, all distributions are automatically
reinvested. When you are over 59 years old, you can receive
distributions in cash.
When each of the Equity Funds deducts a distribution from its NAV, the
reinvestment price is the applicable class's NAV at the close of
business that day. Dividends from the Bond Funds, the
Intermediate-Term Bond Funds, and the Short-Term Bond Funds will be
reinvested at the applicable class's NAV on the last day of the month.
Capital gain distributions from Bond Funds, the Intermediate-Term Bond
Funds, and the Short-Term Bond Funds will be reinvested at the NAV as
of the date the applicable fund deducts the distributions from its
NAV. The mailing of distribution checks will be gin
within seven days, or longer for a December ex-dividend date.
TAXES
As with any investment, you should consider how an investment in the
funds could affect you. Below are some of the funds' tax implications.
If your account is not a tax-deferred retirement account, be aware of
these tax implications.
TAXES ON DISTRIBUTIONS. Interest income that the Municipal Funds earn
is distributed to shareholders as income dividends. Interest that is
federally tax-free remains tax-free when it is distributed.
Distributions from each fund (except the Municipal Funds), however,
are subject to federal income tax. Each fund (except California
Municipal Income and New York Municipal Income) may also be subject to
state or local taxes. If you live outside the United States, your
distributions from these funds could also be taxed by the country in
which you reside.
For federal tax purposes, income and short-term capital gain s from
the Taxable Funds are distributed as dividends and taxed as
ordinary income; capital gain distributions are taxed as
long-term capital gains.
However, for shareholders of the Municipal Funds, gain on the sale
of tax-free bonds results in taxable distributions. Short-term capital
gains and a portion of the gain on bonds purchased at a discount are
distributed as dividends and taxed as ordinary income;
capital gain distributions, if any, are taxed as long-term capital
gains.
Mutual fund dividends from U.S. Government securities are generally
free from state and local income taxes. However, particular states may
limit this benefit, and some types of securities, such as repurchase
agreements and some agency-backed securities, may not qualify for the
benefit. Ginnie Mae securities and other mortgage-backed securities
are notable exceptions in most states. In addition, some states may
impose intangible property taxes. You should consult your own tax
adviser for details and up-to-date information on the tax laws in your
state.
Distributions are taxable when they are paid, whether you take them in
cash or reinvest them. However, distributions declared in December and
paid in January are taxable as if they were paid on December 31.
Every January, Fidelity will send you and the IRS a statement
showing the tax characterization of distributions paid to you
in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each of the Municipal Funds may invest up to
100% of its assets in these securities. Individuals who are subject to
the tax must report this interest on their tax returns.
A portion of the dividends from each of the Municipal Funds may be
free from state or local taxes. Income from investments in your state
are often tax-free to you. Each year, Fidelity will send you a
breakdown of each of these funds' income from each state to help you
calculate your taxes.
To the extent that California Municipal Income's income dividends are
derived from interest on California state tax-free investments, they
will be free from California state personal income tax. Distributions
derived from obligations that are not California state tax-free
obligations, as well as distributions from short or long-term capital
gains, are subject to California State personal income tax. Corporate
taxpayers should note that the fund's income dividends and other
distributions are not exempt from California state franchise or
corporate income taxes. Interest on indebtedness incurred to
purchase, or continued to carry, shares of California Municipal Income
generally will not be deductible for California State income tax
purposes.
To the extent that New York Municipal Income's income dividends are
derived from state-tax free investments, they will be free from New
York State and City personal income taxes. Corporate taxpayers
should note that New York Municipal Income's income dividends and
other distributions are not exempt from New York State and City
franchise or corporate income taxes. In addition, interest or
indebtedness incurred to purchase, or continued to carry, shares of
New York Municipal Income generally will not be deductible for New
York State personal income tax purposes.
During the fiscal year ended 1996, 100% of the income dividends from
High Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal
Income , and New York Municipal Income was free from federal
income tax. During the fiscal year ended 1996, 100% of California
Municipal Income's income dividends was free from California taxes,
and 100% of New York Municipal Income's income dividends was free from
New York taxes. During the fiscal year ended 1996, 26.36% of High
Income Municipal's, 0.79% of Municipal Bond's, 7.58% of Intermediate
Municipal Income's, 18.99% of Short-Intermediate Municipal Income's,
5.5% of California Municipal Income's, and 0.09% of New York Municipal
Income 's income dividends were subject to the federal
alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions - including
exchanges - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price
you receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price.
You will also receive a consolidated transaction statement at least
quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of
tax to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount
of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a class has realized but
not yet distributed income or capital gains, you will pay the full
price for the shares and then receive a portion of the price back in
the form of a taxable distribution.
CURRENCY CONSIDERATIONS. For funds that can invest in foreign
securities, if a fund's dividends exceed its taxable income in any
year, which is sometimes the result of currency-related losses, all or
a portion of the fund's dividends may be treated as a return of
capital to shareholders for tax purposes. To minimize the risk of a
return of capital, a fund may adjust its dividends to take currency
fluctuations into account, which may cause the dividends to vary. Any
return of capital will reduce the cost basis of your shares, which
will result in a higher reported capital gain or a lower reported
capital loss when you sell your shares. The statement you receive in
January will specify if any distributions included a return of
capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a
fund and its investments , and these taxes generally will reduce
a fund's distributions. However, if you meet certain holding period
requirements with respect to your fund shares, an offsetting tax
credit may be available to you. If you do not meet such holding
period requirements, you may still be entitled to a deduction for
certain foreign taxes. In either case, your tax statement will
show more taxable income or capital gains than were actually
distributed by the fund, but will also show the amount of the
available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements,
a fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates Institutional Class's
NAV as of the close of business of the NYSE, normally 4:00 p.m.
Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class
is computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting
that class's pro rata share of the value of the applicable fund's
liabilities, subtracting the liabilities allocated to that class, and
dividing the result by the number of shares of that class that are
outstanding.
Each fund's assets are valued primarily on the basis of market
quotations or on the basis of information furnished by a pricing
service. Short-term securities with remaining maturities of sixty days
or less for which quotations and information furnished by a pricing
service are not readily available are valued on the basis of amortized
cost. This method minimizes the effect of changes in a security's
market value. Foreign securities are valued on the basis of quotations
from the primary market in which they are traded, and are translated
from the local currency into U.S. dollars using current exchange
rates. In addition, if quotations and information furnished by a
pricing service are not readily available, or if the values have been
materially affected by events occurring after the closing of a foreign
market, assets may be valued by another method that the Board of
Trustees believes accurately reflects fair value.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does
not follow 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 the confirmation statements immediately after receipt. If you do
not want the ability to redeem and exchange by telephone, call
Fidelity for instructions. Additional documentation may be required
from corporations, associations, and certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a
period of time. Each fund also reserves the right to reject any
specific purchase order, including certain purchases by exchange. See
"Exchange Restrictions" on page . Purchase orders may be
refused if, in FMR's opinion, they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased
at the next NAV calculated after your order is received and accepted.
Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.
(small solid bullet) Automated Purchase Orders: For shares of the
Bond Funds, the Intermediate-Term Bond Funds, and Short-Term Bond
Funds, you begin to earn dividends as of the day your funds are
received.
(small solid bullet) Other Purchases: For shares of the Bond Funds,
the Intermediate-Term Bond Funds, and Short-Term Bond Funds, you
begin to earn dividends as of the first business day following the day
your funds are received.
AUTOMATED PURCHASE ORDERS. Institutional Class shares can be purchased
or sold through investment professionals utilizing an automated order
placement and settlement system that guarantees payment for orders on
a specified date.
CONFIRMED PURCHASES. Certain financial institutions that meet FDC's
creditworthiness criteria may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow no later than
close of business on the next business day. If payment is not received
by the next business day, the order will be canceled and the financial
institution will be liable for any losses.
TO AVOID THE COLLECTION PERIOD associated with check purchases,
consider buying shares by bank wire, U.S. Postal money order, U.S.
Treasury check, Federal Reserve check, or automatic investment plans.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received and accepted.
Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares of the Bonds Funds, the Intermediate-Term
Bond Funds, and the Short-Term Bond Funds will earn dividends through
the date of redemption; however, shares redeemed on a Friday or prior
to a holiday will continue to earn dividends until the next business
day.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check have been
collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500, subject to an
annual maximum charge of $60.00 per shareholder. Accounts opened after
September 30 will not be subject to the fee for that year. The fee,
which is payable to the transfer agent, is designed to offset in part
the relatively higher costs of servicing smaller accounts. The fee
will not be deducted from retirement accounts (except non-prototype
retirement accounts), accounts using a systematic investment program,
certain (Network Level I and III) accounts which are maintained
through National Securities Clearing Corporation (NSCC), or if total
assets in Fidelity mutual funds exceed $50,000. Eligibility for the
$50,000 waiver is determined by aggregating Fidelity mutual fund
accounts (excluding contractual plans) maintained (i) by FIIOC and
(ii) through NSCC; provided those accounts are registered under the
same primary social security number.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000 you will be
given 30 days' notice to reestablish the minimum balance. If you do
not increase your balance, Fidelity reserves the right to close your
account and send the proceeds to you. Your shares will be redeemed at
the NAV on the day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC will, at its expense, provide promotional incentives such as sales
contests and luxury trips to investment professionals who support the
sale of shares of the funds. In some instances, these incentives will
be offered only to certain types of investment professionals, such as
bank-affiliated or non-bank affiliated broker-dealers, or to
investment professionals whose representatives provide services in
connection with the sale or expected sale of significant amounts of
shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging your
Institutional Class shares for Institutional Class shares of other
Fidelity Advisor funds or for shares of other Fidelity funds. However,
you should note the following:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage difference between that fund's sales charge and
any sales charge you may have previously paid in connection with the
shares you are exchanging. For example, if you had already paid a
sales charge of 2% on your shares and you exchange them into a fund
with a 3% sales charge, you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of a fund per calendar
year. Accounts under common ownership or control, including accounts
with the same taxpayer identification number, will be counted together
for purposes of the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
in certain institutional retirement plans to conform to plan exchange
limits and Department of Labor regulations. See your plan materials
for further information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to a
fund.
Although the funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify these
exchange privileges in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
fees of up to 1.00% on purchases, administrative fees of up to $7.50,
and t r ading fees of up to 1.50% on exchanges. Check each
fund's prospectus for details.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related SAI,
in connection with the offer contained in this Prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the funds or FDC. This Prospectus
and the related SAI do not constitute an offer by the funds or by FDC
to sell or to buy shares of the funds to any person to whom it is
unlawful to make such offer.
APPENDIX A
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF CORPORATE BONDS
Moody's ratings for obligations with an original remaining maturity in
excess of one year fall within nine categories. They range from Aaa
(highest quality) to C (lowest quality). Moody applies numerical
modifiers of 1, 2, or 3 to each generic rating classification from Aa
through B. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS
Debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA to CCC may be modified by the addition of a plus sign (+) or minus
sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
APPENDIX B
E Q UITY GROWTH - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
EQUITY GROWTH -
INSTITUTIONAL CLASS -0.57% 15.57% 44.84% 6.93% 64.71% 10.14% 15.71% -0.04% 40.12% 16.89%
Lipper Growth Funds AverageA 3.08% 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: -0.5700000000000001
ROW: 2, COL: 1, VALUE: 15.57
ROW: 3, COL: 1, VALUE: 44.84
ROW: 4, COL: 1, VALUE: 6.930000000000001
ROW: 5, COL: 1, VALUE: 64.71000000000001
ROW: 6, COL: 1, VALUE: 10.14
ROW: 7, COL: 1, VALUE: 15.71
ROW: 8, COL: 1, VALUE: -0.04000000000000001
ROW: 9, COL: 1, VALUE: 40.12000000000001
ROW: 10, COL: 1, VALUE: 16.89
(LARGE SOLID BOX) EQUITY GROWTH - INSTITUTIONAL
CLASS
G R OWTH OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
GROWTH OPPORTUNITIES - 33.28% 24.14% -1.65% 42.68% 15.03% 22.17% 2.86% 33.58% 18.30%
INSTITUTIONAL CLASS
Lipper Growth Funds AverageA 14.79% 26.91% -4.49% 36.70% 8.08% 10.63% -2.17% 30.79% 19.24%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 33.28
ROW: 3, COL: 1, VALUE: 24.14
ROW: 4, COL: 1, VALUE: -1.65
ROW: 5, COL: 1, VALUE: 42.68
ROW: 6, COL: 1, VALUE: 15.03
ROW: 7, COL: 1, VALUE: 22.17
ROW: 8, COL: 1, VALUE: 2.86
ROW: 9, COL: 1, VALUE: 33.58
ROW: 10, COL: 1, VALUE: 18.3
(LARGE SOLID BOX) GROWTH OPPORTUNITIES -
INSTITUTIONAL CLASS
ST R ATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
STRATEGIC OPPORTUNITIES - -5.72% 22.71% 32.98% -6.59% 23.69% 13.47% 21.07% -6.35% 37.42% 1.99%
INSTITUTIONAL CLASS
Lipper Capital Appreciation
FundsB -0.03% 14.09% 26.60% -8.24% 39.91% 8.78% 15.68% -3.38% 30.34% 16.31%
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: -6.33
ROW: 2, COL: 1, VALUE: 22.25
ROW: 3, COL: 1, VALUE: 32.6
ROW: 4, COL: 1, VALUE: -7.17
ROW: 5, COL: 1, VALUE: 23.08
ROW: 6, COL: 1, VALUE: 12.87
ROW: 7, COL: 1, VALUE: 20.44
ROW: 8, COL: 1, VALUE: -7.17
ROW: 9, COL: 1, VALUE: 37.42
ROW: 10, COL: 1, VALUE: 1.99
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES -
INSTITUTIONAL CLASS
EQU I TY INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
EQUITY INCOME -
INSTITUTIONAL CLASS -2.24% 23.23% 18.43% -14.28% 29.81% 14.94% 18.80% 7.50% 33.49% 15.26%
Lipper Equity Income Funds
AverageC -2.18% 16.74% 22.18% -6.78% 26.86% 9.77% 13.66% -2.54% 30.17% 18.85%
S&P 500 5.10% 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: -2.24
ROW: 2, COL: 1, VALUE: 23.23
ROW: 3, COL: 1, VALUE: 18.43
ROW: 4, COL: 1, VALUE: -14.28
ROW: 5, COL: 1, VALUE: 29.81
ROW: 6, COL: 1, VALUE: 14.94
ROW: 7, COL: 1, VALUE: 18.8
ROW: 8, COL: 1, VALUE: 7.5
ROW: 9, COL: 1, VALUE: 33.49
ROW: 10, COL: 1, VALUE: 15.26
(LARGE SOLID BOX) EQUITY INCOME -
INSTITUTIONAL CLASS
BA L ANCED - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
BALANCED - INSTITUTIONAL CLASS 20.89% 24.60% -2.94% 34.48% 9.20% 19.66% -5.09% 15.00% 8.68%
Lipper Balanced Funds AverageD 12.34% 19.57% -0.57% 26.69% 7.07% 10.91% -2.50% 25.16% 13.76%
S&P 500 16.61% 31.69% -3.10% 30.47% 7.62% 10.08% 1.32% 37.58% 22.96%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 20.89
ROW: 3, COL: 1, VALUE: 24.6
ROW: 4, COL: 1, VALUE: -2.94
ROW: 5, COL: 1, VALUE: 34.58
ROW: 6, COL: 1, VALUE: 9.199999999999999
ROW: 7, COL: 1, VALUE: 19.66
ROW: 8, COL: 1, VALUE: -5.09
ROW: 9, COL: 1, VALUE: 15.0
ROW: 10, COL: 1, VALUE: 8.68
(LARGE SOLID BOX) BALANCED - INSTITUTIONAL CLASS
HIGH YIELD - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
HIGH YIELD - INSTITUTIONAL CLASS 17.24% 3.64% 7.30% 34.94% 23.09% 20.45% -1.49% 18.69% 13.24%
Lipper High Current Yield Funds AverageE 12.89% -0.58% -10.13% 36.91% 17.51% 18.95% -3.85% 16.43% 13.67%
Merrill Lynch High Yield Master Index 13.47% 4.23% -4.35% 34.58% 18.16% 17.18% -1.17% 19.91% 11.06%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 17.24
ROW: 3, COL: 1, VALUE: 3.64
ROW: 4, COL: 1, VALUE: 7.3
ROW: 5, COL: 1, VALUE: 34.94
ROW: 6, COL: 1, VALUE: 23.09
ROW: 7, COL: 1, VALUE: 20.45
ROW: 8, COL: 1, VALUE: -1.49
ROW: 9, COL: 1, VALUE: 18.69
ROW: 10, COL: 1, VALUE: 13.24
(LARGE SOLID BOX) HIGH YIELD - INSTITUTIONAL CLASS
STRATEGIC INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1995 1996
STRATEGIC INCOME - INSTITUTIONAL CLASS 22.41% 13.04%
Lipper Multi-Sector Income Funds AverageF 16.92% 11.74%
Merrill Lynch High Yield Master Index 19.91% 11.06%
Consumer Price Index 2.54% 3.32%
</TABLE>
MOR T GAGE SECURITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
MORTGAGE SECURITIES -
INSTITUTIONAL CLASS 2.70% 6.72% 13.64% 10.36% 13.61% 5.45% 6.71% 1.94% 17.02% 5. 4 3%
Lipper U.S. Mortgage Funds
AverageG 2.53% 7.47% 12.71% 9.52% 15.00% 6.38% 7.58% -4.83% 16.29% 3.07%
Salomon Brothers Mortgage Index 4.06% 8.81% 15.16% 10.90% 15.64% 7.37% 7.04% -1.43% 16.77% 5. 3 7%
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.7
ROW: 2, COL: 1, VALUE: 6.72
ROW: 3, COL: 1, VALUE: 13.64
ROW: 4, COL: 1, VALUE: 10.36
ROW: 5, COL: 1, VALUE: 13.61
ROW: 6, COL: 1, VALUE: 5.45
ROW: 7, COL: 1, VALUE: 6.71
ROW: 8, COL: 1, VALUE: 1.94
ROW: 9, COL: 1, VALUE: 17.02
ROW: 10, COL: 1, VALUE: 5.930000000000001
(LARGE SOLID BOX) MORTGAGE SECURITIES -
INSTITUTIONAL CLASS
GO V ERNMENT INVESTMENT - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS 6.57% 11.75% 8.37% 13.45% 6.48% 9.36% -3.85% 17.70% 2.33%
Lipper General U.S. Government Funds 6.67% 12.46% 8.22% 14.44% 6.41% 9.42% -4.64% 17.34% 1.72%
AverageH
Salomon Brothers Treasury/Agency Index 7.10% 14.24% 8.78% 15.33% 7.24% 10.74% -3.40% 18.39% 2.76%
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 6.57
ROW: 3, COL: 1, VALUE: 11.75
ROW: 4, COL: 1, VALUE: 8.370000000000001
ROW: 5, COL: 1, VALUE: 13.45
ROW: 6, COL: 1, VALUE: 6.48
ROW: 7, COL: 1, VALUE: 9.360000000000001
ROW: 8, COL: 1, VALUE: -3.85
ROW: 9, COL: 1, VALUE: 17.7
ROW: 10, COL: 1, VALUE: 2.33
(LARGE SOLID BOX) GOVERNMENT INVESTMENT -
INSTITUTIONAL CLASS
I NTERMEDIATE BOND - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
INTERMEDIATE BOND - INSTITUTIONAL
CLASS 2.32% 7.84% 12.11% 7.91% 15.16% 7.32% 12.08% -2.06% 12.50% 3.70%
Lipper Intermediate Investment Grade 2.13% 7.06% 11.67% 7.22% 15.63% 6.88% 9.52% -3.25% 16.62% 3.12%
Debt Funds AverageI
Lehman Brothers Intermediate 3.66% 6.67% 12.77% 9.16% 14.62% 7.17% 8.79% -1.93% 15.33% 4.05%
Government/Corporate Bond Index
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.32
ROW: 2, COL: 1, VALUE: 7.84
ROW: 3, COL: 1, VALUE: 12.11
ROW: 4, COL: 1, VALUE: 7.91
ROW: 5, COL: 1, VALUE: 15.16
ROW: 6, COL: 1, VALUE: 7.319999999999999
ROW: 7, COL: 1, VALUE: 12.08
ROW: 8, COL: 1, VALUE: -2.06
ROW: 9, COL: 1, VALUE: 12.5
ROW: 10, COL: 1, VALUE: 3.7
(LARGE SOLID BOX) INTERMEDIATE BOND -
INSTITUTIONAL CLASS
S HORT FIXED-INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
SHORT FIXED-INCOME - INSTITUTIONAL
CLASS 6.19% 10.31% 5.87% 13.37% 7.61% 9.49% -3.37% 9.90% 4.69%
Lipper Short Investment Grade Bond 6.86% 10.22% 7.87% 12.88% 5.97% 6.45% -0.44% 10.84% 4.64%
Funds AverageJ
Lehman Brothers 1-3 Year 6.34% 10.97% 9.69% 11.83% 6.35% 5.55% 0.55% 10.96% 5.14%
Government/Corporate Bond Index
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 6.19
ROW: 3, COL: 1, VALUE: 10.31
ROW: 4, COL: 1, VALUE: 5.87
ROW: 5, COL: 1, VALUE: 13.37
ROW: 6, COL: 1, VALUE: 7.609999999999999
ROW: 7, COL: 1, VALUE: 9.49
ROW: 8, COL: 1, VALUE: -3.37
ROW: 9, COL: 1, VALUE: 9.9
ROW: 10, COL: 1, VALUE: 4.69
(LARGE SOLID BOX) SHORT FIXED-INCOME -
INSTITUTIONAL CLASS
H I GH INCOME MUNICIPAL - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
HIGH INCOME MUNICIPAL - 11.80% 13.09% 10.29% 12.18% 11.11% 13.79% -8.05% 16.84% 3.09%
INSTITUTIONAL CLASS
Lipper High Yield Municipal Bond 11.28% 10.11% 5.13% 11.52% 8.51% 11.41% -4.67% 15.98% 4.17%
Funds AverageK
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: 11.8
ROW: 3, COL: 1, VALUE: 13.09
ROW: 4, COL: 1, VALUE: 10.29
ROW: 5, COL: 1, VALUE: 12.18
ROW: 6, COL: 1, VALUE: 11.11
ROW: 7, COL: 1, VALUE: 13.79
ROW: 8, COL: 1, VALUE: -8.050000000000001
ROW: 9, COL: 1, VALUE: 16.84
ROW: 10, COL: 1, VALUE: 3.09
(LARGE SOLID BOX) HIGH INCOME MUNICIPAL -
INSTITUTIONAL CLASS
M U NICIPAL BOND- INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
MUNICIPAL BOND - INSTITUTIONAL CLASS -1.56% 12.30% 9.56% 6.91% 11.91% 8.93% 13.17% -8.49% 18.15% 4.02%
Lipper General Municipal Debt Funds 0.94 11.53% 9.65% 6.05% 12.09% 8.79% 12.47% -6.50% 16.84% 3.30%
AverageL
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: -1.56
ROW: 2, COL: 1, VALUE: 12.3
ROW: 3, COL: 1, VALUE: 9.560000000000001
ROW: 4, COL: 1, VALUE: 6.91
ROW: 5, COL: 1, VALUE: 11.91
ROW: 6, COL: 1, VALUE: 8.93
ROW: 7, COL: 1, VALUE: 13.17
ROW: 8, COL: 1, VALUE: -8.49
ROW: 9, COL: 1, VALUE: 18.15
ROW: 10, COL: 1, VALUE: -4.02
(LARGE SOLID BOX) MUNICIPAL BOND- INSTITUTIONAL
CLASS
I NTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
INTERMEDIATE MUNICIPAL INCOME - 2.33% 7.38% 7.79% 6.37% 9.64% 7.28% 9.94% -5.43% 14.37% 4.15%
INSTITUTIONAL CLASS
Lipper Intermediate Municipal Debt 1.32% 7.57% 8.26% 6.59% 10.52% 7.80% 10.18% -3.51% 12.89% 3.70%
Funds AverageM
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 2.33
ROW: 2, COL: 1, VALUE: 7.38
ROW: 3, COL: 1, VALUE: 7.79
ROW: 4, COL: 1, VALUE: 6.37
ROW: 5, COL: 1, VALUE: 9.639999999999999
ROW: 6, COL: 1, VALUE: 7.28
ROW: 7, COL: 1, VALUE: 9.94
ROW: 8, COL: 1, VALUE: -5.430000000000001
ROW: 9, COL: 1, VALUE: 14.37
ROW: 10, COL: 1, VALUE: 4.15
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL
INCOME - INSTITUTIONAL CLASS
S HORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL
CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1995 1996
SHORT-INTERMEDIATE MUNICIPAL INCOME - 8.75% 3.67%
INSTITUTIONAL CLASS
Lipper Short- Intermediate Municipal 7.43% 3.53%
Debt Funds AverageN
Consumer Price Index 2.54% 3.32%
</TABLE>
N EW YORK MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1996
NEW YORK MUNICIPAL INCOME - 3.81%
INSTITUTIONAL CLASS
Lipper New York Municipal Debt Funds 3.15%
AverageP
Consumer Price Index 3.32%
</TABLE>
+INITIAL OFFERING OF INSTITUTIONAL CLASS OF GROWTH OPPORTUNITIES,
BALANCED, HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, SHORT
FIXED-INCOME, HIGH INCOME MUNICIPAL, AND SHORT-INTERMEDIATE MUNICIPAL
INCOME TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS PRIOR
TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.65% FOR GROWTH OPPORTUNITIES, STRATEGIC OPPORTUNITIES, AND BALANCED,
0.25% FOR HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, AND
HIGH INCOME MUNICIPAL, AND 0.15% FOR SHORT FIXED-INCOME AND SHORT
INTERMEDIATE MUNICIPAL INCOME. TOTAL RETURNS FOR INSTITUTIONAL CLASS
PRIOR TO JULY 3, 1995 WOULD HAVE BEEN HIGHER IF CLASS T'S 12B-1 FEE
HAD NOT BEEN REFLECTED.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF STRATEGIC OPPORTUNITIES
TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS PRIOR TO JULY
3, 1995 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF MUNICIPAL BOND TOOK
PLACE ON JULY 1, 1996. INSTITUTIONAL CLASS RETURNS PRIOR TO JULY 1,
1996 ARE THOSE OF INITIAL CLASS, WHICH HAS NO 12B-1 FEE.
INITIAL OFFERING OF INSTITUTIONAL CLASS OF MORTGAGE SECURITIES TOOK
PLACE ON MARCH 3, 1997. INSTITUTIONAL CLASS RETURNS PRIOR TO MARCH 3,
1997 ARE THOSE OF INITIAL CLASS WHICH HAS NO 12B-1 FEE.
[A] THE LIPPER GROWTH FUNDS AVERAGE CURRENTLY REFLECTS THE PERFORMANCE
OF OVER 669 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[B] THE LIPPER CAPITAL APPRECIATION FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 189 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[C] THE LIPPER EQUITY INCOME FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 160 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[D] THE LIPPER BALANCED FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 272 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[E] THE LIPPER HIGH CURRENT YIELD FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 148 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[F] THE LIPPER MULTI-SECTOR INCOME FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 51 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[G] THE LIPPER U.S. MORTGAGE FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 59 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[H] THE LIPPER GENERAL U.S. GOVERNMENT BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 170 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[I] THE LIPPER INTERMEDIATE INVESTMENT GRADE BOND FUNDS AVERAGE
CURRENTLY REFLECTS THE PERFORMANCE OF OVER 176 MUTUAL FUNDS WITH
SIMILAR OBJECTIVES.
[J] THE LIPPER SHORT INVESTMENT GRADE BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 95 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[K] THE LIPPER HIGH YIELD MUNICIPAL BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 43 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[L] THE LIPPER GENERAL MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 225 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[M] THE LIPPER INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 136 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES.
[N] THE LIPPER SHORT MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 28 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[O] THE LIPPER NEW YORK MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 96 MUTUAL FUNDS WITH SIMILAR
OBJECTIVES
TECHNOQUANT IS A TRADEMARK OF FMR CORP.
FIDELITY ADVISOR FUNDS:
CLASS A, CLASS T, CLASS B, CLASS C, INSTITUTIONAL CLASS, AND INITIAL
CLASS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C>
10.................................... Cover Page
11.................................... Cover Page
12.................................... Description of the Trust
13 a-c.............................. Investment Policies and Limitations
d................................. Portfolio Transactions
14 a-c.............................. Trustees and Officers
15 a-c ............................. Trustees and Officers
16 a i.............................. FMR; Portfolio Transactions
ii............................ Trustees and Officers
iii........................... Management Contracts
b................................. Management Contracts
c, d............................. Contracts with FMR Affiliates
e................................. Management Contracts
f................................. Distribution and Service Plans
g................................. *
h................................. Description of the Trust
i................................. Contracts with FMR Affiliates
17 a-d............................. Portfolio Transactions
e............................. *
18 a................................. Description of the Trust
b................................. *
19 a................................. Additional Purchase, Exchange and Redemption
Information
b................................. Valuation; Additional Purchase, Exchange and
Redemption Information
c................................. *
20.................................... Distributions and Taxes
21 a, b............................. Contracts with FMR Affiliates; Distribution and
Service Plans
c................................. *
22 a ............................. *
b ................................ Performance
23.................................... Financial Statements
</TABLE>
* Not Applicable
FIDELITY ADVISOR FUNDS
CLASS A, CLASS T, CLASS B, CLASS C, INSTITUTIONAL CLASS, AND INITIAL
CLASS
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 31, 1997
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectuses
(dated October 31, 1997) for Class A, Class T, Class B, Class C,
Institutional Class, and Initial Class shares (except Fidelity Advisor
Municipal Bond Fund: Initial Class and Fidelity Advisor Strategic
Opportunities Fund: Initial Class). Fidelity Advisor Municipal Bond
Fund: Initial Class and Fidelity Advisor Strategic Opportunities Fund:
Initial Class Prospectuses are dated February 28, 1997. Initial Class
shares are available only to current Initial Class shareholders.
Please retain this document for future reference. The funds' Annual
Reports are separate documents supplied with this SAI. To obtain a
free additional copy of a Prospectus or an Annual Report, please call
Fidelity at 1-800-544-8888 or your investment professional.
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Considerations Affecting Canada
Special Considerations Affecting Latin America
Special Considerations Affecting Japan, the Pacific Basin, and Southeast Asia
Special Considerations Affecting Europe
Special Considerations Affecting Africa
Special Considerations Affecting New York
Special Considerations Affecting California
Special Considerations Affecting Puerto Rico
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange, and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Contracts with FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
</TABLE>
ACOM-ptb-0 297-0 1
For more information on any Fidelity fund, including charges and
expenses, call or write for a free prospectus. Read it carefully
before you invest or send money.
GROWTH FUNDS
Fidelity Advisor TechnoQuantTM Growth Fund
Fidelity Advisor International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund
TAXABLE INCOME FUNDS
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
Fidelity Advisor California Municipal Income Fund
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
Fidelity International Investment Advisors (FIIA)
Fidelity International Investment Advisors (U.K.) Limited
(FI IA (U.K. )L )
Fidelity Investments Japan Limited (FIJ)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENTS
Fidelity Investments Institutional Operations Company, Inc. (FIIOC)
(Class A, Class T, Class B, Class C, and Institutional Class
- - Taxable Funds)
UMB Bank, n.a. (UMB) (Class A, Class T, Class B, Class C,
Institutional Class, and Initial Class - Municipal Funds)
Fidelity Service Company, Inc. (FSC) (Initial Class - Taxable
Funds)
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets or other circumstances will
not be considered when determining whether the investment complies
with a fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval of a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940
Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
TECHNOQUANTTM GROWTH FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INTERNATIONAL CAPITAL APPRECIATION FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
OVERSEAS FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government, or any of its agencies or instrumentalities,
or securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
MID CAP FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
EQUITY GROWTH FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite any issue of securities (to the extent that the fund
may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than obligations
issued or guaranteed by the Government of the United States, its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets (taken at current value) would be invested in the
securities of issuers having their principal business activities in
the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
GROWTH OPPORTUNITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
STRATEGIC OPPORTUNITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
LARGE CAP FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
GROWTH & INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
EQUITY INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to
repurchase agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser,
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
BALANCED FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser, or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
beginning on page .
EMERGING MARKETS INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser,
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more that 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
HIGH YIELD FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities)
if, as a result, (a) more than 5% of the value of the fund's total
assets would be invested in the securities of that issuer, or (b) it
would hold more than 10% of the outstanding voting securities of that
issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
STRATEGIC INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL:
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more that 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
MORTGAGE SECURITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. g overnment or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase any security if, as a result thereof, more than 25% of
the value of its total assets would be invested in the securities of
companies having their principal business activities in the same
industry (this limitation does not apply to securities issued or
guaranteed by the United States g overnment, its agencies or
instrumentalities);
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (i) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (ii) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
GOVERNMENT INVESTMENT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. g overnment or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940.
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. g overnment or any of its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of issuers
having their principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other investments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies in the real estate
business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser,
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INTERMEDIATE BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. g overnment or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment), in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. g overnment or any of its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of debt securities or
to repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
SHORT FIXED-INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. g overnment or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. g overnment or any of its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (i) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (ii) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
HIGH INCOME MUNICIPAL FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. g overnment or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others (except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. g overnment or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in securities of companies whose principal business activities are in
the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of investment limitations (1) and (5), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
MUNICIPAL BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. g overnment or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or
(b) the fund would hold more than 10% of the outstanding voting
securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. g overnment or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in securities of companies whose principal business activities are in
the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser, or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
For purposes of limitations (1) and (5), FMR identifies the issuer of
a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INTERMEDIATE MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. g overnment or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of its total
assets would be invested in the securities of that issuer, or (b) the
fund would hold more than 10% of the outstanding voting securities of
that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. g overnment or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in the securities of companies whose principal business activities are
in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities);
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of investment limitations (1) and (5), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
For the fund's limitations on futures contracts and options, see the
section entitled "Limitations on Futures and Options Transactions" on
page .
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. g overnment or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in securities of companies whose principal business activities are in
the same industry;
(5) purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business;
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limitation does not apply to purchases of debt securities or to
repurchase agreements).
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For purposes of investment limitations (4) and (i), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
NEW YORK MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For purposes of investment limitations (4) and (i), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
CALIFORNIA MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For purposes of investment limitations (4) and (i), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
For the fund's limitations on futures and options transaction, see the
section entitled "Limitations on Futures and Options Transactions" on
page .
THE FOLLOWING PAGES CONTAIN MORE DETAILED INFORMATION ABOUT TYPES OF
INSTRUMENTS IN WHICH A FUND MAY INVEST, STRATEGIES FMR MAY EMPLOY IN
PURSUIT OF A FUND'S INVESTMENT OBJECTIVE, AND A SUMMARY OF RELATED
RISKS. FMR MAY NOT BUY ALL OF THESE INSTRUMENTS OR USE ALL OF THESE
TECHNIQUES UNLESS IT BELIEVES THAT DOING SO WILL HELP A FUND ACHIEVE
ITS GOAL.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act. These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50
largest U.S. banks (measured by deposits); municipal securities; U.S.
Government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions;
and short-term borrowings. In accordance with exemptive orders issued
by the Securities and Exchange Commission (SEC), the Board of Trustees
has established and periodically reviews procedures applicable to
transactions involving affiliated financial institutions.
ASSET-BACKED SECURITIES represent interests in pools of consumer loans
(generally unrelated to mortgage loans) and most often are structured
as pass-through securities. Interest and principal payments ultimately
depend upon payment of the underlying loans by individuals, although
the securities may be supported by letters of credit or other credit
enhancements. The value of asset-backed securities may also depend on
the creditworthiness of the servicing agent for the loan pool, the
originator of the loans, or the financial institution providing the
credit enhancement.
CLOSED-END INVESTMENT COMPANIES. A fund may purchase the shares of
closed-end investment companies to facilitate investment in certain
countries. Shares of closed-end investment companies may trade at a
premium or a discount to their net asset value.
DELAYED-DELIVERY TRANSACTIONS. A fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place
after the customary settlement period for that type of security.
Typically, no interest accrues to the purchaser until the security is
delivered. A fund may receive fees for entering into delayed-delivery
transactions.
When purchasing securities on a delayed-delivery basis, a fund assumes
the rights and risks of ownership, including the risk of price and
yield fluctuations. Because a fund is not required to pay for
securities until the delivery date, these risks are in addition to the
risks associated with the fund's other investments. If a fund remains
substantially fully invested at a time when delayed-delivery purchases
are outstanding, the delayed-delivery purchases may result in a form
of leverage. When delayed-delivery purchases are outstanding, a fund
will set aside appropriate liquid assets in a segregated custodial
account to cover its purchase obligations. When a fund has sold a
security on a delayed-delivery basis, the fund does not participate in
further gains or losses with respect to the security. If the other
party to a delayed-delivery transaction fails to deliver or pay for
the securities, a fund could miss a favorable price or yield
opportunity, or could suffer a loss.
A fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are
delivered, which may result in capital gains or losses.
DIRECT INVESTMENT IN MORTGAGES. Although Mortgage Securities has no
current intention to invest directly in mortgages, it may in the
future invest up to 10% of the value of total assets directly in
mortgages securing residential real estate. These mortgages are
normally available from lending institutions which group together a
number of mortgages (usually 10 to 50) for resale and which act as
servicing agent for the purchaser with respect to, among other things,
the receipt of principal and interest payments. The vendor of such
mortgages receives a fee from the fund for acting as servicing agent.
The vendor does not provide any insurance or guarantees covering the
repayment of principal or interest on the mortgages. Unlike
pass-through securities, these constitute direct investment in
mortgages inasmuch as the fund, rather than a financial intermediary,
becomes the mortgagee. At present, such investments are considered to
be illiquid by FMR. The fund will invest in such mortgages only if FMR
has determined through an examination of the mortgage loans and their
originators (which may include an examination of such factors as
percentage of family income dedicated to loan service and the
relationship between loan value and market value) that purchase of the
mortgages should not present a significant risk of loss to the fund.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve significant risks in addition to the risks
inherent in U.S. investments. The value of securities denominated in
foreign currencies, and of dividends and interest paid with respect to
such securities will fluctuate based on the relative strength of the
U.S. dollar.
Foreign investments involve a risk of local political, economic, or
social instability, military action or unrest, or adverse diplomatic
developments, and may be affected by actions of foreign governments
adverse to the interests of U.S. investors. Such actions may include
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 is no assurance that FMR will be
able to anticipate these potential events or counter their effects.
These risks are magnified for investments in developing countries,
which may have relatively unstable governments, economies based on
only a few industries, and securities markets that trade a small
number of securities.
Economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States.
Foreign markets may offer less protection to investors than U.S.
markets. It is anticipated that in most cases the best available
market for foreign securities will be on an exchange or in
over-the-counter markets located outside of the United States. Foreign
stock markets, while growing in volume and sophistication, are
generally not as developed as those in the United States, and
securities of some foreign issuers (particularly those located in
developing countries) may be less liquid and more volatile than
securities of comparable U.S. issuers. Foreign security trading
practices, including those involving securities settlement where fund
assets may be released prior to receipt of payment, may result in
increased risk in the event of a failed trade or the insolvency of a
foreign broker-dealer, and may involve substantial delays. In
addition, the costs of foreign investing, including withholding taxes,
brokerage commissions and custodial costs, are generally higher than
for U.S. investors. In general, there is less overall governmental
supervision and regulation of securities exchanges, brokers, and
listed companies than in the United States. It may also be difficult
to enforce legal rights in foreign countries. Foreign issuers are
generally not bound by uniform accounting, auditing, and financial
reporting requirements and standards of practice comparable to those
applicable to U.S. issuers.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such
transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depositary Receipts (ADRs), as well as other "hybrid" forms
of ADRs, including European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs), are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by
depository banks and generally trade on an established market in the
United States or elsewhere. The underlying shares are held in trust by
a custodian bank or similar financial institution in the issuer's home
country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various
services, including forwarding dividends and interest and corporate
actions. ADRs are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. However,
ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the
underlying issuer's country.
FANNIE MAES AND FREDDIE MACS are pass-through securities issued by the
Fannie Mae and the Federal Home Loan Mortgage Corporation (FHLMC),
respectively. Fannie Mae and FHLMC, which guarantee payment of
interest and principal on Fannie Maes and Freddie Macs, are federally
chartered corporations supervised by the U.S. Government and acting as
governmental instrumentalities under authority granted by Congress.
Fannie Mae is authorized to borrow from the U.S. Treasury to meet its
obligations. Fannie Maes and Freddie Macs are not backed by the full
faith and credit of the U.S. Government; however, their close
relationship with the U.S. Government makes them high quality
securities with minimal credit risks.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, the municipal
funds do not intend to invest in securities whose interest is
federally taxable. However, from time to time on a temporary basis,
each municipal fund may invest a portion of its assets in fixed-income
obligations whose interest is subject to federal income tax.
Should a municipal fund invest in federally taxable obligations, it
would purchase securities that, in FMR's judgment, are of high
quality. These would include those obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities; obligations
of domestic banks; and repurchase agreements. The funds' standards for
high-quality, taxable obligations are essentially the same as those
described by Moody's Investor Service (Moody's) in rating corporate
obligations within its two highest ratings of Prime-1 and Prime-2, and
those described by Standard & Poor's (S&P) in rating corporate
obligations within its two highest ratings of A-1 and A-2.
Proposals to restrict or eliminate the federal income tax exemption
for interest on municipal obligations are introduced before Congress
from time to time. Proposals also may be introduced before state
legislatures that would affect the state tax treatment of the
municipal funds' distributions. If such proposals were enacted, the
availability of municipal obligations and the value of the municipal
funds' holdings would be affected and the Trustees would reevaluate
the municipal funds' investment objectives and policies.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Although foreign exchange dealers generally do not charge
a fee for such conversions, they do realize a profit based on the
difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency at one rate, while offering a lesser rate of exchange should
the counter-party desire to resell that currency to the dealer.
Forward contracts are customized transactions that require a specific
amount of a currency to be delivered at a specific exchange rate on a
specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency
traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the
contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange. A fund may use currency
forward contracts for any purpose consistent with its investment
objective.
The following discussion summarizes the principal currency management
strategies involving forward contracts that could be used by a fund. A
fund may also use swap agreements, indexed securities, and options and
futures contracts relating to foreign currencies for the same
purposes.
A "settlement hedge" or "transaction hedge" is designed to protect a
fund against an adverse change in foreign currency values between the
date a security is purchased or sold and the date on which payment is
made or received. Entering into a forward contract for the purchase or
sale of the amount of foreign currency involved in an underlying
security transaction for a fixed amount of U.S. dollars "locks in" the
U.S. dollar price of the security. Forward contracts to purchase or
sell a foreign currency may also be used by a fund in anticipation of
future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected
by FMR.
A fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if a fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return
for U.S. dollars to hedge against possible declines in the pound's
value. Such a hedge, sometimes referred to as a "position hedge,"
would tend to offset both positive and negative currency fluctuations,
but would not offset changes in security values caused by other
factors. A fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would
not hedge currency exposure as effectively as a direct hedge into U.S.
dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged
securities are denominated.
A fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting
exposure from U.S. dollars to a foreign currency, or from one foreign
currency to another foreign currency. This type of strategy, sometimes
known as a "cross-hedge," will tend to reduce or eliminate exposure to
the currency that is sold, and increase exposure to the currency that
is purchased, much as if a fund had sold a security denominated in one
currency and purchased an equivalent security denominated in another.
Cross-hedges protect against losses resulting from a decline in the
hedged currency, but will cause a fund to assume the risk of
fluctuations in the value of the currency it purchases.
Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to
cover currency forward contracts. As required by SEC guidelines, a
fund will segregate assets to cover currency forward contracts, if
any, whose purpose is essentially speculative. A fund will not
segregate assets to cover forward contracts entered into for hedging
purposes, including settlement hedges, position hedges, and proxy
hedges.
Successful use of currency management strategies will depend on FMR's
skill in analyzing currency values. Currency management strategies may
substantially change a fund's investment exposure to changes in
currency exchange rates and could result in losses to a fund if
currencies do not perform as FMR anticipates. For example, if a
currency's value rose at a time when FMR had hedged a fund by selling
that currency in exchange for dollars, a fund would not participate in
the currency's appreciation. If FMR hedges currency exposure through
proxy hedges, a fund could realize currency losses from both the hedge
and the security position if the two currencies do not move in tandem.
Similarly, if FMR increases a fund's exposure to a foreign currency
and that currency's value declines, a fund will realize a loss. There
is no assurance that FMR's use of currency management strategies will
be advantageous to a fund or that it will hedge at appropriate times.
FOREIGN REPURCHASE AGREEMENTS. Foreign repurchase agreements may
include agreements to purchase and sell foreign securities in exchange
for fixed U.S. dollar amounts, or in exchange for specified amounts of
foreign currency. Unlike typical U.S. repurchase agreements, foreign
repurchase agreements may not be fully collateralized at all times.
The value of the security purchased by the fund may be more or less
than the price at which the counterparty has agreed to repurchase the
security. In the event of a default by the counterparty, the fund may
suffer a loss if the value of the security purchased is less than the
agreed-upon repurchase price, or if the fund is unable to successfully
assert a claim to the collateral under foreign laws. As a result,
foreign repurchase agreements may involve higher credit risks than
repurchase agreements in U.S. markets, as well as risks associated
with currency fluctuations. In addition, as with other emerging market
investments, repurchase agreements with counterparties located in
emerging markets or relating to emerging market securities may involve
issuers or counterparties with lower credit ratings than typical U.S.
repurchase agreements.
FUNDS' RIGHTS AS SHAREHOLDERS. The funds do not intend to direct or
administer the day-to-day operations of any company. A fund, however,
may exercise its rights as a shareholder and may communicate its views
on important matters of policy to management, the Board of Directors,
and shareholders of a company when FMR determines that such matters
could have a significant effect on the value of the fund's investment
in the company. The activities that a fund may engage in, either
individually or in conjunction with others, may include, among others,
supporting or opposing proposed changes in a company's corporate
structure or business activities; seeking changes in a company's
directors or management; seeking changes in a company's direction or
policies; seeking the sale or reorganization of the company or a
portion of its assets; or supporting or opposing third-party takeover
efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that a fund could be involved in
lawsuits related to such activities. FMR will monitor such activities
with a view to mitigating, to the extent possible, the risk of
litigation against a fund and the risk of actual liability if a fund
is involved in litigation. No guarantee can be made, however, that
litigation against a fund will not be undertaken or liabilities
incurred.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options; Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures
Margin Payments, Limitations on Futures and Options Transactions,
Liquidity of Options and Futures Contracts, Options and Futures
Relating to Foreign Currencies, OTC Options, Purchasing Put and Call
Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. Each fund will
comply with guidelines established by the SEC with respect to coverage
of options and futures strategies by mutual funds, and if the
guidelines so require, will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held
in a segregated account cannot be sold while the futures or option
strategy is outstanding, unless they are replaced with other suitable
assets. As a result, there is a possibility that segregation of a
large percentage of a fund's assets could impede portfolio management
or the fund's ability to meet redemption requests or other current
obligations.
COMBINED POSITIONS. A fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, a fund may purchase a put option and
write a call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics
are similar to selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. A fund may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which it typically invests, which involves a risk that the options or
futures position will not track the performance of a fund's other
investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future
date. When a fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which
the purchase and sale will take place is fixed when a fund enters into
the contract. Some currently available futures contracts are based on
specific securities, such as U.S. Treasury bonds or notes, and some
are based on indices of securities prices, such as the Standard &
Poor's 500 Index (S&P 500(registered trademark)). Futures can be held
until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund (except
International Capital Appreciation) has filed and International
Capital Appreciation Fund intends to file 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. Each fund intends to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the fund can commit assets to initial margin deposits and option
premiums.
In addition, each fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of
the fund's total assets would be hedged with futures and options under
normal conditions; (b) purchase futures contracts or write put options
if, as a result, the fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would
exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options
purchased by the fund would exceed 5% of the fund's total assets.
These limitations do not apply to options attached to or acquired or
traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.
The above limitations on each fund's investments in futures contracts
and options, and each fund's policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for a fund to enter into new positions
or close out existing positions. If the secondary market for a
contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold a
position until delivery or expiration regardless of changes in its
value. As a result, a fund's access to other assets held to cover its
options or futures positions could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and
are standardized as to contract size and delivery date. Most currency
futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency,
which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency
call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed
above. A fund may purchase and sell currency futures and may purchase
and write currency options to increase or decrease its exposure to
different foreign currencies. A fund may also purchase and write
currency options in conjunction with each other or with currency
futures or forward contracts. Currency futures and options values can
be expected to correlate with exchange rates, but may not reflect
other factors that affect the value of a fund's investments. A
currency hedge, for example, should protect a Yen-denominated security
from a decline in the Yen, but will not protect a fund against a price
decline resulting from deterioration in the issuer's creditworthiness.
Because the value of a fund's foreign-denominated investments changes
in response to many factors other than exchange rates, it may not be
possible to match the amount of currency options and futures to the
value of the fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter options (OTC)
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows a fund greater flexibility to tailor an
option to its needs, OTC options generally involve greater credit risk
than exchange-traded options, which are guaranteed by the clearing
organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this
right, the fund pays the current market price for the option (known as
the option premium). Options have various types of underlying
instruments, including specific securities, indices of securities
prices, and futures contracts. A fund may terminate its position in a
put option it has purchased by allowing it to expire or by exercising
the option. If the option is allowed to expire, the fund will lose the
entire premium it paid. If the fund exercises the option, it completes
the sale of the underlying instrument at the strike price. A fund may
also terminate a put option position by closing it out in the
secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium paid, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it
takes the opposite side of the transaction from the option's
purchaser. In return for receipt of the premium, the fund assumes the
obligation to pay the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract, a fund will be required
to make margin payments to an FCM as described above for futures
contracts. A fund may seek to terminate its position in a put option
it writes before exercise by closing out the option in the secondary
market at its current price. If the secondary market is not liquid for
a put option a fund has written, however, the fund must continue to be
prepared to pay the strike price while the option is outstanding,
regardless of price changes, and must continue to set aside assets to
cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise
of the option. The characteristics of writing call options are similar
to those of writing put options, except that writing calls generally
is a profitable strategy if prices remain the same or fall. Through
receipt of the option premium, a call writer mitigates the effects of
a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up
some ability to participate in security price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
instruments. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency of trades
and quotations, (2) the number of dealers and prospective purchasers
in the marketplace, (3) dealer undertakings to make a market, (4) the
nature of the security (including any demand or tender features) and
(5) the nature of the marketplace for trades (including the ability to
assign or offset the fund's rights and obligations relating to the
investment).
Investments currently considered by a fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal
and interest within seven days, non-government-stripped fixed-rate
mortgage-backed securities, and over-the-counter options. Also, FMR
may determine some restricted securities, municipal lease obligations,
government-stripped fixed-rate mortgage-backed securities, loans and
other direct debt instruments, emerging market securities, and swap
agreements to be illiquid. However, with respect to over-the-counter
options a fund writes, all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the
option and the nature and terms of any agreement the fund may have to
close out the option before expiration.
In the absence of market quotations, illiquid investments are priced
at fair value as determined in good faith by a committee appointed by
the Board of Trustees. If, through a change in values, net assets or
other circumstances, a fund were in a position where more than 10% or
15% of its net assets (see each fund's non-fundamental investment
limitations) was invested in illiquid securities, it would seek to
take appropriate steps to protect liquidity.
INDEXED SECURITIES. A fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices,
currencies, precious metals or other commodities, or other financial
indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Indexed
securities may have principal payments as well as coupon payments that
depend on the performance of one or more interest rates. Their coupon
rates or principal payments may change by several percentage points
for every 1% interest rate change. A mortgage-indexed security, for
example, could be synthesized to replicate the performance of mortgage
securities and the characteristics of direct ownership. Gold-indexed
securities, for example, typically provide for a maturity value that
depends on the price of gold, resulting in a security whose price
tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt
securities whose maturity values or interest rates are determined by
reference to the values of one or more specified foreign currencies,
and may offer higher yields than U.S. dollar-denominated securities of
equivalent issuers. Currency-indexed securities may be positively or
negatively indexed; that is, their maturity value may increase when
the specified currency value increases, resulting in a security that
performs similarly to a foreign-denominated instrument, or their
maturity value may decline when foreign currencies increase, resulting
in a security whose price characteristics are similar to a put on the
underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes
in the United States and abroad. At the same time, indexed securities
are subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government
agencies. Indexed securities may be more volatile than the underlying
instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend
money to, and borrow money from, other funds advised by FMR or its
affiliates. High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, New York
Municipal Income, and California Municipal Income currently intend to
participate in this program only as borrowers. A fund will borrow
through the program only when the costs are equal to or lower than the
cost of bank loans. Interfund loans and borrowings normally extend
overnight, but can have a maximum duration of seven days. Loans may be
called on one day's notice. A fund will lend through the program only
when the returns are higher than those available from an investment in
repurchase agreements. A fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost
investment opportunity or additional borrowing costs.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from prevailing short-term interest rate
levels - rising when prevailing short-term interest rates fall,
and vice versa. This interest rate feature can make the prices of
inverse floaters considerably more volatile than bonds with comparable
maturities.
ISSUER LOCATION. FMR determines where an issuer is located by looking
at such factors as its country of organization, the primary trading
market for its securities, and the location of its assets, personnel,
sales, and earnings. The issuer of a security is considered to be
located in a particular country if: (1) the security is issued or
guaranteed by the government of the country or any of its agencies,
political subdivisions, or instrumentalities, (2) the security has its
primary trading market in that country; or (3) the issuer is organized
under the laws of the country, derives at least 50% of its revenues or
profits from goods sold, investments made or services performed in the
country, or has at least 50% of its assets located in the country.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other
borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or
other receivables), or to other parties. Direct debt instruments are
subject to each fund's policies regarding the quality of debt
securities.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
principal and interest. Direct debt instruments may not be rated by
any nationally recognized rating service. If a fund does not receive
scheduled interest or principal payments on such indebtedness, the
fund's share price and yield could be adversely affected. Loans that
are fully secured offer a fund more protections than an unsecured loan
in the event of non-payment of scheduled interest or principal.
However, there is no assurance that the liquidation of collateral from
a secured loan would satisfy the borrower's obligation, or that the
collateral could be liquidated. Indebtedness of borrowers whose
creditworthiness is poor involves substantially greater risks and may
be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only a
small fraction of the amount owed. Direct indebtedness of developing
countries also involves a risk that the governmental entities
responsible for the repayment of the debt may be unable, or unwilling,
to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks to a fund. For example, if a loan is foreclosed, the fund could
become part owner of any collateral, and would bear the costs and
liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of
lender liability, the fund could be held liable as a co-lender. Direct
debt instruments may also involve a risk of insolvency of the lending
bank or other intermediary. Direct debt instruments that are not in
the form of securities may offer less legal protection to a fund in
the event of fraud or misrepresentation. In the absence of definitive
regulatory guidance, each fund relies on FMR's research in an attempt
to avoid situations where fraud or misrepresentation could adversely
affect the fund.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of
the loan, as specified in the loan agreement. Unless, under the terms
of the loan or other indebtedness, a fund has direct recourse against
the borrower, it may have to rely on the agent to apply appropriate
credit remedies against a borrower. If assets held by the agent for
the benefit of a fund were determined to be subject to the claims of
the agent's general creditors, the fund might incur certain costs and
delays in realizing payment on the loan or loan participation and
could suffer a loss of principal or interest.
Direct indebtedness purchased by a fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These
commitments may have the effect of requiring the fund to increase its
investment in a borrower at a time when it would not otherwise have
done so, even if the borrower's condition makes it unlikely that the
amount will ever be repaid. A fund will set aside appropriate liquid
assets in a segregated custodial account to cover its potential
obligations under standby financing commitments.
Each fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see each fund's
investment limitations). For purposes of these limitations, a fund
generally will treat the borrower as the "issuer" of indebtedness held
by the fund. In the case of loan participations where a bank or other
lending institution serves as financial intermediary between a fund
and the borrower, if the participation does not shift to the fund the
direct debtor-creditor relationship with the borrower, SEC
interpretations require the fund, in appropriate circumstances, to
treat both the lending bank or other lending institution and the
borrower as "issuers" for these purposes. Treating a financial
intermediary as an issuer of indebtedness may restrict a fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same
industry, even if the underlying borrowers represent many different
companies and industries.
LOWER-QUALITY DEBT SECURITIES. A fund may purchase lower-quality debt
securities that 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-quality debt securities may fluctuate more than those
of higher-quality debt securities and may decline significantly in
periods of general economic difficulty, which may follow periods of
rising interest rates.
While the market for high-yield corporate debt securities has been in
existence for many years and has weathered previous economic
downturns, the 1980s brought a dramatic increase in the use of such
securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication
of the future performance of the high-yield bond market, especially
during periods of economic recession.
The market for lower-quality debt securities may be thinner and less
active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. If market
quotations are not available, lower-quality debt securities will be
valued in accordance with procedures established by the Board of
Trustees, including the use of outside pricing services. Judgment
plays a greater role in valuing high-yield corporate debt securities
than is the case for securities for which more external sources for
quotations and last-sale information are available. Adverse publicity
and changing investor perceptions may affect the ability of outside
pricing services to value lower-quality debt securities and a fund's
ability to dispose of these securities.
Since the risk of default is higher for lower-quality debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by a fund. In considering
investments for a fund, FMR will attempt to identify those issuers of
high-yielding securities whose financial condition is adequate to meet
future obligations, has improved, or is expected to improve in the
future. FMR's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earnings
prospects, and the experience and managerial strength of the issuer.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
LOWER-QUALITY MUNICIPAL SECURITIES. A fund may invest a portion of its
assets in lower-quality municipal securities as described in the
Prospectus.
While the market for municipals is considered to be substantial,
adverse publicity and changing investor perceptions may affect the
ability of outside pricing services used by a fund to value its
portfolio securities, and a fund's ability to dispose of lower-quality
bonds. The outside pricing services are monitored by FMR and reported
to the Board to determine whether the services are furnishing prices
that accurately reflect fair value. The impact of changing investor
perceptions may be especially pronounced in markets where municipal
securities are thinly traded.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
MORTGAGE-BACKED SECURITIES. A fund may purchase mortgage-backed
securities issued by government and non-government entities such as
banks, mortgage lenders, or other financial institutions. A
mortgage-backed security is an obligation of the issuer backed by a
mortgage or pool of mortgages or a direct interest in an underlying
pool of mortgages. Some mortgage-backed securities, such as
collateralized mortgage obligations (CMOs), make payments of both
principal and interest at a variety of intervals; others make
semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed
securities are based on different types of mortgages including those
on commercial real estate or residential properties. Other types of
mortgage-backed securities will likely be developed in the future, and
a fund may invest in them if FMR determines they are consistent with
the fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in
the market's perception of issuers. In addition, regulatory or tax
changes may adversely affect the mortgage securities market as a
whole. Non-government mortgage-backed securities may offer higher
yields than those issued by government entities, but also may be
subject to greater price changes than government issues.
Mortgage-backed securities are subject to prepayment risk. Prepayment,
which occurs when unscheduled or early payments are made on the
underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract,
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities. Generally,
a fund will not hold such obligations directly as a lessor of the
property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest
gives a fund a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the
obligation.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal securities
may be affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Municipal bankruptcies are relatively rare, and
certain provisions of the U.S. Bankruptcy Code governing such
bankruptcies are unclear and remain untested. Further, the application
of state law to municipal issuers could produce varying results among
the states or among municipal securities issuers within a state. These
legal uncertainties could affect the municipal securities market
generally, certain specific segments of the market, or the relative
credit quality of particular securities. Any of these effects could
have a significant impact on the prices of some or all of the
municipal securities held by a fund.
MUNICIPAL SECTORS:
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student
loans. Bonds issued to supply educational institutions with funds are
subject to the risk of unanticipated revenue decline, primarily the
result of decreasing student enrollment or decreasing state and
federal funding. Among the factors that may lead to declining or
insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general
economic conditions. Student loan revenue bonds are generally offered
by state (or substate) authorities or commissions and are backed by
pools of student loans. Underlying student loans may be guaranteed by
state guarantee agencies and may be subject to reimbursement by the
United States Department of Education through its guaranteed student
loan program. Others may be private, uninsured loans made to parents
or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student
loan revenue bonds are impacted by numerous factors, including the
rate of student loan defaults, seasoning of the loan portfolio, and
student repayment deferral during periods of forbearance. Other risks
associated with student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and
other program subsidies currently in effect.
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open
transmission access to any electricity supplier, although it is not
presently known to what extent competition will evolve. Other risks
include: (a) the availability and cost of fuel, (b) the availability
and cost of capital, (c) the effects of conservation on energy demand,
(d) the effects of rapidly changing environmental, safety, and
licensing requirements, and other federal, state, and local
regulations, (e) timely and sufficient rate increases, and (f)
opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to
regulatory action by a number of private and governmental agencies,
including federal, state, and local governmental agencies. A major
source of revenues for the health care industry is payments from the
Medicare and Medicaid programs. As a result, the industry is sensitive
to legislative changes and reductions in governmental spending for
such programs. Numerous other factors may affect the industry, such as
general and local economic conditions; demand for services; expenses
(including malpractice insurance premiums); and competition among
health care providers. In the future, the following elements may
adversely affect health care facility operations: adoption of
legislation proposing a national health insurance program; other state
or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the
way in which such services are delivered; changes in medical coverage
which alter the traditional fee-for-service revenue stream; and
efforts by employers, insurers, and governmental agencies to reduce
the costs of health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state,
county, city, local housing authority, or other public agency. They
are generally secured by the revenues derived from mortgages purchased
with the proceeds of the bond issue. It is extremely difficult to
predict the supply of available mortgages to be purchased with the
proceeds of an issue or the future cash flow from the underlying
mortgages. Consequently, there are risks that proceeds will exceed
supply, resulting in early retirement of bonds, or that homeowner
repayments will create an irregular cash flow. Many factors may affect
the financing of multi-family housing projects, including acceptable
completion of construction, proper management, occupancy and rent
levels, economic conditions, and changes to current laws and
regulations.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways or other transit
facilities. Airport bonds are dependent on the general stability of
the airline industry and on the stability of a specific carrier that
uses the airport as a hub. Air traffic generally tracks broader
economic trends and is also affected by the price and availability of
fuel. Toll road bonds are also affected by the cost and availability
of fuel as well as toll levels, the presence of competing roads, and
the general economic health of the area. Fuel costs and availability
also affect other transportation-related securities, as does the
presence of alternate forms of transportation, such as public
transportation.
WATER AND SEWER. Water and sewer revenue bonds are often considered to
have relatively secure credit as a result of their issuer's
importance, monopoly status, and generally unimpeded ability to raise
rates. Despite this, lack of water supply due to insufficient rain,
run-off, or snow pack is a concern that has led to past defaults.
Further, public resistance to rate increases, costly environmental
litigation, and Federal environmental mandates are challenges faced by
issuers of water and sewer bonds.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors
such as changes in real estate values and property taxes, interest
rates, cash flow of underlying real estate assets, overbuilding, and
the management skill and creditworthiness of the issuer. Real
estate-related instruments may also be affected by tax and regulatory
requirements, such as those relating to the environment.
REFUNDING CONTRACTS. A fund may purchase securities on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and a
fund to buy refunded municipal obligations at a stated price and yield
on a settlement date that may be several months or several years in
the future. A fund generally will not be obligated to pay the full
purchase price if it fails to perform under a refunding contract.
Instead, refunding contracts generally provide for payment of
liquidated damages to the issuer (currently 15-20% of the purchase
price). A fund may secure its obligations under a refunding contract
by depositing collateral or a letter of credit equal to the liquidated
damages provisions of the refunding contract. When required by SEC
guidelines, a fund will place liquid assets in a segregated custodial
account equal in amount to its obligations under refunding contracts.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is
unrelated to the coupon rate or maturity of the purchased security. To
protect a fund from the risk that the original seller will not fulfill
its obligation, the securities are held in an account of the fund at a
bank, marked-to-market daily, and maintained at a value at least equal
to the sale price plus the accrued incremental amount. While it does
not presently appear possible to eliminate all risks from these
transactions (particularly the possibility that the value of the
underlying security will be less than the resale price, as well as
delays and costs to a fund in connection with bankruptcy proceedings),
it is each fund's current policy to engage in repurchase agreement
transactions with parties whose creditworthiness has been reviewed and
found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part
of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time it may
be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, a fund might obtain a less favorable price than prevailed
when it decided to seek registration of the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, a fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under
the agreement. A fund will enter into reverse repurchase agreements
only with parties whose creditworthiness has been found satisfactory
by FMR. Such transactions may increase fluctuations in the market
value of a fund's assets and may be viewed as a form of leverage.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity
Brokerage Services, Inc. (FBSI). FBSI is a member of the New York
Stock Exchange (NYSE) and a subsidiary of FMR Corp.
Securities lending allows a fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there
may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially,
loans will be made only to parties deemed by FMR to be of good
standing. Furthermore, they will only be made if, in FMR's judgment,
the consideration to be earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that a
fund may engage in loan transactions only under the following
conditions: (1) 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 a fund is authorized to invest. Investing this cash
subjects that investment, as well as the security loaned, to market
forces (i.e., capital appreciation or depreciation).
SHORT SALES. A fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a
convertible security a fund holds, it may sell the stock short. If the
stock price subsequently declines, the proceeds of the short sale
could be expected to offset all or a portion of the effect of the
stock's decline on the value of the convertible security. A fund
currently intends to hedge no more than 15% of its total assets with
short sales on equity securities underlying its convertible security
holdings under normal circumstances.
When a fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to the securities sold short
(or securities convertible or exchangeable into such securities) and
will be required to hold them aside while the short sale is
outstanding. A fund will incur transaction costs, including interest
expense s , in connection with opening, maintaining, and closing
short sales.
SHORT SALES "AGAINST THE BOX." A fund may sell securities short
when it owns or has the right to obtain securities equivalent in kind
or amount to the securities sold short. Such short sales are known as
short sales "against the box." If a fund enters into a short sale
against the box, it will be required to set aside securities
equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will
be required to hold such securities while the short sale is
outstanding. The fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short
sales against the box.
SOVEREIGN DEBT OBLIGATIONS. A fund may purchase sovereign debt
instruments issued or guaranteed by foreign governments or their
agencies, including debt of Latin American nations or other developing
countries. Sovereign debt may be in the form of conventional
securities or other types of debt instruments such as loans or loan
participations. Sovereign debt of developing countries may involve a
high degree of risk, and may be in default or present the risk of
default. Governmental entities responsible for repayment of the debt
may be unable or unwilling to repay principal and interest when due,
and may require renegotiation or rescheduling of debt payments. In
addition, prospects for repayment of principal and interest may depend
on political as well as economic factors.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. A fund may acquire standby commitments to enhance the
liquidity of portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a
third party at any time. A fund may purchase standby commitments
separate from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, a fund would pay a
higher price for the securities acquired, thus reducing their yield to
maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments
are not marketable by a fund; and the possibility that the maturities
of the underlying securities may be different from those of the
commitments.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. Government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives
the principal payments made by the underlying mortgage-backed
security, while the holder of the "interest-only" security (IO)
receives interest payments from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall,
prepayment rates tend to increase, which tends to reduce prices of IOs
and increase prices of POs. Rising interest rates can have the
opposite effect.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of investments or market
factors. Depending on their structure, swap agreements may increase or
decrease a fund's exposure to long- or short-term interest rates (in
the United States or abroad), foreign currency values, mortgage
securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. A fund is not
limited to any particular form of swap agreement if FMR determines it
is consistent with a fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the rights to receive payments to the extent that a specified
interest rate exceeds an agreed-upon level, while the seller of an
interest rate floor is obligated to make payments to the extent that a
specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if a fund agreed to
exchange payments in dollars for payments in foreign currency, the
swap agreement would tend to decrease a fund's exposure to U.S.
interest rates and increase its exposure to foreign currency and
interest rates. Caps and floors have an effect similar to buying or
writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a fund's investments
and its share price and yield.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from a fund. If a
swap agreement calls for payments by a fund, the fund must be prepared
to make such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be
likely to decline, potentially resulting in losses. A fund expects to
be able to eliminate its exposure under swap agreements either by
assignment or other disposition, or by entering into an offsetting
swap agreement with the same party or a similarly creditworthy party.
A fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap
agreements. If a fund enters into a swap agreement on a net basis, it
will segregate assets with a daily value at least equal to the excess,
if any, of the fund's accrued obligations under the swap agreement
over the accrued amount the fund is entitled to receive under the
agreement. If a fund enters into a swap agreement on other than a net
basis, it will segregate assets with a value equal to the full amount
of the fund's accrued obligations under the agreement.
TENDER OPTION BONDS are created by coupling an intermediate -
or long-term, tax-exempt bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, a fund
effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds for a fund, FMR will consider the creditworthiness of the issuer
of the underlying bond, the custodian, and the third party provider of
the tender option. In certain instances, a sponsor may terminate a
tender option if, for example, the issuer of the underlying bond
defaults on interest payments.
VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal instruments, have interest rate adjustment
formulas that help stabilize their market values. Many variable and
floating rate instruments also carry demand features that permit a
fund to sell them at par value plus accrued interest on short notice.
In many instances bonds and participation interests have tender
options or demand features that permit a fund to tender (or put) the
bonds to an institution at periodic intervals and to receive the
principal amount thereof. The funds consider variable rate instruments
structured in this way (Participating VRDOs) to be essentially
equivalent to other VRDOs they purchase. The IRS has not ruled whether
the interest on Participating VRDOs is tax-exempt, and, accordingly,
the funds intend to purchase these instruments based on opinions of
bond counsel. The funds may also invest in fixed-rate bonds that are
subject to third party puts and in participation interests in such
bonds held by a bank in trust or otherwise.
WARRANTS are securities that give a fund the right to purchase equity
securities from the issuer at a specific price (the strike price) for
a limited period of time. The strike price of warrants typically is
much lower than the current market price of the underlying securities,
yet they are subject to similar price fluctuations. As a result,
warrants may be more volatile investments than the underlying
securities and may offer greater potential for capital appreciation as
well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying securities and do not represent any rights
in the assets of the issuing company. Also, the value of the warrant
does not necessarily change with the value of the underlying
securities, and a warrant ceases to have value if it is not exercised
prior to expiration date. These factors can make warrants more
speculative than other types of investments.
ZERO COUPON BONDS do not make interest payments; 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 dividends, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price
and its face value.
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.
SPECIAL CONSIDERATIONS AFFECTING CANADA
Canada occupies the northern part of North America and is the second
largest country in the world (3.97 million square miles in area)
extending from the Atlantic Ocean to the Pacific Ocean. The companies
in which a fund may invest may include those involved in the energy
industry, industrial materials (chemicals, base metals, timber, and
paper), and agricultural materials (grain cereals). The securities of
companies in the energy industry are subject to changes in value and
dividend yield which depend, to a large extent, on the price and
supply of energy fuels. Rapid price and supply fluctuations may be
caused by events relating to international politics, energy
conservation, and the success of exploration projects. Canada is one
of the world's leading industrial countries, as well as a major
exporter of agricultural products. Canada is rich in natural resources
such as zinc, uranium, nickel, gold, silver, aluminum, iron, and
copper. Forest covers over 44% of its land area, making Canada a
leading world producer of newsprint. The economy of Canada is strongly
influenced by the activities of companies and industries involved in
the production and processing of natural resources. Canada is a major
producer of hydroelectricity, oil, and gas. The business activities of
companies in the energy field may include the production, generation,
transmission, marketing, control, or measurement of energy or energy
fuels. Economic prospects are changing due to recent government
attempts to reduce restrictions against foreign investment.
Canadian securities are not considered by FMR to have the same level
of risk as other nations' securities. Canadian and U.S. companies are
generally subject to similar auditing and accounting procedures, and
similar government supervision and regulation. Canadian markets are
more liquid than many other foreign markets and share similar
characteristics with U.S. markets. The political system is more stable
than in some other foreign countries, and the Canadian dollar is
generally less volatile relative to the U.S. dollar.
Many factors affect and could have an adverse impact on the financial
condition of Canada, including social, environmental, and economic
conditions; factors which are not within the control of Canada. In
Canada, the pace of economic recovery slowed markedly in 1995 owing to
the tightening of monetary conditions early in the year and the risk
premiums in interest rates that resulted from political and economic
uncertainties, as well as the economic slowdown in the United States.
Following the referendum on Quebec sovereignty in October 1995,
confidence improved and interest rates fell significantly, which
should permit the pace of economic activity to pick up during 1996.
Fiscal imbalances have diminished considerably in recent years but the
federal and provincial governments will need to ensure that further
consolidation is achieved in 1996 and over the medium term. Inflation
has remained low, which provides some flexibility for further easing
of monetary policy if warranted by cyclical considerations and by
further progress on the fiscal front. Overall, conditions are good for
Canada's expansion to proceed at a healthy rate.
The U.S. - Canada Free Trade Agreement which became effective
in January 1989, will be phased in over a period of 10 years. This
agreement will remove tariffs on U.S. technology and Canadian
agricultural products in addition to removing trade barriers affecting
other important sectors of each country's economy. Relations with the
U.S. are likely to be further strengthened by the implementation of
the North American Free Trade Agreement, which came into effect in
January 1994.
The majority of new equity issues or initial public offerings in
Canada are through underwritten offerings. The funds may elect to
participate in these issues.
SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICA
Latin America is a region rich in natural resources such as oil,
copper, tin, silver, iron ore, forestry, fishing, livestock, and
agriculture. The region has a large population (over 350 million)
representing a large domestic market. The region has been transitional
over the last five years from the stagnant 1980s, which were
characterized by poor economic policies, higher international interest
rates, and limited access to new foreign capital.
High inflation and low economic growth have given way to stable,
manageable inflation rates and higher economic growth. Changes in
political leadership, the implementation of market-oriented economic
policies, such as privatization, trade reform and monetary reform have
been among the recent steps taken to modernize the Latin American
economies and to regenerate growth in the region. Various trade
agreements have also been formed within the region such as the Andean
Pact, Mercosur and the North America Free Trade Agreement (NAFTA). The
largest of these is NAFTA, which was implemented on January 1, 1994.
Latin American equity markets can be extremely volatile and in the
past have shown little correlation with the U.S. market. Currencies
are typically weak, but most are now relatively free floating, and it
is not unusual for the currencies to undergo wide fluctuations in
value over short periods of time due to changes in the market.
Mexico's economy has been transformed significantly over the last 6-7
years. In the past few years the government has sold the telephone
company, the major steel companies, the banks and many other
state-owned enterprises. The major state ownership remaining is in the
oil sector and the electricity sector. The United States is Mexico's
major trading partner, accounting for two-thirds of its exports and
imports. The government, in consultation with international economic
agencies, is implementing programs to stabilize the economy and foster
growth.
In the early 1980s Mexico experienced a foreign debt crisis. By 1987,
foreign debt had reached prohibitive levels, accounting for 90 to 95
percent of GDP, thus draining Mexico of all its resources. By the end
of 1994, a large current account deficit, fueled in part by
expansionary policy, and the burden of its large national debt forced
the Mexican government to devalue the peso, triggering a severe crisis
of confidence. Both the crisis and the measures taken to stabilize the
economy since, have led to severely reduced domestic demand, which has
been only partially offset by positive trade-related activity.
Following a difficult year that saw real output contract by almost 7
percent, the recovery that had begun gathered strength by late 1996.
There are still risks arising from fragility in the banking sector,
and continuing fiscal discipline will be needed to maintain market
confidence.
Brazil entered the 1990s with declining real growth, runaway
inflation, an unserviceable foreign debt of $122 billion, and a lack
of policy direction. Over the past few years, Brazil has been able to
stabilize its domestic economy through a relentless process of
balancing the government budget, the privatization of state
enterprises, deregulation and reduction of red tape and introducing
greater competition into the domestic business environment. Monthly
inflation was brought down from 43 percent in the first half of 1994
to 1.5 percent in 1995. This reduction reflects the success of the
Real Plan, which included the elimination of most forms of
backward-looking indexation, the introduction of a new currency, and
tight credit policy, which subsequently led to a nominal appreciation
of the exchange rate. A major long-run strength is Brazil's natural
resources. Iron ore, bauxite, tin, gold, and forestry products make up
some of Brazil's basic natural resource base, which includes some of
the largest mineral reserves in the world. In terms of population,
Brazil is the fifth-largest in the world with about 154+ million
people and represents a huge domestic market.
Chile, like Brazil, is endowed with considerable mineral resources, in
particular copper. Economic reform has been ongoing in Chile for at
least 15 years, but political democracy has only recently returned to
Chile. Privatization of the public sector beginning in the early 1980s
has bolstered the equity market and given Chile the most competitive
and successful economy in Latin America. A well organized pension
system has created a long-term domestic investor base. Chile tightened
its monetary policy late in 1995 amid signs of overheating and 1996
GDP growth slowed while inflation moderated.
Argentina is strong in wheat production and other foodstuffs and
livestock ranching. A well-educated and skilled population boasts one
of the highest literacy rates in the region. The country has been
ravaged by decades of extremely high inflation and political
instability. Privatization is ongoing and should reduce the amount of
external debt outstanding. The markets for labor, capital and goods
and services have been deregulated. Nearly all non-tariff barriers and
export taxes have been eliminated, the tariff structure simplified and
tariffs sharply reduced. In the first months of 1995 the government
had to struggle to prevent a Mexican-style collapse of the economy. A
significant adjustment of the fiscal stance, together with a
restructuring of the banking system, particularly the provincial
banks, helped contain the spillover effects of the crisis in Mexico.
The government vowed to maintain a restrictive fiscal policy and the
peso's convertibility to the U.S. dollar after the recent resignation
of Domingo Cavallo, the Economy Minister who masterminded the most
successful reform program in Argentina's post-World War II history,
and this commitment is seen as the key to the country's economic
stability.
Venezuela has substantial oil reserves. External debt is being
renegotiated, and the government is implementing economic reform in
order to reduce the size of the public sector. Internal gasoline
prices, which are one-third those of international prices, were
increased in order to reduce subsidies. However, economic conditions
worsened in 1995, as the government failed to reduce the fiscal
deficit, and investment stagnated. Prospects for an improvement in
economic situation in 1997 depend on the adoption of a credible
exchange rate policy, the removal of controls, strengthening the
fiscal position through measures such as privatization, and addressing
the problems of the banking sector.
EMERGING MARKETS: LATIN AMERICA
MARKET CAPITALIZATION IN U.S. DOLLARS
DECEMBER 1995
Billions:
Argentina $38
Brazil 148
Chile 73
Colombia 17
Mexico 91
Peru 12
Venezuela 4
Source: The LGT Guide to World Equity Markets, 1996
For national stock market performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS AFFECTING JAPAN, THE PACIFIC BASIN, AND
SOUTHEAST ASIA
Many Asian countries may be subject to a greater degree of social,
political and economic instability than is the case in the United
States and Western European countries. Such instability may result
from (i) authoritarian governments or military involvement in
political and economic decision-making; (ii) popular unrest associated
with demands for improved political, economic, and social conditions;
(iii) internal insurgencies; (iv) hostile relations with neighboring
countries; and (v) ethnic, religious, and racial disaffection.
The success of market reforms and a surge in infrastructure spending
have fueled rapid growth in many developing countries in Asia. Rapidly
rising household incomes have fostered large middle classes and new
waves of consumer spending. Increases in infrastructure spending and
consumer spending have made domestic demand the growth engine for
these countries. Thus, their growth now depends less upon exports to
OECD countries. While exports may no longer be the sole source of
growth for developing economies, improved competitiveness in export
markets has contributed to growth in many of these nations. The
increased productivity of many Asian countries has enabled them to
achieve, or continue, their status as top exporters while improving
their national living standards.
The emerging market economies of Asia are likely to remain
particularly buoyant, although growth may likely moderate in several
of them. This should help to alleviate inflationary pressures and
reduce current account imbalances associated in part with large
private capital inflows. Nevertheless, actions already taken in
Indonesia, Malaysia, and Thailand to dampen domestic demand may need
to be followed up by additional measures of restraint.
Thailand has one of the fastest-growing economies in the region, with
over 8% average growth in recent years. The economy has until now been
run on a strictly centralist principle, with five-year targets for
most product sectors, but policies have now been relaxed to allow
foreign companies into the market. Most of the Thai population rely on
agriculture, largely in a subsistence capacity: rice, sugar, maize and
vegetables are grown for the home market, while palm oil, fishing and
(until the recent ban) timber extraction have been the main export
crops. Industry is moderately developed but revolves around primary
commodity processing for the local market. The major exception is the
minerals sector, which contributes over half of the country's wealth:
tin, lead, iron, tungsten, antimony and lignite are extracted for
export. There is a small and growing tourist industry, but the sector
was adversely affected by political uncertainties in recent years. In
mid-1995, the ruling Democrat Party lost the support of one of the
four coalition partners, it resigned and was replaced in a full
election by the opposition Chart Thai Party. However, King Bhumibol
Adulyadej has been forthright in his condemnation of the new
government, sparking fears of a constitutional challenge.
Hong Kong's impending return to Chinese dominion on July 1, 1997, has
not initially had a positive effect on its economic growth which was
vigorous in the 1980s. Although China has committed by treaty to
preserve the economic and social freedoms enjoyed in Hong Kong for 50
years after regaining control of Hong Kong, the continuation of the
current form of the economic system in Hong Kong after the reversion
will depend on the actions of the government of China. Business
confidence in Hong Kong, therefore, can be significantly affected by
such developments, which in turn can affect markets and business
performance. In preparation for 1997, Hong Kong has continued to
develop trade with China, where it is the largest foreign investor,
while also maintaining its long-standing export relationship with the
United States. Spending on infrastructure improvements is a
significant priority of the colonial government while the private
sector continues to diversify abroad based on its position as an
established international trade center in the Far East. It is
important to note that a substantial portion of the companies listed
on the Hong Kong Stock Exchange are involved in real estate-related
business.
China's economy has grown at the extraordinary rate of 10% per year on
average over the past decade with the industrial segment leading the
way. China's economic growth itself has been characterized by spurts
of almost uncontrolled growth alternating with periods of harsh
austerity measures, causing inefficiencies and dislocations within
China, including troublesome inflation rates of over 16% per year over
the past five years. Foreign trading is limited to a special class of
shares (Class B) which were created for that purpose, and the
government must approve sales of Class B shares among foreign
investors.
China is greatly dependent on foreign trade, particularly with Japan,
the United States, and Germany. If political events become severe in
China, there is always the danger that the United States or other
nations could alter their trade stance towards China, which could hurt
its economy by reducing exports. In addition, the strength of the
economy and the weakness of the government could lead to substantially
higher inflation in coming years, which would erode investors'
earnings through the mechanism of changing rates of currency exchange.
A tightening in the money supply as well as some supply-side
constraints on the very rapid growth of exports in 1995 served to
discourage foreign investment and has contributed to lower prices for
Class B shares. However, due to lax enforcement of regulatory
policies, Class B shares have been opened to local investors and their
prices roughly doubled in November 1996.
In terms of GDP, industrial standards and level of education, South
Korea is second only to Japan in Asia. It enjoys the benefits of a
diversified economy with well-developed sectors in electronics,
automobiles, textiles and shoe manufacture, steel and shipbuilding
among others. The driving force behind the economy's dynamic growth
has been the planned development of an export-oriented economy in a
vigorously entrepreneurial society. Real GDP grew about 9.5% in 1995.
Recent volatility of the political scene is unlikely to deflect
continued economic growth. Both Koreas joined the United Nations
separately in late 1991, creating another forum for negotiation and
joint cooperation. Reunification of North Korea and South Korea could
have a detrimental effect on the economy of South Korea.
Indonesia is a mixed economy with many socialist institutions and
central planning but with a recent emphasis on deregulation and
private enterprise. Like Thailand, Indonesia has extensive natural
wealth yet with a large and rapidly increasing population. Dependent
on oil exports during the 1980s, crude oil alone contributes 80% of
all foreign exchange revenues. Indonesia's economy is growing very
rapidly and the Suharto regime is attempting to move away from
dependence on oil. However, the country remains generally very poor
and has only a limited potential domestic market for consumer goods.
Foreign investment regulations were relaxed in 1994 and 1995, in an
effort to stimulate growth.
Malaysia has one of the fastest-growing economies in the Asian-Pacific
region. Rapid industrialization is transforming the economy away from
its traditional agricultural base, and in the process it is creating
major new opportunities for providers of consumer goods and services.
Malaysia has become the world's top producer and exporter of
semiconductor devices. Meanwhile, the high import content of newly
established, fast-growing manufacturing industries and Malaysian
consumers' high marginal propensity to import, has resulted in a high
current-account deficit (10% of GDP), which may have a negative impact
on equity performance.
Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links
derived from its history. Singapore's economy has boomed since the
1960s, thanks to the government's policy of encouraging highly skilled
and hence high value-added manufacturing facilities. Per capita GDP is
among the highest in Asia. However, the country keeps a tight rein on
imports and engages in extensive regulation of the economy, in
manufacturing in particular. Although financial services now
contribute almost as much to the economy as manufacturing, Singapore
holds a position as a major oil refining and services center.
Japan currently has the second-largest GDP in the world. The Japanese
economy has grown substantially over the last three decades. Its
growth rate averaged over 5% in the 1970s and 1980s. However in 1994,
the growth rate in Japan slowed to 0.6% and its budget showed a
deficit of 7.8% of GDP. The boom in Japan's equity and property
markets during the expansion of the late 1980s supported high rates of
investment and consumer spending on durable goods, but both of these
components of demand have now retreated sharply following the decline
in asset prices. This led to major bankruptcies in the financial
sector that have continued through the end of 1996. Economic activity
now appears to be picking up in Japan after protracted sluggishness
that has left the economy with considerable margins of unused
resources. The supportive stance of both monetary and fiscal policies
and the correction of the yen's excessive appreciation in early 1995
helped the recovery to continue. Confidence in the financial system
has begun to improve somewhat with the announcement of a strategy for
resolving the financial problems of Japanese banks, steps to deal more
effectively with failed institutions, and plans to strengthen banking
supervision. Nevertheless, extricating financial institutions from
their bad loans problem could act as a drag on the pace of recovery.
Fiscal policy is appropriately aimed at providing continuing support
in 1996 but budgetary consolidation will need to resume when the
recovery gathers enough momentum to permit a withdrawal of stimulus.
In addition to a cyclical downturn, Japan is suffering through
structural adjustments. Like the Europeans, the Japanese have seen a
deterioration in their competitiveness due to high wages, a strong
currency and structural rigidities. Japan has also become a mature
industrial economy and, as a result, will see its long-term growth
rate slow down over the next ten years. Finally, Japan is reforming
its political process and deregulating its economy. This has brought
about turmoil, uncertainty and a crisis of confidence.
Japan is heavily dependent upon international trade and, accordingly,
has been and may continue to be adversely affected by trade barriers
and other protectionist or retaliatory measures of, as well as
economic conditions in, the United States and other countries with
which it trades. Industry, the most important sector of the economy,
is heavily dependent on imported raw materials and fuels. Japan's
major industries are in the engineering, electrical, textile,
chemical, automobile, fishing, and telecommunication fields. Japan
imports iron ore, copper, and many forest products. Only 19% of its
land is suitable for cultivation. Japan's agricultural economy is
subsidized and protected. It is about 50% self-sufficient in food
production. Even though Japan produces a minute rice surplus, it is
dependent upon large imports of wheat, sorghum and soybeans from other
countries.
Australia has a prosperous Western-style capitalist economy, with a
per capita GDP comparable to levels in industrialized Western European
countries. Economic growth accelerated markedly in 1994 as robust
domestic spending boosted activity. However, business investment
remains weak. The many setbacks since the 1970s have resulted
primarily from the loss of Australia's almost guaranteed export
markets in Britain, after the latter's accession to the European
Union, but also from the slump in world mineral prices and from the
government's failure to reduce public spending. Unemployment remains
uncompromisingly high, and there are few signs of a change at present.
Much of the most dominant activity in Australia is farming, especially
of wheat, and sheep rearing: together, the two contribute more than
half of the country's export revenues. Minerals provide the next most
significant source of foreign exchange, although the industry will
remain vulnerable to fluctuations in the state of the world minerals
markets. Most recently, oil and gas development has been proceeding at
a particularly rapid pace. Manufacturing has moved away from the
processing of agricultural and mineral raw materials: there is a wide
range of often sophisticated engineering activity, and Australia is a
very large producer of motor vehicles.
EMERGING MARKETS: ASIA
MARKET CAPITALIZATION IN U.S. DOLLARS
DECEMBER 1995
Billions:
India $183
Indonesia 66
Korea 182
Malaysia 223
Pakistan 10
Philippines 59
Sri Lanka 2
Taiwan 187
Thailand 143
Source: The LGT Guide to World Equity Markets, 1996
For national stock market performance, please see the section on
Performance beginning on page .
REAL GDP ANNUAL RATE OF GROWTH 1995
China 10.2%
Hong Kong 5.0
India 6.2
Indonesia 8.1
Japan 0.9
Korea 9.0
Malaysia 9.6
Philippines 4.8
Singapore 8.9
Taiwan 6.4
Thailand 8.6
Source: World Economic Outlook, May 1996
SPECIAL CONSIDERATIONS AFFECTING EUROPE
New developments surrounding the creation of a unified common market
in Europe have helped to reduce physical and economic barriers,
promoting the free flow of goods and services throughout western
Europe. These new developments could make this new unified market one
of the largest in the world. However, growth slowed more markedly than
expected during 1995 in the region, leading to further increases in
unemployment in some countries from already high levels and also to
fears of a new economic downturn. The most pronounced deterioration in
cyclical conditions since early 1995 has been in Germany, France,
several other countries closely linked to the deutsche mark, and
Switzerland. In response, short-term interest rates have been reduced
significantly and several countries have taken various fiscal and
structural measures to revive confidence and stimulate job creation.
The timing and strength of the expected pickup in activity in these
countries is somewhat uncertain, but the conditions appear to be in
place for a quickening in the pace of economic growth during 1997. A
strengthening of activity in these countries is essential to put
unemployment securely on a downward path and to facilitate fiscal
consolidation in accordance with the agreed timetable for Economic and
Monetary Union (EMU). Conversely, a prolonged period of lackluster
growth could exacerbate doubts about the EMU timetable and might lead
to tensions in financial markets.
The eastern European countries, after several years of declining
output, have generally shown dramatic growth in 1994 and 1995. Despite
formidable obstacles and major differences among countries and
regions, many nations are making substantial progress in their efforts
to become market-oriented economies. Poland, the Czech and Slovak
Republics, and Slovenia, have achieved some of the most impressive
results. Disciplined financial policies, structural reforms, trade
liberalization, and rapid growth of trade, especially with western
Europe, are important factors contributing to the rapid transformation
that is taking place in these economies. Many of the countries that
are less advanced in the transition, including some of the former
Soviet republics, have made significant progress with structural
reform, including price liberalization, privatization, and the
dismantling of trade barriers. There has been progress toward
macroeconomic stability, although the sustainability of recent
reductions in inflation is in doubt in some cases. Output appears to
have bottomed out during 1995 in Russia, but political instability in
1996 dampened prospects for a quick economic recovery. Economic
prospects have also improved in Kazakstan, the Kyrgyz Republic,
Moldova, Armenia, Georgia, and Uzbekistan. Ukraine made considerable
progress with stabilization and systemic reform in 1995; in the
absence of policy slippage, the decline in output should bottom out in
1996. In Belarus, Tajikistan, and Turkmenistan, where reform and
stabilization efforts have been inadequate thus far, the contraction
of output may well continue. Armed conflicts continue to delay the
necessary reforms in several other countries, but throughout the
former Yugoslavia prospects for recovery have now improved following
the cessation of hostilities in Bosnia and Herzegovina.
Notwithstanding the continued economic difficulties in many countries,
recent positive developments offer hope for a cooperative growth
strategy in the near term, which could also permit a strengthening of
global economic performance over the medium term. Efforts to enhance
assistance to countries affected by the transition to market-based
trading systems occurring in central Europe and the former Soviet
Union, and to low-income countries to support strengthened
stabilization and restructuring efforts, are moving forward. Many of
the transition countries have achieved considerable progress with
macroeconomic stabilization and reform, and fruits of their efforts to
transform their economies are increasingly visible.
The European Union (EU) consists of 15 member states including
Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, the United Kingdom, Austria, Finland and
Sweden. In 1986, the member states of the EU signed the "Single
European Act", an agreement committing these countries to the
establishment of a market among themselves, unimpeded by internal
barriers or hindrances to the free movement of goods, persons,
services, or capital. To meet this goal, a series of directives have
been issued to the member states. Compliance with these directives is
designed to eliminate three principal categories of barriers: (1)
physical frontiers, such as customs posts and border controls; (2)
technical barriers (which include restrictions operating within
national territories) such as regulations and norms for goods and
services (product standards); discrimination against foreign bids
(bids by other EU members) on public purchases; or restrictions on
foreign requests to establish subsidiaries; and (3) fiscal frontiers,
notably value-added taxes, tariffs, or excises on goods or services
imported from other EU states.
The ultimate goal of this project is to achieve a large unified
domestic European market in which available resources would be more
efficiently allocated through the elimination of the above-mentioned
barriers and the added costs associated with those barriers.
Elimination of these barriers would simplify product distribution
networks, allow economies of scale to be more readily achieved, and
free the flow of capital and other resources. The Maastricht Treaty on
economic and monetary union (EMU) attempts to provide its members with
a stable monetary framework consistent with the EU's broad economic
goals. But until the EMU takes effect, which is intended to occur
before 1999, the community will face the need to reinforce monetary
cooperation in order to reduce the risk of a recurrence of tensions
between domestic and external policy objectives.
The total European market, as represented by EU countries, consists of
over 370 million consumers, making it larger currently than either the
U.S. or Japanese markets. European businesses compete nationally and
internationally in a wide range of industries including:
telecommunications and information services, roads and transportation,
building materials, food and beverages, broadcast and media, financial
services, electronics, and textiles. Actual and anticipated actions on
the part of member states to conform to the unified Europe directives
have prompted interest and activity not only by European firms, but
also by foreign entities anxious to establish a presence in Europe
that will result from these changes. Indications of the effect of this
response to a unified Europe can be seen in the areas of mergers and
acquisitions, corporate expansion and development, GDP growth, and
national stock market activity. In the long-term, economic unification
of Europe could prove to be an engine for domestic and international
growth.
REAL GDP ANNUAL RATE OF GROWTH
1995
Denmark 2.9%
France 2.4
Germany 1.9
Italy 3.2
Netherlands 2.4
Spain 3.0
Switzerland 0.7
United Kingdom 2.4
Source: World Economic Outlook, May 1996
(Figures are quoted based on each country's domestic currency.)
For national stock market performance, please see the section on
Performance beginning on page .
SPECIAL CONSIDERATIONS AFFECTING AFRICA
Africa is a continent of roughly 50 countries with a total population
of over 700 million people. The primary industries include crude oil,
natural gas, manganese ore, phosphate, bauxite, copper, iron, diamond,
cotton, coffee, cocoa, timber, tobacco, sugar, tourism, and cattle.
Many of the countries are fraught with political instability. However,
there has been a trend over the past five years toward
democratization. Still, there remain many countries that do not have a
stable political process. Other countries have been enmeshed in civil
wars and border clashes.
Economically, the Northern Rim countries (including Morocco, Egypt,
and Algeria) and Nigeria, Zimbabwe, and South Africa are the wealthier
countries on the continent due to their strong ties with the European
nations. The market capitalization of these countries has been growing
recently as more international companies invest in Africa and as local
companies start to list on the exchanges. However, religious strife
has been a significant source of instability.
On the other end of the economic spectrum are countries, such as
Burkina Faso, Madagascar, and Malawi, that are considered to be among
the poorest or least developed in the world. These countries are
generally landlocked or have poor natural resources. The economies of
many African countries are heavily dependent on international oil
prices. Of all the African industries, oil has been the most
lucrative, accounting for 40% to 60% of many countries' GDP. However,
the general decline in oil prices has had an adverse impact on many
economies.
SPECIAL CONSIDERATIONS AFFECTING NEW YORK
The financial condition of New York State (the State), its public
authorities and public benefit corporations (the Authorities) and its
local governments, particularly The City of New York (the City), could
affect the market values and marketability of, and therefore the net
asset value per share and the interest income of New York Municipal
Income Fund or result in the default of existing obligations,
including obligations which may be held by the fund. The following
section provides only a brief summary of the complex factors affecting
the financial situation in New York and is based on information
obtained from the State, certain of its Authorities, the City and
certain other localities, as publicly available on the date of this
SAI. The information contained in such publicly available documents
has not been independently verified. It should be noted that the
creditworthiness of obligations issued by local issuers may be
unrelated to the creditworthiness of the State, and that there is no
obligation on the part of the State to make payment on such local
obligations in the event of default in the absence of a specific
guarantee or pledge provided by the State.
The State and the City are each facing serious financial difficulties
and have each experienced recent declines in their credit standings.
S&P and Moody's have each assigned ratings for the State's general
obligation bonds that are among the three lowest of those states with
rated general obligation bonds. S&P and Moody's have each assigned
ratings for the City's general obligations that are among the four
lowest of those cities with rated general obligation bonds. The
ratings of certain related debt of other issuers for which the State
has an outstanding moral obligation, lease purchase, guarantee or
other contractual obligation are generally linked directly to the
State's rating. Should the financial condition of the State, its
Authorities, or its local governments deteriorate, their respective
credit ratings could be further reduced, and the market value and
marketability of their outstanding notes and bonds could be adversely
affected, and their respective access to the public credit markets
jeopardized.
ECONOMIC FACTORS. New York is the third most populous state in the
nation, and has a relatively high level of personal wealth. However,
the State economy has grown more slowly than that of the nation as a
whole, resulting in the gradual erosion of its relative economic
affluence (due to factors such as relative costs for taxes, labor, and
energy). The State's economy is diverse, with a comparatively large
share of the nation's financial, insurance, transportation,
communications, and services employment, and a very small share of the
nations' farming and mining activity. Travel and tourism constitute an
important part of the State's economy. New York has a declining
proportion of its workforce engaged in manufacturing and increasing
proportion engaged in service industries. The State, therefore is
likely to be less affected than the nation as a whole during an
economic recession concentrated in construction and manufacturing
sectors of the economy, but is likely to be more affected during a
recession concentrated in the service-producing sector. The State's
manufacturing and maritime base have been seriously eroded, as
illustrated by the decline of the steel industry in the Buffalo area
and of the apparel and textile industries in the City. In addition,
the City experienced substantial socio-economic changes, as a large
segment of its population and a significant share of corporate
headquarters and other businesses relocated (many out-of-state).
Both the State and the City experienced substantial revenue increases
in the mid-1980s attributable directly and indirectly to growth in new
jobs, rising profits, and capital appreciation derived from the
finance sector of the City's economy. From 1977 to its 1988 peak, the
finance, insurance and real estate sectors rose to 55%, to account for
23% of total earnings in the City and 14% Statewide (compared to 7%
nationwide). The finance sector's growth was a catalyst for the New
York City metropolitan region's related business and professional
services, retail trade and residential and commercial real estate
markets. The then-rising real estate market contributed to City
revenues, as higher property values and new construction added to
collections from property taxes, mortgage recording, and transfer
taxes and sales taxes on building materials. The boom on Wall Street
more than compensated for the continued erosion of the State's (and
the City's) manufacturing and maritime base, since average wages in
finance and related business and professional services were
substantially higher (thereby providing a net increase of higher
incomes, taxed at even higher marginal rates).
During the calendar years 1984 through 1991, the State's rate of
economic expansion was somewhat slower than that of the nation as a
whole. In the 1990-91 national recession, the economy of the Northeast
region in general and the State in particular was more heavily damaged
than that of the rest of the nation and has been slower to recover.
Although the national economy began to expand in 1991, the State
economy remained in recession until 1993, when employment growth
resumed. Employment growth has been hindered during recent years by
significant cutbacks in the computer and instrument manufacturing,
utility and defense industries. Personal income increased
substantially in 1992 and 1993 and the State economy entered the third
year of a slow recovery in 1995. Most of the growth occurred in the
trade, construction and service industries, with business, social
services and health sectors accounting for most of the service
industry growth. According to assumptions contained in the State
financial plan for fiscal year 1995-1996 issued on July 25, 1996 (the
1996-97 State Financial Plan), employment is projected to continue to
grow modestly during 1996 and 1997, and although the rate of increase
is expected to be slightly above the rate experienced in 1995, it is
expected to be below the rate experienced in 1994. The Third-Quarter
Update to the 1996-97 State Financial Plan issued on January 14, 1997
(the "Third-Quarter Update") reflects stronger than expected growth
during the first half of calendar year 1996 and continues to project
overall employment growth at a modest rate, reflecting the slowdown in
the national economy, continued spending restraint in government and
restructuring in the health care and financial sectors. Actual
receipts through the first two quarters of the State 1996-97 fiscal
year reflected a stronger-than-expected growth in most tax receipts
(by approximately $250 million) and actual disbursements during the
same period were approximately $415 million less than projected. The
1996-97 State Financial Plan was revised along with the release of the
Third-Quarter Update and the Governors Executive Budget for the
1997-98 fiscal year released on January 14, 1997 (the "1997-98
Executive Budget"). The General Fund Financial Plan, as revised,
continues to be balanced and would have shown an operating surplus of
$1.3 billion but for certain tax reduction actions which were
implemented on January 1, 1997 to help finance 1997-98 spending
requirements.
Notwithstanding the State budget for fiscal year 1996-97 which enacts
significant tax and program reductions, the State can expect to
confront structural deficits in future years. The 1996-97 State
Financial Plan includes actions that will have an effect on the budget
outlook for fiscal year 1996-97 and beyond. The net impact of these
and other factors is expected to provide greater reductions in future
fiscal years. The net impact of these and other factors is expected to
produce a potential imbalance in receipts and disbursements for future
fiscal years. Additionally, uncertainties with regard to both the
economy and potential decisions to be made at the federal level add
further pressure on the balanced budget outlook for fiscal year
1996-97 and fiscal years beyond. For example, various proposals
relating to federal tax and spending policies may have a significant
impact on the State's financial condition in fiscal year 1996-97 and
subsequent fiscal years.
Further, there can be no assurance that the State economy will not
experience worse-than-predicted results in the 1996-97 fiscal year
with corresponding material and adverse effects on the State's
projections of receipts and disbursements. The 1996-97 State Financial
Plan is based upon forecasts of national and State economic activity.
As all State financial plans are based upon forecasts of national and
State economic activity, it should be noted that many uncertainties
exist in forecasts, including federal financial and monetary policies,
the availability of credit and the condition of the world economy. In
addition, the economic and financial condition of the State may be
affected by various financial, social, economic and political factors.
These factors can be complex, may vary from year to year and are
frequently the results of actions taken not only by the State and its
agencies and instrumentalities, but also by other entities, such as
the federal government, that are not under the control of the State.
The fiscal health of the State may also be impacted by the fiscal
health of the City. Although the City has had a balanced budget since
1981, estimates of the City's future revenues and expenditures are
subject to various uncertainties. For example, the effects of the
October 1987 stock market crash and the 1990-92 national recession
have had a disproportionately adverse impact on the New York City
metropolitan region, as private sector job losses since 1989 have
offset all the prior employment gains of the 1980s. Declines in both
employment and earnings in the finance sector contributed to declines
in retail sales and real estate values. In addition, a number of
widely publicized bankruptcies among highly leveraged retailing,
brokerage and real estate development companies occurred. The effects
of the recession have extended to banking, insurance, business
services (such as law, accounting and advertising), publishing and
communications. Factors which may inhibit the City's economic recovery
include (i) credit restraints imposed by the weak financial condition
of several major money center banks located in the City; (ii)
increases in combined State and local tax burdens, if uncompetitive
tax rates are imposed; (iii) perceived declines in the quality of life
attributable to service reductions and the deterioration of the City's
infrastructure; (iv) additional employment losses in the City's
banking sector or corporate headquarters complex due to further
corporate relocations or restructurings; or (v) increased expenditures
for public health assistance and care. The City's future economic
condition will also likely be affected by its competitive position as
a world financial center (compared to London, Tokyo, Frankfurt, and
competing regional U.S. centers). Investors should note that the
budget for the City's 1996 fiscal year addresses a projected $2.6
billion budget gap. Most of the budget-gap closing initiatives may be
implemented only with the cooperation of certain City officials, the
City's municipal unions, or the State or Federal governments. No
assurance can be given that such initiatives will be taken.
While the State's economy is broader-based than that of the City,
particular industries are concentrated in and have a disproportionate
impact on certain areas, such as heavy industry in Buffalo,
photographic and optical equipment in Rochester, machinery and
transportation equipment in Syracuse and Utica-Rome, computers in
Binghamton and in the Mid-Hudson Valley, and electrical equipment in
the Albany-Troy-Schenectady area. Constraints on economic growth,
taxpayer resistance to proposed substantial increases in local tax
rates, and reductions in State aid in regions apart from the City have
contributed to financial difficulties for several county and other
local governments.
THE STATE. As noted above, the financial condition of the State is
affected by several factors, including the strength of the State and
its regional economies, actions of the federal government, and State
actions affecting the level of receipts and disbursements. Owing to
these and other factors, the State may, in future years, face
substantial potential budget gaps resulting from a significant
disparity between tax revenues projected from a lower recurring
receipts base and the future costs of maintaining State programs at
current levels. The State has been experiencing and continues to
experience substantial financial difficulties, with General Fund (the
principal operating account) deficits incurred during the fiscal years
1989-1990 through 1991-1992. The State's accumulated General Fund
deficit (on a GAAP basis) grew 91% from fiscal year1986-87 to fiscal
year1990-91, and reached a then-record $6.265 billion (audited) by
March 31, 1991. An accumulated General Fund deficit at March 31, 1993
was restated to be $2.551 billion. The State ended its 1993-94 fiscal
year with a negative fund balance of $1.637 billion. This represented
an improvement over prior years, primarily due to an improving
national and State economy resulting in higher-than-expected receipts
from personal income tax and various business taxes and the relative
success of the New York Local Government Assistance Corporation
(LGAC). The General Fund showed an operating surplus of $914 million
(on a GAAP basis). The State's 1994-95 fiscal year budget was adopted
on June 8, 1994, more than two months after the beginning of the
State's fiscal year. The State ended its fiscal year 1994-95 reporting
a General Fund operating deficit of $1.426 billion, primarily due to
changes in accounting methodologies used by the State Comptroller and
the use of $1.026 billion of the fiscal year 1993-94 cash surplus to
fund operating expenses in fiscal year 1994-95. These factors were
offset by net proceeds of $315 million of bonds issued by LGAC. Actual
receipts reported fell short of original projections, primarily in the
categories of business taxes. These shortfalls were offset by better
than expected performance in the remaining taxes, principally the user
taxes and fees. Total expenditures for fiscal year 1994-95 increased
$2.083 billion, or 6.7% over the prior fiscal year.
On June 7, 1995, the New York State legislature passed the final
legislation regarding the State's 1995-96 budget, again adopting such
budget more than two months after the beginning of the State's fiscal
year. Both the enacted budget bills for 1995-96 and the 1995-96 State
Financial Plan included reductions in the actual level of spending
from that which occurred in the 1994-95 fiscal year and project
reductions in Medicaid and State Authority operating costs. The
1995-96 budget also projected an approximate increase of 3% in all
governmental funds over the amounts received in fiscal year 1994-95
and included the phase-in of a three-year reduction in the State's
personal income tax. The State ended its 1995-96 fiscal year with a
General Fund surplus, showing a balance of $287 million, which was an
increase of $129 million from the prior fiscal year. Revenues exceeded
projections by $270 million and spending for social service and all
other programs was $175 million lower than forecast. General Fund
receipts reflected a decrease of 1.1% from levels of the prior fiscal
year.
The State's budget for the 1996-97 fiscal year was enacted by the
legislature on July 13, 1996, more than three months after the
beginning of such fiscal year. The adopted budget for 1996-97 projects
a year-over-year increase in General Fund disbursements of 0.2%, and
increases General Fund spending by $842 million, primarily for
increased costs for education, special education and higher education,
community projects and increased assistance to fiscally distressed
cities. Resources used to fund these additional expenditures include
$540 million in increased projected revenues for 1996-97 based on
higher than projected tax collections during the second half of the
prior fiscal year, $110 million in projected receipts from a new State
tax amnesty program and other resources, including certain
non-recurring resources. The total amount of such non-recurring
resources (sometimes referred to as "one-shots") included in the
1996-97 State budget is projected to be $1.3 billion, or 3.9% of total
General Fund receipts.
The 1997-98 Executive Budget, which is expected to be revised on or
about February 14, 1997, contains financial projections for the
State's 1998-99 and 1999-2000 fiscal years and detailed estimates of
receipts, among other items. The 1997-98 Executive Budget projects a
balance on a cash basis in the General Fund and reflects a continuing
strategy of substantially reduced State spending including social
welfare spending, and efficiency and productivity initiatives. Total
General Fund receipts are projected to be $32.88 billion, a decrease
of $88 million from total receipts projected in the current fiscal
year, and total General Fund disbursements are projected to be $33.84
billion, a decrease of $56 million from spending totals projected for
the current fiscal year. The 1997-98 Executive Budget identifies a
$2.3 billion budget gap, which it proposes to close primarily through
spending reductions and medicaid cost containment measures, the use of
a portion of the projected 1996-97 budget surplus and other actions.
Even if all spending and tax cuts contained in the State budget for
fiscal year 1996-97 are successfully implemented, resulting in a
balanced budget for fiscal year 1996-97, there can be no assurance
that the State will not face budget gaps in future years, resulting
from a disparity between tax revenues projected from a lower
recurring-receipts base and the spending required to maintain State
programs at current levels. Furthermore, the State is a party to
numerous lawsuits in which an adverse decision could require
extraordinary expenditures.
The State's budget for fiscal year 1996-97 and future fiscal years may
be materially adversely impacted by future changes to federal
entitlement programs either not foreseen or inaccurately forecast at
the time such budget was enacted. Recent changes at the federal level
and uncertainties stemming from such changes continue to represent
significant risk to the efficacy of the State's fiscal year 1996-97
budget, since federal expenditure reductions could reduce, or in some
cases eliminate, federal funding of some local programs and
accordingly might impose substantial increased expenditure
requirements on affected localities. On August 22, 1996, the President
signed into law the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996. This federal legislation fundamentally
changed the programmatic and fiscal responsibilities for
administration of welfare programs at the federal, state and local
levels. The new law abolishes the federal Aid to Families with
Dependent Children program (AFDC), and creates a new Temporary
Assistance to Needy Families program (TANF) funded with a fixed
federal block grant to states. The new law also imposes (with certain
exceptions) a five-year durational limit on TANF recipients, requires
that virtually all recipients be engaged in work or community service
activities within two years of receiving benefits, and limits
assistance provided to certain immigrants and other classes of
individuals. States are required to meet work activity participation
targets for their TANF caseload; these requirements are phased in over
time. States that fail to meet these federally mandated job
participation rates, or that fail to conform with certain other
federal standards, face potential sanctions in the form of a reduced
federal block grant. On October 16, 1996, the Governor submitted the
State's TANF implementation plan to the federal government as required
under the new federal welfare law. On December 13, 1996, the State's
plan was approved by the federal government. Legislation will be
required to implement the State's TANF plan, and the Governor has
introduced legislation necessary to conform with federal law. States
are required to comply with the new federal welfare reform law no
later than July 1, 1997. There can be no assurance that the
Legislature will enact welfare reform proposals as submitted by the
Governor and as required under federal law. Certain major budgetary
considerations affecting the State are outlined below.
REVENUE BASE. The State's principal revenue sources are economically
sensitive, and include the personal income tax (52% of fiscal year
1995-96 General Fund receipts and estimated to be approximately 53% of
fiscal year 1996-97 General Fund receipts), user taxes and fees (20%
of both fiscal year 1995-96 and estimated 1996-97 General Fund
receipts), and business taxes (15% and 14%, respectively, of fiscal
year 1995-96 and estimated fiscal year 1996-97 General Fund tax
receipts). Uncertainties in taxpayer behavior as a result of actual
and proposed changes in federal tax law also can have an adverse
impact on State tax receipts. One-fourth of the 4% State sales tax has
been dedicated to pay debt service of LGAC, and has correspondingly
reduced General Fund receipts. To the extent those moneys are not
necessary for payment to LGAC, they are transferred from the LGAC Tax
fund to the General Fund and reported as a transfer from other funds
rather than as sales and use tax receipts. During fiscal years
1991-92, 1992-93, 1993-94, and 1994-95 moneys were so transferred.
Capital gains are a significant component of income tax collections.
Auto sales and building materials are significant components of retail
sales tax collections. Tax rates are relatively high and may impose
political and economic constraints on the ability of the State to
further increase its taxes. In 1995, the State enacted a tax-reduction
program designed to reduce, by 20 percent over three years, receipts
from the personal income tax. The tax had remained unchanged since
1989 as a result of annual deferrals of tax reductions originally
enacted in 1987. The tax-reduction program is estimated to reduce
receipts by $2.3 billion in the 1996-97 fiscal year and produce
further significant reductions in fiscal year 1997-98. In addition to
such reductions in overall tax rates, the tax-reduction program also
includes other modifications to the tax laws which will have the
effect of lowering the amount of tax revenues to be received by the
State. In the absence of countervailing economic growth or expenditure
cuts, the tax cuts could make the achievement of a balanced State
budget more difficult in future years.
A significant risk to the 1996-97 State Financial Plan arises from
proposed tax legislation in the U.S. Congress. Changes to the federal
tax treatment of capital gains, if made, are likely to flow
automatically to the State personal income tax. Such changes,
depending upon their precise character and timing, as well as taxpayer
response, could produce revenue loss during the remainder of the
State's 1996-97 fiscal year.
STATE DEBT. The State has the heaviest debt burden of any state (with
nearly $5.05 billion of long-term general obligations, $5.28 billion
of LGAC debt and $20.34 billion of lease-purchase or other contractual
debt outstanding as of March 31, 1996), and debt service costs absorb
a large share of the State's budget. As of March 31, 1996, the State
is also obligated with respect to nearly $6.46 billion for statutory
moral obligations for nine of its Authorities and for guarantees of
$315 million of other Authority debt. Historically, the State has had
one of the largest seasonal financing requirements of any municipal
issuer, and was required each spring to borrow substantial sums from
public credit markets to finance its accumulated General Fund deficit
and its scheduled payments of aid to local governments and school
districts. To help reduce such seasonal financing needs, the State
created LGAC as a financing vehicle to finance the State's local
assistance payments by issuing long-term debt, payable over 30 years
from a portion of the State sales tax, as discussed above. As of June
1995, LGAC had issued bonds and notes to provide net proceeds of $4.7
billion, thus completing the LGAC program. The impact of LGAC's
borrowing is that the State is able to meet its cash flow needs in the
first quarter of the 1995-96 fiscal year without relying on short-term
seasonal borrowings. Spring borrowing has not been included in a State
Financial Plan since the 1994-95 State Financial Plan. The 1994-95
fiscal year was the first year in 35 years that there was no
short-term borrowing. Investors should note that the enabling
legislation for LGAC contains a covenant restricting the amount of any
future State spring borrowing, which may reduce the State's fiscal
flexibility in future years.
BUDGETARY FLEXIBILITY. A significant portion of the State's General
Fund budget is accounted for by contractually required expenses (such
as pension and debt service costs) and by federally mandated programs
(such as AFDC and Medicaid). In addition, State aid for school
districts comprises a major share of the budget, and total
appropriations and distribution of such aid is especially contentious
politically. Furthermore, the State's ability to respond to
unanticipated developments in the future may have been impaired since
the State has utilized a substantial range of actions of a
non-recurring nature in recent years to finance its General fund
operations, including tapping excess monies in special funds,
refinancing outstanding debt to reduce reserve fund requirements and
current (but not long-term) debt service costs, recalculating pension
fund contributions, selling State assets, reimbursing past General
Fund expenditures by the issuance of authority debt and deferring
payment for expenditures to future fiscal years. The 1996-97 State
Financial Plan contains actions of a non-recurring nature including
the use of certain surplus funds available from the Medical
Malpractice Insurance Association (MMIA) (approximately $481 million),
savings from refinancing of certain pension and bond obligations
(approximately $222 million) and non-recurring resources carried
forward from the State's prior fiscal year and various other actions
(approximately $314 million). It has been reported that certain health
care providers are considering a challenge to the State's rights to
the MMIA surplus revenues, totaling approximately $1.3 billion.
LABOR COSTS. The State government workforce is mostly unionized,
subject to the Taylor Law which authorizes collective bargaining and
prohibits (but has not historically prevented) strikes and work
slowdowns. Costs for employee health benefits have increased
substantially, and can be expected to further increase. The State has
a substantial unfunded liability for future pension benefits, and has
utilized changes in its pension fund investment return assumptions to
reduce current contribution requirements. If such investment earnings
assumptions are not sustained by actual results, additional State
contributions will be required in future years to meet the State's
contractual obligations. The State's change in actuarial method from
the aggregate cost method to a modified projected unit credit in the
1990-91 fiscal year created a substantial surplus that was amortized
and applied to offset the State's contribution through the 1993-94
fiscal year. This change in actuarial method was ruled
unconstitutional by the State's highest court and the State returned
to the aggregate cost method in fiscal year 1994-95 using a four-year
phase-in. Employer contributions, including the State's, are expected
to increase over the next five to ten years.
PUBLIC ASSISTANCE. The State has the second largest number of persons
receiving public assistance (AFDC and Home Relief) of any state. AFDC
costs are shared among the federal government, the State and its
counties (including the City) by statutory formula. Caseloads tend to
rise significantly during economic downturns, but have fallen only in
the later stages of past economic recoveries. The budget adopted for
fiscal year 1996-97 includes reduction in disbursements for public
assistance.
MEDICAID. The State participates in the federal Medicaid program under
a State plan approved by the Health Care Financing Administration.
Currently, the federal government provides a substantial portion of
eligible program costs, with the remainder shared by the State and its
counties (including the City). Basic program eligibility and benefits
are determined by federal guidelines, but the State provides a number
of optional benefits and expanded eligibility. Program costs have
increased substantially in recent years, and account for a rising
share of the State budget. Federal law requires the State adopt
reimbursement rates for hospitals and nursing homes that are
reasonable and adequate to meet the costs that must be incurred by
efficiently and economically operated facilities in providing patient
care, a standard that has led to past litigation by hospitals and
nursing homes seeking higher reimbursement from the State. The budget
adopted for fiscal year 1996-97 includes reductions in spending for
Medicare. Cutbacks in State spending for Medicaid may adversely affect
the financial condition of hospitals and health care institutions that
are the obligors of bonds that may be held by the fund.
THE STATE AUTHORITIES. The State's Authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to
the State itself, and may issue bonds and notes within the amounts of,
and as otherwise restricted by, their legislative authorization. The
New York State Public Authorities Control Board approves the issuance
of debt and major contracts by ten of the Authorities. As of September
30, 1995, the date of the latest available data, there were 17
Authorities that had outstanding debt of $100 million or more, the
aggregate debt of which (including refunding bonds and moral
obligation, lease-purchase, contractual obligation, or
State-guaranteed debt) then totaled approximately $73.45 billion. As
of March 31, 1996, aggregate public authority debt outstanding as
State-supported was approximately $30.67 billion and State-related
debt was approximately $38.26 billion. In recent years the State has
provided financial assistance through appropriations, in some cases of
a recurring nature, to certain Authorities for operating and other
expenses and, (from 1976 to 1987) in fulfillment of its commitments on
moral obligation indebtedness or otherwise, for debt service. The
State has budgeted operating assistance of approximately $1.09 billion
for the Metropolitan Transportation Authority (MTA) for fiscal year
1996-97. This assistance is expected to continue to be required (and
may increase) in future years. Failure by the State to appropriate
necessary amounts or to take other action to permit the Authorities to
meet their obligations could adversely affect the ability of the State
and the Authorities to obtain financing in the public credit markets
and the market price of the State's outstanding bonds and notes.
The MTA oversees the operation of the City's subway and bus lines by
its affiliates, the New York City Transit Authority and the Manhattan
and Bronx Surface Transit Operating Authority (collectively, the TA).
MTA subsidiaries operate certain commuter rail and bus lines in the
New York metropolitan area. An affiliated agency, the Triborough
Bridge and Tunnel Authority (TBTA), operates certain intrastate toll
bridges and tunnels. To maintain its facilities and equipment, which
deteriorated significantly in the late 1970s due to deferred
maintenance, the MTA prepared a five-year capital program subject to
approval by the MTA Capital Program Review Board. State legislation
accompanying the State's budget for fiscal year 1996-97 authorized the
MTA, TBTA and TA to issue an aggregate of $6.5 billion in bonds to
finance a portion of a new $11.98 billion MTA capital plan for the
1995 through 1999 calendar years (the "1995-1999 Capital Program").
The 1995-1999 Capital Program assumes the issuance of an estimated
$5.1 billion in bonds under this $6.5 billion aggregate bonding
authority. If the 1995-1999 Capital Program is delayed or reduced,
ridership and fare revenues may decline, which could impair the MTA's
ability to meet its operating expenses without additional State
assistance. In addition, because fares are not sufficient to finance
its mass transit operations, the MTA has depended and will continue to
depend for operating Support upon a system of State, local government
and TBTA support, and, to the extent available, federal assistance
(including loans, grants and operating subsidies). If current revenue
projections are not realized and/or operating expenses exceed current
projections, the TA or commuter railroads may seek additional State
assistance, raise fares or take other actions. No assurance can be
given that any such assistance will continue at any particular level
or in any fixed relationship to the operating costs and capital needs
of the MTA.
THE CITY. The City has required, and continues to require, significant
financial assistance from the State. The City depends on State
assistance both to enable the City to balance its budget and to meet
its cash requirements. In the early 1970s, the City incurred
substantial operating deficits, and its financial controls, accounting
practices, and disclosure policies were widely criticized. In 1975,
the City encountered severe financial difficulties and lost access to
the public credit markets. The State Legislature responded in 1975 by
creating the Municipal Assistance Corporation For The City of New York
(MAC) to provide financing assistance for the City and the Financial
Control Board to exercise certain oversight and review functions with
respect to the City's finances. The Financial Control Board's powers
over the City were suspended in June 1986, but would be reinstated
(under current law) if the City experiences certain adverse financial
circumstances. At the time of the fiscal crisis, the State provided
substantial financial assistance to the City, the federal government
provided the City with direct seasonal loans and guarantees on the
City's long-term debt, and the City's labor unions accepted deferrals
of wage increases and approved purchases of City bonds by the pension
funds. No assurance can be given that similar assistance would again
be made available if needed, particularly given the current budgetary
constraints faced by both the federal and State governments.
The City provides services usually undertaken by counties, school
districts or special districts in other large urban areas including
the provision of social services such as day care, foster care, health
care, family planning, services for the elderly and special employment
services for needy individuals and families who qualify for such
assistance. State law requires the City to allocate a large portion of
its total budget to Board of Education operations, and mandates the
City to assume the local share of public assistance and Medicaid
costs. For each of the 1981 through 1995 fiscal years, the City
achieved balanced operating results as reported in accordance with
generally accepted accounting principles (GAAP). While the City has
had GAAP operating surpluses during the 1980's, the City has
experienced ongoing and growing financial difficulties, primarily
related to the impact of the 1989-1992 recession on the local economy
(reducing revenues from most major taxes and increasing public
assistance and Medicaid caseloads), rising health care costs for City
employees and for Medicaid, and rising inflation and interest rates.
To address substantial budget gaps occurring as a result of these
difficulties, the City has implemented gap-closing programs in recent
fiscal years, which relied primarily on actions of a non-recurring
nature, but included substantial property tax rate increases and a
personal income tax surcharge and significant service reductions. Aid
to nonprofit cultural institutions in the City was significantly
reduced (as was State aid to such institutions), including certain
institutions that are obligors of bonds that may be held by the fund.
The City achieved balanced operating results as reported in accordance
with GAAP for the 1994 fiscal year. For fiscal year 1995, the City
adopted a budget which halted the trend in recent years of substantial
increases in City-funded spending from one year to the next and the
City budget adopted for fiscal year 1996 reduced City-funded spending
for the second consecutive year. The City budget adopted for fiscal
year 1997 (the "1997 City Budget") continues the trend of reduced
City-funded spending for the third consecutive year.
Pursuant to State law, the City prepares a four-year annual financial
plan, which is reviewed and revised on a quarterly basis and includes
the City's capital, revenue and expense projections and outlines
proposed budget gap-closing programs for those years with projected
budget gaps. The mayor is responsible for preparing the City's
four-year financial plan, including the City's current financial plan
for the 1997 through 2000 fiscal years revised and published on
November 14, 1996 (the "1997-2000 Financial Plan"). The 1997-2000
Financial Plan projects substantial budget gaps (approximately $1.2
billion, $2.1 billion and $3.0 billion) for each of the 1998 through
2000 fiscal years, and assumes additional programs to reduce
expenditures and to increase revenues to close such projected budget
gaps. The City's projections set forth in the 1997-2000 Financial Plan
are based on various assumptions and contingencies which are uncertain
and which may not materialize. Changes in major assumptions could
significantly affect the City's ability to balance its budget and to
meet its annual cash flow and financing requirements. Such assumptions
and contingencies include the timing and pace of a regional and local
economic recovery, increases in employment growth, the ability to
implement proposed reductions in City personnel and other cost
reduction initiatives, which may require in certain cases, the
cooperation of the City's municipal unions, the ability to complete
revenue generating transactions, provision of State and federal aid
and mandate relief, and the impact on City revenues of proposals for
federal and State welfare reform. No assurance can be given that the
assumptions used by the City in the 1997-2000 Financial Plan will be
realized. Further, cost-containment assumptions contained in both the
1997-2000 Financial Plan and the 1997 City Budget may be significantly
adversely affected by the changes which may result from the adoption
of the State's fiscal year 1996-97 budget as well as from recent
changes occurring at the federal level with respect to various social
spending programs. Additionally, actions taken in recent fiscal years
to avert deficits may have reduced the City's flexibility in
responding to future budgetary imbalances, and have deferred certain
expenditures to later fiscal years.
The 1997 City Budget identifies a $2.6 billion budget gap which it
attempts to close by implementing a variety of actions, including an
approximate $1.2 billion reduction in City spending for a variety of
services and programs, a renewal of the 12.5% personal income tax
surcharge, and the use of non-recurring measures estimated to provide
approximately $1.4 billion in one-time savings. The City's budget for
fiscal year 1997 has been the subject of substantial criticism,
questioning, among other things, the capacity of the City to generate
future revenues sufficient to meet expected expenditure increases and
to provide necessary municipal services. Such criticism has also noted
the City's reliance on non-recurring resources to close budget gaps
and has charged that the City has made no progress in achieving
structural balance.
The City Budget for the fiscal year 1997, like all City budgets, is
subject to the ability of the City to implement the proposed
reductions in expenditures, personal services and personnel, which are
substantial and may be difficult to implement. For example, one of the
key items contained in the 1997 City Budget was the sale of the City's
water system for approximately $2.3 billion. This plan has been hotly
contested since it was announced, has been the focus of several
lawsuits and has been ruled illegal by both the lower and the Appeals
Court. It is unclear whether a final appeal will be sought. Further,
the 1997 City Budget and the 1997-2000 Financial Plan reflect the
costs of tentative settlements with a coalition of municipal unions
which together represent approximately 2/3 of its workforce. There can
be no assurance that such proposed settlement will be ratified. In
addition, certain proposals may be offset by various State and federal
legislation which could mandate levels of nature in recent years to
finance its General Fund operations, including tapping excess monies
in special funds, refinancing outstanding debt to reduce reserve fund
requirements and current (but not long-term) debt service costs,
recalculating pension fund contributions, selling state assets,
reimbursing past General Fund expenditures by the issuance of
Authority debt and deferring payment for expenditures to future fiscal
years. The 1996-97 State Financial Plan contains actions of a
non-recurring nature including the use of certain surplus funds
available from the MMIA (approximately $481 million), savings from
refinancing of certain pension and bond obligations (approximately
$222 million) and non-recurring resources carried forward from the
State's prior fiscal year and various other actions (approximately
$314 million). It has been reported that certain health care providers
are considering a challenge to the State's rights to the MMIA surplus
revenues, totaling approximately $1.3 billion. In addition, certain
proposals may be offset by various State and Federal legislation which
could mandate levels of City funding inconsistent with the 1997 City
Budget and the 1997-2000 Financial Plan. In addition, the 1997-2000
Financial Plan anticipates the receipt of substantial amounts of
Federal aid. Certain proposed State and Federal actions are subject to
approvals from the Legislature, the Governor and the President, as
applicable. Both Federal and State actions are uncertain; certain
legislative proposals contemplate significant reductions in Federal
spending, including proposed Federal welfare reform which could result
in caps on, or block grants of, Federal programs. Further, no
assurance can be given that either such actions will in fact be taken
or that the projected savings will result even if such actions are
taken.
The City derives its revenues from a variety of local taxes, user
charges, miscellaneous revenues and federal and State unrestricted and
categorical grants. The City projects that local revenues will provide
approximately 68.2% of total revenues in fiscal year 1997 while
federal aid, including categorical grants, will provide 11.5% in
fiscal year 1997 and State aid, including unrestricted aid and
categorical grants, will provide 20.3% in fiscal year 1997. As a
proportion of total revenues, State aid has remained relatively
constant over the period from 1980 to 1990, while federal aid was
sharply reduced (having provided nearly 20% of total fiscal year 1980
revenues). The largest source of the City's revenues is the real
estate tax (approximately 22% of total revenues projected for fiscal
year 1997), at rates levied by the City council (subject to certain
State constitutional limits). State legislation requires that
increases in assessments of certain classes of real property be
phased-in over a five-year period; thus, property owners may receive
higher assessments when property values are declining. However, in the
event of a reduction in total assessments, higher tax rates would be
required to maintain the same amount of tax revenue. The City derives
the remainder of its tax revenues from a variety of other economically
sensitive local taxes (subject to authorization by the legislature),
including: a local sales and compensating use tax (primarily dedicated
to MAC debt service) imposed in addition to the State's retail sales
tax; the personal income tax on City residents and the earnings tax on
non-residents; a general corporation tax; and a financial corporation
tax. High tax burdens in the city impose political and economic
constraints on the ability of the City to increase local tax rates.
The City's four-year financial plans have been the subject of
extensive public comment and criticism, principally questioning the
reasonableness of assumptions that the City will have the capacity to
generate sufficient revenues in the future to provide the level of
services contained in such City financial plans. On July 10, 1995, S&P
lowered the City's credit rating from A- to BBB+, among the lowest
ratings of any major city in the country. The rating agency cited
specifically the City Budget's reliance on "one-shot" measures to
balance the budget for fiscal year 1996 without rectifying the
underlying structural problems, its continued optimistic projections
of State and Federal aid, and continued high debt levels. S&P also
mentioned the feeble local economy and the City Budget's over-reliance
on the financial services sector which historically has been volatile.
On February 28, 1996, Fitch Investors Service, L.P., placed the City's
general obligation bonds on Fitch Alert with negative implications.
The City is the largest municipal debt issuer in the nation, and has
more than doubled its debt load since the end of fiscal year 1988, in
large measure to rehabilitate its extensive, aging physical plant. The
City's seasonal borrowing needs increased significantly during fiscal
years 1990 and 1991, largely due to delayed State aid payments, and
totalled $1.4 billion in fiscal year 1993, $1.75 billion in fiscal
year 1994, $2.2 billion in fiscal year 1995 and $2.4 billion in fiscal
year 1996. Current projections do not forecast a need for seasonal
financing for fiscal year 1997. The City's current capital financing
program reflects major reductions (approximately $2.13 billion) in the
size of the capital program to be implemented cumulatively through
fiscal year 1999 which is intended to reduce future debt service
requirements. Such reductions may adversely affect the condition of
the City's aging and deteriorating infrastructure and physical assets,
such as sewers, streets, bridges and tunnels, and mass transit
facilities. Further, the City's capital financing program currently
contemplates receipt of proceeds of approximately $1 billion resulting
from the sale of the City's water and sewer system to the Water Board,
and proposes to utilize a substantial portion of such proceeds for
capital project improvements. It is unlikely that such proceeds will
become available for capital improvements, because, as discussed
above, the legality of the sale of the water system has been
successfully challenged in the lower and the intermediate appeals
court. In the event such proceeds are not available, the City will be
required to find alternative sources of funding or to reduce the
capital program by a corresponding amount.
In November 1993, the voters approved a proposed charter whereby
Staten Island would secede from the City. Staten Island is one of five
counties/boroughs, comprising 4% of the City's population and 19% of
its land area. State law provides a complex mechanism for such
secession. The State Legislature is also considering establishment of
a similar secession mechanism for Queens.
OTHER LOCALITIES. Certain localities in addition to the City could
have financial problems which, if significant, could lead to requests
for additional State assistance during the State's 1995-96 fiscal year
and thereafter. Fiscal difficulties experienced by the City of
Yonkers, for example, could result in State actions to allocate State
resources in amounts that cannot yet be determined. In the recent
past, the State provided substantial financial assistance to its
political subdivisions, primarily for aid to elementary, secondary and
higher education, Medicaid income maintenance, and local
transportation programs. The legislature enacted substantial
reductions from previously budgeted levels of State aid since December
1990. To the extent the State is constrained by its financial
condition, State assistance to localities may be further reduced,
compounding the serious fiscal constraints already experienced by many
local governments. Localities also face anticipated and potential
problems resulting from pending litigation (including challenges to
local property tax assessments), judicial decisions and socio-economic
trends. The Legislature enacted substantial reductions from previously
budgeted levels of State aid since December 1990.
SPECIAL CONSIDERATIONS AFFECTING CALIFORNIA
Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations, and voter initiatives,
as discussed below, could adversely affect the market values and
marketability of, or result in default of, existing obligations,
including obligations that may be held by the fund. Obligations of the
state or local governments may also be affected by budgetary pressures
affecting the State of California (the State) and economic conditions
in the State. Interest income to the fund could also be adversely
affected. The following discussion highlights only some of the more
significant financial trends and problems, and is based on information
drawn from official statements and prospectuses relating to securities
offerings of the State, its agencies, or instrumentalities, as
available as of the date of this SAI. FMR has not independently
verified any of the information contained in such official statements
and other publicly available documents, but is not aware of any fact
which would render such information inaccurate.
CONSTITUTIONAL LIMITATIONS ON TAXES, OTHER CHANGES AND APPROPRIATIONS
LIMITATION ON PROPERTY TAXES. Certain obligations held by the fund may
be obligations of issuers that rely in whole or in part, directly or
indirectly, on AD VALOREM property taxes as a source of revenue. The
taxing powers of local governments and districts are limited by
Article XIIIA of the California Constitution, enacted by the voters in
1978 and commonly known as "Proposition 13." Briefly, Proposition 13
limits to 1% of full cash value the rate of AD VALOREM property taxes
on real property and generally restricts the increase in taxes upon
reassessment of property to 2% per year, except upon new construction
or change of ownership (subject to a number of exemptions). Taxing
entities may, however, raise AD VALOREM taxes above the 1% limit to
pay debt service on voter-approved bonded indebtedness.
Under Article XIIIA, the basic 1% AD VALOREM tax levy is applied
against the assessed value of property as of the owner's date of
acquisition (or as of March 1, 1975 if acquired earlier), subject to
certain adjustments. This system has resulted in widely varying
amounts of tax on similarly situated properties. Several lawsuits were
filed challenging the acquisition-based assessment system of
Proposition 13, but on June 18, 1992, the U.S. Supreme Court announced
a decision upholding Proposition 13.
Article XIIIA prohibits local governments from raising revenues
through AD VALOREM property taxes above the 1% limit; it also requires
voters of any government unit to give 2/3 approval to levy any
"special tax." However, court decisions allowed non-voter-approved
levies of "general taxes" which were not dedicated to a specific use.
LIMITATIONS ON OTHER TAXES, FEES AND CHARGES. On November 5, 1996, the
voters of the State approved Proposition 218, called the "Right to
Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to
the State Constitution, which contain a number of provisions affecting
the ability of local agencies to levy and collect both existing and
future taxes, assessments, fees and charges.
Article XIIIC requires that all new or increased local taxes be
submitted to the electorate before they become effective. Taxes for
general governmental purposes require a majority vote and taxes for
specific purposes require a two-thirds vote. Further, any general
purpose tax which was imposed, extended or increased without voter
approval after December 31, 1994, must be approved by a majority vote
within two years.
Article XIIID contains several new provisions making it generally more
difficult for local agencies to levy and maintain "assessments" for
municipal services and programs. Article XIIID also contains several
new provisions affecting "fees" and "charges," defined for purposes of
Article XIIID to mean "any levy other than an ad valorem tax, a
special tax, or an assessment, imposed by a [local government] upon a
parcel or upon a person as an incident of property ownership,
including a user fee or charge for a property-related service." All
new and existing property-related fees and charges must conform to
requirements prohibiting, among other things, fees and charges which
generate revenues exceeding the funds required to provide the
property-related service or are used for unrelated purposes. There are
new notice, hearing and protest procedures for levying or increasing
property-related fees and charges, and, except for fees or charges for
sewer, water and refuse collection services (or fees for electrical
and gas service, which are not treated as "property-related" for
purposes of Article XIIID), no property-related fee or charge may be
imposed or increased without majority approval by the property owners
subject to the fee or charge or, at the option of the local agency,
two-thirds voter approval by the electorate residing in the affected
area.
In addition to the provisions described above, Article XIIIC removes
limitations on the initiative power in matters of local taxes,
assessments, fees and charges. Consequently, local voters could, by
future initiative, repeal, reduce or prohibit the future imposition or
increase of any local tax, assessment, fee or charge. It is unclear
how this right of local initiative may be used in cases where taxes or
charges have been or will be specifically pledged to secure debt
issues.
The interpretation and application of Proposition 218 will ultimately
be determined by the courts with respect to a number of matters, and
it is not possible at this time to predict with certainty the outcome
of such determinations. Proposition 218 is generally viewed as
restricting the fiscal flexibility of local governments, and for this
reason, some ratings of California cities and counties have been, and
others may be, reduced.
APPROPRIATIONS LIMITS. The State and its local governments are subject
to an annual "appropriations limit" imposed by Article XIIIB of the
California Constitution, enacted by the voters in 1979 and
significantly amended by Propositions 98 and 111 in 1988 and 1990,
respectively. Article XIIIB prohibits the State or any covered local
government from spending "appropriations subject to limitation" in
excess of the appropriations limit imposed. "Appropriations subject to
limitation" are authorizations to spend "proceeds of taxes," which
consist of tax revenues and certain other funds, including proceeds
from regulatory licenses, user charges, or other fees to the extent
that such proceeds exceed the cost of providing the product or
service; but " proceeds of taxes" for local governments exclude most
State subventions. No limit is imposed on appropriations of funds
which are not "proceeds of taxes," such as reasonable user charges or
fees and certain other non-tax funds, including bond proceeds.
Among the expenditures not included in the Article XIIIB
appropriations limit are: (1) the debt service cost of bonds issued or
authorized prior to January 1, 1979, or subsequently authorized by the
voters; (2) appropriations arising from certain emergencies declared
by the Governor; (3) appropriations for certain capital outlay
projects; and (4) appropriations by the State of post-1989 increases
in gasoline taxes and vehicle weight fees.
The appropriations limit for each year is adjusted annually to reflect
changes in cost of living and population, and any transfers of service
responsibilities between government units. The definitions for such
adjustments were liberalized by Proposition 111 to follow more closely
growth in the State's economy. For the 1990-91 fiscal year, each unit
of government has recalculated its appropriations limit by taking the
actual 1986-87 limit and applying the Proposition 111 annual
adjustments forward to 1990-91. This was expected to raise the limit
in most cases.
Under Proposition 111, "excess" revenues are measured over a two-year
cycle. With respect to local governments, excess revenues must be
returned by a revision of tax rates or fee schedules within the two
subsequent fiscal years. The appropriations limit for a local
government may be overridden by referendum under certain conditions
for up to four years at a time. With respect to the State, 50% of any
excess revenues is to be distributed to K-12 school and community
college districts (collectively, K-14 districts) and the other 50% is
to be refunded to taxpayers.
In the years immediately following enactment, very few California
governmental entities operated near their appropriations limit. In the
mid-to-late 1980's, many entities were at or approaching their limit,
and several successfully obtained voter approval for four-year waivers
of the limit. Since Proposition 111, the appropriations limit has
again ceased to be a practical limit on California governments, but
this condition may change in the future. During fiscal year 1986-87,
State receipts from proceeds of taxes exceeded its appropriations
limit by $1.138 billion, which was returned to taxpayers. Since that
time, appropriations subject to limitation were under the State limit.
The 1996-97 Budget provided for State appropriations more than $7.0
billion under the limit for fiscal year 1996-97.
OBLIGATIONS OF THE STATE OF CALIFORNIA
As of August 1, 1997, the State had approximately $17. 8
billion of general obligation bonds outstanding (including $ 1.0
b illion of commercial paper notes which were intended to be
refinanced by future bond sales), and $ 8.3 billion remained
authorized but unissued. In addition, the State had outstanding
lease-purchase obligations, payable from the State's General Fund,
of approximately $6. 2 billion , and $1.8 billion authorized
and unissued . State voters approved about $6.4 billion of new
bonds in two elections in 1996. Of the State's outstanding general
obligation debt, approximately 21% is presently self-liquidating (for
which program revenues are anticipated to be sufficient to reimburse
the General Fund for debt service payments). In fiscal year
199 6 -9 7 , debt service on general obligation bonds and
lease-purchase debt was approximately 5. 0 % of General Fund
revenues. The State has paid the principal of and interest on its
general obligation bonds, lease-purchase debt, and short-term
obligations when due.
ECONOMY
The State's economy is the largest among the 50 states and one of the
largest in the world. The State's population grew by 27% in the 1980s
and, at over 32 million, it now represents over 12% of the total U.S.
population. Total personal income in the State, at an estimated
$ 810 billion in 199 6 , accounts for more than 12% of all
personal income in the nation. Total employment in 1995 was over 14
million, the majority of which is in the service, trade, and
manufacturing sectors.
From mid-1990 to late 1993, the State suffered a recession with the
worst economic, fiscal and budget conditions since the 1930s.
Construction, manufacturing (especially aerospace), and financial
services, among others, were all severely affected, particularly in
Southern California. Job losses were the worst of any post-war
recession. Employment levels stabilized by late 1993 and steady growth
has occurred since the start of 1994; pre-recession job levels were
reached in early 1996. Unemployment, while higher than the national
average, came down significantly from the January 1994 peak of 10%.
Economic indicators show a steady recovery underway in California
since the start of 1994 particularly in export-related industries,
services, electronics, entertainment and tourism, although the
residential housing sector has been weaker than in previous
recoveries. Any delay or reversal of the economic recovery may cause a
recurrence of revenue shortfalls for the State.
RECENT STATE FINANCIAL RESULTS
The principal sources of State General Fund revenues in 1994-95 were
the California personal income tax (43% of total revenues), the sales
tax (34%), bank and corporation taxes (13%), and the gross premium tax
on insurance (3%). The State maintains a Special Fund for Economic
Uncertainties (the SFEU), derived from General Fund revenues, as a
reserve to meet cash needs of the General Fund, but which is required
to be replenished as soon as sufficient revenues are available.
Year-end balances in the SFEU are included for financial reporting
purposes in the General Fund balance. In recent years (but not in the
past four years, as the recession cut revenues and created a deficit),
the State has budgeted to maintain the SFEU at around 3% of General
Fund expenditures.
Throughout the 1980s, State spending increased rapidly as the State
population and economy also grew rapidly, including many assistance
programs to local governments, which were constrained by Proposition
13 and other laws. The largest State program is assistance to local
public school districts. In 1988, an initiative (Proposition 98) was
enacted which (subject to suspension by a 2/3 vote of the Legislature
and the Governor) guarantees local school districts and community
college districts a minimum share of State General Fund revenues
(currently about 35%).
Since the start of fiscal year 1990-91 until fiscal year 1995-96, the
State faced adverse economic, fiscal, and budget conditions. The
economic recession seriously affected State tax revenues. It also
caused increased expenditures for health and welfare programs. The
State is also facing a structural imbalance in its budget with the
largest programs supported by the General Fund (education, health,
welfare and corrections) growing at rates significantly higher than
the growth rates for the principal revenue sources of the General
Fund. These structural concerns will continue in future years; in
particular, it is anticipated that there will be a need to increase
capital and operating costs of the correctional system in response to
a "Three Strikes" law enacted in 1994 which mandates life imprisonment
for certain felony offenders.
RECENT BUDGETS. As a result of these factors, among others, from the
late 1980s until 1992-93 the State had a period of nearly chronic
budget imbalance, with expenditures exceeding revenues in four out of
six years, and the State accumulated and sustained a budget deficit in
the SFEU approaching $2.8 billion at its peak at June 30, 1993. For
several years , each budget required multibillion dollar actions to
bring projected revenues and expenditures into balance and to close
large "budget gaps" which were identified. The Legislature and
Governor eventually agreed on a number of different steps to produce
Budget Acts in the years 1991-92 to 199 4 -9 5 ,
(although not all these actions were taken in each year):
(small solid bullet) significant cuts in health and welfare program
expenditures;
(small solid bullet) transfers of program responsibilities and some
funding sources from the State to local governments, coupled with some
reduction in mandates on local government;
(small solid bullet) transfer of about $3.6 billion in annual local
property tax revenues from cities, counties, redevelopment agencies
and some other districts to local school districts, thereby reducing
state funding for schools;
(small solid bullet) reduction in growth of support for higher
education programs, coupled with increases in student fees;
(small solid bullet) revenue increases (particularly in the fiscal
year 1991-92 budget), most of which were for a short duration;
(small solid bullet) increased reliance on aid from the federal
government to offset the costs of incarcerating, educating and
providing health and welfare services to undocumented aliens (although
these efforts have produced much less federal aid than the State
Administration had requested); and
(small solid bullet) various one-time adjustment and accounting
changes.
The combination of stringent budget actions cutting State
expenditures, and the turnaround of the economy by late 1993, finally
led to the restoration of positive financial results, with revenues
equaling or exceeding expenditures starting in fiscal year 1992-1993.
As a result, the accumulated budget deficit of about $2.8 billion was
eliminated by June 30, 1997, when the State showed a positive balance
of about $408 million, on a budgetary basis, in the SFEU.
A consequence of the accumulated budget deficits in the early
1990's, together with other factors such as disbursement of funds to
local school districts "borrowed" from future fiscal years and hence
not shown in the annual budget, was to significantly reduce the
State's cash resources available to pay its ongoing obligations. The
State's cash condition became so serious that from late spring 1992
until 1995, the State had to rely on issuance of short term notes
which matured in a subsequent fiscal year to finance its ongoing
deficit, and pay current obligations. For a two-month period in the
summer of 1992, pending adoption of the annual Budget Act, the State
was forced to issue registered warrants (IOUs) to some of its
suppliers, employees and other creditors. The last of these deficit
notes was repaid in April, 1996.
The 1995-96 and 1996-97 Budget Acts reflected significantly
improved financial conditions, as the State's economy recovered and
tax revenues soared above projections. Over the two years, revenues
averaged about $2 billion higher than initially estimated. Most of the
additional revenues were allocated to school funding, as required by
Proposition 98, and to make up shortfalls in federal aid for health
and welfare costs and costs of illegal aliens. The budgets for both
these years showed strong increases in funding for K-14 public
education, including implementation of initiatives to reduce class
sizes for lower elementary grades to not more than 20 pupils. Higher
education funding also increased. Spending for health and welfare
programs was kept in check, as previously-implemented cuts in benefit
levels were retained.
The final results for fiscal year 1996-97 showed General Fund
revenues of $49.2 billion and expenditures of $48.9 billion. The
improved revenues allowed the repayment of the last of the
recession-induced budget deficits; the SFEU had a balance of $408
million on a budgetary basis ($281 million on a cash basis) as of June
30, 1997, the first significant positive balance in the decade. In
1996-97, the State implemented its regular cash flow borrowing program
with the issuance of $3.0 billion of Revenue Anticipation Notes which
matured on June 30, 1997, and did not require any external borrowing
over the end of the fiscal year.
Fiscal Year 1997-98 Budget. With continued strong economic recovery
and surging tax receipts, the State entered the 1997-98 Fiscal Year in
the strongest financial position in the decade. However, in May 1997,
the California Supreme Court ruled that the State had acted illegally
in 1993 and 1994 by using a deferral of payments to the Public
Employees Retirement Fund to help balance earlier budgets. In response
to this court decision, the Governor ordered an immediate repayment to
the Retirement Fund of about $1.235 billion, which was made in late
July, 1997, and substantially "used up" the expected additional
revenues for the fiscal year.
On August 18, 1997, the Governor signed the 1997-98 Budget Act. The
Budget Act assumes General Fund revenues and transfers of $52.5
billion, and contains expenditures of $52.8 billion. As a result, the
budget reserve (SFEU) is reduced to an estimated $112 million at June
30, 1998. The Budget Act also contains $14.4 million of Special Fund
expenditures. Following enactment of the Budget Act, the State plans
to carry out its normal annual cash flow borrowing, totaling $3.0
billion to mature June 30, 1998.
The 1997-98 Budget Act provides another year of rapidly increasing
funding for K-14 public education. Total General Fund support will
reach $5,150 per pupil, more than 20% higher than the recession-period
levels which were in effect as late as fiscal year 1993-94. The $1.75
billion in new funding will be spent on class size reduction and other
initiatives, as well as fully funding growth and cost of living
increases. Support for higher education units in the State also
increased by about 6 percent. Because of the pension payment, most
other State programs were funded at levels consistent with prior
years, and several initiatives had to be dropped. These included
additional assistance to local governments, state employee raises, and
funding of a bond bank.
Part of the 1997-98 Budget Act was completion of State welfare
reform legislation to implement the new federal law passed in 1996.
The new State program, called "CalWORKs," to become effective January
1, 1998, will emphasize programs to bring aid recipients into the
workforce. As required by federal law, new time limits will be placed
on receipt of welfare aid. Grant levels for 1997-98 remain at the
reduced, prior years' levels.
Although, as noted, the 1997-98 Budget Act projects a budget
reserve in the SFEU of $112 million on June 30, 1998, the General Fund
fund balance on that date also reflects $1.25 billion of "loans" which
the General Fund made to local schools in the recession years,
representing cash outlays above the mandatory minimum funding level.
Settlement of litigation over these transactions in July 1996 calls
for repayment of these loans over the period ending in 2001-02, about
equally split between outlays from the General Fund and from schools'
entitlements. the 1997-98 Budget Act contained a $200 million
appropriation from the General Fund toward this settlement.
The State's financial difficulties for the past budget years and other
factors noted above will result in continued pressure upon almost all
local governments, especially those which depend on State aid, such as
school districts and counties. While recent budgets included both
permanent tax increases and actions to reduce costs of state
government over the longer term, the Governor and other analysts have
noted that structural imbalances still exist, and there can be no
assurance that the State will not face budget gaps in the future.
The ratings on California's long-term general obligation bonds were
reduced in the early 1990's from "AAA" levels which had existed prior
to the recession. In 1996, Fitch and Standard & Poor's raised their
ratings of California's general obligation bonds, which are currently
assigned ratings of "A+" from Standard & Poor's, "A1" from Moody's and
"A+" from Fitch. There can be no assurance that such ratings will
be maintained in the future. It should be noted that the
creditworthiness of obligations issued by local California issuers may
be unrelated to creditworthiness of obligations issued by the state of
California, and that there is no obligation on the part of the state
to make payment on such local obligations in the event of default.
OBLIGATIONS OF OTHER CALIFORNIA ISSUERS
STATE ASSISTANCE. Property tax revenues received by local governments
declined more than 50% following passage of Proposition 13.
Subsequently, the State's Legislature enacted measures to provide for
the redistribution of the State's General Fund surplus to local
agencies; the reallocation of certain State revenues to local
agencies; and the assumption of certain governmental functions by the
State to assist municipal issuers to raise revenues. Total local
assistance from the State's General Fund totaled approximately
$3 6.6 billion in fiscal year 199 6 -9 7 (over 70% of
General Fund expenditures) and has been budgeted at $3 8.8
billion for fiscal year 199 7 -9 8 , including the effect of
implementing reductions in certain aid programs. To reduce State
General Fund support for school districts, the 1992-93 and 1993-94
Budget Acts caused local governments to transfer $3.8 billion of
annual property tax revenues to school districts, representing
reversal of the post-Proposition 13 "bailout" aid.
To the extent the State should be constrained by its Article XIIIB
appropriations limit, or its obligation to conform to Proposition 98,
or other considerations, the absolute level, or the rate of growth, of
State assistance to local governments may continue to be reduced. Any
such reductions in State aid could compound the serious fiscal
constraints already experienced by many local governments,
particularly counties. A number of counties both rural and urban, have
indicated that their budgetary condition is extremely serious. At the
start of fiscal year 1995-96, Los Angeles County ("L.A. County") the
largest county in the State, was forced to impose significant cuts in
services and personnel, particularly in the health care system, in
order to balance its budget. L.A. County's debt was downgraded by
Moody's and S&P in the summer of 1995. Orange County, which recently
emerged from federal bankruptcy protection, has substantially reduced
services and personnel in order to live within much reduced means. A
school district (Richmond Unified) filed for protection under
bankruptcy laws several years ago, but the petition was later
dismissed; other school districts have indicated financial stress,
although none has threatened bankruptcy .
Counties and cities may face further budgetary pressures as a
result of changes in welfare and public assistance programs, which
were enacted in August, 1997 in order to comply with the federal
welfare reform law. Generally, counties play a large role in the new
system, and are given substantial flexibility to develop and
administer programs to bring aid recipients into the workforce.
Counties are also given financial incentives if either at the county
or statewide level, the "Welfare-to-Work" programs exceed minimum
targets; counties are also subject to financial penalties for failure
to meet such targets. Counties remain responsible to provide "general
assistance" for able-bodied indigents who are ineligible for other
welfare programs. The long-term financial impact of the new CalWORKS
system on local governments is still unknown.
ASSESSMENT BONDS. Municipal obligations which are assessment bonds or
Mello-Roos bonds may be adversely affected by a general decline in
real estate values or a slowdown in real estate sales activity. In
many cases, such bonds are secured by land which is undeveloped at the
time of issuance but anticipated to be developed within a few years
after issuance. In the event of such reduction or slowdown, such
development may not occur or may be delayed, thereby increasing the
risk of a default on the bonds. Because the special assessments or
taxes securing these bonds are not the personal liability of the
owners of the property assessed, the lien on the property is the only
security for the bonds. Moreover, in most cases the issuer of these
bonds is not required to make payments on the bonds in the event of
delinquency in the payment of assessments or taxes, except from
amounts, if any, in a reserve fund established for the bonds.
CALIFORNIA LONG-TERM LEASE OBLIGATIONS. Certain State long-term lease
obligations, though typically payable from the General Fund of the
municipality, are subject to "abatement" in the event the facility
being leased is unavailable for beneficial use and occupancy by the
municipality during the term of the lease. Abatement is not a default,
and there may be no remedies available to the holders of the
certificates evidencing the lease obligation in the event abatement
occurs. The most common causes of abatement are failure to complete
construction of the facility before the end of the period during which
lease payments have been capitalized and uninsured casualty losses to
the facility (e.g., due to earthquake). In the event abatement occurs
with respect to a lease obligation, lease payments may be interrupted
(if all available insurance proceeds and reserves are exhausted) and
the certificates may not be paid when due.
Several years ago the Richmond Unified School District (District)
entered into a lease transaction in which certain existing properties
of the District were sold and leased back in order to obtain funds to
cover operating deficits. Following a fiscal crisis in which the
District's finances were taken over by a State receiver (including a
brief period under bankruptcy court protection), the District failed
to make rental payments on this lease, resulting in a lawsuit by the
Trustee for the Certificate of Participation holders. One of the
defenses raised in answer to this lawsuit was the invalidity of the
original lease transaction. The trial court upheld the validity of the
District's lease, and the case has been settled. However, any future
judgment in a similar case against the position taken by the Trustee
may have implications for lease transactions of a similar nature by
other State entities.
OTHER CONSIDERATIONS. The repayment of Industrial Development
Securities secured by real property may be affected by State laws
limiting foreclosure rights of creditors. Health Care and Hospital
Securities may be affected by changes in State regulations governing
cost reimbursements to health care providers under Medi-Cal (the
State's Medicaid program), including risks related to the policy of
awarding exclusive contracts to certain hospitals.
Limitations on AD VALOREM property taxes may particularly affect "tax
allocation" bonds issued by State redevelopment agencies. Such bonds
are secured solely by the increase in assessed valuation of a
redevelopment project area after the start of redevelopment activity.
In the event that assessed values in the redevelopment project decline
(for example, because of a major natural disaster such as an
earthquake), the tax increment revenue may be insufficient to make
principal and interest payments on these bonds. Both Moody's and S&P
suspended ratings on State tax allocation bonds after the enactment of
Articles XIIIA and XIIIB, and only resumed such ratings on a selective
basis.
Proposition 87, approved by State voters in 1988, requires that all
revenues produced by a tax rate increase go directly to the taxing
entity which increased such tax rate to repay that entity's general
obligation indebtedness. As a result, redevelopment agencies (which,
typically, are the issuers of Tax Allocation Securities) no longer
receive an increase in tax increment when taxes on property in the
project area are increased to repay voter-approved bonded
indebtedness.
Substantially all of the State is within an active geologic region
subject to major seismic activity. Any California municipal obligation
held by the fund could be affected by an interruption of revenues
because of damaged facilities or, consequently, income tax deductions
for casualty losses or property tax assessment reductions.
Compensatory financial assistance could be constrained by the
inability of (i) an issuer to have obtained earthquake insurance
coverage at reasonable rates; (ii) an insurer to perform on its
contracts of insurance in the event of widespread losses; or (iii) the
federal or State government to appropriate sufficient funds within
their respective budget limitations.
Because of the complex nature of Articles XIIIA, XIIIB, XIIIC and
XIIID of the California Constitution (described briefly above), the
ambiguities and possible inconsistencies in their terms, and the
impossibility of predicting future appropriations or changes in
population and the cost of living, and the probability of continuing
legal challenges, it is not currently possible to determine fully the
impact of these provisions, or the outcome of any pending litigation
with respect to those provisions on State obligations held by the fund
or on the ability of the State or local governments to pay debt
service on such obligations. Legislation has been or may be introduced
(either in the State Legislature or by initiative) which would modify
existing taxes or other revenue-raising measures or which either would
further limit or, alternatively, would increase the abilities of State
and local governments to impose new taxes or increase existing taxes.
It is not presently possible to predict the extent to which any such
legislation will be enacted, or if enacted, how it would affect
California municipal obligations. It is also not presently possible to
predict the extent of future allocations of State revenues to local
governments or the abilities of State or local governments to pay the
interest on, or repay the principal of, such California municipal
obligations in light of future fiscal circumstances.
SPECIAL FACTORS AFFECTING PUERTO RICO
The following only highlights some of the more significant financial
trends and problems affecting the Commonwealth of Puerto Rico (the
"Commonwealth" or "Puerto Rico"), and is based on information drawn
from official statements and prospectuses relating to the securities
offerings of Puerto Rico, its agencies and instrumentalities, as
available on the date of this Statement of Additional Information. FMR
has not independently verified any of the information contained in
such official statements, prospectuses and other publicly available
documents, but is not aware of any fact which would render such
information materially inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1995 trade with the United States accounted for
approximately 89% of Puerto Rico's exports and approximately 65% of
its imports. In this regard, in fiscal 1995 Puerto Rico experienced a
$4.6 billion positive adjusted merchandise trade balance.
Since fiscal 1985 personal income, both aggregate and per capita, has
increased consistently each fiscal year. In fiscal 1995 aggregate
personal income was $27.0 billion ($26.2 billion in 1992 prices) and
personal per capita income was $7,296 ($7,074 in 1992 prices). Gross
domestic product in fiscal 1992 was $23.7 billion and gross product in
fiscal 1996 was $30.2 billion; ($26.7 billion in 1992 prices). This
represents an increase in gross product of 27.5% from fiscal 1992 to
1996 (12.7% in 1992 prices). For fiscal 1997, an increase in gross
domestic product of 2.7% over fiscal 1996 is forecasted. However,
actual growth in the Puerto Rico economy will depend on several
factors including the condition of the U.S. economy, the exchange
value of the U.S. dollar, the price stability of oil imports, increase
in the number of visitors to the island, the level of exports, the
level of federal transfers, and the cost of borrowing.
Puerto Rico's economy continued to expand throughout the five-year
period from fiscal 1992 through fiscal 1996. Almost every sector of
the economy participated and record levels of employment were
achieved. Factors behind the continued expansion included government
sponsored economic development programs, periodic declines in the
exchange value of the U.S. dollar, the level of federal transfers and
the relatively low cost of borrowing funds during the period.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but
it still remains significantly above the United States average and has
been increasing in recent years. Despite long term improvements, the
unemployment rate rose from 16.5% to 16.8% from fiscal 1992 to fiscal
1993. However, by the end of fiscal 1994, the unemployment rate
dropped to 15.9% and as of the end of fiscal 1996, stands at 13.8%.
Despite this downturn, there is a possibility that the unemployment
rate will increase.
Manufacturing is the largest sector in the economy accounting for
$17.7 billion or 41.8% of gross domestic product in fiscal 1995.
Manufacturing has experienced a basic change over the years as a
result of the influx of higher wage, high technology industries such
as the pharmaceutical industry, electronics, computers,
microprocessors, scientific instruments and high technology machinery.
The service sector, which includes finance, insurance, real estate,
wholesale and retail trade, hotels and related services and other
services, ranks second in its contribution to gross domestic product
and is the sector that employs the greatest number of people. In
fiscal 1995, the service sector generated $15.9 billion in gross
domestic product or 37.5% of the total. Employment in this sector grew
from 449,000 in fiscal 1992 to 527,000 in fiscal 1996, a cumulative
increase of 17.6%, which increase was greater than the 11.8%
cumulative growths in employment over the same period, providing 46.7%
of total employment. The government sector of the Commonwealth plays
an important role in the economy of the island. In fiscal year 1995
the government accounted for $4.5 billion or 10.6% of Puerto Rico's
gross domestic product and provided 21.7% of the total employment.
Tourism also contributes significantly to the island economy,
accounting for $1.8 billion of gross domestic product in fiscal 1995.
The present administration has developed and is implementing a new
economic development program which is based on the premise that the
private sector should provide the primary impetus for economic
development and growth. This new program, which is referred to as the
New Economic Model, promotes changing the role of the government from
one of being a provider of most basic services to that of a
facilitator for private sector initiatives and encourages private
sector investment by reducing government-imposed regulatory
restraints.
The New Economic Model contemplates the development of initiatives
that will foster private investment in, and private management of,
sectors that are served more efficiently and effectively by the
private enterprise. One of these initiatives has been the adoption of
a new tax code intended to expand the tax base, reduce top personal
and corporate tax rates, and simplify the tax system.
The New Economic Model also seeks to identify and promote areas in
which Puerto Rico can compete more effectively in the global markets.
Tourism has been identified as one such area because of its potential
for job creation and contribution to the gross product. In 1993, a new
Tourism Incentives Act and a Tourism Development Fund were implemented
in order to provide special tax incentives and financing for the
development of new hotel projects and the tourism industry. As a
result of these initiatives, new hotels have been constructed or are
under construction which have increased the number of hotel rooms on
the island from 8,415 in fiscal 1992 to 10,345 in fiscal 1996 and to
12,250 by the end of fiscal 1997.
The New Economic Model also seeks to reduce the size of the
government's direct contribution to gross domestic product. As part of
this goal the government has transferred certain governmental
operations and sold a number of its assets to private parties. Among
these are: (i) the sale of the assets of the Puerto Rico Maritime
Authority; (ii) the execution of a five-year management agreement for
the operation and management of the Aqueducts and Sewer Authority by a
private company; (iii) the execution by the Aqueducts and Sewer
Authority of a construction and operating agreement with a private
consortium for the design, construction, and operation of an
approximately 75 million gallon per day water pipeline to the San Juan
metropolitan area from the Dos Bocas reservoir in Utuado; and (iv) the
execution by the Electric Power Authority of power purchase contracts
with private power producers under which two cogeneration plants (with
a total capacity of 800 megawatts) will be constructed.
As part of the government's program to facilitate the provision of
private health services, in 1994 a new health insurance program was
started in the Fajardo region to provide qualifying Puerto Rico
residents with comprehensive health insurance coverage. In conjunction
with this program certain public health facilities are being
privatized. The administration's goal is to provide universal health
insurance for such qualifying residents. The total cost of this
program will depend on the number of municipalities included and the
total number of participants. As of June 30, 1996, over 760,000
persons were participating in the program at an annual cost to the
General Fund of approximately $296 million.
One of the factors assisting the development of the manufacturing
sector in Puerto Rico has been the federal and Commonwealth tax
incentives available, most notably section 936 of the Internal Revenue
Code of 1986, as amended ("Section 936") and the Commonwealth's
Industrial Incentives Program. The Industrial Incentives Program,
through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from
municipal license taxes during a 10, 15, 20, or 25 year period
depending on location.
For many years, United States companies operating in Puerto Rico
enjoyed a special tax credit that was available under Section 936 of
the Code. Originally, the credit provided an effective 100% federal
tax exemption for operating and qualifying investment income from
Puerto Rico sources. Amendments to Section 936 made in 1993 (the "1993
Amendments") instituted two alternative methods for calculating the
tax credit and limited the amount of the credit that a qualifying
company could claim. These limitations are based on a percentage of
qualifying income (the "percentage of income limitation") and on
qualifying expenditures on wages and other wage related benefits (the
"economic activity limitation", also known as the "wage credit
limitation"). As a result of amendments incorporated in the Small
Business Job Protection Act of 1996 enacted by the United States
Congress and signed into law by President Clinton on August 20, 1996
(the "1996 Amendments"), as described below the tax credit is now
being phased out over a ten-year period for existing claimants and is
no longer available for corporations that establish operations in
Puerto Rico after October 13, 1995 (including existing Section 936
Corporations (as defined below) to the extent substantially new
operations are established in Puerto Rico). The 1996 Amendments also
moved the credit based on the economic activity limitation to Section
30A of the Code and phased it out over 10 years. In addition, the 1996
Amendments eliminated the credit previously available for income
derived from certain qualified investments in Puerto Rico. The Section
30A Credit and the remaining Section 936 credit are discussed below.
SECTION 30A. The 1996 Amendments added a new Section 30A to the Code.
Section 30A permits a "qualifying domestic corporation" ("QDC") that
meets certain gross income tests (which are similar to the 80% and 75%
gross income tests of Section 936 of the Code discussed below) to
claim a credit (the "Section 30A Credit") against the federal income
tax imposed on taxable income derived from sources outside the United
States from the active conduct of a trade or business in Puerto Rico
or from the sale of substantially all the assets used in such business
("possession income").
A QDC is a United States corporation which (i) was actively conducting
a trade or business in Puerto Rico on October 13, 1995, (ii) had a
Section 936 election in effect for its taxable year that included
October 13, 1995, (iii) does not have in effect an election to use the
percentage limitation of Section 936(a)(4)(B) of the Code, and (iv)
does not add a "substantial new line of business."
The Section 30A Credit is limited to the sum of (i) 60% of qualified
possession wages as defined in the Code, which includes wages up to
85% of the maximum earnings subject to the OASDI portion of Social
Security taxes plus an allowance for fringe benefits of 15% of
qualified possession wages, (ii) a specified percentage of
depreciation deductions ranging between 15% and 65%, based on the
class life of tangible property, and (iii) a portion of Puerto Rico
income taxes paid by the QDC, up to a 9% effective tax rate (but only
if the QDC does not elect the profit-split method for allocating
income from intangible property).
A QDC electing Section 30A of the code may compute the amount of its
active business income, eligible for the Section 30A Credit, by using
either the cost sharing formula, the profit-split formula, or the
cost-plus formula, under the same rules and guidelines prescribed for
such formulas as provided under Section 936 (see discussion below). To
be eligible for the first two formulas, the QDC must have a
significant presence in Puerto Rico.
In the case of taxable years beginning after December 31, 2001, the
amount of possession income that would qualify for the Section 30A
Credit would be subject to a cap based on the QDC's possession income
for an average adjusted base period ending before October 14, 1995.
Section 30A applies only to taxable years beginning after December 31,
1995 and before January 1, 2006.
SECTION 936. Under Section 936 of the Code, as amended by the 1996
Amendments, and as an alternative to the Section 30A Credit, United
States corporations that meet certain requirements and elect its
application ("Section 936 Corporations") are entitled to credit
against their United States corporate income tax, the portion of such
tax attributable to income derived from the active conduct of a trade
or business within Puerto Rico ("active business income") and from the
sale or exchange of substantially all assets used in the active
conduct of such trade or business. To qualify under Section 936 in any
given taxable year, a corporation must derive for the three-year
period immediately preceding the end of such taxable year, (i) 80% or
more of its gross income from sources within Puerto Rico, and (ii) 75%
or more of its gross income from the active conduct of a trade or
business in Puerto Rico.
Under Section 936, a Section 936 Corporation may elect to compute its
active business income, eligible for the Section 936 credit, under one
of three formulas: (A) a cost-sharing formula, whereby it is allowed
to claim all profits attributable to manufacturing intangibles, and
other functions carried out in Puerto Rico, provided it contributes to
the research and development expenses of its affiliated group or pays
certain royalties; (B) a profit-split formula, whereby it is allowed
to claim 50% of the net income of its affiliated group from the sale
of products manufactured in Puerto Rico; or (C) a cost-plus formula,
whereby it is allowed to claim a reasonable profit on the
manufacturing costs incurred in Puerto Rico. To be eligible for the
first two formulas, the Section 936 Corporation must have a
significant business presence in Puerto Rico for purposes of the
Section 936 rules.
As a result of the 1993 Amendments and the 1996 Amendments, the
Section 936 credit is only available to companies that elect the
percentage of income limitation and is limited in amount to 40% of the
credit allowable prior to the 1993 Amendments, subject to a five-year
phase-in period from 1994 to 1998 during which period the percentage
of the allowable credit is reduced from 60% to 40%.
In the case of taxable years beginning on or after 1998, the
possession income subject to the 936 credit will be subject to a cap
based on the Section 936 Corporation's possession income for an
average adjusted base period ending on October 14, 1995. The 936
credit is eliminated for taxable years beginning in 2006.
OUTLOOK. It is not possible at this time to determine the long-term
effect on the Puerto Rico economy of the enactment of the 936
Amendments. The Government of Puerto Rico does not believe there will
be short-term or medium-term material adverse effects on Puerto Rico's
economy as a result of the enactment of the 1996 Amendments. The
Government of Puerto Rico further believes that during the phase-out
period sufficient time exists to implement additional incentive
programs to safeguard Puerto Rico's competitive position.
Additionally, the Governor intends to propose a new federal incentive
program similar to what is now provided under Section 30A. Such
program would provide U.S. companies a tax credit based on qualifying
wages paid, other wage related expenses such as fringe benefits,
depreciation expenses for certain tangible assets, and research and
development expenses, and would restore the credit granted to passive
income under Section 936 prior to its repeal by the 1996 Amendments.
Under the Governor's proposal, the credit granted to qualifying
companies would continue in effect until Puerto Rico shows, among
other things, substantial economic improvements in terms of certain
economic parameters.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. If FMR grants investment management authority to
the sub-advisers (see the section entitled "Management
Contract s "), the sub-advisers are authorized to place orders
for the purchase and sale of portfolio securities, and will do so in
accordance with the policies described below. FMR is also responsible
for the placement of transaction orders for other investment companies
and accounts for which it or its affiliates act as investment adviser.
In selecting broker-dealers, subject to applicable limitations of the
federal securities laws, FMR considers various relevant factors,
including, but not limited to: the size and type of the transaction;
the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability,
and financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; the reasonableness
of any commissions; and for equity funds arrangements for payment of
fund expenses. Generally, commissions for investments traded on
foreign exchanges will be higher than for investments traded on U.S.
exchanges and may not be subject to negotiation.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts
over which FMR or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; and
the availability of securities or the purchasers or sellers of
securities. In addition, such broker-dealers may furnish analyses and
reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; effect
securities transactions, and perform functions incidental thereto
(such as clearance and settlement). The selection of such
broker-dealers generally is made by FMR (to the extent possible
consistent with execution considerations) in accordance with a ranking
of broker-dealers determined periodically by FMR's investment staff
(for equity funds), and is based upon the quality of research and
execution services provided.
The receipt of research from broker-dealers that execute transactions
on behalf of the funds may be useful to FMR in rendering investment
management services to the funds or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to the funds. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause a fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided
by such executing broker-dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to the funds and its
other clients. In reaching this determination, FMR will not attempt to
place a specific dollar value on the brokerage and research services
provided, or to determine what portion of the compensation should be
related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the funds or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC) and Fidelity Brokerage
Services (FBS), indirect subsidiaries of FMR Corp., if the commissions
are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. From
September 1992 through December 1994, FBS operated under the name
Fidelity Brokerage Services Limited (FBSL). As of January 1995, FBSL
was converted to an unlimited liability company and assumed the name
FBS.
FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer
allocates a portion of the commissions paid by each fund toward
payment of the fund's expenses, such as transfer agent fees or
custodian fees. The transaction quality must, however, be comparable
to those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the Board
of Trustees has authorized NFSC to execute portfolio transactions on
national securities exchanges in accordance with approved procedures
and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the funds and review the commissions paid by
each fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For Mortgage Securities, the investment activities described herein
are likely to result in the fund engaging in a considerable amount of
trading of securities held for less than one year. Accordingly, it can
be expected that the fund will have a higher turnover rate, and thus a
higher incidence of short-term capital gains taxable as ordinary
income, than might be expected from investment companies that invest
substantially all of their funds on a long-term basis.
For the fiscal period s ended 1997 and 1996, Mortgage
Securities portfolio turnover rate was 149 % and 221%
respectively . For the fiscal periods ended 1995 and 1996,
respectively, each fund's portfolio turnover rates are shown in the
chart below. Because a high turnover rate increases transaction costs
and may increase taxable gains, FMR carefully weighs the anticipated
benefits of short-term investing against these consequences. An
increased turnover rate may be due to a greater volume of shareholder
purchase or redemption orders, short-term interest rate volatility and
other special market conditions.
FUND FISCAL PERIOD ENDED 1995 1996
TechnoQuant Growth November 30 n/a >200%*
Overseas October 31 47% 82%
Mid Cap November 30 n/a 101%**
Equity Growth November 30 97% 76%
Growth Opportunities October 31 39% 33%
Strategic Opportunities December 31 142% 151%
Large Cap November 30 n/a 59%**
Growth & Income November 30 n/a <200%*
Equity Income November 30 80% 78%
Balanced October 31 297% 223%
Emerging Markets Income December 31 305% 410%
High Yield October 31 112% 121%
Strategic Income December 31 193% 119%
Government Investment October 31 261% 153%
Intermediate Bond November 30 189% 200%
Short Fixed-Income October 31 179% 124%
High Income Municipal October 31 37% 49%
Municipal Bond December 31 72% 35%
Intermediate Municipal Income November 30 53% 35%
Short-Intermediate Municipal Income November 30 80% 62%
New York Municipal Income October 31 0% 17%
California Municipal Income October 31 n/a 21%**
* Estimated 1997 turnover rate
** Annualized
The following tables show the brokerage commissions paid by Overseas,
Mid Cap, Equity Growth, Growth Opportunities, Strategic Opportunities,
Large Cap, Equity Income, Balanced, Emerging Markets Income, High
Yield, and Strategic Income. The first table shows the total amount of
brokerage commissions paid by each fund and the total amount of
brokerage commissions paid to NFSC and FBS (formerly FBSL) for the
past three fiscal years. The second table shows the percentage of
aggregate brokerage commissions paid to and the percentage of the
aggregate dollar amount of transactions for which the fund paid
brokerage commissions effected through NFSC and FBS for the fiscal
year ended 1996. The third table shows the amount of brokerage
commissions paid to firms providing research and the approximate
dollar amount of the transactions on which brokerage commissions were
paid for the fiscal year ended 1996. Each of these funds pays both
commissions and spreads in connection with the placement of portfolio
transactions; NFSC and FBS are paid on a commission basis. The
difference between the percentage of brokerage commissions paid to and
the percentage of the dollar amount of transactions effected through
NFSC is a result of the low commission rates charged by NFSC. The
other funds paid no brokerage commissions for the fiscal years ended
1994 through 1996. M ortgage Sec urities paid no brokerage
commissions for the fiscal year ended 1997 , 1996 and 1995 .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FISCAL PERIOD TOTAL TO NFSC TO FBS
ENDED AMOUNT PAID
OVERSEAS October 31
1996 $ 2,828,416 $ 15,499 $ 169,534
1995 1,420,464 5,926 142,450
1994 1,601,660 685 0
MID CAP November 30
1996 280,816 72,019 0
EQUITY GROWTH November 30
1996 3,252,297 820,661 9,780
1995 2,185,589 862,434 2,034
1994 2,086,370 729,903 0
GROWTH OPPORTUNITIES October 31
1996 6,894,871 1,513,633 74,768
1995 6,189,975 1,793,388 9,682
1994 3,589,080 1,368,574 0
STRATEGIC OPPORTUNITIES December 31
1996 1,107,012 257,886 0
1995 1,138,485 217,580 0
10/1/94-12/31/94 403,617 70,465 96
10/1/93-9/30/94 1,166,854 151,233 0
LARGE CAP November 30
1996 31,692 8,248 0
EQUITY INCOME November 30
1996 2,634,183 685,839 0
1995 1,410,440 549,549 7,528
1994 827,499 290,182 0
BALANCED October 31
1996 7,090,976 1,476,330 61,240
1995 8,952,888 2,249,157 122,777
1994 7,338,038 1,104,577 0
EMERGING MARKETS INCOME December 31
1996 0 0 0
1995 11,820 0 0
1994 0 0 0
HIGH YIELD October 31
1996 139,187 1,507 0
1995 123,145 3,958 0
1994 0 0 0
STRATEGIC INCOME December 31
1996 0 0 0
1995 152 0 0
1994 0 0 0
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FISCAL PERIOD % OF % OF % OF % OF
ENDED 1996 COMMISSIONS TRANSACTIONS COMMISSIONS TRANSACTIONS
PAID TO NFSC EFFECTED THROUGH PAID TO FBS EFFECTED THROUGH
NFSC FBS
OVERSEAS October 31 0.55% 1.96% 5.99% 7.99%
MID CAP November 30 25.68% 35.14% 0.00% 0.00%
EQUITY GROWTH November 30 25.24% 35.56% 0.30% 0.15%
GROWTH OPPORTUNITIES October 31 21.96% 32.76% 1.08% 0.62%
STRATEGIC OPPORTUNITIES December 31 23.30% 30.55% 0.00% 0.00%
LARGE CAP November 30 26.02% 37.32% 0.00% 0.00%
EQUITY INCOME November 30 26.03% 40.25% 0.00% 0.00%
BALANCED October 31 20.82% 32.90% 0.86% 0.61%
EMERGING MARKETS INCOME December 31 0.00% 0.00% 0.00% 0.00%
HIGH YIELD October 31 1.08% 1.98% 0.00% 0.00%
STRATEGIC INCOME December 31 0.00% 0.00% 0.00% 0.00%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FISCAL PERIOD AMOUNT PAID TO FIRMS TOTAL AMOUNT OF
ENDED 1996 PROVIDING RESEARCH* TRANSACTIONS ON WHICH
COMMISSIONS WERE PAID
OVERSEAS October 31 $ 2,431,734 $ 1,240,865,595
MID CAP November 30 161,428 100,269,755
EQUITY GROWTH November 30 2,246,930 2,069,366,778
GROWTH OPPORTUNITIES October 31 6,363,933 6,472,339,765
STRATEGIC OPPORTUNITIES December 31 870,328 995,680,016
LARGE CAP November 30 15,483 13,093,107
EQUITY INCOME November 30 1,654,417 1,285,537,976
BALANCED October 31 6,711,713 5,583,982,528
EMERGING MARKETS INCOME December 31 0 0
HIGH YIELD October 31 122,322 42,560,879
STRATEGIC INCOME December 31 0 0
</TABLE>
* The provision of research services was not necessarily a factor in
the placement of all this business with such firms.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR, investment decisions for
each fund are made independently from those of other funds managed by
FMR or accounts managed by FMR affiliates. It sometimes happens that
the same security is held in the portfolio of more than one of these
funds or accounts. Simultaneous transactions are inevitable when
several funds and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
FSC normally determines each class's net asset value per share (NAV)
as of the close of the New York Stock Exchange (NYSE) (normally 4:00
p.m. Eastern time). The valuation of portfolio securities is
determined as of this time for the purpose of computing each class's
NAV.
GROWTH AND GROWTH & INCOME FUNDS. Portfolio securities are valued by
various methods depending on the primary market or exchange on which
they trade. Most equity securities for which the primary market is the
United States are valued at last sale price or, if no sale has
occurred, at the closing bid price. Most equity securities for which
the primary market is outside the United States are valued using the
official closing price or the last sale price in the principal market
in which they are traded. If the last sale price (on the local
exchange) is unavailable, the last evaluated quote or last bid price
normally is used.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC gathers all exchange rates daily at the
close of the NYSE using the last quoted price on the local currency
and then translates the value of foreign securities from their local
currencies into U.S. dollars. Any changes in the value of forward
contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of NAV. If an extraordinary event that is
expected to materially affect the value of a portfolio security occurs
after the close of an exchange on which that security is traded, then
that security will be valued as determined in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value. In addition, securities and other assets for which
there is no readily available market value may be valued in good faith
by a committee appointed by the Board of Trustees. The procedures set
forth above need not be used to determine the value of the securities
owned by a fund if, in the opinion of a committee appointed by the
Board of Trustees, some other method would more accurately reflect the
fair market value of such securities.
TAXABLE BOND FUNDS. Portfolio securities are valued by various methods
depending on the primary market or exchange on which they trade.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets.
Or, fixed-income securities and convertible securities may be valued
on the basis of information furnished by a pricing service that uses a
valuation matrix which incorporates both dealer-supplied valuations
and electronic data processing techniques. Use of pricing services has
been approved by the Board of Trustees. A number of pricing services
are available, and the funds may use various pricing services or
discontinue the use of any pricing service.
Most equity securities for which the primary market is the United
States are valued at last sale price or, if no sale has occurred, at
the closing bid price. Most equity securities for which the primary
market is outside the United States are valued using the official
closing price or the last sale price in the principal market in which
they are traded. If the last sale price (on the local exchange) is
unavailable, the last evaluated quote or last bid price normally is
used.
Futures contracts and options are valued on the basis of market
quotations, if available.
Foreign securities are valued based on prices furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC gathers all exchange rates daily at the
close of the NYSE using the last quoted price on the local currency
and then translates the value of foreign securities from their local
currencies into U.S. dollars. Any changes in the value of forward
contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of NAV. If an extraordinary event that is
expected to materially affect the value of a portfolio security occurs
after the close of an exchange on which that security is traded, then
that security will be valued as determined in good faith by a
committee appointed by the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which market quotations and information furnished by a pricing
service are not readily available are valued either at amortized cost
or at original cost plus accrued interest, both of which approximate
current value. In addition, securities and other assets for which
there is no readily available market value may be valued in good faith
by a committee appointed by the Board of Trustees. The procedures set
forth above need not be used to determine the value of the securities
owned by a fund if, in the opinion of a committee appointed by the
Board of Trustees, some other method would more accurately reflect the
fair market value of such securities.
MUNICIPAL BOND FUNDS. Portfolio securities are valued by various
methods. If quotations are not available, fixed-income securities are
usually valued on the basis of information furnished by a pricing
service that uses a valuation matrix which incorporates both
dealer-supplied valuations and electronic data processing techniques.
Use of pricing services has been approved by the Board of Trustees. A
number of pricing services are available, and the funds may use
various pricing services or discontinue the use of any pricing
service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Securities and other assets for which there is no readily available
market value are valued in good faith by a committee appointed by the
Board of Trustees. The procedures set forth above need not be used to
determine the value of the securities owned by a fund if, in the
opinion of a committee appointed by the Board of Trustees, some other
method would more accurately reflect the fair market value of such
securities.
PERFORMANCE
Each class of shares may quote performance in various ways. All
performance information supplied by the funds in advertising is
historical and is not intended to indicate future returns. Share
price, yield, and total return fluctuate in response to market
conditions and other factors, and the value of shares when redeemed
may be more or less than their original cost.
YIELD CALCULATIONS. Yields for a class are computed by dividing the
class's pro rata share of the applicable interest and dividend income,
if any, for a given 30-day or one-month period, net of expenses, by
the average number of shares of that class entitled to receive
distributions during the period, dividing this figure by the class's
net asset value (NAV) or offering price, as appropriate, at the end of
the period, and annualizing the result (assuming compounding of
income) in order to arrive at an annual percentage rate. Income is
calculated for purposes of yield quotations in accordance with
standardized methods applicable to all stock and bond funds. Dividends
from equity investments are treated as if they were accrued on a daily
basis, solely for the purposes of yield calculations. In general,
interest income is reduced with respect to bonds trading at a premium
over their par value by subtracting a portion of the premium from
income on a daily basis, and is increased with respect to bonds
trading at a discount by adding a portion of the discount to daily
income. For a fund's investments denominated in foreign currencies,
income and expenses are calculated first in their respective
currencies, and are then converted to U.S. dollars, either when they
are actually converted or at the end of the 30-day or one month
period, whichever is earlier. Capital gains and losses generally are
excluded from the calculation as are gains and losses from currency
exchange rate fluctuations. Income is adjusted to reflect gains and
losses from principal repayments received by a fund with respect to
mortgage-related securities and other asset-backed securities. Other
capital gains and losses generally are excluded from the calculation.
Income calculated for the purposes of calculating a class's yield
differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, a class's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
In calculating a class's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing a class's yield.
Yield information may be useful in reviewing a class's performance and
in providing a basis for comparison with other investment
alternatives. However, each class's yield fluctuates, unlike
investments that pay a fixed interest rate over a stated period of
time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest
rates, a class's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates, the class's
yield will tend to be somewhat lower. Also, when interest rates are
falling, the inflow of net new money to a fund from the continuous
sale of its shares will likely be invested in instruments producing
lower yields than the balance of the fund's holdings, thereby reducing
the class's current yield. In periods of rising interest rates, the
opposite can be expected to occur.
A class's tax-equivalent yield is the rate an investor would have to
earn from a fully taxable investment before taxes to equal the class's
tax-free yield. Tax-equivalent yields are calculated by dividing a
class's yield by the result of one minus a stated federal or combined
federal and state and, if applicable, city income tax rate. If only a
portion of a class's yield is tax-exempt, only that portion is
adjusted in the calculation.
The following tables show the effect of a shareholder's tax status on
effective yield under federal and, where applicable, state income tax
laws for 1997. The second table shows the approximate yield a taxable
security must provide at various income brackets to produce after-tax
yields equivalent to those of hypothetical tax-exempt obligations
yielding from 2.00% to 8.00%. Of course, no assurance can be given
that a class will achieve any specific tax-exempt yield. While the
municipal funds invest principally in obligations whose interest is
exempt from federal or from federal and state income tax, other income
received by the funds may be taxable. The tables do not take into
account local taxes, if any, payable on fund distributions.
1997 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
If individual tax-exempt yield is:
2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable Income* Federal
Marginal
Single Return Joint Return Rate** Then taxable equivalent yield is:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 24,650 $ 0 - $ 41,200 15.0% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24% 9.41%
$ 24,651 - $ 59,750 $ 41,201 - $ 99,600 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11%
$ 59,751 - $ 124,650 $ 99,601 - $ 151,750 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14% 11.59%
$ 124,651 - $ 271,050 $ 151,751 - $ 271,050 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50%
$ 271,051 - + $ 271,051 - + 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% 13.25%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
A federally tax-exempt fund may invest a portion of its assets in
obligations that are subject to federal income tax. When a fund
invests in these obligations, its tax-equivalent yields will be lower.
In the table above, tax-equivalent yields are calculated assuming
investments are 100% federally tax-free.
NEW YORK MUNICIPAL INCOME ONLY
Use the first table to find your approximate effective tax bracket
taking into account federal, state, and city taxes for 1997.
1997 TAX RATES
Taxable Income*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Single Return Joint Return Federal New York New York Combined Combined
Marginal State City Federal and State Federal, State, and
Rate Marginal Marginal Effective Local
Rate Rate Rate** Effective Rate**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 24,651 - $ 25,000 $ 41,201 - $ 45,000 28.0% 6.85% 3.76% 32.93% 36.02%
$ 25,001 - $ 50,000 $ 45,001 - $ 90,000 28.0% 6.85% 3.82% 32.93% 36.07%
$ 50,001 - $ 59,750 $ 90,001 - $ 99,600 28.0% 6.85% 3.88% 32.93% 36.12%
$ 59,751 - $ 124,650 $ 99,601 - $ 151,750 31.0% 6.85% 3.88% 35.73% 38.78%
$ 124,651 - $ 271,050 $ 151,751 - $ 271,050 36.0% 6.85% 3.88% 40.38% 43.21%
$ 271,051 - + $ 271,051 - + 39.6% 6.85% 3.88% 43.74% 46.41%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
Having determined your effective tax bracket, use the appropriate
table below to determine the tax-equivalent yield for a given tax-free
yield.
NEW YORK CITY RESIDENTS - TRIPLE TAXES - 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
If your combined federal, state, and local effective tax rate in 1997 is:
36.02% 36.07% 36.12% 38.78% 43.21% 46.41%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
To match these Your taxable investment would have to earn the following yield:
tax-free yields:
</TABLE>
2% 3.13% 3.13% 3.13% 3.27% 3.52% 3.73%
3% 4.69% 4.69% 4.70% 4.90% 5.28% 5.60%
4% 6.25% 6.26% 6.26% 6.53% 7.04% 7.46%
5% 7.81% 7.82% 7.83% 8.17% 8.81% 9.33%
6% 9.38% 9.38% 9.39% 9.80% 10.57% 11.20%
7% 10.94% 10.95% 10.96% 11.43% 12.33% 13.06%
8% 12.50% 12.51% 12.52% 13.07% 14.09% 14.93%
9% 14.07% 14.08% 14.09% 14.70% 15.85% 16.79%
10% 15.63% 15.64% 15.65% 16.33% 17.61% 18.66%
11% 17.19% 17.21% 17.22% 17.97% 19.37% 20.53%
NEW YORK STATE RESIDENTS (OUTSIDE NEW YORK CITY) - DOUBLE TAXES - 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
If your combined federal and state effective tax rate in 1997 is:
32.93% 35.73% 40.38% 43.74%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
To match these Your taxable investment would have to earn the following yield:
tax-free yields:
</TABLE>
2% 2.98% 3.11% 3.35% 3.55%
3% 4.47% 4.67% 5.03% 5.33%
4% 5.96% 6.22% 6.71% 7.11%
5% 7.46% 7.78% 8.39% 8.89%
6% 8.95% 9.34% 10.06% 10.66%
7% 10.44% 10.89% 11.74% 12.44%
8% 11.93% 12.45% 13.42% 14.22%
9% 13.42% 14.00% 15.10% 16.00%
10% 14.91% 15.56% 16.77% 17.77%
11% 16.40% 17.11% 18.45% 19.55%
The fund may invest a portion of its assets in obligations that are
subject to city, state or federal income taxes. When the fund invests
in these obligations, its tax-equivalent yield will be lower. In the
tables above, the tax-equivalent yields are calculated assuming
investments are 100% federally and state tax-free.
CALIFORNIA MUNICIPAL INCOME ONLY
Use the first table to find your approximate effective tax bracket
taking into account federal and state taxes for 1997.
1997 TAX RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Taxable Income* Federal Marginal California State Combined Federal
and State Effective
Single Return Joint Return Rate Marginal Rate Rate**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
$ 0 - $ 4,908 $ 0 - $ 9,816 15.0% 1.0% 15.85%
$ 4,909 - $ 11,632 $ 9,817 - $ 23,264 15.0% 2.0% 16.70%
$ 11,633 - $ 18,357 $ 23,265 - $ 36,714 15.0% 4.0% 18.40%
$ 18,358 - $ 24,650 $ 36,715 - $ 41,200 15.0% 6.0% 20.10%
$ 24,651 - $ 25,484 $ 41,201 - $ 50,968 28.0% 6.0% 32.32%
$ 25,485 - $ 32,207 $ 50,969 - $ 64,414 28.0% 8.0% 33.76%
$ 32,208 - $ 59,750 $ 64,415 - $ 99,600 28.0% 9.3% 34.70%
$ 59,751 - $ 124,650 $ 99,601 - $ 151,750 31.0% 9.3% 37.42%
$ 124,651 - $ 271,050 $ 151,751 - $ 271,050 36.0% 9.3% 41.95%
over $ 271,050 over $ 271,050 39.6% 9.3% 45.22%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
Having determined your effective tax bracket, use the following table
to determine the tax-equivalent yield for a given tax-free
yield.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
If your combined federal and state effective tax rate in 1997 is:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15.85% 16.70% 18.40% 20.10% 32.32% 33.76% 34.70% 37.42% 41.95% 45.22%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
To match Your taxable investment would have to earn the following yield:
these tax-free
yields:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2% 2.38% 2.40% 2.45% 2.50% 2.96% 3.02% 3.06% 3.20% 3.45% 3.65%
3% 3.57% 3.60% 3.68% 3.75% 4.43% 4.53% 4.59% 4.79% 5.17% 5.48%
4% 4.75% 4.80% 4.90% 5.01% 5.91% 6.04% 6.13% 6.39% 6.89% 7.30%
5% 5.94% 6.00% 6.13% 6.26% 7.39% 7.55% 7.66% 7.99% 8.61% 9.13%
6% 7.13% 7.20% 7.35% 7.51% 8.87% 9.06% 9.19% 9.59% 10.34% 10.95%
7% 8.32% 8.40% 8.58% 8.76% 10.34% 10.57% 10.72% 11.19% 12.06% 12.78%
8% 9.51% 9.60% 9.80% 10.01% 11.82% 12.08% 12.25% 12.78% 13.78% 14.60%
9% 10.70% 10.80% 11.03% 11.26% 13.30% 13.59% 13.78% 14.38% 15.50% 16.43%
10% 11.88% 12.00% 12.25% 12.52% 14.78% 15.10% 15.31% 15.98% 17.23% 18.25%
11% 13.07% 13.21% 13.48% 13.77% 16.25% 16.61% 16.84% 17.58% 18.95% 20.08%
</TABLE>
The fund may invest a portion of its assets in obligations that are
subject to state or federal income taxes. When the fund invests in
these obligations, its tax-equivalent yields will be lower. In the
table above, tax-equivalent yields are calculated assuming investments
are 100% federally and state tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of a class's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in a class's
NAV over a stated period. Average annual total returns are calculated
by determining the growth or decline in value of a hypothetical
historical investment in a class over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had
been constant over the period. For example, a cumulative total return
of 100% over ten years would produce an average annual total return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. Average annual total
returns covering periods of less than one year are calculated by
determining a class's total return for the period, extending that
return for a full year (assuming that return remains constant over the
year), and quoting the result as an annual return. While average
annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a class's performance is
not constant over time, but changes from year to year, and that
average annual total returns represent averaged figures as opposed to
the actual year-to-year performance of the class.
In addition to average annual total returns, a class may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions
to total return. Total returns may be quoted on a before-tax or
after-tax basis and may be quoted with or without taking a class's
maximum sales charge into account. Excluding a class's sales charge
from a total return calculation produces a higher total return figure.
Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using a class's NAVs, adjusted
NAVs, and benchmark indices may be used to exhibit performance. An
adjusted NAV includes any distributions paid and reflects all elements
of its return. Unless otherwise indicated, a class's adjusted NAVs are
not adjusted for sales charges, if any.
MOVING AVERAGES. A growth or growth and income fund may illustrate
performance using moving averages. A long-term moving average is the
average of each week's adjusted closing NAV for a specified period. A
short-term moving average is the average of each day's adjusted
closing NAV for a specified period. Moving Average Activity Indicators
combine adjusted closing NAVs from the last business day of each week
with moving averages for a specified period to produce indicators
showing when a NAV has crossed, stayed above, or stayed below its
moving average.
The 13-week and 39-week long-term moving averages are shown below:*
FUND AS OF 13-WEEK 39-WEEK
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Overseas - Class A 4/25/97 $15.56 $15.00
Overseas - Class T 4/25/97 15.66 15.09
Overseas - Class B 4/25/97 15.42 14.88
Overseas - Institutional 4/25/97 15.52 14.94
TechnoQuant Growth - A 6/27/97 9.69 N/A
TechnoQuant Growth - T 6/27/97 9.68 N/A
TechnoQuant Growth - B 6/27/97 9.66 N/A
TechnoQuant Growth - I 6/27/97 9.69 N/A
Mid Cap - Class A 5/30/97 11.42 11.38
Mid Cap - Class T 5/30/97 11.45 11.41
Mid Cap - Class B 5/30/97 11.38 11.35
Mid Cap - Institutional 5/30/97 11.45 11.39
Equity Growth - Class A 5/30/97 43.09 42.47
Equity Growth - Class T 5/30/97 43.32 42.68
Equity Growth - Institutional 5/30/97 43.91 43.21
Growth Opportunities - Class A 4/25/97 36.52 34.63
Growth Opportunities - Class T 4/25/97 36.71 34.82
Growth Opportunities - Institutional 4/25/97 36.67 34.74
Strategic Opportunities - Class A 6/27/97 22.41 21.95
Strategic Opportunities - Class T 6/27/97 22.60 22.13
Strategic Opportunities - Class B 6/27/97 22.21 21.78
Strategic Opportunities - Institutional 6/27/97 22.45 21.99
Strategic Opportunities - Initial 12/97/96 22.60 22.15
Large Cap - Class A 5/30/97 11.81 11.54
Large Cap - Class T 5/30/97 11.82 11.55
Large Cap - Class B 5/30/97 11.74 11.50
Large Cap - Institutional 5/30/97 11.84 11.56
Growth & Income - Class A 6/27/97 10.65 N/A
Growth & Income - Class T 6/27/97 10.63 N/A
Growth & Income - Class B 6/27/97 10.63 N/A
Growth & Income - Class I 6/27/97 10.63 N/A
Equity Income - Class A 5/30/97 22.71 21.89
Equity Income - Class T 5/30/97 22.83 22.00
Equity Income - Class B 5/30/97 22.75 2 1 .95
Equity Income - Institutional 5/30/97 22.99 22.12
Balanced - Class A 4/25/97 16.87 16.10
Balanced - Class T 4/25/97 16.88 16.10
Balanced - Institutional 4/25/97 16.93 16.13
High Yield - Class A 4/25/97 12.02 11.72
High Yield - Class T 4/25/97 12.03 11.72
High Yield - Class B 4/25/97 12.01 11.72
High Yield - Institutional 4/25/97 11.83 11.52
Emerging Markets Income - Class A 6/27/97 12.00 11.47
Emerging Markets Income - Class T 6/27/97 12.00 11.47
Emerging Markets Income - Class B 6/27/97 12.05 11.53
Emerging Markets Income - Institutional 6/27/97 11.94 11.41
Strategic Income - Class A 6/27/97 11.02 10.84
Strategic Income - Class T 6/27/97 11.01 10.84
Strategic Income - Class B 6/27/97 11.04 10.88
Strategic Income - Institutional 6/27/97 11.06 10.88
</TABLE>
* Moving averages are shown for those classes that had commenced
operations prior to January 1, 1997.
The following tables and charts show performance for each class of
shares of each fund. Class A shares have a maximum front-end sales
charge of 5.75 % for TechnoQuant Growth, International
Capital Appreciation Fund, Overseas, Mid Cap, Equity Growth,
Growth Opportunities, Strategic Opportunities, Large Cap, Growth &
Income, Equity Income, and Balanced (the Equity Funds); 4.75 %
for Emerging Markets Income, High Yield, Strategic Income, Mortgage
Securities, Government Investment, High Income Municipal, Municipal
Bond, New York Municipal Income, and California Municipal Income (the
Bond Funds); 3.75% for Intermediate Bond and Intermediate
Municipal Income (the Intermediate-Term Bond Funds); or 1.50% for
Short Fixed-Income and Short-Intermediate Municipal Income (the
Short-Term Bond Funds). Class A shares are also subject to a 12b-1 fee
of 0.25% (Equity Funds), or 0.15% (Bond Funds, Intermediate-Term Bond
Funds, and Short-Term Bond Funds). Class T shares have a maximum
front-end sales charge of 3.50% for the Equity Funds and the Bond
Funds, 2.75% for the Intermediate-Term Bond Funds, or 1.50% for the
Short-Term Bond Funds. Class T shares are also subject to a 12b-1 fee
of 0.50% (the Equity Funds), 0.25% (the Bond Funds and the
Intermediate-Term Bond Funds), or 0.15% (the Short-Term Bond Funds).
Class B shares may be subject to a contingent deferred sales charge
(CDSC) upon redemption: maximum CDSC of 5.00% for the Equity and the
Bond Funds a or a maximum CDSC of 3.00% for the Intermediate-Term Bond
Funds. Class B shares are also subject to a 12b-1 fee of 1.00% (the
Equity Funds) or 0.90% (the Bonds Funds and the Intermediate-Term Bond
Funds). Class C shares that are redeemed within a year of purchase are
subject to a CDSC of 1.00% for all funds (except Strategic
Opportunities, Mortgage Securities, Short Fixed-Income, Municipal
Bond, New York Municipal Income and California Municipal Income).
Class C shares are also subject to a 12b-1 fee of 1.00% for all funds
(except Strategic Opportunities, Mortgage Securities,
Short-Intermediate Municipal Income, Municipal Bond: New York
Municipal Income and California Municipal Income). Institutional Class
shares do not have a sales charge or a 12b-1 fee. Initial Class shares
of Strategic Opportunities have a front-end sales charge of 3.50% and
no 12b-1 fee. Initial Class shares of Mortgage Securities and
Municipal Bond do not have a sales charge or a 12b-1 fee.
HISTORICAL BOND FUND RESULTS. The following tables show yields,
tax-equivalent yields (for municipal funds), and total returns for
each class of each bond fund for the semi-annual period ended April
30, May 31, June 30, and for the fiscal year ended July 31 for
Mortgage Securities and December 31 for Municipal Bond: Initial Class
and Strategic Opportunities: Initial Class, a s indicated below.
The tax-equivalent yield is based on a 36% federal income tax rate for
each municipal fund except New York Municipal Income. The
tax-equivalent yield for New York Municipal Income is based on a
combined effective federal, state, and city income tax rate of 43.41%
and reflects that, as of October 31, 1996, none of the fund's income
was subject to state taxes. Note that each municipal fund may invest
in securities whose income is subject to the federal alternative
minimum tax.
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Cumulative Total
Returns1 Returns1
Fiscal Yield2 Tax One Five Ten Past Six One Five Ten
Period Equiva Year Years Years/ Months Year Years Years/
Ended lent Life of Life of
Yield2 Fund+ Fund+
Emerging Markets
6/30 N/A N/A 33.45% N/A 16.46% 7.61% 33.45% N/A 65.66%
Income - Class A
Emerging Markets
6.85% N/A 35.31% N/A 16.95% 9.11% 35.31% N/A 67.96%
Income - Class T
Emerging Markets
6.33% N/A 34.36% N/A 16.86% 7.63% 34.36% N/A 67.53%
Income - Class B
Emerging Markets
N/A N/A 38.36% N/A 17.49% 11.63% 38.36% N/A 70.53%
Income - Class C
Emerging Markets
7.26% N/A 40.37% N/A 18.23% 13.19% 40.37% N/A 74.14%
Income - Institutional
High Yield - Class A
4/30 N/A N/A 4.22% 10.86% 12.69% -1.63% 4.22% 67.43% 230.29%
High Yield - Class T
7.65% N/A 5.83% 11.20% 12.86% -0.31% 5.83% 70.01% 235.37%
High Yield - Class B
7.28% N/A 4.00% 11.20% 13.00% -1.89% 4.00% 70.06% 239.41%
High Yield - Class C
N/A N/A 7.98% 11.46% 13. 00 % 1.99% 7.98% 72.06% 23 9 .41%
High Yield -
8.30% N/A 9.78% 11.90% 13.22% 3.51% 9.78% 75.47% 246.14%
Institutional
Strategic Income -
6/30 N/A N/A 8.33% N/A 12.60% -0.48% 8.33% N/A 37.23%
Class A
Strategic Income -
6.26% N/A 9.88% N/A 13.20% 0.88% 9.88% N/A 39.20%
Class T
Strategic Income -
5.82% N/A 8.22% N/A 13.08% -0.72% 8.22% N/A 38.82%
Class B
Strategic Income -
N/A N/A 12.22% N/A 13.99% 3.28% 12.22% N/A 41.82%
Class C
Strategic Income -
6.53% N/A 13.97% N/A 14.90% 4.54% 13.97% N/A 44.87%
Institutional
Average Annual Total Cumulative Total
Returns1 Returns1
Fiscal Yield2 Tax One Five Ten Past Six One Five Ten
Period Equiva Year Years Years/ Months Year Years Years/
Ended lent Life of Life of
Yield2 Fund+ Fund+
Mortgage Securities
7/31 N/A N/A 5.01% 6.61% 8.27% 0.0 9 % 5.01% 37.73% 121.29%
- Class A
Mortgage Securities
N/A N/A 6.35% 6.88% 8.40% 1.19% 6.35% 39.48% 124.11%
- Class T
Mortgage Securities
N/A N/A 4.81% 7.27% 8.75% 0.52% 4.81% 42.02% 131.40%
- Class B
Mortgage Securities
N/A N/A 10.22% 7.65% 8.79% 4.87% 10.22% 44.56% 132.27%
- Institutional
Mortgage Securities
N/A N/A 10.34% 7.67% 8.80% 4.99% 10.34% 44.72% 132.53%
- Initial
Government
4/30 N/A N/A 0.84% 5.40% 6.90% -3.64% 0.84% 30.05% 94.89%
Investment - Class A
Government
5.76% N/A 2.04% 5.64% 7.03% -2.53% 2.04% 31.59% 97.20%
Investment - Class T
Government
5.32% N/A 0.20% 5.66% 7.19% -4.20% 0.20% 31.67% 100.26%
Investment - Class B
Government
N/A N/A 4.18% 5.97% 7.19% -0.30% 4.18% 33.63% 100.26%
Investment - Class C
Government
6.25% N/A 6.03% 6.49% 7.45% 1.16% 6.03% 36.95% 105.23%
Investment -
Institutional
Intermediate Bond -
5/31 5.63% N/A 2.37% 5.48% 7.50% 2.72% 2.37% 30.60% 106.03%
Class A
Intermediate Bond -
5.61% N/A 3.55% 5.73% 7.62% -1.82% 3.55% 32.11% 108.42%
Class T
Intermediate Bond -
5.07% N/A 2.86% 5.84% 7.68% -2.24% 2.86% 32.85% 109.58%
Class B
Intermediate Bond -
N/A N/A 4.86% 5.84% 7.68% -0.30% 4.86% 32.85% 109.58%
Class C
Intermediate Bond -
6.06% N/A 6.89% 6.70% 8.11% 1.10% 6.89% 38.31% 118.19%
Institutional
Short Fixed-Income
4/30 5.84% N/A 3.74% 4.92% 6.78% 0.27% 3.74% 27.16% 88.10%
- Class A
Short Fixed-Income
5.83% N/A 4.23% 5.02% 6.83% 0.59% 4.23% 27.76% 88.99%
- Class T
Short Fixed-Income
N/A N/A 4.82% 5.34% 7.00% 1.12% 4.82% 29.71% 91.87%
- Class C
Short Fixed-Income
6.08% N/A 5.82% 5.36% 7.01% 2.20% 5.82% 29.84% 92.06%
- Institutional
High Income
4/30 4.68% 7.31% 1.31% 5.46% 8.34% -2.41% 1.31% 30.43% 116.31%
Municipal - Class A
High Income
4.66% 7.28% 2.68% 5.74% 8.49% -1.32% 2.68% 32.20% 119.23%
Municipal - Class T
High Income
4.13% 6.45% 0.64% 5.67% 8.63% -3.10% 0.64% 31.78% 121.85%
Municipal - Class B
High Income
N/A N/A 4.64% 5.99% 8.63% 0.87% 4.64% 33.78% 121.85%
Municipal - Class C
High Income
5.47% 8.55% 6.46% 6.55% 8.92% 2.70% 6.46% 37.32% 127.72%
Municipal -
Institutional
Average Annual Total Cumulative Total
Returns1 Returns1
Fiscal Yield2 Tax One Five Ten Past Six One Five Ten
Period Equiva Year Years Years/ Months Year Years Years/
Ended lent Life of Life of
Yield2 Fund+ Fund+
Municipal Bond -
6/30 4.08% 6.38% 2.64% 5.42% 7.32% -1.99% 2.64% 30.17% 102.63%
Class A
Municipal Bond -
4.02% 6.28% 3.84% 5.66% 7.44% -0.85% 3.84% 31.70% 105.00%
Class T
Municipal Bond -
3.50% 5.47% 2.10% 6.01% 7.77% -2.43% 2.10% 33.90% 111.43%
Class B
Municipal Bond -
4.42% 6.91% 7.89% 6.47% 7.85% 2.88% 7.89% 36.83% 112.99%
Institutional
Municipal Bond -
12/31 4.79% 7.48% 4.12% 6.77% 7.24% N/A 4.12 % 38.78 % 101.11 %
Initial
Intermediate
5/31 4.12% 6.44% 2.66% 4.69% 6.11% -2.42% 2.66% 25.75% 80.94%
Municipal Income -
Class A
Intermediate
4.04% 6.31% 3.78% 4.92% 6.22% -1.36% 3.78% 27.12% 82.92%
Municipal Income -
Class T
Intermediate
3.51% 5.48% 3.04% 5.04% 6.29% -1.96% 3.04% 27.85% 83.97%
Municipal Income -
Class B
Intermediate
N/A N/A 5.04% 5.04% 6.29% 0.01% 5.04% 27.85% 83.97%
Municipal Income -
Class C
Intermediate
4.40% 6.88% 7.09% 5.76% 6.65% 1.56% 7.09% 32.33% 90.41%
Municipal Income -
Institutional
Short-Intermediate
5/31 3.65% 5.70% 3.10% N/A 3.1% -0.20% 3.10% N/A 13.88%
Municipal Income -
Class A
Short-Intermediate
3.76% 5.88% 3.11% N/A 4.13% -0.21% 3.11% N/A 13.89%
Municipal Income -
Class T
Short-Intermediate
3.98% 6.22% 4.72% N/A 4.67% 1.38% 4.72% N/A 15.80%
Municipal Income -
Institutional
New York Municipal
4/30 4.47% 7.82% 1.03% N/A 3.90% -3.28% 1.03% N/A 6.71%
Income - Class A
New York Municipal
4.41% 7.72% 2.33% N/A 4.69% -1.97% 2.33% N/A 8.08%
Income - Class T
New York Municipal
3 .93% 6.88% 0.47% N/A 3.96% -3.59% 0.47% N/A 6.81%
Income - Class B
New York Municipal
4.82% 8. 44 % 6.29% N/A 7.25% 1.91% 6.29% N/A 12.61%
Income - Institutional
California Municipal
4/30 N/A N/A 1.20% N/A -1.26% -3.40% 1.20% N/A -1.50%
Income - Class A
California Municipal
4.27% 7.36% 2.59% N/A -0.12% 2.09% 2.59% N/A -0.14%
Income - Class T
California Municipal
3.79% 6.53% 0.51% N/A -1.19% 3.83% 0.51% N/A -1.43%
Income - Class B
California Municipal
4.70% 8.10% 6.50% N/A 2.91% 1.18% 6.50% N/A 3.48%
Income - Institutional
</TABLE>
+ Life of fund figures are from commencement of operations (March
10, 1994 for Emerging Markets Income; October 31, 1994 for Strategic
Income; September 16, 1987 for Short Fixed-Income and High Income
Municipal; March 16, 1994 for Short-Intermediate Municipal Income;
August 21, 1995 for New York Municipal Income; and February 20, 1996
for California Municipal Income) through the semiannual periods ended
1997.
1 Average annual and cumulative total returns for Class A include
the effect of paying Class A's maximum front-end sales charge of 4.75%
for Bond Funds, 3.75% for Intermediate-Term Bond Funds, and 1.50% for
Short-Term Bond Funds.
Average annual and cumulative total returns for Class T include
the effect of paying Class T's maximum front-end sales charge of 3.50%
for Bond Funds; 2.75% for Intermediate-Term Bond Funds; and 1.50% for
Short-Term Bond Funds.
Average annual and cumulative total returns for Class B include
the effect of paying Class B's CDSC upon redemption based on the
following schedule: for Bond Funds for periods less than one year, 5%;
one year to less than two years, 4%; two years to less than four
years, 3%; four years to less than five years, 2%; five years to less
than six years, 1%; six years or greater, 0%; for Intermediate-Term
Bond Funds for periods less than one year, 3%; one year to less than
two years, 2%; two years to less than three years, 1%; three years or
greater, 0%.
Average annual and cumulative total returns for Class C include
the effect of paying Class C's CDSC of 1% for shares redeemed within
one year of purchase.
Initial offering of Class A for each fund (except Mortgage
Securities and Municipal Bond) took place on September 3, 1996. Class
A returns prior to September 3, 1996 (except for Intermediate Bond and
Intermediate Municipal Income) are those of Class T, which reflect a
12b-1 fee of 0.15%. For Intermediate Bond, Intermediate Municipal
Income, and Emerging Markets Income returns from September 3, 1996
through September 10, 1992 are those of Class T which reflect a 12b-1
fee of 0.25%. Class A returns prior to September 10, 1992 are those of
Institutional Class, which has no 12b-1 fee. If Class A's 12b-1 fee
had been reflected, total returns prior to September 3, 1996 through
September 10, 1992 would have been higher and total returns prior to
September 10, 1992 would have been lower.
Initial offering of Class A, Class T, and Class B of Mortgage
Securities took place on March 3, 1997. Class A, Class T and Class B
returns prior to March 3, 1997 are those of Initial Class which has no
12b-1 fee. If Class A's, Class T's and Class B's respective 12b-1 fees
had been reflected, total returns prior to March 3, 1997 would have
been lower.
Initial offering of Class A of Municipal Bond took place on March
3, 1997. Class A returns prior to March 3, 1997 through July 1, 1996
are those of Class T which reflect a 12b-1 fee of 0.25%. Class A
returns prior to July 1, 1996 are those of Initial Class which has no
12b-1 fee. If Class A's 12b-1 fee had been reflected, total returns
prior to March 3, 1997 through July 1, 1996 would have been higher and
total returns prior to July 1, 1996 would have been lower.
Initial offering of Class T and Class B of Municipal Bond took
place on July 1, 1996. Class T and Class B returns prior to July 1,
1996 are those of Initial Class which had no 12b-1 fee. If Class T's
and Class B's respective 12b-1 fees had been reflected, total returns
prior to July 1, 1996 would have been lower.
Initial offering of Class T of Intermediate Bond and Intermediate
Municipal Income took place on September 10, 1992. Class T returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class T's 12b-1 fee had been reflected, total returns
prior to September 10, 1992 would have been lower.
Initial offering of Class B of Intermediate Bond and Intermediate
Municipal Income took place on June 30, 1994. Class B returns prior to
June 30, 1994 through September 10, 1992 are those of Class T which
reflect a 12b-1 fee of 0.25%. Class B returns prior to September 10,
1992 are those of Institutional Class which has no 12b-1 fee. If Class
B's 12b-1 fee had been reflected, total returns prior to June 30, 1994
would have been lower.
Initial offering of Class B of High Yield, Government Investment,
High Income Municipal and Emerging Markets Income took place on June
30, 1994. Class B returns prior to June 30, 1994 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class B's 12b-1 fee had been
reflected, total returns prior to June 30, 1994 would have been
lower.
Class C of each fund (except Mortgage Securities, Municipal Bond,
Short-Intermediate Municipal Income, California Municipal Income, and
New York Municipal Income) is expected to commence operations on or
about November 3, 1997.
Class C returns for Strategic Income for the period ended June 30,
1997 are those of Class B which reflect a 12b-1 fee of 0.90% (1.00%
prior to January 1, 1996). If Class C's 12b-1 fee had been reflected,
total returns after December 31, 1995 would have been lower.
Class C returns for High Yield, Government Investment, Emerging
Markets Income, and High Income Municipal from April 30, 1997 through
June 30, 1994 are those of Class B which reflect a 12b-1 fee of 0.90%
(1.00% prior to January 1, 1996). Class C returns prior to June 30,
1994 are those of Class T which reflect a 12b-1 fee of 0.25%. If Class
C's 12b-1 fee had been reflected, total returns prior to April 30,
1997 through December 31, 1995 and prior to June 30, 1994 would have
been lower.
Class C returns for Emerging Markets Income from June 30, 1997
through June 30, 1994 are those of Class B which reflect a 12b-1 fee
of 0.90% (1.00% prior to January 1, 1996). Class C returns prior to
June 30, 1994 are those of Class T which reflect a 12b-1 fee of 0.25%.
If Class C's 12b-1 fee had been reflected, total returns prior to June
30, 1997 through January 1, 1996 and prior to June 30, 1994 would have
been lower.
Class C returns for Short Fixed-Income for the period ended April
30, 1997 are those of Class T which reflect a 12b-1 fee of 0.15%. If
Class C's 12b-1 fee had been reflected, total returns would have been
lower.
Class C returns for Intermediate Bond and Intermediate Municipal
Income from May 31, 1997 through June 30, 1994 are those of Class B
which reflect a 12b-1 fee of 0.90% (1.00% prior to January 1, 1996).
Class C returns prior to June 30, 1994 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.25%. Returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class C's 12b-1 fee had been reflected, total returns prior to
May 31, 1997 through December 31, 1995 and prior to June 30, 1994
would have been lower.
Initial offering of Institutional Class of High Yield, Strategic
Income, Government Investment, Short Fixed-Income, High Income
Municipal, Emerging Markets Income, and Short-Intermediate Municipal
Income took place on July 3, 1995. Institutional Class returns prior
to July 3, 1995 are those of Class T which reflect a 12b-1 fee of
0.25% for High Yield, Strategic Income, Government Investment,
Emerging Markets Income, and High Income Municipal; and 0.15% for
Short Fixed-Income and Short-Intermediate Municipal Income. Total
returns prior to July 3, 1995 for Institutional Class would have been
higher if Class T's 12b-1 fee had not been reflected.
Initial offering of Institutional Class of Municipal Bond took
place on July 1, 1996. Institutional Class returns prior to July 1,
1996 are those of Initial Class which has no 12b-1 fee.
Initial offering of Institutional Class of Mortgage Securities
took place on March 3, 1997. Institutional Class returns prior to
March 3, 1997 are those of Initial Class which has no 12b-1 fee.
2 Yields and tax-equivalent yields shown for Class A shares include
the effect of the applicable Class A front-end sales charge and 12b-1
fee. Yields and tax-equivalent yields shown for Class T shares include
the effect of the applicable Class T front-end sales charge and 12b-1
fee. Yields and tax-equivalent yields shown for Class B and Class C
include the effect of the applicable Class B or Class C 12b-1 fee, but
not the CDSC.
Note: If FMR had not reimbursed certain class expenses during
certain of these periods, the yields and total returns for those
periods for Government Investment, Intermediate Bond, Short
Fixed-Income, High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, New York
Municipal Income and California Municipal Income would have been
lower. The table below shows what yields and tax-equivalent yields (if
applicable) would have been if the class had not been in
reimbursement.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Class T Class B Institutional Class Initial Class
Yield* Tax-Equi Yield* Tax-Equi Yield* Tax-Equi Yield* Tax-Equi Yield* Tax-Equi
v alent valent valent valent valent
Yield Yield Yield Yield Yield
Government N/A N/A 5.71% N/A N/A N/A N/A N/A + +
Investment
Intermediate
Bond 4.47% N/A 2.75% N/A N/A N/A N/A N/A + +
Short-Fixed 2.20% N/A N/A N/A ** ** 5.80% N/A + +
Income
High Income -1.04% N/A N/A N/A N/A N/A 5.47% 8.55% + +
Municipal
Municipal
Bond 0.35% 0.55% 0.10% 0.16% -2.61% N/A 4.42% 6.91% + +
Intermediate -1.54% N/A 4.00% 6.25% N/A N/A 4.35% 6.80% N/A N/A
Municipal
Short-Interme
diate -14.60% N/A 3.60% 5.63%* ** ** 3.73% 5.83% + +
Municipal Income
New York -11.05% N/A 4.41% 7.72% 3.93% 6.88% 4.35% 7.61% + +
Municipal Income
California N/A N/A 3.06% 5.27% 3.41% 5.87% 3.41% 5.87% + +
Municipal Income
</TABLE>
* See footnote 2 on page .
** Class B is not available for this fund.
+ Initial Class is not available for this fund.
HISTORICAL EQUITY FUND RESULTS. The following table shows the total
returns for each class of each equity fund for the semi-annual period
ended April 30, May 31, or June 30, 1997, as indicated below.
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Cumulative Total
Returns1 Returns1
Six One Five Ten Past Six One Five Years Ten
months Year Years Years/Life Months Year Years/Life of
Ended of Fund+ Fund+
TechnoQuant - Class A
5/31 N/A N/A N/A N/A N/A N/A -5.75%
TechnoQuant - Class T
N/A N/A N/A N/A N/A N/A -3.60%
TechnoQuant - Class B
N/A N/A N/A N/A N/A N/A -5.38%
TechnoQuant - Class C
N/A N/A N/A N/A N/A N/A -1.40%
TechnoQuant - Institutional
N/A N/A N/A N/A N/A N/A 0.00%
Growth & Income - Class A
5/31 N/A N/A N/A N/A N/A N/A 2.93%
Growth & Income - Class T
N/A N/A N/A N/A N/A N/A 5.09%
Growth & Income - Class B
N/A N/A N/A N/A N/A N/A 3.81%
Growth & Income - Class C
N/A N/A N/A N/A N/A N/A 7.81%
Growth & Income -Institutional
N/A N/A N/A N/A N/A N/A 9.11%
Overseas - Class A
4/30 3.58% 9.46% 7.50% 3.44% 3.58% 57.16% 66.27%
Overseas - Class T
6.14% 10.00% 7.88% 5.94% 6.14% 61.06% 70.39%
Overseas - Class B
4.22% 10.27% 8.26% 4.51% 4.22% 63.04% 74.61%
Overseas - Class C
8.22% 10.54 % 8.26% 8.51% 8.22% 65.04% 74.61%
Overseas - Institutional
10.15% 10.90% 8.51% 10.15% 10.15% 67.78% 77.51%
Mid Cap - Class A
5/31 3.59% N/A 12.87% -0.21% 3.59% N/A 16.75%
Mid Cap - Class T
6.13% N/A 15.03% 2.23% 6.13% N/A 19.61%
Mid Cap - Class B
4.09% N/A 14.28% 0.61% 4.09% N/A 18.62%
Mid Cap - Class C
8.09% N/A 17.28% 4.61% 8.09% N/A 22.62%
Mid Cap - Institutional
10.38% N/A 18.53% 6.23% 10.38% N/A 24.28%
Equity Growth - Class A
5/31 8.13% 16.92% 18.17% 0.31% 8.13% 118.48% 430.81%
Equity Growth - Class T
10.84% 17.50% 18.46% 2.80% 10.84% 123.95% 444.10%
Equity Growth - Class B
8.94% 17.94% 18.79% 0.68% 8.94% 128.21% 459.32%
Average Annual Total Cumulative Total
Returns1 Returns1
Six One Five Ten Past Six One Five Years Ten
months Year Years Years/Life Months Year Years/Life
Ended of Fund+ of Fund+
Equity Growth - Class C
12.94% 18.15% 18.79% 4.68% 12.94% 130.21% 459.32%
Equity Growth - Institutional
15.48% 19.12% 19.27% 6.81% 15.48% 139.86% 482.76%
Growth Opportunities - Class A
4/30 13.45% 16.00% 19.99% 4.28% 13.45% 110.07% 460.38%
Growth Opportunities - Class T
16.14% 16.55% 20.29% 6.69% 16.14% 115.04% 473.64%
Growth Opportunities - Class B
15.28% 17.16% 20.73% 5.50% 15.28% 120.72% 494.13%
Growth Opportunities - Class C
19.28% 17.37% 20.73% 9.50% 19.28% 122.72% 494.13%
Growth Opportunities -
20.95% 17.63% 20.88% 10.86% 20.95% 125.23% 500.82%
Institutional
Strategic Opportunities - Class A
6/30 8.01% 12.46% 11.13% 6.39% 8.01% 79.87% 187.36%
Strategic Opportunities - Class T
10.66% 13.00% 11.40% 9.01% 10.66% 84.28% 194.40%
Strategic Opportunities - Class B
9.10% 13.25% 11.64% 7.65% 9.10% 86.25% 200.74%
Strategic Opportunities -
14.89% 14.51% 12.23% 12.85% 14.89% 93.80% 217.10%
Institutional
Strategic Opportunities - Initial
12/31 -1.57% 11.93% 12.06% N/A -1.57% 75.71% 212.32%
Large Cap - Class A
5/31 14.73% N/A 14.29% 0.28% 14.73% N/A 18.63%
Large Cap - Class T
17.45% N/A 16.41% 2.75% 17.45% N/A 21.45%
Large Cap - Class B
15.85% N/A 15.95% 1.07% 15.85% N/A 20.84%
Large Cap - Class C
19.85% N/A 18.94% 5.07% 19.85% N/A 24.84%
Large Cap - Institutional
22.20% N/A 20.16% 6.64% 22.20% N/A 26.48%
Equity Income - Class A
5/31 12.64% 16.24% 12.29% 2.75% 12.64% 112.25% 218.83%
Equity Income - Class T
15.51% 16.83% 12.58% 5.29% 15.51% 117.67% 226.97%
Equity Income - Class B
14.13% 17.17% 12.84% 3.91% 14.13% 120.82% 234.71%
Equity Income - Class C
18.13% 17.38% 12.84% 7.91% 18.13% 122.82% 234.71%
Equity Income - Institutional
20.41% 18.47% 13.36% 9.47% 20.41% 133.37% 250.57%
Balanced - Class A
4/30 9.57% 8.11% 10.52% 2.97% 9.57% 47.66% 171.80%
Balanced - Class T
12.37% 8.65% 10.80% 5.55% 12.37% 51.43% 178.75%
Balanced - Class B
11.04% 9.07% 11.15% 3.99% 11.04% 54.38% 187.85%
Balanced - Class C
15.04% 9.35% 11.15% 7.99% 15.04% 56.38% 187.85%
Balanced - Institutional
16.81% 9.70% 11.33% 9.67% 16.81% 58.84% 192.37%
</TABLE>
+ Life of fund figures are from commencement of operations (April
23, 1990 for Overseas; November 18, 1987 for Growth Opportunities; and
February 20, 1996 for Mid Cap and Large Cap; and December 31, 1996 for
TechnoQuant Growth and Growth & Income) through the semiannual periods
ended 1997.
1 Average annual and cumulative total returns for Class A shares
include the effect of paying Class A's maximum applicable front-end
sales charge of 5.75% for Equity Funds.
Average annual and cumulative total returns for Class T shares
include the effect of paying Class T's maximum applicable front-end
sales charge of 3.50% for Equity Funds.
Average annual and cumulative total returns for Class B shares
include the effect of paying Class B's CDSC upon redemption based on
the following schedule: for Equity Funds for periods less than one
year, 5%; one year to less than two years, 4%; two years to less than
four years, 3%; four years to less than five years, 2%; five years to
less than six years, 1%; six years or greater, 0%.
Average annual and cumulative total returns for Class C shares
include the effect of paying Class C's CDSC of 1% for shares redeemed
within one year of purchase.
Initial offering of Class A for each fund took place on September
3, 1996. Class A returns prior to September 3, 1996 (except for Equity
Growth and Equity Income) are those of Class T which reflect a 12b-1
fee of 0.50% (0.65% prior to January 1, 1996). If Class A's 12b-1 fee
had been reflected, total returns prior to September 3, 1996 would
have been higher. For Equity Growth and Equity Income, Class A returns
from September 3, 1996 through September 10, 1992 are those of Class T
which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
Class A returns prior to September 10, 1992 are those of Institutional
Class which has no 12b-1 fee. If Class A's 12b-1 fee had been
reflected, total returns prior to September 3, 1996 through September
10, 1992 would have been higher and total returns prior to September
10, 1992 would have been lower.
Initial offering of Class T of Equity Growth and Equity Income
took place on September 10, 1992. Class T returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class T's 12b-1 fee had been reflected, total returns prior to
September 10, 1992 would have been lower.
Initial offering of Class B of Equity Growth took place on
December 31, 1996. Class B returns prior to December 31, 1996 through
September 10, 1992 are those of Class T which reflect a 12b-1 of fee
of 0.50% (0.65% prior to January 1, 1996). Returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class B's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
Initial offering of Class B of Balanced took place on December 31,
1996. Class B returns prior to December 31, 1996 are those of Class T
which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
If Class B's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
Initial offering of Class B of Growth Opportunities took place on
March 3, 1997. Class B returns prior to March 3, 1997 are those of
Class T which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1,
1996). If Class B's 12b-1 fee had been reflected, total returns prior
to March 3, 1997 would have been lower.
Initial offering of Class B of Equity Income took place on June
30, 1994. Class B returns prior to June 30, 1994 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.65%. Class B
returns prior to September 10, 1992 are those of Institutional Class
which has no 12b-1 fee. If Class B's 12b-1 fee had been reflected,
total returns prior to June 30, 1994 would have been lower.
Initial offering of Class B of Strategic Opportunities took place
on June 30, 1994. Class B returns prior to June 30, 1994 are those of
Class T which reflect a 12b-1 fee of 0.65%. If Class B's 12b-1 fee had
been reflected, total returns prior to June 30, 1994 would have been
lower.
Initial offering of Class B of Overseas took place on July 3,
1995. Class B returns prior to July 3, 1995, are those of Class T,
which reflect a 12b-1 fee of 0.65%. If Class B's 12b-1 fee returns had
been reflected, total returns prior to July 3, 1995 would have been
lower.
Class C of each fund (except Strategic Opportunities) is expected
to commence operations on or about November 3, 1997.
Class C returns for TechnoQuant Growth, Mid Cap, Large Cap, and
Growth & Income for the period ended May 31, 1997 are those of class B
which reflect a 12b-1 fee of 1.00%.
Class C returns for Equity Growth from May 31, 1997 through
December 31, 1996 are those of Class B, which reflect a 12b-1 fee of
1.00%. Class C returns prior to December 31, 1996 through September
10, 1992 are those of Class T which reflect a 12b-1 fee of 0.50%
(0.65% prior to January 1, 1996). Class C returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class C's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
Class C returns for Growth Opportunities from April 30, 1997
through March 3, 1997 are those of Class B which reflect a 12b-1 fee
of 1.00%. Class C returns prior to March 3, 1997 are those of Class T
which reflect a 12b-1 fee of 0.50 (0.65% prior to January 1, 1996). If
Class C's 12b-1 fee had been reflected, total returns prior to March
3, 1997 would have been lower.
Class C returns for Balanced from April 30, 1997 through December
31, 1996 are those of Class B, which reflect a 12b-1 fee of 1.00%.
Class C returns prior to December 31, 1996 are those of Class T which
reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996). If
Class C's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
Class C returns for Equity Income from May 31, 1997 through June
30, 1994 are those of Class B, which reflect a 12b-1 fee of 1.00%.
Class C returns prior to June 30, 1994 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.65%. Class C returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class C's 12b-1 fee had been reflected, total returns
prior to June 30, 1994 would have been lower.
Class C returns for Overseas from April 30, 1997 through July 3,
1995 are those of Class B which reflect a 12b-1 fee of 1.00%. Class C
returns prior to July 3, 1995 are those of Class T which reflect a
12b-1 fee of 0.65%. If Class C's 12b-1 fee had been reflected, total
returns prior to July 3, 1995 would have been lower.
Initial offering of Institutional Class of Growth Opportunities,
Strategic Opportunities, Balanced, and Overseas took place on July 3,
1995. Institutional Class returns prior to July 3, 1995 are those of
Class T which reflect a 12b-1 fee of 0.65%. Total returns for
Institutional Class prior to July 3, 1995 would have been higher if
Class T's 12b-1 fee had not been reflected.
Note: If FMR had not reimbursed certain class expenses during
certain of these periods, the total returns for those periods for
TechnoQuant Growth, Overseas, Mid Cap, Strategic Opportunities, Large
Cap, Growth & Income, Equity Income, and Balanced would have been
lower.
The following tables show the income and capital elements of each
class's cumulative total return. The table compares each class's
return to the record of the S&P 500, the Dow Jones Industrial Average
(DJIA), and the cost of living as measured by the Consumer Price Index
(CPI), over the same period. The S&P 500 and DJIA comparisons are
provided to show how each class's total return compared to the record
of a broad unmanaged index of common stocks and a narrower set of
stocks of major industrial companies, respectively, over the same
period. Because each of the Bond Funds invest in fixed-income
securities, common stocks represent a different type of investment
from the funds. Common stocks generally offer greater growth potential
than the Bond Funds, but generally experience greater price
volatility, which means greater potential for loss. In addition,
common stocks generally provide lower income than a fixed-income
investment such as the Bond Funds. Each of the Equity Funds has the
ability to invest in securities not included in either index, and its
investment portfolio may or may not be similar in composition to the
indices. The S&P 500 and DJIA returns are based on the prices of
unmanaged groups of stocks and, unlike each class's returns, do not
include the effect of brokerage commissions or other costs of
investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each class of each fund (except TechnoQuant
Growth, Growth & Income and International Capital Appreciation) during
the past 10 fiscal years ended 1996 or life of each fund, as
applicable, assuming all distributions were reinvested. The figures
below reflect the fluctuating interest rates, bond prices, and stock
prices of the specified periods and should not be considered
representative of the dividend income or capital gain or loss that
could be realized from an investment in a class today. Tax
consequences of different investments have not been factored into the
figures.
During the period from April 23, 1990 (commencement of operations
of the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class A of Overseas would have grown to $16,627, including the effect
of Class A's 5.75% maximum sales charge.
OVERSEAS - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
April 30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 14,939 $ 900 $ 788 $ 16,627 $ 29,174 $ 31,659 $ 12,428
1996 14,392 615 123 15,130 23,314 24,645 12,126
1995 12,818 463 100 13,381 17,904 18,692 11,784
1994 13,270 479 0 13,749 15,243 15,505 11,435
1993 10,754 370 0 11,124 14,473 14,041 11,171
1992 9,745 226 0 9,971 13,247 13,357 10,822
1991 8,935 73 0 9,008 11,615 11,134 10,489
1990 $ 9,321 $ 0 $ 0 $ 9,321 $ 9,876 $ 9,862 $ 10,000
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of Overseas on April 23, 1990, assuming the 5.75% maximum sales charge
had been in effect, the net amount invested in Class A shares was
$9,425. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $11,392. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $641 for dividends and $697 for capital gain
distributions. Initial offering of Class A for Overseas took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T, which reflect a 12b-1 fee of 0.50% (0.65% prior to
January 1, 1996). If Class A's 12b-1 fee had been reflected total
returns prior to September 3, 1996 for the fund would have been
higher.
During the period from April 23, 1990 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class T of Overseas would have grown to $17,039, including the effect
of Class T's 3.50% maximum sales charge.
OVERSEAS - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
April
30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 15,401 $ 830 $ 808 $ 17,039 $ 29,174 $ 31,659 $ 12,428
1996 14,736 630 125 15,491 23,314 24,645 12,126
1995 13,124 473 103 13,700 17,904 18,692 11,784
1994 13,587 490 0 14,077 15,243 15,505 11,435
1993 11,011 379 0 11,390 14,473 14,041 11,171
1992 9,978 231 0 10,209 13,247 13,357 10,822
1991 9,148 75 0 9,223 11,615 11,134 10,489
1990* 9,544 0 0 9,544 9,876 9,862 10,000
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Overseas on April 23, 1990, assuming the 3.50% maximum sales charge
had been in effect, the net amount invested in Class T shares was
$9,650. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $11,334. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $569 for dividends and $714 for capital gain
distributions.
During the period from April 23, 1990 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class B of Overseas would have grown to $17,461.
OVERSEAS - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
April 30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 15,700 $ 922 $ 839 $ 17,461 $ 29,174 $ 31,659 $ 12,428
1996 15,100 759 129 15,988 23,314 24,645 12,126
1995 13,600 491 106 14,197 17,904 18,692 11,784
1994 14,080 508 0 14,588 15,243 15,505 11,435
1993 11,410 393 0 11,803 14,473 14,041 11,171
1992 10,340 240 0 10,580 13,247 13,357 10,822
1991 9,480 78 0 9,558 11,615 11,134 10,489
1990 9,890 0 0 9,890 9,876 9,862 10,000
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Overseas on April 23, 1990, the net amount invested in Class B shares
was $10,000. The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $11,451. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $650 for dividends and $740 for capital gain
distributions. Initial offering of Class B of Overseas took place
on July 3, 1995. Class B returns prior to July 3, 1995, are those of
Class T, which reflect a 12b-1 fee of 0.65%. If Class B's 12b-1 fee
returns had been reflected, total returns prior to July 3, 1995 would
have been lower.
During the period from April 23, 1990 (commencement of operations
of the fund) to April 30, 1997 a hypothetical $10,000 investment in
Class C of Overseas would have grown to $17,461.
OVERSEAS - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
April 30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 15,700 $ 922 $ 839 $ 17,461 $ 29,174 $ 31,659 $ 12,428
1996 15,100 759 129 15,988 23,314 24,645 12,126
1995 13,600 491 106 14,197 17,904 18,692 11,784
1994 14,080 508 0 14,588 15,243 15,505 11,435
1993 11,410 393 0 11,803 14,473 14,041 11,171
1992 10,340 240 0 10,580 13,247 13,357 10,822
1991 9,480 78 0 9,558 11,615 11,134 10,489
1990 9,890 0 0 9,890 9,876 9,862 10,000
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C
of Overseas on April 23, 1990, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $11,451. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $650 for dividends and $740 for capital gain
distributions. Class C returns for Overseas from April 30, 1997
through July 3, 1995 are those of Class B which reflect a 12b-1 fee of
1.00%. Class C returns prior to July 3, 1995 are those of Class T
which reflect a 12b-1 fee of 0.65%. If Class C's 12b-1 fee had been
reflected, total returns prior to July 3, 1995 would have been
lower.
During the period from April 23, 1990 (commencement of operations
of the fund) to April 30, 1997, a hypothetical $10,000 investment in
Institutional Class of Overseas would have grown to $17,751.
OVERSEAS - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
April 30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 15,830 $ 1077 $ 844 $ 17,751 $ 29,174 $ 31,659 $ 12, 428
1996 15,200 785 130 16,115 23,314 24,645 12, 126
1995 13,600 491 106 14,197 17,904 18,692 11, 784
1994 14,080 508 0 14,588 15,243 15,505 11, 435
1993 11,410 393 0 11,803 14,473 14,401 11, 171
1992 10,340 240 0 10,580 13,247 13,357 1 0,822
1991 9,480 78 0 9,558 11,615 11,134 10,489
1990 9,890 0 0 9,890 9,876 9,862 10, 000
</TABLE>
* From April 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Overseas on April 23, 1990, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $11,589. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $780 for
dividends and $740 for capital gain distributions. Initial offering of
Institutional Class of Overseas took place on July 3, 1995.
Institutional Class returns prior to July 3, 1995 are those of Class T
which reflect a 12b-1 fee of 0.65%. Total returns for Institutional
Class prior to July 3, 1995 would have been higher if Class T's 12b-1
fee had not been reflected.
During the period from February 20, 1996 (commencement of
operations of the fund) to May 31, 1997, a hypothetical $10,000
investment in Class A of Mid Cap would have grown to $11,675,
including the effect of Class A's maximum 5.75% sales charge.
MID CAP - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,461 $ 10 $ 204 $ 11,675 $ 13,453 $ 13,675 $ 10,336
1996* 10,622 0 0 10,622 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Mid Cap on February 20, 1996, assuming the 5.75% maximum sales charge
had been in effect, the net amount invested in Class A shares was
$9,425. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $10, 198 . If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $9 for dividends and $189 for capital gain
distributions. Initial offering of Class A for Mid Cap took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T, which reflect a 12b-1 fee of 0.50% (0.65% prior to
January 1, 1996). If Class A's 12b-1 fee had been reflected total
returns prior to September 3, 1996 would have been higher.
During the period from February 20, 1996 (commencement of operations
of the fund) to May 31, 1996, a hypothetical $10,000 investment in
Class T of Mid Cap would have grown to $11,9 6 1, including the
effect of Class T's maximum 3.50% sales charge.
MID CAP - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,773 $ 0 $ 188 $ 11,961 $ 13,453 $ 13,675 $ 10,336
1996* 10,876 0 0 10,876 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Mid Cap on February 20, 1996, assuming the 3.50% maximum sales charge
had been in effect, the net amount invested in Class T shares was
$9,650. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $10,174. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $0 for dividends and $ 1 74 for capital gain
distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to May 31, 1997, a hypothetical $10,000 investment in
Class B of Mid Cap would have grown to $11,862, including the effect
of Class B's maximum applicable CDSC.
MID CAP - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11, 70 0 $ 0 $ 162 $ 11,862 $ 13,453 $ 13,675 $ 10,336
1996* 11,240 0 0 11,240 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Mid Cap on February 20, 1996, assuming the maximum applicable CDSC had
been in effect, the net amount invested in Class B shares was $10,000.
The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $10,150. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $0 for dividends and $ 1 50 for capital gain
distributions.
During the period from February 20, 1996 (commencement of
operations of the fund) to May 31, 1997, a hypothetical $10,000
investment in Class C of Mid Cap would have grown to $12,262,
including the effect of Class C's maximum applicable CDSC.
MID CAP - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,000 $ 0 $ 162 $ 12,262 $ 13,453 $ 13,675 $ 10,336
1996* 11,240 0 0 11,240 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C
of Mid Cap on February 20, 1996, assuming the maximum applicable CDSC
had been in effect, the net amount invested in Class C shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $10,150. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $0 for dividends and $150 for capital gain
distributions. Class C returns for Mid Cap for the period ended May
31, 1997 are those of class B which reflect a 12b-1 fee of 1.00%.
During the period from February 20, 1996 (commencement of operations
of the fund) to May 31, 1997, a hypothetical $10,000 investment in
Institutional Class of Mid Cap would have grown to $12,428.
MID CAP - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,190 $ 21 $ 217 $ 12,428 $ 13,453 $ 13,675 $ 10,336
1996* 11,260 0 0 11,260 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Mid Cap on February 20, 1996, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $10,220. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $20 for
dividends and $2 0 0 for capital gain distributions.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class A of Equity Growth would have grown to
$53,081, including the effect of Class A's maximum 5.75% sales
charge.
EQUITY GROWTH - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 31,914 $ 1,793 $ 19,374 $ 53,081 $ 39,484 $ 43,263 $ 14,156
1996 28,865 1,227 16,173 46,265 30,509 32,636 13,846
1995 22,705 910 10,791 34,406 23,754 25,247 13,457
1994 19,850 710 9,210 29,770 19,765 20,695 13,042
1993 19,725 706 7,723 28,154 18,958 18,895 12,750
1992 16,398 517 5,984 22,899 16,982 17,663 12,352
1991 16,634 497 3,694 20,825 15,458 15,270 11,989
1990 12,113 361 2,690 15,164 13,828 13,974 11,424
1989 11,043 264 774 12,081 11,858 11,604 10,946
1988 7,960 6 558 8,524 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Equity Growth on June 1, 1987 assuming the 5.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $9,425. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $20,996. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $667 for dividends and $7,550 for capital gain
distributions. Initial offering of Class A for Equity Growth took
place on September 3, 1996. Class A returns from September 3, 1996
through September 10, 1992 are those of Class T which reflect a 12b-1
fee of 0.50% (0.65% for prior to January 1, 1996). Class A returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class A's 12b-1 fee had been reflected, total returns
prior to September 3, 1996 through September 10, 1992 would have been
higher and total returns prior to September 10, 1992 would have been
lower.
During the 10-year period ended May 31, 1997, a hypothetical $10,000
investment in Class T of Equity Growth would have grown to $54,410,
including the effect of the Class T's maximum 3.50% sales charge.
EQUITY GROWTH - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 32,861 $ 1,608 $ 19,941 $ 54,410 $ 39,484 $ 43,263 $ 14,156
1996 29,554 1,257 16,559 47,370 30,509 32,636 13,846
1995 23,247 931 11,049 35,227 23,754 25,247 13,457
1994 20,324 727 9,430 30,481 19,765 20,695 13,042
1993 20,196 722 7,908 28,826 18,958 18,895 12,750
1992 16,790 529 6,126 23,445 16,982 17,663 12,352
1991 17,032 508 3,782 21,322 15,458 15,270 11,989
1990 12,402 370 2,754 15,526 13,828 13,974 11,424
1989 11,307 270 792 12,369 11,858 11,604 10,946
1988 8,150 7 571 8,728 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Equity Growth on June 1, 1987, assuming the 3.50% maximum sales charge
had been in effect, the net amount invested in Class T shares was
$9,650. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $21,042. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $548 for dividends and $7, 7 30 for capital gain
distributions. Initial offering of Class T of Equity Growth took
place on September 10, 1992. Class T returns prior to September 10,
1992 are those of Institutional Class which has no 12b-1 fee. If Class
T's 12b-1 fee had been reflected, total returns prior to September 10,
1992 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical $10,000
investment in Class B of Equity Growth would have grown to
$5 5,932 .
EQUITY GROWTH - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 33,780 $ 1,653 $ 20,499 $ 55,932 $ 39,484 $ 43,263 $ 14 ,156
1996 30, 626 1 , 302 17,160 49,088 30,509 32,636 13, 846
1995 24,090 965 11,450 36,505 23,754 25,247 13,457
1994 21,061 753 9,772 31,586 19,765 20,695 13,042
1993 20,929 747 8,195 29,871 18,958 18,895 12,750
1992 17,399 548 6,349 24,296 16,982 17,663 12,352
1991 17,649 527 3,919 22,095 15,458 15,270 11,98 9
1990 12,852 384 2,854 1 6 ,0 9 0 13,828 13,974 11,424
1989 11,717 280 821 12,818 11,858 11,604 10,94 6
1988 8,445 7 592 9,044 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Equity Growth on June 1, 1987, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $21,442. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $567 for dividends and $8,010 for capital gain
distributions. Initial offering of Class B of Equity Growth took
place on December 31, 1996. Class B returns prior to December 31, 1996
through September 10, 1992 are those of Class T which reflect a 12b-1
of fee of 0.50% (0.65% prior to January 1, 1996). Class B returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class B's 12b-1 fee had been reflected, total returns
prior to December 31, 1996 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class C of Equity Growth would have grown to
$55,932.
EQUITY GROWTH - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
Nov.
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 33,780 $ 1,653 $ 20,499 $ 55,932 $ 39 ,484 $ 43,263 $ 14,156
1996 30,626 1,302 17,160 49,088 30,509 32,636 13,846
1995 24,090 965 11,450 36,505 23,754 25,247 13,457
1994 21,061 753 9,772 31,586 19,765 20,695 13,042
1993 20,929 747 8,195 29,871 18,958 18,895 12,750
1992 17,399 548 6,349 24,296 16,982 17,663 12,352
1991 17,649 527 3,919 22,095 15,458 15,270 11,989
1990 12,852 384 2,854 16,090 13,828 13,974 11,424
1989 11,717 280 821 12,818 11,858 11,604 10,946
1988 8,445 7 592 9,044 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C
of Equity Growth on June 1, 1987, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $21,442. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $567 for dividends and $8,010 for capital gain
distributions. Class C returns for Equity Growth from May 31, 1997
through December 31, 1996 are those of Class B, which reflect a 12b-1
fee of 1.00%. Class C returns prior to December 31, 1996 through
September 10, 1992 are those of Class T which reflect a 12b-1 fee of
0.50% (0.65% prior to January 1, 1996). Class C returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class C's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical $10,000
investment in Institutional Class of Equity Growth would have grown to
$58,276.
EQUITY GROWTH - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May 31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 34,539 $ 2,782 $ 20,955 $ 58,276 $ 39,484 $ 43,263 $ 14,156
1996 31,024 2,064 17,375 50,463 30,509 32,636 13,846
1995 24,340 1,382 11,560 37,282 23,754 25,247 13,457
1994 21,253 898 9,854 32,005 19,765 20,695 13,042
1993 21,017 773 8,229 30,019 18,958 18,895 12,750
1992 17,399 548 6,349 24,296 16,982 17,663 12,352
1991 17,649 527 3,919 22,095 15,458 15,270 11,989
1990 12,852 384 2,854 16,090 13,828 13,974 11,424
1989 11,717 280 821 12,818 11,858 11,604 10,946
1988* 8,445 7 592 9,044 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Equity Growth on June 1, 1987, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $22 , 287. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$1,083 for dividends and $8,010 for capital gain distributions.
During the period from November 18, 1987 (commencement of
operations of the fund) to April 30, 1997, a hypothetical $10,000
investment in Class A of Growth Opportunities would have grown to
$56,038, including the effect of Class A's maximum 5.75% sales
charge.
GROWTH OPPORTUNITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 34,797 $ 3,555 $ 17,686 $ 56,038 $ 43,804 $ 48,550 $ 13,882
1996 30,660 2,191 13,702 46,553 35,005 37,794 13,544
1995 25,325 1,318 10,838 37,481 26,883 28,664 13,163
1994 24,185 882 8,734 33,801 22,887 23,776 12,773
1993 21,574 705 6,800 29,079 21,730 21,532 12,478
1992 19,896 493 4,753 25,142 19,890 20,483 12,088
1991 18,237 346 2,537 21,120 17,440 17,075 11,716
1990 13,817 80 1,922 15,819 14,829 15,124 11,170
1989 14,609 33 831 15,473 13,413 13,261 10,667
1988 12,347 0 0 12,347 10,913 10,747 10,147
</TABLE>
* From November 18, 1987 (commencement of operations). 32636,
** From month-end closest to initial investment date.25247
Explanatory Notes: With an initial investment of $10,000 in Class A
of Growth Opportunities on November 18, 1987, assuming the 5.75%
maximum sales charge had been in effect, the net amount invested in
Class A shares was $9,425. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $22,830. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $1,828 for dividends and $8,068 for
capital gain distributions. Initial offering of Class A for Growth
Opportunities took place on September 3, 1996. Class A returns prior
to September 3, 1996 are those of Class T, which reflect a 12b-1 fee
of 0.50% (0.65% prior to January 1, 1996). If Class A's 12b-1 fee had
been reflected total returns prior to September 3, 1996 would have
been higher.
During the period from November 18, 1987 (commencement of operations
of the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class T of Growth Opportunities would have grown to $57,364, including
the effect of Class T's maximum 3.50% sales charge.
GROWTH OPPORTUNITIES - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 35,802 $ 3,379 $ 18,184 $ 57,364 $ 43,804 $ 48,550 $ 13,882
1996 31,391 2,244 14,029 47,665 35,005 37,794 13,544
1995 25,930 1,350 11,096 38,375 26,883 28,664 13,163
1994 24,762 904 8,943 34,608 22,887 23,776 12,773
1993 22,089 722 6,963 29,773 21,730 21,532 12,478
1992 20,371 505 4,866 25,743 19,890 20,483 12,088
1991 18,673 353 2,598 21,624 17,440 17,075 11,716
1990 14,147 81 1,968 16,196 14,829 15,124 11,170
1989 14,958 34 851 15,842 13,413 13,261 10,667
1988* 12,642 0 0 12,642 10,913 10,747 10,147
</TABLE>
* From November 18, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Growth Opportunities on November 18, 1987, assuming the 3.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $9,650. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $22,873. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $1,698 for dividends and $8,260 for capital
gain distributions.
During the period from November 18, 1987 (commencement of operations
of the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class B of Growth Opportunities would have grown to $59,413.
GROWTH OPPORTUNITIES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost
April 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 37,080 $ 3,499 $ 18,834 $ 59,413 $ 43,804 $ 48,550 $ 13,882
1996 32,530 2,326 14,538 49,394 35,005 37,794 13,544
1995 26,870 1,398 11,499 39,767 26,883 28,664 13,163
1994 25,660 936 9,267 35,863 22,887 23,776 12,773
1993 22,890 748 7,215 30,853 21,730 21,532 12,478
1992 21,110 523 5,043 26,676 19,890 20,483 12,088
1991 19,350 366 2,692 22,408 17,440 17,075 11,716
1990 14,660 85 2,039 16,784 14,829 15,124 11,170
1989 15,500 35 882 16,417 13,413 13,261 10,667
1988* 13,100 0 0 13,100 10,913 10,747 10,147
</TABLE>
* From November 18, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Growth Opportunities on November 18, 1987, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $23,340. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $1,760 for dividends and $8,560 for
capital gain distributions. Initial offering of Class B of Growth
Opportunities took place on March 3, 1997. Class B returns prior to
March 3, 1997 are those of Class T which reflect a 12b-1 fee of 0.50%
(0.65% prior to January 1, 1996). If Class B's 12b-1 fee had been
reflected, total returns prior to March 3, 1997 would have been
lower.
During the period from November 18, 1987 (commencement of
operations of the fund) to April 30, 1997, a hypothetical $10,000
investment in Class C of Growth Opportunities would have grown to
$59,413.
GROWTH OPPORTUNITIES - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 37,080 $ 3,499 $ 18,834 $ 59,413 $ 43,804 $ 48,550 $ 13,882
1996 32,530 2,326 14,538 49,394 35,005 37,794 13,544
1995 26,870 1,398 11,499 39,767 26,883 28,664 13,163
1994 25,660 936 9,267 35,863 22,887 23,776 12,773
1993 22,890 748 7,215 30,853 21,730 21,532 12,478
1992 21,110 523 5,043 26,676 19,890 20,483 12,088
1991 19,350 366 2,692 22,408 17,440 17,075 11,716
1990 14,660 85 2,039 16,784 14,829 15,124 11,170
1989 15,550 35 882 16,417 13,413 13,261 10,667
1988* 13,100 0 0 13,100 10,913 10,747 10,147
</TABLE>
* From November 18, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C
of Growth Opportunities on November 18, 1987, the net amount invested
in Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $23,340. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $1,760 for dividends and $8,560 for
capital gain distributions. Class C returns for Growth Opportunities
from April 30, 1997 through March 3, 1997 are those of Class B which
reflect a 12b-1 fee of 1.00%. Class C returns prior to March 3, 1997
are those of Class T which reflect a 12b-1 fee of 0.50 (0.65% prior to
January 1, 1996). If Class C's 12b-1 fee had been reflected, total
returns prior to March 3, 1997 would have been lower.
During the period from November 18, 1987 (commencement of operations
of the fund) to April 30, 1997 , a hypothetical $10,000
investment in Institutional Class of Growth Opportunities would have
grown to $60,082 .
GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 37,090 $ 4,132 $ 18,860 $ 60,082 $ 43,804 $ 48,550 $ 13,882
1996 32,510 2,635 14,530 49,675 35,005 37,794 13,544
1995 26,870 1,398 11,499 39,767 26,883 28,664 13,163
1994 25,660 936 9,267 35,863 22,887 23,776 12,773
1993 22,890 748 7,215 30,853 21,730 21,532 12,478
1992 21,110 523 5,043 26,676 19,890 20,483 12,088
1991 19,350 366 2,692 22,408 71,440 17,075 11,716
1990 14,660 85 2,039 16,784 14,829 15,124 11,170
1989 15,500 35 882 16,417 13,413 13,261 10,667
1988 13,100 0 0 13,100 10,913 10,747 10,147
</TABLE>
* From November 18, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Growth Opportunities on November 18, 1987, the
net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $2 3,915 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 2,130 for dividends and $ 8,560 for capital gain
distributions. Initial offering of Institutional Class of Growth
Opportunities took place on July 3, 1995. Institutional Class returns
prior to July 3, 1995 are those of Class T which reflect a 12b-1 fee
of 0.65%. Total returns for Institutional Class prior to July 3, 1995
would have been higher if Class T's 12b-1 fee had not been
reflected.
During the 10-year period ended June 30, 1997, a hypothetical
$10,000 investment in Class A of Strategic Opportunities would have
grown to $28,736, including the effect of Class A's maximum 5.75%
sales charge.
STRATEGIC OPPORTUNITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500
of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $
12,509 $ 4,658 $ 11,569 $ 28,736 $ 39,269 $ 42,862 $ 14,123
1996 12,514 4,245 8,316 25,075 29,153 30,967 13,806
1995 11,409 3,525 6,716 21,650 23,138 24,400 13,436
1994 10,049 2,760 5,659 18,468 18,354 18,911 13,040
1993 10,642 2,555 4,534 17,731 18,099 17,847 12,722
1992 9,901 1,916 3,240 15,057 15,925 16,351 12,352
1991 10,351 1,527 1,528 13,406 14,041 13,899 11,982
1990 9,512 902 1,404 11,818 13,074 13,267 11,445
1989 9,236 562 1,363 11,161 11,223 10,825 10,934
1988 7,983 148 1,178 9,309 9,312 9,160 10,396
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Strategic Opportunities on July 1, 1987, assuming the 5.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $9,425. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $22,721. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $2,470 for dividends and $5,769 for capital
gain distributions. Initial offering of Class A for Strategic
Opportunities took place on September 3, 1996. Class A returns prior
to September 3, 1996 are those of Class T, which reflect a 12b-1 fee
of 0.50% (0.65% prior to January 1, 1996). If Class A's 12b-1 fee had
been reflected total returns prior to September 3, 1996 would have
been higher.
During the 10-year period ended June 3 0 , 199 7 , a
hypothetical $10,000 investment in Class T of Strategic Opportunities
would have grown to $29, 440 , including the effect of Class T's
maximum 3.50% sales charge.
STRATEGIC OPPORTUNITIES - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 12,923 $ 4,601 $ 11,916 $ 29,440 $ 39,269 $ 42,862 $ 14,123
1996 12,813 4,345 8,515 25,673 29,153 30,967 13,806
1995 11,682 3,608 6,877 22,167 23,138 24,400 13,436
1994 10,289 2,826 5,794 18,909 18,354 18,911 13,040
1993 10,896 2,617 4,642 18,155 18,099 17,847 12,722
1992 10,137 1,963 3,317 15,417 15,925 16,351 12,352
1991 10,598 1,564 1,564 13,726 14,041 13,899 11,982
1990 9,739 923 1,438 12,100 13,074 13,267 11,445
1989 9,456 575 1,396 11,427 11,223 10,825 10,934
1988 8,173 152 1,206 9,531 9,312 9,160 10,396
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Strategic Opportunities on J uly 1, 1987, assuming the 3.50%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $9,650. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 22,828 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $2 ,435 for
dividends and $ 5,906 for capital gain distributions.
During the 10-year period ended June 3 0 , 199 7 , a
hypothetical $10,000 investment in Class B of Strategic Opportunities
would have grown to $30, 074 .
STRATEGIC OPPORTUNITIES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 13,152 $ 4,702 $ 12,220 $ 30,074 $ 39,269 $ 42,862 $ 14,123
1996 13,066 4,588 8,705 26,359 29,153 30,967 13,806
1995 11,986 3,849 7,058 22,893 23,138 24,400 13,436
1994 10,662 2,928 6,005 19,595 18,354 18,911 13,040
1993 11,291 2,712 4,810 18,813 18,099 17,847 12,722
1992 10,505 2,034 3,437 15,976 15,925 16,351 12,352
1991 10,982 1,621 1,621 14,224 14,041 13,899 11,982
1990 10,092 957 1,490 12,539 13,074 13,267 11,445
1989 9,799 597 1,446 11,842 11,223 10,825 10,934
1988 8,470 157 1,250 9,877 9,312 9,160 10,396
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Strategic Opportunities on J uly 1, 1987, the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$23, 299 . If distributions had not been reinvested, the amount
of distributions earned from the class over time would have been
smaller, and cash payments for the period would have amounted to
$2, 518 for dividends and $6, 120 for capital gain
distributions. Initial offering of Class B of Strategic
Opportunities took place on June 30, 1994. Class B returns prior to
June 30, 1994 are those of Class T which reflect a 12b-1 fee of 0.65%.
If Class B's 12b-1 fee had been reflected, total returns prior to June
30, 1994 would have been lower.
During the 10-year period ended June 3 0 , 199 7 , a
hypothetical $10,000 investment in Institutional Class of Strategic
Opportunities would have grown to $30, 714 .
STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested ValueM/r>
500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 13,304 $ 5,088 $ 12,322 $ 30,714 $ 39,269 $ 42,862 $ 14,123
1996 13,256 4,662 8,815 26,733 29,153 30,967 13,806
1995 12,105 3,740 7,126 22,971 23,138 24,400 13,436
1994 10,662 2,928 6,005 19,595 18,354 18,911 13,040
1993 11,291 2,712 4,810 18,813 18,099 17,847 12,722
1992 10,505 2,034 3,437 15,976 15,925 16,351 12,352
1991 10,982 1,621 1,621 14,224 14,041 13,899 11,982
1990 10,092 957 1,490 12,539 13,074 13,267 11,445
1989 9,799 597 1,446 11,842 11,223 10,825 10,934
1988 8,470 157 1,250 9,877 9,312 9,160 10,396
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Strategic Opportunities on J uly 1, 1987,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 23,653 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 2,691 for dividends and $6, 120 for capital gain
distributions. Initial offering of Institutional Class of Strategic
Opportunities took place on July 3, 1995. Institutional Class returns
prior to July 3, 1995 are those of Class T which reflect a 12b-1 fee
of 0.65%. Total returns for Institutional Class prior to July 3, 1995
would have been higher if Class T's 12b-1 fee had not been
reflected.
During the 10-year period ended December 3 1 ,
199 6 , a hypothetical $10,000 investment in Initial Class of
Strategic Opportunities would have grown to $3 1,232 , including
the effect of Initial Class's maximum 3.50% sales charge.
STRATEGIC OPPORTUNITIES - INITIAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
December
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
199 6 $ 13,633 $ 6,010 $ 11,589 $ 31,232 $ 41,499 $ 46,181 $ 14,353
199 5 14,942 6,149 9,528 30,619 33,750 35,882 13,891
1994 11,228 4,172 6,668 22,068 24,531 26,244 13,548
199 3 12,472 4,011 7,082 23,565 24,213 25,001 13,195
199 2 11,394 3,190 4,880 19,464 21,996 21,370 12,842
199 1 11,067 2,457 3,629 17,153 20,434 19,916 12,480
199 0 10,549 1,772 1,546 13,867 15,660 16,018 12,109
19 89 11,835 1,276 1,735 14,846 16,164 16,104 11,412
198 8 9,221 591 1,352 11,164 12,275 12,222 10,905
198 7 7,805 149 1,144 9,098 10,526 10,543 10,443
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Strategic Opportunities on January 1, 1987, assuming
the 3.50% maximum sales charge had been in effect, the net amount
invested in Initial Class shares was $9,650.The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to
$ 24,713 . If distributions had not been reinvested, the amount
of distributions earned from the class over time would have been
smaller, and cash payments for the period would have amounted to
$ 3,369 for dividends and $ 6,197 for capital gain
distributions.
During the period from February 20, 1996 (commencement of
operations of the fund) to May 31, 1997, a hypothetical $10,000
investment in Class A of Large Cap would have grown to $11,863,
including the effect of Class A's maximum 5.75% sales charge.
LARGE CAP - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,781 $ 0 $ 82 $ 11,863 $ 13,453 $ 13,675 $ 10,336
1996* 9,745 0 0 9,745 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of Large Cap on February 20, 1996, assuming the 5.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $9,425. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $10,076. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $0 for dividends and $75 for capital gain
distributions. Initial offering of Class A for Large Cap took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T, which reflect a 12b-1 fee of 0.50% (0.65% prior to
January 1, 1996). If Class A's 12b-1 fee had been reflected total
returns prior to September 3, 1996 would have been higher.
During the period from February 20, 1996 (commencement of operations
of the fund) to May 3 1 , 199 7 , a hypothetical
$10,000 investment in Class T of Large Cap would have grown to
$12,145, including the effect of Class T's maximum 3.50% sales charge.
LARGE CAP - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Reinvested Total S&P DJIA Cost
May 31 Initial Reinvested Capital Gain Value 500 of
$10,000 Dividend Distributions Living**
Investment Distributions
1997 $ 12,082 $ 0 $ 63 $ 12,145 $ 13,453 $ 13,675 $ 10,336
1996* 9,978 0 0 9,978 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Large Cap on February 20, 1996, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $9,650. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $10, 058 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $0 for dividends and $ 58 for capital
gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to May 3 1 , 199 7 , a hypothetical
$10,000 investment in Class B of Large Cap would have grown to
$12,084, including the effect of Class B's maximum applicable CDSC.
LARGE CAP - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,030 $ 0 $ 54 $ 12,084 $ 13,453 $ 13,675 $ 10,336
1996* 10,330 0 0 10,330 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Large Cap on February 20, 1996, assuming the maximum applicable CDSC
had been in effect, the net amount invested in Class B shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $10, 050 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $0 for dividends and $ 50 for capital
gain distributions.
During the period from February 20, 1996 (commencement of
operations of the fund) to May 31, 1997, a hypothetical $10,000
investment in Class C of Large Cap would have grown to $12,384,
including the effect of Class C's maximum applicable CDSC.
LARGE CAP - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,330 $ 0 $ 54 $ 12,384 $ 13,453 $ 13,675 $ 10,336
1996* 10,330 0 0 10,330 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Large Cap on February 20, 1996, assuming the maximum applicable CDSC
had been in effect, the net amount invested in Class C shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $10,050. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $0 for dividends and $50 for capital gain
distributions. Class C returns for Large Cap for the period ended May
31, 1997 are those of class B which reflect a 12b-1 fee of 1.00%.
During the period from February 20, 1996 (commencement of operations
of the fund) to May 31, 1997, a hypothetical $10,000 investment in
Institutional Class of Large Cap would have grown to $12,648.
LARGE CAP - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,550 $ 0 $ 98 $ 12,648 $ 13,453 $ 13,675 $ 10,336
1996* 10,350 0 0 10,350 10,395 10,316 10,110
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Large Cap on February 20, 1996, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,0 0 0) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $10,0 9 0. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$0 for dividends and $ 9 0 for capital gain distributions.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class A of Equity Income would have grown to
$31,883, including the effect of Class A's maximum 5.75% sales
charge.
EQUITY INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 16,747 $ 9,618 $ 5,518 $ 31,883 $ 39,484 $ 43,263 $ 14,156
1996 14,630 7,952 4,096 26,678 30,509 32,636 13,846
1995 12,443 6,411 2,970 21,824 23,754 25,247 13,457
1994 10,745 5,914 2,237 18,176 19,765 20,695 13,042
1993 10,047 4,608 2,091 16,746 18,958 18,895 12,750
1992 8,754 3,582 1,822 14,158 16,982 17,663 12,352
1991 7,930 2,716 1,651 12,297 15,458 15,270 11,989
1990 7,881 1,910 1,640 11,431 13,828 13,974 11,424
1989 8,636 1,332 1,496 11,464 11,858 11,604 10,946
1988 7,448 511 1,290 9,249 >9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Equity Income on June 1, 1987, assuming the 5.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $9425. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $18,263. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $3,486 for dividends and $2,292 for capital
gain distributions. Initial offering of Class A for each fund took
place on September 3, 1996. Class A returns from September 3, 1996
through September 10, 1992 are those of Class T which reflect a 12b-1
fee of 0.50% (0.65% for prior to January 1, 1996). Class A returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Class A's 12b-1 fee had been reflected, total returns
prior to September 3, 1996 through September 10, 1992 would have been
higher and total returns prior to September 10, 1992 would have been
lower.
During the 10-year period ended May 31 , 199 7 , a
hypothetical $10,000 investment in Class T of Equity Income would have
grown to $3 2 , 697 , including the effect of Class T's
maximum 3.50% sales charge.
EQUITY INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 17,247 $ 9,772 $ 5,678 $ 32,697 $ 39,484 $ 43,263 $ 14,156
1996 14,979 8,143 4,193 27,315 30,509 32,636 13,846
1995 12,740 6,565 3,040 22,345 23,754 25,247 13,457
1994 11,002 5,317 2,290 18,609 19,765 20,695 13,042
1993 10,287 4,717 2,141 17,145 18,958 18,895 12,750
1992 8,963 3,667 1,866 14,496 16,982 17,663 12,352
1991 8,119 2,781 1,690 12,590 15,458 15,270 11,989
1990 8,069 1,955 1,680 11,704 13,828 13,974 11,424
1989 8,842 1,365 1,531 11,738 11,858 11,604 10,946
1988 7,626 523 1,321 9,470 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Equity Income on June 1, 198 7 , assuming the 3.50%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $9,650. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $1 8,340 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $3, 505 for
dividends and $2, 346 for capital gain distributions. Initial
offering of Class T of Equity Income took place on September 10, 1992.
Class T returns prior to September 10, 1992 are those of Institutional
Class which has no 12b-1 fee. If Class T's 12b-1 fee had been
reflected, total returns prior to September 10, 1992 would have been
lower.
During the 10-year period ended May 3 1 , 199 7 , a
hypothetical $10,000 investment in Class B of Equity Income would have
grown to $3 3,471 .
EQUITY INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 17,806 $ 9,804 $ 5,861 $ 33,471 39,484 $ 43,263 $ 14,156
1996 15,471 8,294 4,332 28,097 30,509 23,636 13,846
1995 13,173 6,773 3,144 23,090 23,754 25,247 13,457
1994 11,401 5,510 2,373 19,284 19,765 20,695 13,042
1993 10,660 4,888 2,219 17,767 18,958 18,895 12,750
1992 9,288 3,800 1,934 15,022 16,982 17,663 12,352
1991 8,414 2,882 1,751 13,047 15,458 15,270 11,989
1990 8,362 2,026 1,740 12,128 13,828 13,974 11,424
1989 9,162 1,415 1,587 12,164 11,858 11,604 10,946
1988 7,902 542 1,369 9,813 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Equity Income on June 1, 198 7 , the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $1 8,392 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $3, 499 for
dividends and $2, 431 for capital gain distributions. Initial
offering of Class B of Equity Income took place on June 30, 1994.
Returns prior to June 30, 1994 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.65%. Class B returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class B's 12b-1 fee had been reflected, total returns prior to
June 30, 1994 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class C of Equity Income would have grown to
$33,471.
EQUITY INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 17,806 $ 9,804 $ 5,861 $ 33,471 39,484 $ 43,263 $ 14,156
1996 15,471 8,294 4,332 28,097 30,509 32,636 13,846
1995 13,173 6,773 3,144 23,090 23,754 25,247 13,457
1994 11,401 5,510 2,373 19,284 19,765 20,695 13,042
1993 10,660 4,888 2,219 17,767 18,958 18,895 12,750
1992 9,288 3,800 1,934 15,022 16,982 17,663 12,352
1991 8,414 2,882 1,751 13,047 15,458 15,270 11,989
1990 8,362 2,026 1,740 12,128 13,828 13,974 11,424
1989 9,162 1,415 1,587 12,164 11,858 11,604 10,946
1988 7,902 542 1,369 9,813 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C
of Equity Income on June 1, 1987, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $18,392. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $3,499 for dividends and $2,431 for capital
gain distributions. Class C returns for Equity Income from May 31,
1997 through June 30, 1994 are those of Class B, which reflect a 12b-1
fee of 1.00%. Returns prior to June 30, 1994 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.65%. Class C
returns prior to September 10, 1992 are those of Institutional Class
which has no 12b-1 fee. If Class C's 12b-1 fee had been reflected,
total returns prior to June 30, 1994 would have been lower.
During the 10-year period ended May 31, 1997 , a hypothetical
$10,000 investment in Institutional Class of Equity Income would have
grown to $35 ,057 .
EQUITY INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 18,013 $ 11,086 $ 5,958 $ 35,057 $ 39,484 $ 43,263 $ 14,156
1996 15,641 9,084 4,390 29,115 30,509 32,636 13,846
1995 13,291 7,202 3,175 23,668 23,754 25,247 13,457
1994 11,483 5,668 2,390 19,541 19,765 20,695 13,042
1993 10,675 4,947 2,222 17,843 18,958 18,895 12,750
1992 9,288 3,800 1,934 15,022 16,982 17,663 12,352
1991 8,414 2,882 1,751 13,047 15,458 15,270 11,989
1990 8,362 2,026 1,740 12,128 13,828 13,974 11,424
1989 9,162 1,415 1,587 12,164 11,858 11,604 10,946
1988 7,902 542 1,369 9,813 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Equity Income on June 1, 198 7 ,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $ 19,330 . If distributions had not been reinvested,
the amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$ 3.988 for dividends and $2 ,431 for capital gain
distributions.
During the 10-year period ended from April 30, 1987 to April 30,
1997, a hypothetical $10,000 investment in Class A of Balanced would
have grown to $27,180, including the effect of Class A's maximum 5.75%
sales charge.
BALANCED - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 14,958 $ 8,650 $ 3,572 $ 27,180 $ 37,542 $ 41,495 $ 14,215
1996 13,387 6,956 3,037 23,380 30,001 32,301 13,869
1995 12,959 5,875 2,898 21,732 23,040 24,499 13,478
1994 12,881 5,355 2,880 21,116 19,615 20,321 13,079
1993 13,247 4,830 2,307 20,384 18,624 18,403 12,777
1992 12,218 3,775 1,356 17,349 17,047 17,506 12,378
1991 11,101 2,895 544 14,540 14,947 14,593 11,996
1990 9,870 1,941 484 12,295 12,709 12,926 11,437
1989 10,394 1,007 0 11,401 11,495 11,334 10,923
1988 9,242 376 0 9,618 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Balanced on May 1, 1987, assuming the 5.75% maximum sales charge
had been in effect, the net amount invested in Class A shares was
$9,425. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $19,541. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $4,887 for dividends and $2,051 for capital gain
distributions. Initial offering of Class A for Balanced took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T, which reflect a 12b-1 fee of 0.50% (0.65% prior to
January 1, 1996). If Class A's 12b-1 fee had been reflected total
returns prior to September 3, 1996 would have been higher.
During the 10-year period ended April 30, 1997, a hypothetical
$10,000 investment in Class T of Balanced would have grown to $27,875,
including the effect of Class T's maximum 3.50% sales charge.
BALANCED - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 15,333 $ 8,880 $ 3,662 $ 27,875 $ 37,542 $ 41,495 $ 14,125
1996 13,707 7,121 3,110 23,938 30,001 32,301 13,869
1995 13,269 6,015 2,967 22,251 23,040 24,499 13,478
1994 13,188 5,483 2,949 21,620 19,615 20,321 13,079
1993 13,564 4,944 2,362 20,870 18,624 18,403 12,777
1992 12,509 3,865 1,389 17,763 17,047 17,506 12,378
1991 11,366 2,964 557 14,887 14,947 14,593 11,996
1990 10,106 1,987 495 12,558 12,709 12,926 11,437
1989 10,642 1,031 0 11,673 11,495 11,334 10,923
1988 9,462 385 0 9,847 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Balanced on May 1 , 1987, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $9,650. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $19, 784 . If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $5, 013 for dividends and $2, 100
for capital gain distributions.
During the 10-year period ended April 30 , 199 7 , a
hypothetical $10,000 investment in Class B of Balanced would have
grown to $28, 785 .
BALANCED - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 15,852 $ 9,147 $ 3,786 $ 28,785 $ 37,542 $ 41,495 $ 14,215
1996 14,204 7,380 3,222 24,806 30,001 32,301 13,869
1995 13,750 6,233 3,075 23,058 23,040 24,499 13,478
1994 13,667 5,681 3,056 22,404 19,615 20,321 13,079
1993 14,056 5,123 2,448 21,627 18,624 18,403 12,777
1992 12,963 4,005 1,439 18,407 17,047 17,506 12,378
1991 11,778 3,072 577 15,427 14,947 14,593 11,996
1990 10,472 2,060 513 13,045 12,709 12,926 11,437
1989 11,028 1,068 0 12,096 11,495 11,334 10,923
1988 9,806 398 0 10,204 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Balanced on May 1 , 1987, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $20, 106 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $5, 176 for
dividends and $2, 176 for capital gain distributions. Initial
offering of Class B of Balanced took place on December 31, 1996. Class
B returns prior to December 31, 1996 are those of Class T which
reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996). If
Class B's 12b-1 fee had been reflected, total returns prior to
December 31, 1996 would have been lower.
During the 10-year period ended April 30, 1997, a hypothetical
$10,000 investment in Class C of Balanced would have grown to
$28,785.
BALANCED - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 15,852 $ 9,147 $ 3,786 $ 28,785 $ 37,542 $ 41,495 $ 14,215
1996 14,204 7,380 3,222 24,806 30,001 32,301 13,869
1995 13,750 6,233 3,075 23,058 23,040 24,499 13,478
1994 13,667 5,681 3,056 22,404 19,615 20,321 13,079
1993 14,056 5,123 2,448 21,627 18,624 18,403 12,777
1992 12,963 4,005 1,439 18,407 17,047 17,506 12,378
1991 11,778 3,072 577 15,427 14,947 14,593 11,996
1990 10,472 2,060 513 13,045 12,709 12,926 11,437
1989 11,028 1,068 0 12,096 11,495 11,334 10,923
1988 9,806 398 0 10,204 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C
of Balanced on May 1, 1987, the net amount invested in Class C shares
was $10,000. The cost of the initial investment ($10,000) together
with the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $20,106. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $5,176 for dividends and $2,176 for capital
gain distributions. Class C returns for Balanced from April 30, 1997
through December 31, 1996 are those of Class B, which reflect a 12b-1
fee of 1.00%. Class C returns prior to December 31, 1996 are those of
Class T which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1,
1996). If Class C's 12b-1 fee had been reflected, total returns prior
to December 31, 1996 would have been lower.
During the 10-year period ended April 30, 1997, a hypothetical
$10,000 investment in Institutional Class of Balanced would have grown
to $29,237.
BALANCED - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 15,944 $ 9,484 $ 3,809 $ 29,237 $ 37,542 $ 41,495 $ 14,215
1996 14,269 7,523 3,237 25,029 30,001 32,301 13,869
1995 13,750 6,233 3,075 23,058 23,040 24,499 13,478
1994 13,667 5,681 3,056 22,404 19,615 20,321 13,079
1993 14,056 5,123 2,448 21,627 18,624 18,403 12,777
1992 12,963 4,005 1,439 18,407 17,047 17,506 12,378
1991 11,778 3,072 577 15,427 14,947 14,593 11,996
1990 10,472 2,060 513 13,045 12,709 12,926 11,437
1989 11,028 1,068 0 12,096 11,495 11,334 10,923
1988 9,806 399 0 10,204 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Balanced on May 1, 1987, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $20,373. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $5,324 for
dividends and $2,176 for capital gain distributions. Initial offering
of Institutional Class of Balanced took place on July 3, 1995.
Institutional Class returns prior to July 3, 1995 are those of Class T
which reflect a 12b-1 fee of 0.65%. Total returns for Institutional
Class prior to July 3, 1995 would have been higher if Class T's 12b-1
fee had not been reflected.
During the period from March 10, 1994 (commencement of operations
of the fund) to June 30, 1997, a hypothetical $10,000 investment in
Class A of Emerging Markets Income would have grown to $16,566,
including the effect of Class A's maximum 4.75% sales charge.
EMERGING MARKETS INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
June
30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,040 $ 3,428 $ 1,098 $ 16,566 $ 20,539 $ 21,503 $ 10,927
1996 9,630 1,944 250 11,824 15,248 15,535 10,682
1995 7,972 832 207 9,011 12,101 12,241 10,395
1994* 9,239 129 0 9,368 9,599 9,487 10,089
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class A
of Emerging Markets Income on March 10, 1994, assuming the 4.75%
maximum sales charge had been in effect, the net amount invested in
Class A shares was $9,525. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $13,661. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $2,282 for dividends and $819 for
capital gain distributions. Initial offering of Class A for Emerging
Markets Income took place on September 3, 1996. Class A returns from
September 3, 1996 through September 10, 1992 are those of Class T
which reflect a 12b-1 fee of 0.25%. Class A returns prior to September
10, 1992 are those of Institutional Class, which has no 12b-1 fee. If
Class A's 12b-1 fee had been reflected, total returns prior to
September 3, 1996 through September 10, 1992 would have been higher
and total returns prior to September 10, 1992 would have been
lower.
During the period from March 10, 1994 (commencement of operations of
the fund) to June 30, 1997 , a hypothetical $10,000 investment
in Class T of Emerging Markets Income would have grown to $16,796,
including the effect of Class T's maximum 3.50% sales charge.
EMERGING MARKETS INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
June
30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,198 $ 3,484 $ 1,114 $ 16,796 $ 20,539 $ 21,503 $ 10,927
1996 9,756 1,970 253 11,979 15,248 15,535 10,682
1995 8,077 842 210 9,129 12,101 12,241 10,395
1994* 9,361 130 0 9,491 9,599 9,487 10,089
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations .
Explanatory Notes: With an initial investment of $10,000 in Class T of
Emerging Markets Income on March 10, 1994, assuming the 3.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $9,650. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $13,719. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $2,319 for dividends and $830 for capital gain
distributions.
During the period from March 10, 1994 (commencement of operations of
the fund) to June 30, 1997, a hypothetical $10,000 investment in Class
B of Emerging Markets Income would have grown to $1 6,753 ,
including the effect of Class B's maximum applicable CDSC.
EMERGING MARKETS INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
June 30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,380 $ 3,235 $ 1,138 $ 16,753 $ 20,539 $ 21,503 $ 10,927
1996 10,130 1,846 261 12,237 15,248 15,535 10,682
1995 8,390 790 217 9,397 12,101 12,241 10,395
1994* 9,700 133 0 9,833 9,599 9,487 10,089
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations .
Explanatory Notes: With an initial investment of $10,000 in Class B of
Emerging Markets Income on March 10, 1994, assuming the maximum
applicable CDSC had been in effect, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $13,534. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $2,172 for dividends and $860 for capital gain
distributions. Initial offering of Class B of Emerging Markets
Income took place on June 30, 1994. Class B returns prior to June 30,
1994 are those of Class T which reflect a 12b-1 fee of 0.25%. If Class
B's 12b-1 fee (1.00% prior to January 1, 1996) had been reflected,
total returns prior to June 30, 1994 would have been lower.
During the period from March 10, 1994 (commencement of operations
of the fund) to June 30, 1997, a hypothetical $10,000 investment in
Class C of Emerging Markets Income would have grown to $17,053.
EMERGING MARKETS INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
June 30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,680 $ 3,235 $ 1,138 $ 17,053 $ 20,539 $ 21,503 $ 10,927
1996 10,130 1,846 261 12,237 15,248 15,535 10,682
1995 8,390 790 217 9,397 12,101 12,241 10,395
1994* 9,700 133 0 9,833 9,599 9,487 10,089
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations .
Explanatory Notes: With an initial investment of $10,000 in Class C
of Emerging Markets Income on March 10, 1994, the net amount invested
in Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $13,534. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $2,172 for dividends and $860 for
capital gain distributions. Class C returns for Emerging Markets
Income from June 30, 1997 through June 30, 1994 are those of Class B
which reflect a 12b-1 fee of 0.90% (1.00% prior to January 1, 1996).
Class C returns prior to June 30, 1994 are those of Class T which
reflect a 12b-1 fee of 0.25%. If Class C's 12b-1 fee had been
reflected, total returns prior to June 30, 1997 through December 31,
1995 and prior to June 30, 1994 would have been lower.
During the period from March 10, 1994 (commencement of operations of
the fund) to June 30, 1997, a hypothetical $10,000 investment in
Institutional Class of Emerging Markets Income would have grown to
$17,414.
EMERGING MARKETS INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P DJIA Cost
Ended Initial Reinvested Reinvested Value 500 of
June
30 $10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 12,580 $ 3,677 $ 1,157 $ 17,414 $ 20,539 $ 21,503 $ 10,927
1996 10,070 2,075 261 12,406 15,248 15,535 10,682
1995 8,370 873 217 9,460 12,101 12,241 10,395
1994* 9,700 135 0 9,835 9,599 9,487 10,089
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end preceding commencement of fund operations .
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Emerging Markets Income on March 10, 1994, the
net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $13,922. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$2,452 for dividends and $860 for capital gain distributions.
Initial offering of Institutional Class of Emerging Markets Income
took place on July 3, 1995. Institutional Class returns prior to July
3, 1995 are those of Class T which reflect a 12b-1 fee of 0.25%.Total
Returns for Institutional Class prior to July 3, 1995 would have been
higher if Class T's 12b-1 fee had not been reflected.
During the 10-year period ended from April 30, 1987 to April 30,
1997, a hypothetical $10,000 investment in Class A of High Yield would
have grown to $33,027, including the effect of Class A's maximum 4.75%
sales charge.
HIGH YIELD - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,184 $ 20,696 $ 1,147 $ 33,027 $ 37,542 $ 41,495 $ 14,215
1996 11,240 17,946 999 30,185 30,001 32,301 13,869
1995 10,699 14,677 951 26,327 23,040 24,499 13,478
1994 10,597 12,671 941 24,209 19,615 20,321 13,079
1993 10,681 10,972 441 22,094 18,624 18,403 12,777
1992 10,177 8,612 0 18,789 17,047 17,506 12,378
1991 8,714 5,533 0 14,247 14,947 14,593 11,996
1990 8,006 3,585 0 11,591 12,709 12,926 11,437
1989 8,835 2,38 6 0 11,221 11,495 11,334 10,923
1988 9,040 1,127 0 10,167 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of High Yield on May 1, 1987, assuming the 4.75% maximum sales charge
had been in effect, the net amount invested in Class A shares was
$9,525. The cost of the initial investment ($10,000) together with the
aggregate cost of reinvested dividends and capital gain distributions
for the period covered (their cash value at the time they were
reinvested) amounted to $29,501. If distributions had not been
reinvested, the amount of distributions earned from the class over
time would have been smaller, and cash payments for the period would
have amounted to $10,042 for dividends and $513 for capital gain
distributions. Initial offering of Class A for High Yield took place
on September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T, which reflect a 12b-1 fee of 0.15%. If Class A's
12b-1 fee had been reflected, total returns prior to September 3, 1996
through September 10, 1992 would have been higher and total returns
prior to September 10, 1992 would have been lower.
During the 10-year period ended from April 30,
1987 to April 3 0 , 199 7 , a hypothetical
$10,000 investment in Class T of High Yield would have grown to
$3 3 , 537 , including the effect of Class T's maximum 3.50%
sales charge.
HIGH YIELD - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,340 $ 21,034 $ 1,163 $ 33,537 $ 37,542 $ 41,495 $ 14,215
1996 11,387 18,182 1,012 30,581 30,001 32,301 13,869
1995 10,840 14,870 963 26,673 23,040 24,499 13,478
1994 10,736 12,837 954 24,527 19,615 20,321 13,079
1993 10,821 11,116 447 22,384 18,624 18,403 12,777
1992 10,311 8,725 0 19,036 17,047 17,506 12,378
1991 8,829 5,605 0 14,434 14,947 14,593 11,996
1990 8,111 3,632 0 11,743 12,709 12,926 11,437
1989 8,951 2,417 0 11,368 11,495 11,334 10,923
1988 9,159 1,142 0 10,301 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
High Yield on May 1 , 1987, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $9,650. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $29,808. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $10,191 for dividends and $5 1 9 for
capital gain distributions.
During the 10-year period ended from April 30,
1987 to April 30 , 199 7 , a hypothetical $10,000
investment in Class B of High Yield would have grown to $33,941.
HIGH YIELD - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,722 $ 21,019 $ 1,200 $ 33,941 $ 37,542 $ 41,495 $ 14,215
1996 11,771 18,327 1,046 31,144 30,001 32,301 13,869
1995 11,213 15,163 996 27,372 23,040 24,499 13,478
1994 11,125 13,304 988 25,417 19,615 20,321 13,079
1993 11,213 11,519 463 23,195 18,624 18,403 12,777
1992 10,685 9,041 0 19,726 17,047 17,506 12,378
1991 9,149 5,809 0 14,958 14,947 14,593 11,996
1990 8,405 3,764 0 12,169 12,709 12,926 11,437
1989 9,276 2,504 0 11,780 11,495 11,334 10,923
1988 9,491 1,183 0 10,674 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
High Yield on May 1 , 1987, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $29,80 2 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $10, 313 for
dividends and $ 538 for capital gain distributions. Initial
offering of Class B of High Yield took place on June 30, 1994. Class B
returns prior to June 30, 1994 are those of Class T which reflect a
12b-1 fee of 0.25%. If Class B's 12b-1 fee (1.00% prior to January 1,
1996) had been reflected, total returns prior to June 30, 1994 would
have been lower.
During the 10-year period ended from April 30, 1987 to April 30,
1997, a hypothetical $10,000 investment in Class C of High Yield would
have grown to $33,941.
HIGH YIELD - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,722 $ 21,019 $ 1,200 $ 33,941 $ 37,542 $ 41,495 $ 14,215
1996 11,771 18,327 1,046 31,144 30,001 32,301 13,869
1995 11,213 15,163 996 27,372 23,040 24,499 13,478
1994 11,125 13, 3 04 988 25,417 19,615 20,321 13,079
1993 11,213 11,519 463 23,195 18,624 18,403 12,777
1992 10,685 9,041 0 19,726 17,047 17,506 12,378
1991 9,149 5,809 0 14,958 14,947 14,593 11,996
1990 8,405 3,764 0 12,169 12,709 12,926 11,437
1989 9,276 2,504 0 11,780 11,495 11,334 10,923
1988 9,491 1,183 0 10,674 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C
of High Yield on May 1, 1987, the net amount invested in Class C
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $29,802. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $10,313 for dividends and $538 for capital gain
distributions. Class C returns for High Yield from April 30, 1997
through June 30, 1994 are those of Class B which reflect a 12b-1 fee
of 0.90% (1.00% prior to January 1, 1996). Class C returns prior to
June 30, 1994 are those of Class T which reflect a 12b-1 fee of 0.25%.
If Class C's 12b-1 fee had been reflected, total returns prior to
April 30, 1997 through December 31, 1995 and prior to June 30, 1994
would have been lower.
During the 10-year period ended from April 30, 1997, a
hypothetical $10,000 investment in Institutional Class of High Yield
would have grown to $34,614.
HIGH YIELD - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 11,566 $ 21,858 $ 1,190 $ 34,614 $ 37,542 $ 41,495 $ 14,215
1996 11,644 18,853 1,034 31,531 30,001 32,301 13,869
1995 11,233 15,409 998 27,640 23,040 24,499 13,478
1994 11,125 13,304 988 25,417 19,615 20,321 13,079
1993 11,213 11,519 463 23,195 18,624 18,403 12,777
1992 10,685 9,041 0 19,726 17,047 17,506 12,378
1991 9,149 5,809 0 14,958 14,947 14,593 11,996
1990 8,405 3,764 0 12,169 12,709 12,926 11,437
1989 9,276 2,504 0 11,780 11,495 11,334 10,923
1988 9,491 1,183 0 10,674 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of High Yield on May 1 , 198 7 , the
net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $30,868. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$10,675 for dividends and $538 for capital gain distributions.
Initial offering of Institutional Class of High Yield took place on
July 3, 1995. Institutional Class returns prior to July 3, 1995 are
those of Class T which reflect a 12b-1 fee of 0.25%.Total Returns for
Institutional Class prior to July 3, 1995 would have been higher if
Class T's 12b-1 fee had not been reflected.
During the period from October 31, 1994 (commencement of operations
of the fund) to June 30, 1997, a hypothetical $10,000 investment in
Class A of Strategic Income would have grown to $13,732, including the
effect of Class A's maximum 4.75% sales charge.
STRATEGIC INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of/r>
Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,773 $ 2,297 $ 653 $ 13,723 $ 19,892 $ 20,716 $ 10,722
1996 10,430 1,338 299 12,067 14,768 14,967 10,482
1995 10,354 487 0 10,841 11,721 11,793 10,201
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of Strategic Income on October 31, 1994, assuming the 4.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $9,525. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $12,861. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $1,974 for dividends and $560 for capital gain
distributions. Initial offering of Class A for Strategic Income took
place on September 3, 1996. Class A returns prior to September 3, 1996
are those of Class T, which reflect a 12b-1 fee of 0.15%. Class A
returns prior to September 10, 1992 are those of Institutional Class,
which has no 12b-1 fee. If Class A's 12b-1 fee had been reflected,
total returns prior to September 3, 1996 through September 10, 1992
would have been higher and total returns prior to September 10, 1992
would have been lower.
During the 10-year period ended from October 31, 1994
(commencement of operations of the fund) to June 30, 1997, a
hypothetical $10,000 investment in Class T of Strategic Income would
have grown to $13,920, including the effect of Class T's maximum 3.50%
sales charge.
STRATEGIC INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,914 $ 2,345 $ 661 $ 13,920 $ 19,892 $ 20,716 $ 10,722
1996 10,567 1,356 302 12,225 14,768 14,967 10,482
1995 10,490 494 0 10,984 11,721 11,793 10,201
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Strategic Income on October 31, 1994, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $9,650. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $12,915. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $2,012 for dividends and $569 for capital gain
distributions.
During the period from October 31, 1994 (commencement of operations of
the fund) to June 30, 1997, a hypothetical $10,000 investment in Class
B of Strategic Income would have grown to $13, 882 , including
the effect of Class B's maximum applicable CDSC.
STRATEGIC INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,030 $ 2,174 $ 678 $ 13,882 $ 19,892 $ 20,716 $ 10,722
1996 10,960 1,254 311 12,525 14,768 14,967 10,482
1995 10,870 456 0 11,326 11,721 11,793 10,201
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Strategic Income on October 31, 1994, assuming the maximum applicable
CDSC had been in effect, the net amount invested in Class B shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $12,765. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $1,882 for dividends and $590 for capital gain
distributions.
During the period from October 31, 1994 (commencement of operations
of the fund) to June 30, 1997, a hypothetical $10,000 investment in
Class C of Strategic Income would have grown to $14,182.
STRATEGIC INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,330 $ 2,174 $ 678 $ 14,182 $ 19,892 $ 20,716 $ 10,722
1996 10,960 1,254 311 12,525 14,768 14,967 10,482
1995 10,870 456 0 11,326 11,721 11,793 10,201
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class C
of Strategic Income on October 31, 1994, the net amount invested in
Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $12,765. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $1,882 for dividends and $590 for
capital gain distributions. Class C returns for Strategic Income for
the period ended June 30, 1997 are those of Class B which reflect a
12b-1 fee of 0.90% (1.00% prior to January 1, 1996). If Class C's
12b-1 fee had been reflected, total returns after December 31, 1995
would have been lower.
During the period from October 31, 1994 (commencement of operations of
the fund) to June 30, 1997, a hypothetical $10,000 investment in
Institutional Class of Strategic Income would have grown to
$1 4,487 .
STRATEGIC INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,360 $ 2,441 $ 686 $ 14,487 $ 19,892 $ 20,716 $ 10,722
1996 10,990 1,408 314 12,712 14,768 14,967 10,482
1995 10,870 512 0 11,382 11,721 11,793 10,201
</TABLE>
* From October 31, 1994 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Strategic Income on October 31, 1994, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $13,028. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $2,092 for
dividends and $590 for capital gain distributions. Initial offering
of Institutional Class of Strategic Income took place on July 3, 1995.
Institutional Class returns prior to July 3, 1995 are those of Class T
which reflect a 12b-1 fee of 0.25%. Total returns for Institutional
Class prior to July 3, 1995 would have been higher if Class T's 12b-1
fee had not been reflected.
During the 10-year period ended July 31, 1997, a hypothetical
$10,000 investment in Class A of Mortgage Securities would have grown
to $22,129, including the effect of Class A's maximum 4.75% sales
charge.
MORTGAGE SECURITIES - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
July
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,421 $ 11,123 $ 585 $ 22,129 $ 40,348 $ 43,156 $ 14,104
1996 10,166 9,546 361 20,073 26,521 28,457 13,796
1995 10,270 8,348 191 18,809 22,751 23,704 13,401
1994 9,978 6,880 105 16,963 18,041 18,466 13,040
1993 10,289 6,159 0 16,448 17,157 16,894 12,689
1992 10,213 5,091 0 15,304 15,777 15,726 12,346
1991 9,883 3,907 0 13,790 13,986 13,606 11,968
1990 9,638 2,74 4 0 12,382 12,403 12,596 11,459
1989 9,676 1,790 0 11,466 11,646 11,108 10,931
1988 9,346 843 0 10,189 8,829 8,567 10,413
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Mortgage Securities on August 1, 1987, assuming the 4.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $9,525. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $21,152. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $7,137 for dividends and $311 for capital gain
distributions. Initial offering of Class A of Mortgage Securities took
place on March 3, 1997. Class A returns prior to March 3, 1997 are
those of Initial Class which has no 12b-1 fee. If Class A's 12b-1 fees
had been reflected, total returns prior to March 3, 1997 would have
been lower.
During the 10-year period ended July 31, 1997, a hypothetical
$10,000 investment in Class T of Mortgage Securities would have grown
to $22,411, including the effect of Class T's maximum 3.50% sales
charge.
MORTGAGE SECURITIES - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
July
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,558 $ 11,260 $ 593 $ 22,411 $ 40,348 $ 43,156 $ 14,104
1996 10,300 9,670 366 20,336 26,521 28,457 13,796
1995 10,405 8,457 194 19,056 22,751 23,704 13,401
1994 10,109 6,971 106 17,186 18,041 18,466 13,040
1993 10,424 6,240 0 16,664 17,157 16,894 12,689
1992 10,347 5,158 0 15,505 15,777 15,726 12,346
1991 10,013 3,958 0 13,971 13,986 13,606 11,968
1990 9,765 2,779 0 12,544 12,403 12,596 11,459
1989 9,803 1,814 0 11,617 11,646 11,108 10,931
1988 9,468 855 0 10,323 8,829 8,567 10,413
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T
of Mortgage Securities on August 1, 1987, assuming the 3.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $9,650. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $21,290. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $7,227 for dividends and $315 for capital gain
distributions. Initial offering of Class T of Mortgage Securities took
place on March 3, 1997. Class T returns prior to March 3, 1997 are
those of Initial Class which has no 12b-1 fee. If Class T's 12b-1 fees
had been reflected, total returns prior to March 3, 1997 would have
been lower.
During the 10-year period ended July 31, 1997, a hypothetical
$10,000 investment in Class B of Mortgage Securities would have grown
to $23,140.
MORTGAGE SECURITIES - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
July
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,931 $ 11,595 $ 614 $ 23,140 $ 40,348 $ 43,156 $ 14,104
1996 10,673 10,022 379 21,074 26,521 28,457 13,796
1995 10,782 8,764 201 19,747 22,751 23,704 13,401
1994 10,475 7,224 110 17,809 18,041 18,466 13,040
1993 10,802 6,466 0 17,268 17,157 16,894 12,689
1992 10,723 5,344 0 16,067 15,777 15,726 12,346
1991 10,376 4,102 0 14,478 13,986 13,606 11,968
1990 10,119 2,880 0 12,999 12,403 12,596 11,459
1989 10,158 1,880 0 12,038 11,646 11,108 10,931
1988 9,812 885 0 10,697 8,829 8,567 10,413
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B
of Mortgage Securities on August 1, 1987, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $21,637. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $7,460 for dividends and $327 for
capital gain distributions. Initial offering of Class B of Mortgage
Securities took place on March 3, 1997. Class B returns prior to March
3, 1997 are those of Initial Class which has no 12b-1 fee. If Class
B's 12b-1 fees had been reflected, total returns prior to March 3,
1997 would have been lower.
During the 10-year period ended July 31, 1997, a hypothetical
$10,000 investment in Institutional Class of Mortgage Securities would
have grown to $23,227.
MORTGAGE SECURITIES - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
July
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,931 $ 11,682 $ 614 $ 23,227 $ 40,348 $ 43,156 $ 14,104
1996 10,673 10,022 379 21,074 26,521 28,457 13,796
1995 10,782 8,764 201 19,747 22,751 23,704 13,401
1994 10,475 7,224 110 17,809 18,041 18,466 13,040
1993 10,802 6,466 0 17,268 17,157 16,894 12,689
1992 10,723 5,344 0 16,067 15,777 15,726 12,346
1991 10,376 4,102 0 14,478 13,986 13,606 11,968
1990 10,119 2,880 0 12,999 12,403 12,596 11,459
1989 10,158 1,880 0 12,038 11,646 11,108 10,931
1988 9,812 885 0 10,697 8,829 8,567 10,413
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Mortgage Securities on August 1, 1987, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $21,723. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $7,500 for
dividends and $327 for capital gain distributions. Initial offering of
Institutional Class of Mortgage Securities took place on March 3,
1997. Returns prior to March 3, 1997 are those of Initial Class which
has no 12b-1 fee.
During the 10-year period ended July 31, 1997, a hypothetical
$10,000 investment in Initial Class of Mortgage Securities would have
grown to $23,253.
MORTGAGE SECURITIES - INITIAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
July
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,941 $ 11,698 $ 614 $ 23,253 $ 40,348 $ 43,156 $ 14,104
1996 10,673 10,022 379 21,074 26,521 28,457 13,796
1995 10,782 8,764 201 19,747 22,751 23,704 13,401
1994 10,475 7,224 110 17,809 18,041 18,466 13,040
1993 10,802 6,466 0 17,268 17,157 16,894 12,689
1992 10,723 5,344 0 16,067 15,777 15,726 12,346
1991 10,376 4,102 0 14,478 13,986 13,606 11,968
1990 10,119 2,880 0 12,999 12,403 12,596 11,459
1989 10,158 1,880 0 12,038 11,646 11,108 10,931
1988 9,812 885 0 10,697 8,829 8,567 10,413
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Mortgage Securities on July 31, 1987, the net amount invested
in Initial Class shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $21,728. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $7,503 for dividends
and $327 for capital gain distributions.
During the period April 30, 1987 to April 30, 1997, a hypothetical
$10,000 investment in Class A of Government Investment would have
grown to $19,489, including the effect of Class A's maximum 4.75%
sales charge.
GOVERNMENT INVESTMENT - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain/r>
Living
Investment Distributions Distributions
1997 $ 9,404 $ 9,543 $ 542 $ 19,489 $ 37,542 $ 41,495 $ 14,215
1996 9,434 8,431 544 18,409 30,001 32,301 13,869
1995 9,313 7,255 537 17,105 23,040 24,499 13,478
1994 9,283 6,204 535 16,022 19,615 20,321 13,079
1993 9,999 5,801 322 16,122 18,624 18,403 12,777
1992 9,606 4,668 0 14,274 17,047 17,506 12,378
1991 9,454 3,662 0 13,116 14,947 14,593 11,996
1990 9,000 2,552 0 11,552 12,709 12,926 11,437
1989 9,121 1,667 0 10,788 11,495 11,334 10,923
1988 9,333 810 0 10,143 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Government Investment on April 30, 1987, assuming the 4.75% maximum
sales charge had been in effect, the net amount invested in Class A
shares was $9,525. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $20,187. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $6,576 for dividends and $353 for capital gain
distributions. Initial offering of Class A for Government Investment
took place on September 3, 1996. Class A returns from September 3,
1996 through September 10, 1992 are those of Class T which reflect a
12b-1 fee of 0.25%. Class A returns prior to September 10, 1992 are
those of Institutional Class, which has no 12b-1 fee. If Class A's
12b-1 fee had been reflected, total returns prior to September 3, 1996
through September 10, 1992 would have been higher and total returns
prior to September 10, 1992 would have been lower.
During the 10-year period ended April 30, 1987 to
April 3 0 , 19 88 , a hypothetical $10,000 investment
in Class T of Government Investment would have grown to $19,720,
including the effect of Class T's maximum 3.50% sales charge.
GOVERNMENT INVESTMENT - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,517 $ 9,654 $ 549 $ 19,720 $ 37,542 $ 41,495 $ 14,215
1996 9,558 8,541 551 18,650 30,001 32,301 13,869
1995 9,435 7,350 544 17,329 23,040 24,499 13,478
1994 9,405 6,285 542 16,232 19,615 20,321 13,079
1993 10,130 5,876 327 16,333 18,624 18,403 12,777
1992 9,732 4,729 0 14,461 17,047 17,506 12,378
1991 9,578 3,710 0 13,288 14,947 14,593 11,996
1990 9,118 2,585 0 11,703 12,709 12,926 11,437
1989 9,241 1,688 0 10,929 11,495 11,334 10,923
1988 9,456 820 0 10,276 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Government Investment on May 1 , 1987, assuming the 3.50%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $9,650. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $20,317. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $6,660 for dividends and $358 for
capital gain distributions.
During the 10-year period ended April 30, 1987
(commencement of operations of the fund) to April 30, 1997, a
hypothetical $10,000 investment in Class B of Government Investment
would have grown to $ 20,026 .
GOVERNMENT INVESTMENT - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,862 $ 9,595 $ 569 $ 20,026 $ 37,542 $ 41,495 $ 14,215
1996 9,894 8,574 571 19,039 30,001 32,301 13,869
1995 9,767 7,48 6 563 17,816 23,040 24,499 13,478
1994 9,746 6,513 562 16,821 19,615 20,321 13,079
1993 10,498 6,090 338 16,926 18,624 18,403 12,777
1992 10,085 4,901 0 14,986 17,047 17,506 12,378
1991 9,926 3,844 0 13,770 14,947 14,593 11,996
1990 9,449 2,679 0 12,128 12,709 12,926 11,437
1989 9,576 1,750 0 11,326 11,495 11,334 10,923
1988 9,799 849 0 10,648 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Government Investment on May 1, 1987, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $ 20 , 277 . If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $6,699 for dividends
and $371 for capital gain distributions.
During the 10-year period ended April 30, 1987 to April 30, 1997, a
hypothetical $10,000 investment in Class C of Government Investment
would have grown to $20,026.
GOVERNMENT INVESTMENT - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,862 $ 9,595 $ 569 $ 20,026 $ 37,542 $ 41,495 $ 14,215
1996 9,894 8,574 571 19,039 30,001 32,301 13,869
1995 9,767 7,48 6 563 17,816 23,040 24,499 13,478
1994 9,746 6,513 562 16,821 19,615 20,321 13,079
1993 10,498 6,090 338 16,926 18,624 18,403 12,777
1992 10,085 4,901 0 14,986 17,047 17,506 12,378
1991 9,926 3,844 0 13,770 14,947 14,593 11,996
1990 9,449 2,679 0 12,128 12,709 12,926 11,437
1989 9,576 1,750 0 11,326 11,495 11,334 10,923
1988 9,799 849 0 10,648 9,353 9,185 10,390
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C
of Government Investment on May 1, 1987 the net amount invested in
Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $20,277. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $6,699 for dividends and $371 for
capital gain distributions. Class C returns for Government Investment
from April 30, 1997 through June 30, 1994 are those of Class B which
reflect a 12b-1 fee of 0.90% (1.00% prior to January 1, 1996). Class C
returns prior to June 30, 1994 are those of Class T which reflect a
12b-1 fee of 0.25%. If Class C's 12b-1 fee had been reflected, total
returns prior to April 30, 1997 through December 31, 1995 and prior to
June 30, 1994 would have been lower.
During the 10-year period ended April 30, 1987 to April
30, 1997, a hypothetical $10,000 investment in Institutional Class of
Government Investment would have grown to $20,523.
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,852 $ 10,103 $ 568 $ 20,523 $ 37,542 $ 14,215 $ 41,495
1996 9,894 8,891 571 19,356 30,001 13,869 32,301
1995 9,778 7,616 564 17,958 23,040 13,478 24,499
1994 9,746 6,513 562 16,821 19,615 13,079 20,321
1993 10,498 6,090 338 16,926 18,624 12,777 18,403
1992 10,085 4,901 0 14,986 17,047 12,378 17,506
1991 9,926 3,844 0 13,770 14,947 11,996 14,593
1990 9,449 2,679 0 12,128 12,709 11,437 12,926
1989 9,576 1,750 0 11,326 11,495 10,923 11,334
1988 9,799 849 0 10,648 9,353 10,390 9,185
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Government Investment on May 1 , 1987,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $20,801. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$6,955 for dividends and $371 for capital gain distributions.
Initial offering of Institutional Class of Government Investment took
place on July 3, 1995. Institutional Class returns prior to July 3,
1995 are those of Class T which reflect a 12b-1 fee of 0.25%. Total
Returns for Institutional Class prior to July 3, 1995 would have been
higher if Class T's 12b-1 fee had not been reflected.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class A of Intermediate Bond would have grown to
$20,603, including the effect of Class A's maximum 3.75% sales
charge.
INTERMEDIATE BOND - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,579 $ 11,024 $ 0 $ 20,603 $ 39,484 $ 43,263 $ 14,156
1996 9,579 9,793 0 19,372 30,509 32,636 13,846
1995 9,819 8,820 0 18,639 23,754 25,247 13,457
1994 9,671 7,653 0 17,324 19,765 20,695 13,042
1993 10,096 6,886 0 16982 18,958 18,895 12,750
1992 9,736 5,448 0 15,184 16,982 17,663 12,352
1991 9,450 4,114 0 13,564 15,458 15,270 11,989
1990 9,284 2,923 0 12,207 13,828 13,974 11,424
1989 9,413 1,907 0 11,320 11,858 11,604 10,946
1988 9,394 909 0 10,303 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Intermediate Bond on June 1, 1987 assuming the 3.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was $9,625. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $21,120. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $7,402 for dividends and $0 for capital gain
distributions. Initial offering of Class A for Intermediate Bond took
place on September 3, 1996. Class A returns from September 3, 1996
through September 10, 1992 are those of Class T which reflect a 12b-1
fee of 0.25%. Class A returns prior to September 10, 1992 are those of
Institutional Class, which has no 12b-1 fee. If Class A's 12b-1 fee
had been reflected, total returns prior to September 3, 1996 through
September 10, 1992 would have been higher and total returns prior to
September 10, 1992 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical $10,000
investment in Class T of Intermediate Bond would have grown to
$20,842, including the effect of Class T's maximum 2.75% sales charge.
INTERMEDIATE BOND - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,688 $ 11,154 $ 0 $ 20,842 $ 39,484 $ 43,263 $ 14,156
1996 9,678 9,895 0 19,573 30,509 32,636 13,846
1995 9,921 8,912 0 18,833 23,754 25,247 13,457
1994 9,772 7,732 0 17,504 19,765 20,695 13,042
1993 10,201 6,958 0 17,159 1 8,958 18,895 12,750
1992 9,837 5,505 0 15,342 16,982 17,663 12,352
1991 9,548 4,157 0 13,705 15,458 15,270 11,989
1990 9,380 2,954 0 12,334 13,828 13,974 11,424
1989 9,511 1,926 0 11,437 11,858 11,604 10,946
1988 9,492 918 0 10,410 9,353 9,163 10,389
</TABLE>
During the 10-year period ended May 31, 1997, a hypothetical $10,000
investment in Class T of Intermediate Bond would have grown to
$20,842, including the effect of Class T's maximum 2.75% sales charge.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Intermediate Bond on June 1, 1987 assuming the 2.75% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $9,725. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $21,241. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $7,481 for dividends and $0 for capital gain
distributions. Initial offering of Class T of Intermediate Bond
took place on September 10, 1992. Class T returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class T's 12b-1 fee had been reflected, total returns prior to
September 10, 1992 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical $10,000
investment in Class B of Intermediate Bond would have grown to
$20,958.
INTERMEDIATE BOND - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,952 $ 11,006 $ 0 $ 20,958 $ 39,484 $ 43,263 $ 14,156
1996 9,933 9,864 0 19,797 30,509 32,636 13,846
1995 10,192 9,004 0 19,196 23,754 25,247 13,457
1994 10,048 7,951 0 17,999 19,765 20,695 13,042
1993 10,489 7,155 0 17,644 18,958 18,895 12,750
1992 10,115 5661 0 15,776 16,982 17,663 12,352
1991 9,818 4,275, 0 14,093 15,458 15,270 11,989
1990 9,645 3,038 0 12,683 13,828 13,974 11,424
1989 9,779 1,982 0 11,761 11,858 11,604 10,946
1988 9,760 944 0 10,704 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Intermediate Bond on June 1 198 7 , the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $21,098. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $7,475 for dividends
and $0 for capital gain distributions. Initial offering of Class B
of Intermediate Bond took place on June 30, 1994. Class B returns
prior to June 30, 1994 through September 10, 1992 are those of Class T
which reflect a 12b-1 fee of 0.25%. Class B returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class B's 12b-1 fee had been reflected, total returns prior to June
30, 1994 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class C of Intermediate Bond would have grown to
$20,958.
INTERMEDIATE BOND - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested/r>
Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,952 $ 11,006 $ 0 $ 20,958 $ 39,484 $ 43,263 $ 14,156
1996 9,933 9,864 0 19,797 30,509 32,636 13,846
1995 10,192 9,004 0 19,196 23,754 25,247 13,457
1994 10,048 7,951 0 17,999 19,765 20,695 13,042
1993 10,489 7,155 0 17,644 18,958 18,895 12,750
1992 10,115 5 , 661 0 15,776 16,982 17,663 12,352
1991 9,818 4,275 0 14,093 15,458 15,270 11,989
1990 9,645 3,038 0 12,683 13,828 13,974 11,424
1989 9,779 1,982 0 11,761 11,858 11,604 10,946
1988 9,760 944 0 10,704 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Intermediate Bond on June 1, 198 7 , the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $21,098. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $7,475 for dividends
and $0 for capital gain distributions. Class C returns for
Intermediate Bond from May 31, 1997 through June 30, 1994 are those of
Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to January 1,
1996). Class C returns prior to June 30, 1994 through September 10,
1992 are those of Class T which reflect a 12b-1 fee of 0.25%. Class C
returns prior to September 10, 1992 are those of Institutional Class
which has no 12b-1 fee. If Class C's 12b-1 fee had been reflected,
total returns prior to May 31, 1997 through December 31, 1995 and
prior to June 30, 1994 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class C of Intermediate Bond would have grown to
$21,819.
INTERMEDIATE BOND - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9 , 971 $ 11 , 848 $ 0 $ 21 , 819 $ 39 , 484 $ 43 ,263 $ 14, 156
1996 9 , 952 10 , 461 0 20 , 413 30 , 509 32 ,636 13, 846
1995 10 , 211 9 , 392 0 19 , 603 23 , 754 25 ,247 13, 457
1994 10 , 058 8 , 111 0 18 , 169 19 , 765 20 ,695 13, 042
1993 10 , 489 7 , 211 0 17 , 700 18 , 958 18 ,895 12, 750
1992 10 , 115 5 , 661 0 15 , 776 16 , 982 17 ,663 12, 352
1991 9 , 818 4 , 275 0 14 , 093 15 , 458 15 ,270 11, 989
1990 9 , 645 3 , 038 0 12 , 683 13 , 828 13 ,974 11, 424
1989 9 , 779 1 ,982 0 11 , 761 11 , 858 11 ,604 10, 946
1988 9 , 760 944 0 10 , 704 9 , 353 9 ,163 10, 389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Intermediate Bond on June 1,
198 7 , the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $21,941. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $7,870 for dividends and $0 for capital gain
distributions.
During the period September 16, 1987 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class A of Short Fixed-Income would have grown to $18,810, including
the effect of Class A's maximum 1.50% sales charge.
SHORT FIXED-INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,111 $ 9,69 9 $ 0 $ 18,810 $ 33,701 $ 36,580 $ 13,930
1996 9,200 8,660 0 17,860 26,932 28,475 13,591
1995 9,180 7,595 0 16,775 20,683 21,597 13,209
1994 9,466 6,826 0 16,292 17,609 17,914 12,817
1993 9,889 6,053 0 15,942 16,719 16,223 12,522
1992 9,761 4,810 0 14,571 15,303 15,433 12,130
1991 9,545 3,534 0 13,079 13,418 12,865 11,757
1990 9,594 2,377 0 11,971 11,409 11,395 11,209
1989 9,633 1,414 0 11,047 10,319 9,991 10,704
1988* 9,889 531 0 10,420 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of Short Fixed-Income on September 16, 1987, assuming the 1.50%
maximum sales charge had been in effect, the net amount invested in
Class A shares was $9,850. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $20,199. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $6,993 for dividends and $0 for capital
gain distributions. Initial offering of Class A for Short Fixed-Income
took place on September 3, 1996. Class A returns prior to September 3,
1996 are those of Class T, which reflect a 12b-1 fee of 0.15%. Class A
returns prior to September 10, 1992 are those of Institutional Class,
which has no 12b-1 fee. If Class A's 12b-1 fee had been reflected,
total returns prior to September 3, 1996 through September 10, 1992
would have been higher and total returns prior to September 10, 1992
would have been lower.
During the period September 16, 1987 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class T of Short Fixed-Income would have grown to $18,899, including
the effect of Class T's maximum 1.50% sales charge.
SHORT FIXED-INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,151 $ 9,748 $ 0 $ 18,899 $ 33,701 $ 36,580 $ 13,930
1996 9,200 8,660 0 17,860 26,932 28,475 13,591
1995 9,180 7,595 0 16,775 20,683 21,597 13,209
1994 9,466 6,826 0 16,292 17,609 17,914 12,817
1993 9,889 6,053 0 15,942 16,719 16,223 12,522
1992 9,761 4,810 0 14,571 15,303 15,433 12,130
1991 9,545 3,534 0 13,079 13,418 12,865 11,757
1990 9,594 2,377 0 11,971 11,409 11,395 11,209
1989 9,633 1,414 0 11,047 10,319 9,991 10,704
1988* 9,889 531 0 10,420 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Short Fixed-Income on September 16, 1987, assuming the 1.50% maximum
sales charge had been in effect, the net amount invested in Class T
shares was $9,850. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $20,210. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $6,998 for dividends and $0 for capital gain
distributions .
During the 10-year period from September 16, 1987 (commencement of
operations of the fund) to April 30, 1997, a hypothetical $10,000
investment in Class C of Short-Fixed Income would have grown to
$19,187.
SHORT-FIXED INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9, 290 $ 9,897 $ 0 $ 19,187 $ 33,701 $ 36,580 $ 13,930
1996 9, 340 8,792 0 18,132 26,932 28,475 13,591
1995 9, 320 7, 710 0 17,030 20,683 21,597 13,209
1994 9, 610 6 ,930 0 16,540 17,609 17,914 12,817
1993 10,040 6, 145 0 16,185 16,719 16,223 12,522
1992 9,910 4,883 0 14,793 15,303 15,433 12,130
1991 9,690 3, 589 0 13,279 13,418 12,865 11,757
1990 9,740 2, 413 0 1 2 ,1 53 11,409 11,395 11,209
1989 9,780 1, 435 0 11, 215 10,319 9,991 10,704
1988* 10,040 599 0 10, 579 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in Class C
of Short-Fixed Income on September 16, 1987, the net amount invested
in Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $20,366. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $7,105 for dividends and $0 for capital
gain distributions. Class C returns for Short Fixed-Income for the
period ended April 30, 1997 are those of Class T which reflect a 12b-1
fee of 0.15%. If Class C's 12b-1 fee had been reflected, total returns
would have been lower.
During the period September 16, 1987 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Institutional Class of Short Fixed-Income would have grown to
$19,206.
SHORT FIXED-INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,280 $ 9,926 $ 0 $ 19,206 $ 33,701 $ 36,580 $ 13,930
1996 9,340 8,810 0 18,150 26,932 28,475 13,591
1995 9,320 7,710 0 17,030 20,683 21,597 13,209
1994 9,610 6,930 0 16,540 17,609 17,914 12,817
1993 10,040 6,145 0 16,185 16,719 16,223 12,522
1992 9,910 4,883 0 14,793 15,303 15,433 12,130
1991 9,690 3,589 0 13,279 13,418 12,865 11,757
1990 9,740 2,413 0 12,153 11,409 11,395 11,209
1989 9,780 1,435 0 11,215 10,319 9,991 10,704
1988* 10,040 539 0 10,579 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end following commencement of fund operations.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Short Fixed-Income on September 16, 1987, the
net amount invested Institutional Class shares was $10,000. The cost
of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $20,406. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $7,125 for
dividends and $0 for capital gain distributions. Initial offering
of Institutional Class of Short Fixed-Income took place on July 3,
1995. Institutional Class returns prior to July 3, 1995 are those of
Class T which reflect a 12b-1 fee of 0.15%. Total Returns for
Institutional Class prior to July 3, 1995 would have been higher if
Class T's 12b-1 fee had not been reflected.
During the period September 16, 1987 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class A of High Income Municipal would have grown to $21,631,
including the effect of Class A's maximum 4.75% sales charge.
HIGH INCOME MUNICIPAL - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,144 $ 9,990 $ 497 $ 21,631 $ 33,701 $ 36,580 $ 13,930
1996 11,078 8,769 490 20,337 26,932 28,475 13,591
1995 10,992 7,593 487 19,072 20,683 21,597 13,209
1994 11,144 6,545 493 18,182 17,609 17,914 12,817
1993 11,678 5,834 413 17,925 16,719 16,223 12,522
1992 10,982 4,467 347 15,796 15,303 15,433 12,130
1991 10,611 3,301 322 14,234 13,418 12,865 11,757
1990 10,106 2,187 164 12,457 11,409 11,395 11,209
1989 10,087 1,301 53 11,441 10,319 9,991 10,704
1988* 9,744 455 0 10,199 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of High Income Municipal on September 16, 1987, assuming the 4.75%
maximum sales charge had been in effect, the net amount invested in
Class A shares was $9,525. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $20,186. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $6,770 for dividends and $364 for
capital gain distributions. Initial offering of High Income Municipal
took place on September 3, 1996. Class A returns prior to September 3,
1996 ) are those of Class T, which reflect a 12b-1 fee of 0.25%. Class
A returns prior to September 10, 1992 are those of Institutional
Class, which has no 12b-1 fee. If Class A's 12b-1 fee had been
reflected, total returns prior to September 3, 1996 through September
10, 1992 would have been higher and total returns prior to September
10, 1992 would have been lower.
During the period September 16, 1987 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class T of High Income Municipal would have grown to $21,923,
including the effect of Class T's maximum 3.50% sales charge.
HIGH INCOME MUNICIPAL - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,291 $ 10,128 $ 504 $ 21,923 $ 33,701 $ 36,580 $ 13,930
1996 11,223 9,884 497 20,604 26,932 28,475 13,591
1995 11,136 7,694 493 19,323 20,683 21,597 13,209
1994 11,291 6,630 500 18,421 17,609 17,914 12,817
1993 11,831 5,910 419 18,160 16,719 16,223 12,522
1992 11,126 4,525 352 16,003 15,303 15,433 12,130
1991 10,750 3,345 326 14,421 13,418 12,865 11,757
1990 10,239 2,215 166 12,620 11,409 11,395 11,209
1989 10,219 1,318 54 11,591 10,319 9,991 10,704
1988 * 9,872 461 0 10,333 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
High Income Municipal on September 16, 1987, assuming the 3.50%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $9,650. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $20,328. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $6,863 for dividends and $369 for
capital gain distributions.
During the period September 16, 1987 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class B of High Income Municipal would have grown to $22,185.
HIGH INCOME MUNICIPAL - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,670 $ 9,995 $ 520 $ 22,185 $ 33,701 $ 36,580 $ 13,930
1996 11,610 8,876 514 21,000 26,932 28,475 13,591
1995 11,520 7,803 510 19,833 20,683 21,597 13,209
1994 11,700 6,871 518 19,089 17,609 17,914 12,817
1993 12,260 6,125 434 18,819 16,719 16,223 12,522
1992 11,530 4,690 364 16,584 15,303 15,433 12,130
1991 11,140 3,466 338 14,944 13,418 12,865 11,757
1990 10,610 2,296 172 13,078 11,409 11,395 11,209
1989 10,590 1,366 56 12,012 10,319 9,991 10,704
1988* 10,230 477 0 10,707 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
High Income Municipal on September 16, 1987, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $20,224. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $6,862 for dividends and $382 for
capital gain distributions. Initial offering of Class B of High Income
Municipal took place on June 30, 1994. Class B returns prior to June
30, 1994 are those of Class T which reflect a 12b-1 fee of 0.25%. If
Class B's 12b-1 fee (1.00% prior to January 1, 1996) had been
reflected, total returns prior to June 30, 1994 would have been lower.
During the period September 16, 1987 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Class C of High Income Municipal would have grown to $22,185.
HIGH INCOME MUNICIPAL - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,670 $ 9,995 $ 520 $ 22,185 $ 33,701 $ 36,580 $ 13,930
1996 11,610 8,876 514 21,000 26,932 28,475 13,591
1995 11,520 7,803 510 19,833 20,683 21,597 13,209
1994 11,700 6,871 518 19,089 17,609 17,914 12,817
1993 12,260 6,125 434 18,819 16,719 16,223 12,522
1992 11,530 4,690 364 16,584 15,303 15,433 12,130
1991 11,140 3,466 338 14,944 13,418 12,865 11,757
1990 10,610 2,296 172 13,078 11,409 11,395 11,209
1989 10,590 1,366 56 12,012 10,319 9,991 10,704
1988* 10,230 477 0 10,707 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C
of High Income Municipal on September 16, 1987, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $20,224. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $6,862 for dividends
and $382 for capital gain distributions. Class C returns for High
Income Municipal from April 30, 1997 through June 30, 1994 are those
of Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to January
1, 1996). Class C returns prior to June 30, 1994 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class C's 12b-1 fee had been
reflected, total returns prior to April 30, 1997 through December 31,
1995 and prior to June 30, 1994 would have been lower.
During the period September 16, 1987 (commencement of operations of
the fund) to April 30, 1997, a hypothetical $10,000 investment in
Institutional Class of High Income Municipal would have grown to
$22,772.
HIGH INCOME MUNICIPAL - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 11,680 $ 10,571 $ 521 $ 22,772 $ 33,701 $ 36,580 $ 13,930
1996 11,640 9,235 515 21,390 26,932 28,475 13,591
1995 11,540 7,972 511 20,023 20,683 21,597 13,209
1994 11,700 6,871 518 19,089 17,609 17,914 12,817
1993 12,260 6,125 434 18,819 16,719 16,223 12,522
1992 11,530 4,690 364 16,584 15,303 15,433 12,130
1991 11,140 3,466 338 14,944 13,418 12,865 11,757
1990 10,610 2,296 172 13,078 11,409 11,395 11,209
1989 10,590 1,366 56 12,012 10,319 9,991 10,704
1988* 10,230 477 0 10,707 8,396 8,097 10,183
</TABLE>
* From September 16, 1987 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of High Income Municipal on September 16, 1987,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $20,796. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$7,160 for dividends and $382 for capital gain distributions. Initial
offering of Institutional Class of High Income Municipal took place on
July 3, 1995. Institutional Class returns prior to July 3, 1995 are
those of Class T which reflect a 12b-1 fee of 0.25%. Total Returns for
Institutional Class prior to July 3, 1995 would have been higher if
Class T's 12b-1 fee had not been reflected.
During the 10-year period ended June 30, 1997, a hypothetical
$10,000 investment in Class A of Municipal Bond would have grown to
$20,263, including the effect of Class A's maximum 4.75% sales
charge.
MUNICIPAL BOND - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June 30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,101 $ 8,644 $ 1,518 $ 20,263 $ 39,269 $ 42,862 $ 14,123
1996 9,807 7,523 1,474 18,804 29,153 30,967 13,806
1995 9,709 6,551 1,448 17,707 23,138 24,400 13,436
1994 9,709 5,591 1,148 16,448 18,354 18,911 13,040
1993 10,873 5,293 534 16,700 18,099 17,847 12,722
1992 10,493 4,215 118 14,826 15,925 16,351 12,352
1991 10,052 3,182 0 13,234 14,041 13,899 11,982
1990 9,917 2,315 0 12,232 13,074 13,267 11,445
1989 10,052 1,535 0 11,587 11,223 10,825 10,934
1988 9,550 710 0 10,260 9,312 9,160 10,396
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Municipal Bond on July 1, 1987, assuming the 4.75% maximum sales
charge had been in effect, the net amount invested in Class A shares
was 9,525. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $20,073. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $6,001 for dividends and $987 for capital gain
distributions. Initial offering of Class A of Municipal Bond took
place on March 3, 1997. Class A returns prior to March 3, 1997 through
July 1, 1996 are those of Class T which reflect a 12b-1 fee of 0.25%.
Class A returns prior to July 1, 1996 are those of Initial Class which
has no 12b-1 fee. If Class A's 12b-1 fee had been reflected, total
returns prior to March 3, 1997 through July 1, 1996 would have been
higher and total returns prior to July 1, 1996 would have been lower.
During the 10-year period ended June 30, 1997, a hypothetical $10,000
investment in Class T of Municipal Bond would have grown to $20,500,
including the effect of Class T's maximum 3.50% sales charge.
MUNICIPAL BOND - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,221 $ 8,743 $ 1,536 $ 20,500 $ 39,269 $ 42,862 $ 14,123
1996 9,936 7,622 1,493 19,051 29,153 30,967 13,806
1995 9,836 6,637 1,467 17,940 23,138 24,400 13,436
1994 9,836 5,665 1,163 16,664 18,354 18,911 13,040
1993 11,016 5,362 541 16,919 18,099 17,847 12,722
1992 10,631 4,270 120 15,021 15,925 16,351 12,352
1991 10,184 3,224 0 13,408 14,041 13,899 11,982
1990 10,047 2,346 0 12,393 13,074 13,267 11,445
1989 10,184 1,555 0 11,739 11,223 10,825 10,934
1988 9,675 719 0 10,394 9,312 9,160 10,396
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Municipal Bond on July 1, 1987, assuming the 3.50% maximum sales
charge had been in effect, the net amount invested in Class T shares
was $9,650. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $20,201. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $6,078 for dividends and $1,000 for capital
gain distributions. Initial offering of Class T of Municipal Bond took
place on July 1, 1996. Class T returns prior to July 1, 1996 are those
of Initial Class which had no 12b-1 fee. If Class T's 12b-1 fees had
been reflected, total returns prior to July 1, 1996 would have been
lower.
During the 10-year period ended June 30, 1997, a hypothetical $10,000
investment in Class B of Municipal Bond would have grown to $21,143.
MUNICIPAL BOND - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,605 $ 8,944 $ 1,594 $ 21,143 $ 39,269 $ 42,862 $ 14,123
1996 10,296 7,899 1,547 19,742 29,153 30,967 13,806
1995 10,193 6,877 1,520 18,590 23,138 24,400 13,436
1994 10,193 5,870 1,205 17,268 18,354 18,911 13,040
1993 11,416 5,556 560 17,532 18,099 17,847 12,722
1992 11,017 4,425 124 15,566 15,925 16,351 12,352
1991 10,553 3,341 0 13,894 14,041 13,899 11,982
1990 10,412 2,430 0 12,842 13,074 13,267 11,445
1989 10,553 1,612 0 12,165 11,223 10,825 10,934
1988 10,026 745 0 10,771 9,312 9,160 10,396
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Municipal Bond on July 1, 1987, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $20,446. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $6,236 for dividends and $1,036 for capital
gain distributions. Initial offering of Class B of Municipal Bond took
place on July 1, 1996. Class B returns prior to July 1, 1996 are those
of Initial Class which had no 12b-1 fee. If Class B's 12b-1 fees had
been reflected, total returns prior to July 1, 1996 would have been
lower.
During the 10-year period ended June 30, 1997, a hypothetical $10,000
investment in Institutional Class of Municipal Bond would have grown
to $21,299.
MUNICIPAL BOND - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
June
30 Initial Reinvested Reinvested Value 500 of/r>
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 10,592 $ 9,115 $ 1,592 $ 21,299 $ 39,269 $ 42,862 $ 14,123
1996 10,296 7,899 1,547 19,742 29,153 30,967 13,806
1995 10,193 6,877 1,520 18,590 23,138 24,400 13,436
1994 10,193 5,870 1,205 17,268 18,354 18,911 13,040
1993 11,416 5,556 560 17,532 18,099 17,847 12,722
1992 11,017 4,425 124 15,566 15,925 16,351 12,352
1991 10,553 3,341 0 13,894 14,041 13,899 11,982
1990 10,412 2,430 0 12,842 13,074 13,267 11,445
1989 10,553 1,612 0 12,165 11,223 10,825 10,934
1988 10,026 745 0 10,771 9,312 9,160 10,396
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Municipal Bond on July 1, 1987, the net amount
invested in Institutional Class shares was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $20,626. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period would have amounted to $6,326 for
dividends and $1,036 for capital gain distributions. Initial offering
of Institutional Class of Municipal Bond took place on July 1, 1996.
Returns prior to July 1, 1996 are those of Initial Class which has no
12b-1 fee.
During the 10-year period ended December 31, 1996 , a
hypothetical $10,000 investment in Initial Class of Municipal Bond
would have grown to $21,365.
MUNICIPAL BOND - INITIAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
Dec.
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1996 $ 9,891 $ 8,683 $ 1,537 $ 20,111 $ 41,499 $ 46,181 $ 14,353
1995 9,988 7,778 1,550 19,316 33,750 35,882 13,891
1994 8,901 6,074 1,373 16,348 24,531 26,244 13,548
1993 10,495 6,107 1,263 17,865 24,213 25,001 13,195
1992 10,266 5,073 447 15,786 21,996 21,370 12,842
1991 10,229 4,144 119 14,492 20,434 19,916 12,480
1990 9,819 3,131 0 12,950 15,660 16,018 12,109
1989 9,819 2,293 0 12,112 16,164 16,104 11,412
1988 9,601 1,454 0 11,055 12,275 12,222 10,905
1987 9,179 665 0 9,844 10,526 10,543 10,443
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Municipal Bond on January 1, 1987, the net amount invested in
Initial Class shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $20,188. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $6,041 for dividends and $972 for
capital gain distributions.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class A of Intermediate Municipal Income would
have grown to $18,094, including the effect of Class A's maximum 3.75%
sales charge.
INTERMEDIATE MUNICIPAL INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,579 $ 7,310 $ 1,205 $ 18,094 $ 39,484 $ 43,263 $ 14,156
1996 9,393 6,391 1,180 16,964 30,509 32,636 13,846
1995 9,430 5,688 1,184 16,302 23,754 25,247 13,457
1994 9,282 4,862 1,166 15,310 19,765 20,695 13,042
1993 9,606 4,345 1,177 15,128 18,958 18,895 12,750
1992 10,098 3,751 0 13,849 16,982 17,663 12,352
1991 9,959 2,872 0 12,831 15,458 15,270 11,989
1990 9,764 2,026 0 11,790 13,828 13,974 11,424
1989 9,801 1,300 0 11,101 11,858 11,604 10,946
1988 9,755 614 0 10,369 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A
of Intermediate Municipal Income on June 1, 1986, assuming the 3.75%
maximum sales charge had been in effect, the net amount invested in
Class A shares was $9,625. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $18,580. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $5,365 for dividends and $836 for
capital gain distributions. Initial offering of Class A for
Intermediate Municipal Income took place on September 3, 1996. Class A
returns from September 3, 1996 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.25%. Class A returns prior to
September 10, 1992 are those of Institutional Class, which has no
12b-1 fee. If Class A's 12b-1 fee had been reflected, total returns
prior to September 3, 1996 through September 10, 1992 would have been
higher and total returns prior to September 10, 1992 would have been
lower.
During the 10-year period ended May 31, 1997, a hypothetical $10,000
investment in Class T of Intermediate Municipal Income would have
grown to $18,292, including the effect of Class T's maximum 2.75%
sales charge.
INTERMEDIATE MUNICIPAL INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,687 $ 7,387 $ 1,218 $ 18,292 $ 39,484 $ 43,263 $ 14,156
1996 9,491 6,458 1,192 17,141 30,509 32,636 13,846
1995 9,528 5,747 1,196 16,471 23,754 25,247 13,457
1994 9,378 4,913 1,178 15,469 19,765 20,695 13,042
1993 9,706 4,390 1,189 15,285 18,958 18,895 12,750
1992 10,203 3,790 0 13,993 16,982 17,663 12,352
1991 10,063 2,901 0 12,964 15,458 15,270 11,989
1980 9,866 2,047 0 11,913 13,828 13,974 11,424
1989 9,903 1,313 0 11,216 11,858 11,604 10,946
1988 9,856 621 0 10,477 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Intermediate Municipal Income on June 1, 1987, assuming the 2.75%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $9,725. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $18,662. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $5,417 for dividends and $845 for
capital gain distributions. Initial offering of Class T of
Intermediate Municipal Income took place on September 10, 1992. Class
T returns prior to September 10, 1992 are those of Institutional Class
which has no 12b-1 fee. If Class T's 12b-1 fee had been reflected,
total returns prior to September 10, 1992 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical $10,000
investment in Class B of Intermediate Municipal Income would have
grown to $18,397.
INTERMEDIATE MUNICIPAL INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,952 $ 7,193 $ 1,252 $ 18,397 $ 39,434 $ 43,263 $ 14,156
1996 9,749 6,376 1,224 17,349 30,509 32,636 13,846
1995 9,797 5,778 1,230 16,805 23,754 25,247 13,457
1994 9,643 5,055 1,211 15,909 19,765 20,695 13,042
1993 9,981 4,515 1,223 15,719 18,958 18,895 12,750
1992 10,492 3,897 0 14,389 16,982 17,663 12,352
1991 10,347 2,984 0 13,331 15,458 15,270 11,989
1990 10,145 2,105 0 12,250 13,828 13,974 11,424
1989 10,183 1,350 0 11,533 11,858 11,604 10,946
1988 10,135 638 0 10,773 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Intermediate Municipal Income on June 1, 1987, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $18,520. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $5,363 for dividends and $869 for
capital gain distributions. Initial offering of Class B of
Intermediate Municipal Income took place on June 30, 1994. Class B
returns prior to June 30, 1994 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.25%. Class B returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class B's 12b-1 fee had been reflected, total returns prior to
June 30, 1994 would have been lower.
During the 10-year period ended May 31, 1997, a hypothetical
$10,000 investment in Class C of Intermediate Municipal Income would
have grown to $18,397.
INTERMEDIATE MUNICIPAL INCOME - CLASS C INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,952 $ 7,193 $ 1,252 $ 18,397 $ 39,484 $ 43,263 $ 14,156
1996 9,749 6,376 1,224 17,349 30,509 32,636 13,846
1995 9,797 5,778 1,230 16,805 23,754 25,247 13,547
1994 9,643 5,055 1,211 15,909 19,765 20,695 13,042
1993 9,981 4,515 1,223 15,719 18,958 18,895 12,750
1992 10,492 3,897 0 14,389 16,982 17,663 12,352
1991 10,347 2,984 0 13,331 15,458 15,270 11,989
1990 10,145 2,105 0 12,250 13,828 13,974 11,424
1989 10,183 1,350 0 11,533 11,858 11,604 10,946
1988 10,135 638 0 10,773 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C
of Intermediate Municipal Income on June 1, 1987, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $18,520. If
distributions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for the period would have amounted to $5,363 for dividends
and $869 for capital gain distributions. Class C returns for
Intermediate Municipal Income from May 31, 1997 through June 30, 1994
are those of Class B which reflect a 12b-1 fee of 0.90% (1.00% prior
to January 1, 1996). Class C returns prior to June 30, 1994 through
September 10, 1992 are those of Class T which reflect a 12b-1 fee of
0.25%. Class C returns prior to September 10, 1992 are those of
Institutional Class which has no 12b-1 fee. If Class C's 12b-1 fee had
been reflected, total returns prior to May 31, 1997 through December
31, 1995 and prior to June 30, 1994 would have been lower.
During the 10-year period ended May 31, 1996, a hypothetical $10,000
investment in Institutional Class of Intermediate Municipal Income
would have grown to $19,041.
INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living
Investment Distributions Distributions
1997 $ 9,961 $ 7,827 $ 1,253 $ 19,041 $ 39,484 $ 43,263 $ 14,156
1996 9,749 6,806 1,225 17,780 30,509 32,636 13,846
1995 9,797 6,029 1,231 17,057 23,754 25,247 13,457
1994 9,643 5,124 1,212 15,979 19,765 20,695 13,042
1993 9,971 4,537 1,222 15,730 18,958 18,895 12,750
1992 10,492 3,897 0 14,389 16,982 17,663 12,352
1991 10,347 2,984 0 13,331 15,458 15,270 11,989
1990 10,145 2,105 0 12,250 13,828 13,974 11,424
1989 10,183 1,350 0 11,533 11,858 11,604 10,946
1988 10,135 638 0 10,773 9,353 9,163 10,389
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Intermediate Municipal Income on June 1, 1987,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $19,135. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$5,691 for dividends and $869 for capital gain distributions.
During the period March 16, 1994 (commencement of operations of the
fund) to May 31, 1997, a hypothetical $10,000 investment in Class A of
Short-Intermediate Municipal Income would have grown to
$11,38 9 , including the effect of Class A's maximum 1.50% sales
charge.
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,958 $ 1 ,367 $ 64 $ 11,38 9 $ 19,651 $ 20,528 $ 10,876
1996 9,929 919 31 10,879 15,185 15,485 10,639
1995 9,958 489 0 10,447 11,823 11,980 10,340
1994* 9,811 59 0 9,870 9,837 9,820 10,020
</TABLE>
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Short-Intermediate Municipal Income on March 16, 1994, assuming the
1.50% maximum sales charge had been in effect, the net amount invested
in Class A shares was $9,850. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $11,425. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $1,275 for dividends and $59 for capital
gain distributions. Initial offering of Class A for each fund took
place on September 3, 1996. Class A returns prior to September 3, 1996
are those of Class T, which reflect a 12b-1 fee of 0.15%. Class A
returns prior to September 10, 1992 are those of Institutional Class,
which has no 12b-1 fee. If Class A's 12b-1 fee had been reflected,
total returns prior to September 3, 1996 through September 10, 1992
would have been higher and total returns prior to September 10, 1992
would have been lower.
During the period March 16, 1994 (commencement of operations of the
fund) to May 31, 1997, a hypothetical $10,000 investment in Class T of
Short-Intermediate Municipal Income would have grown to $11,389,
including the effect of Class T's maximum 1.50% sales charge.
SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,958 $ 1,377 $ 64 $ 11,389 $ 19,651 $ 20,528 $ 10,876
1996 9,929 919 31 10,879 15,185 15,485 10,639
1995 9,958 489 0 10,447 11,823 11,980 10,340
1994 * 9,811 59 0 9,870 9,837 9,820 10,020
</TABLE>
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Short-Intermediate Municipal Income on March 16, 1994, assuming the
1.50% maximum sales charge had been in effect, the net amount invested
in Class T shares was $9,850. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $11,427. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $1,276 for dividends and $59 for capital
gain distributions.
During the period March 16, 1994 (commencement of operations of the
fund) to May 31, 1997, a hypothetical $10,000 investment in
Institutional Class of Short-Intermediate Municipal Income would have
grown to $11,580.
SHORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
May
31 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 10,110 $ 1,405 $ 65 $ 11,580 $ 19,651 $ 20,528 $ 10,876
1996 10,090 936 32 11,058 15,185 15,485 10,639
1995 10,110 497 0 10,607 11,823 11,980 10,340
1994* 9,960 60 0 10,020 9,837 9,820 10,020
</TABLE>
* From March 16, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Short-Intermediate Municipal Income on March
16, 1994, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $11,466. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $1,311 for dividends and $60 for capital gain
distributions. Initial offering of Institutional Class of
Short-Intermediate Municipal Income took place on July 3, 1995.
Institutional Class returns prior to July 3, 1995 are those of Class T
which reflect a 12b-1 fee of 0.15%. Total Returns for Institutional
Class prior to July 3, 1995 would have been higher if Class T's 12b-1
fee had not been reflected.
During the period August 21, 1995 (commencement of operations of the
fund) to April 30, 1997, a hypothetical $10,000 investment in Class A
of New York Municipal Income would have grown to $10,671, including
the effect of Class A's maximum 4.75% sales charge.
NEW YORK MUNICIPAL INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,868 $ 743 $ 60 $ 10,671 $ 14,869 $ 15,736 $ 10,477
1996* 9,773 287 0 10,060 11,883 12,250 10,222
</TABLE>
* From August 21, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of New York Municipal Income on August 21, 1995, assuming the 4.75%
maximum sales charge had been in effect, the net amount invested in
Class A shares was $9,625. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $10,808. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $721 for dividends and $57 for capital
gain distributions. Initial offering of Class A for New York
Municipal Income took place on September 3, 1996. Class A returns
prior to September 3, 1996 are those of Class T, which reflect
a 12b-1 fee of 0.25%. Class A returns prior to September 10, 1992 are
those of Institutional Class, which has no 12b-1 fee. If Class A's
12b-1 fee had been reflected, total returns prior to September 3, 1996
through September 10, 1992 would have been higher and total returns
prior to September 10, 1992 would have been lower.
During the period August 21, 1995 (commencement of operations of the
fund) to April 30, 1997, a hypothetical $10,000 investment in Class T
of New York Municipal Income would have grown to $10,808, including
the effect of Class T's maximum 3.50% sales charge.
NEW YORK MUNICIPAL INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,997 $ 751 $ 60 $ 10,808 $ 14,869 $ 15,736 $ 10,477
1996* 9,901 291 0 10,192 11,883 12,250 10,222
</TABLE>
* From August 21, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
New York Municipal Income on August 21, 1995, assuming the 3.50%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $9,650. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $10,815. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $728 for dividends and $58 for capital
gain distributions.
During the period August 21, 1995 (commencement of operations of the
fund) to April 30, 1997, a hypothetical $10,000 investment in Class B
of New York Municipal Income would have grown to $10,681, including
the effect of Class B's maximum applicable CDSC.
NEW YORK MUNICIPAL INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,960 $ 659 $ 62 $ 10,681 $ 14,869 $ 15,736 $ 10,477
1996* 10,250 256 0 10,506 11,883 12,250 10,222
</TABLE>
* From August 21, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
New York Municipal Income on August 21, 1995, assuming the maximum
applicable CDSC had been in effect, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $10,724. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $641 for dividends and $60 for capital gain
distributions.
During the period August 21, 1995 (commencement of operations of the
fund) to April 30, 1997, a hypothetical $10,000 investment in
Institutional Class of New York Municipal Income would have grown to
$11,261.
NEW YORK MUNICIPAL INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
199 7 $ 10,370 $ 828 $ 63 $ 11,261 $ 14,869 $ 15,736 $ 10,477
1995* 10,270 325 0 10,595 11,883 12,250 10,222
</TABLE>
* From August 21, 1995 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of New York Municipal Income on August 21, 1995,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $10,896. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash payments for the period would have amounted to
$801 for dividends and $60 for capital gain distributions.
During the period February 20, 1996 (commencement of operations of the
fund) to April 30, 199 7 , a hypothetical $10,000 investment in
Class A of California Municipal Income would have been $9,850,
including the effect of Class A's maximum 4.75% sales charge.
CALIFORNIA MUNICIPAL INCOME - CLASS A INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,392 $ 458 $ 0 $ 9,850 $ 12,681 $ 13,055 $ 10,342
1996* 9,211 60 0 9,271 10,134 10,162 10,090
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of California Municipal Income on February 20, 1996, assuming the
4.75% maximum sales charge had been in effect, the net amount invested
in Class A shares was $9,525. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $10,458. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $448 for dividends and $0 for capital
gain distributions. Initial offering of Class A for California
Municipal Income took place on September 3, 1996. Class A returns
prior to September 3, 1996 are those of Class T, which reflect
a 12b-1 fee of 0.25%. Class A returns prior to September 10, 1992 are
those of Institutional Class, which has no 12b-1 fee. If Class A's
12b-1 fee had been reflected, total returns prior to September 3, 1996
through September 10, 1992 would have been higher and total returns
prior to September 10, 1992 would have been lower.
During the period February 20, 1996 (commencement of operations of the
fund) to April 30, 1997, a hypothetical $10,000 investment in Class T
of California Municipal Income would have been $9,986, including the
effect of Class T's maximum 3.50% sales charge.
CALIFORNIA MUNICIPAL INCOME - CLASS T INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,525 $ 461 $ 0 $ 9,986 $ 12,681 $ 13,055 $ 10,342
1996 9,332 61 0 9,393 10,134 10,162 $ 10,090
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
California Municipal Income on February 20, 1996, assuming the 3.50%
maximum sales charge had been in effect, the net amount invested in
Class T shares was $9,650. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $10,460. If distributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period would have amounted to $450 for dividends and $0 for capital
gain distributions.
During the period February 20, 1996 (commencement of operations of the
fund) to April 30, 1997, a hypothetical $10,000 investment in Class B
of California Municipal Income would have been $9,851, including the
effect of Class B's maximum applicable CDSC.
CALIFORNIA MUNICIPAL INCOME - CLASS B INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9, 4 40 $ 411 $ 0 $ 9,851 $ 12,681 $ 13,055 $ 10,342
1996 9,660 56 0 9,716 10,134 10,162 10,090
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
California Municipal Income on February 20, 1996, assuming the maximum
applicable CDSC had been in effect, the net amount invested in Class B
shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $10,410. If distributions had
not been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $403 for dividends and $0 for capital gain
distributions.
During the period February 20, 1996 (commencement of operations of the
fund) to April 30, 1997, a hypothetical $10,000 investment in
Institutional Class of California Municipal Income would have grown to
$10,348.
CALIFORNIA MUNICIPAL INCOME - INSTITUTIONAL CLASS INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period
Ended Value of Value of Value of Total S&P DJIA Cost
April
30 Initial Reinvested Reinvested Value 500 of
$10,000 Dividend Capital Gain Living**
Investment Distributions Distributions
1997 $ 9,810 $ 538 $ 0 $ 10,348 $ 12,681 $ 13,055 $ 10,342
1996 9,630 87 0 9,717 10,134 10,162 10,090
</TABLE>
* From February 20, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of California Municipal Income on February 20,
1996, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $10,538. If distributions had not
been reinvested, the amount of distributions earned from the class
over time would have been smaller, and cash payments for the period
would have amounted to $524 for dividends and $0 for capital gain
distributions.
The yield for the S&P 500 for the year ended December 31, 1996 was
2.01%, calculated by dividing the dollar value of dividends paid by
the S&P 500 stocks during the period by the average value of the S&P
500 on December 31, 1996. The S&P 500 yield is calculated differently
from each class's yield. For example, a class's yield calculation
treats dividends as accrued in anticipation of payment, rather than
recording them when paid.
INTERNATIONAL INDICES, MARKET CAPITALIZATION, AND NATIONAL STOCK
MARKET RETURN. The following tables show the total market
capitalization of certain countries according to the Morgan Stanley
Capital International (MSCI) Indices database, the total market
capitalization of Latin American countries according to the
International Finance Corporation Emerging Market database, and the
performance of national stock markets as measured in U.S. dollars by
the MSCI stock market indices for the twelve months ended October 31,
1996. Of course, these results are not indicative of future stock
market performance or the classes' performance. Market conditions
during the periods measured fluctuated widely. Brokerage commissions
and other fees are not factored into the values of the indices.
MARKET CAPITALIZATION. Companies outside the United States now make up
nearly two-thirds of the world's stock market capitalization.
According to MSCI, the size of the markets as measured in U.S. dollars
grew from $5,080.3 ($8621.7 including the US) billion in 1995 to
$5,749.4 ($10,078.9 including the US) billion in 1996.
The following table measures the indexed market capitalization of
certain countries according to the MSCI indices database. The value of
the markets are measured in billions of U.S. dollars as of October 31,
1996.
TOTAL MARKET CAPITALIZATION
Australia $ 163.6 Japan $ 1944.0
Austria $ 22.9 Netherlands $ 248.1
Belgium $ 66.2 Norway $ 26.2
Canada $ 250.8 Singapore/Malaysia $ 213.6
Denmark $ 47.2 Spain $ 108.4
France $ 372.2 Sweden $ 134.0
Germany $ 401.6 Switzerland $ 325.4
Hong Kong $ 200.6 United Kingdom $ 1002.8
Italy $ 147.0 United States $ 4329.4
The following table measures the total market capitalization of
certain Latin American countries according to the International
Finance Corporation Emerging Markets database. The value of the
markets is measured in m illions of U.S. dollars as of October
31, 1996.
TOTAL MARKET CAPITALIZATION - LATIN AMERICA
Argentina $ 24,980.3
Brazil $ 89,501.4
Chile $ 38,528.7
Colombia $ 9,277.4
Mexico $ 72,037.8
Venezuela $ 5,384.5
Total Latin America $ 239,710.1
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents
the performance of national stock markets as measured in U.S. dollars
by the MSCI stock market indices for the twelve months ended October
31, 1996. The second table shows the same performance as measured in
local currency. Each table measures total return based on the period's
change in price, dividends paid on stocks in the index, and the effect
of reinvesting dividends net of any applicable foreign taxes. These
are unmanaged indices composed of a sampling of selected companies
representing an approximation of the market structure of the
designated country.
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN U.S. DOLLARS
Australia 16.9% Japan -0.8%
Austria -0.5% Netherlands 26.2%
Belgium 16.3% Norway 15.4%
Canada 29.9% Singapore/Malaysia -3.1/26.8%
Denmark 16.8% Spain 32.1%
France 18.2% Sweden 28.9%
Germany 12.5% Switzerland 8.9%
Hong Kong 28.0% United Kingdom 20.3%
Italy 7.8% United States 23.8%
STOCK MARKET PERFORMANCE (CUMULATIVE TOTAL RETURNS)
MEASURED IN LOCAL CURRENCY
Australia 12.1% Japan 10.3%
Austria 6.9% Netherlands 35.5%
Belgium 25.2% Norway 18.1%
Canada 29.6% Singapore/Malaysia -3.5/26.0%
Denmark 24.2% Spain 37.8%
France 23.4% Sweden 27.4%
Germany 20.8% Switzerland 20.6%
Hong Kong 28.0% United Kingdom 16.6%
Italy 2.5% United States 23.8%
The following table shows the average annualized stock market returns
measured in U.S. dollars as of October 31, 1996.
STOCK MARKET PERFORMANCE
<TABLE>
<CAPTION>
<S> <C> <C>
FIVE YEARS ENDED OCTOBER 31, 1996 TEN YEARS ENDED OCTOBER 31, 1996
Germany 11.98% 8.73%
Hong Kong 26.94% 22.25%
Japan 0.58% 5.35%
Spain 8.15% 11.16%
United Kingdom 11.50% 15.03%
United States 14.98% 13.73%
</TABLE>
PERFORMANCE COMPARISONS. A class's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on total return, assume reinvestment of distributions, do
not take sales charges or redemption fees into consideration, and are
prepared without regard to tax consequences. Lipper may also rank bond
funds based on yield. In addition to mutual fund rankings, performance
may be compared to stock, bond, and money market mutual fund
performance indices prepared by Lipper or other organizations. When
comparing these indices, it is important to remember the risk and
return characteristics of each type of investment. For example, while
stock mutual funds may offer higher potential returns, they also carry
the highest degree of share price volatility. Likewise, money market
funds may offer greater stability of principal, but generally do not
offer the higher potential returns available from stock mutual funds.
From time to time, performance may also be compared to other mutual
funds tracked by financial or business publications and periodicals.
For example, a class may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that
rates mutual funds on the basis of risk-adjusted performance. Rankings
that compare the performance of Fidelity funds to one another in
appropriate categories over specific periods of time may also be
quoted in advertising.
A class's performance may also be compared to that of a benchmark
index representing the universe of securities in which the fund may
invest. The total return of a benchmark index reflects reinvestment of
all dividends and capital gains paid by securities included in the
index. Unlike a class returns, however, the index returns do not
reflect brokerage commissions, transaction fees, or other costs of
investing directly in the securities included in the index.
Each of TechnoQuant Growth, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
and Balanced may compare its performance to that of the Standard &
Poor's 500 Index, a widely recognized, unmanaged index of common
stocks.
International Capital Appreciation Fund may compare its performance
to that of the Morgan Stanley Capital International All Countries
World Free, ex US Index, a market capitalization weighted equity index
comprising 46 counties-20 developed markets and 26 emerging
markets.
Overseas may compare its performance to that of the Morgan Stanley
Capital International Europe, Austialsia, Far East Index, a market
capital ization weighted unmanaged index of over 1,000 foreign
stocks.
Mid-Cap may compare its performance to that of the Standard & Poor's
MidCap 400 Index, a widely recognized, unmanaged index of 400
medium-capitalization stocks.
Balanced may compare its performance to that of the Lehman Brothers
Aggregate Bond Index, a market value weighted performance benchmark
for investment-grade fixed-rate debt issues, including government,
corporate, asset-backed, and mortgage-backed securities. Issues
included in the index have an outstanding par value of at least $100
million and maturities of at least one year. Government and corporate
issues include all public obligations of the U.S. Treasury (excluding
flower bonds and foreign-targeted issues) and U.S. government
agencies, as well as nonconvertible investment-grade, SEC-registered
corporate debt. Mortgage-backed securities include 15- and 30-year
fixed-rate securities backed by mortgage pools of the Government
National Mortgage Association (GNMA), Federal Home Loan Mortgage
Corporation (FHLMC), and Fannie Mae. Asset-backed securities include
credit card, auto, and home equity loans.
Emerging Markets Income may compare its performance to that of the
J.P. Morgan Emerging Markets Bond Index Plus, a market capitalization
weighted total return index of U.S. dollar- and other external
currency-denominated Brady bonds, loans, Eurobonds, and local market
debt instruments traded in emerging markets.
Each of High Yield and Strategic Income may compare its performance to
that of the Merrill Lynch High Yield Master Index, a market
capitalization weighted index of all domestic and yankee high-yield
bonds with an outstanding par value of at least $50 million and
maturities of at least one year. Issues included in the index have a
credit rating lower than BBB-/Baa3 but are not in default (DDD1 or
lower). Split-rated issues (i.e., rated investment-grade by one rating
agency and high-yield by another) are included in the index based on
the issue's corresponding composite rating. Structured-note issues,
deferred interest bonds, and pay-in-kind bonds are excluded.
Mortgage Securities may compare its performance to that of the Salomon
Brothers Mortgage Index, a market capitalization weighted index of 15-
and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA), Fannie Mae and
Federal Home Loan Mortgage Corporation (FHLMC), and Fannie Mae and
FHLMC balloon mortgages with fixed-rate coupons. For mortgage issues,
the entry and exit amounts are $1 billion public amount outstanding.
Government Investment may compare its performance to that of the
Salomon Brothers Treasury/Agency Index, a market capitalization
weighted index of U.S. Treasury and U.S. Government agency securities
with fixed-rate coupons and weighted average lives of at least one
year. For U.S. Treasury issues, the entry and exit amounts are $1
billion public amount outstanding. For U.S. Government agency issues,
the entry and exit amounts are $100 million and $75 million,
respectively.
Intermediate Bond may compare its performance to that of the Lehman
Brothers Intermediate Government/Corporate Bond Index, a market value
weighted performance benchmark for government and corporate fixed-rate
debt issues. Issues included in the index have an outstanding par
value of at least $100 million and maturities between one and 10
years. Government and corporate issues include all public obligations
of the U.S. Treasury (excluding flower bonds and foreign-targeted
issues) and U.S. government agencies, as well as nonconvertible
investment-grade, SEC-registered corporate debt.
Short Fixed-Income may compare its performance to that of the Lehman
Brothers 1-3 Year Government/Corporate Bond Index, a market value
weighted performance benchmark for government and corporate fixed-rate
debt issues. Issues included in the index have an outstanding par
value of at least $100 million and maturities between one and three
years. Government and corporate issues include all public obligations
of the U.S. Treasury (excluding flower bonds and foreign-targeted
issues) and U.S. government agencies, as well as nonconvertible
investment-grade, SEC-registered corporate debt.
Each class of the municipal funds may compare its performance to that
of the Lehman Brothers Municipal Bond Index, a total return
performance benchmark for investment-grade municipal bonds with
maturities of at least one year. In addition, High Income Municipal
may compare its performance to that of the Lehman Brothers 70%
Municipal/30% Non-Investment Grade Composite Index, a total return
performance benchmark for both investment-grade and non-investment
grade municipal bonds. The Lehman Brothers 70% Municipal/30%
Non-Investment Grade Composite Index has a Municipal Bond Index weight
of 70% and a Non-Investment Grade Bond Index weight of 30%. The Lehman
Brothers Non-Investment Grade Municipal Bond Index includes municipal
bonds with maturities of at least one year that have a maximum credit
rating of BA1 or are unrated. Intermediate Municipal Income may
compare its performance to that of the Lehman Brothers 1-17 Year
Municipal Bond Index, a total return performance benchmark for
investment-grade municipal bonds with maturities between one and 17
years. Short-Intermediate Municipal Income may compare its performance
to that of the Lehman Brothers 1-5 Year Municipal Bond Index, a total
return performance benchmark for investment-grade municipal bonds with
maturities between one and five years. New York Municipal Income may
compare its performance to that of the Lehman Brothers New York 4 Plus
Year Municipal Bond Index, a total return performance benchmark for
New York investment-grade municipal bonds with maturities of at least
four years. California Municipal Income may compare its performance to
that of the Lehman Brothers California Municipal Bond Index, a total
return performance benchmark for California investment-grade municipal
bonds with maturities of at least one year. Issues included in each
index have been issued after December 31, 1990 and have an outstanding
par value of at least $50 million. Subsequent to December 31, 1995,
zero coupon bonds and issues subject to the alternative minimum tax
are included in each index.
A class may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks or other depository
institutions. Mutual funds differ from bank investments in several
respects. For example, a fund may offer greater liquidity or higher
potential returns than CDs, a fund does not guarantee your principal
or your return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates total returns in
the same method as the classes. The classes may also compare
performance to that of other compilations or indices that may be
developed and made available in the future.
Each class of a bond fund may compare its performance or the
performance of securities in which that bond fund may invest to
averages published by IBC Financial Data, Inc. of Ashland,
Massachusetts. These averages assume reinvestment of distributions.
IBC's MONEY FUND REPORT AVERAGES(trademark)/All Taxable (Emerging
Markets Income, Strategic Income, Mortgage Securities, Government
Investment, Intermediate Bond, High Yield, and Short-Fixed Income),
which is reported in IBC's MONEY FUND REPORT(trademark), covers over
810 taxable money market funds. IBC's MONEY FUND REPORT
AVERAGES(trademark)/Municipal (High Income Municipal, Municipal Bond,
Intermediate Municipal Income, Short-Intermediate Municipal Income,
New York Municipal Income, and California Municipal Income), which is
reported in IBC's MONEY FUND REPORT(trademark), covers over 410
municipal money market funds. When evaluating comparisons to money
market funds, investors should consider the relevant differences in
investment objectives and policies. Specifically, money market funds
invest in short-term, high-quality instruments and seek to maintain a
stable $1.00 share price. Bond funds, however, invest in longer-term
instruments and their share prices change daily in response to a
variety of factors.
A municipal fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual
municipal bond. Unlike municipal mutual funds, individual municipal
bonds offer a stated rate of interest and, if held to maturity,
repayment of principal. Although some individual municipal bonds might
offer a higher return, they do not offer the reduced risk of a mutual
fund that invests in many different securities. The initial investment
requirements and sales charges of many municipal mutual funds are
lower than the purchase cost of individual municipal bonds, which are
generally issued in $5,000 denominations and are subject to direct
brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include the following: other Fidelity
funds; retirement investing; model portfolios or allocations; and
saving for college or other goals. In addition, Fidelity may quote or
reprint financial or business publications and periodicals as they
relate to current economic and political conditions, fund management,
portfolio composition, investment philosophy, investment techniques,
the desirability of owning a particular mutual fund, and Fidelity
services and products.
Each fund may be advertised as part of certain asset allocation
programs involving other Fidelity or non-Fidelity mutual funds. These
asset allocation programs may advertise a model portfolio and its
performance results.
Each fund may be advertised as part of a no transaction fee (NTF)
program in which Fidelity and non-Fidelity mutual funds are offered.
An NTF program may advertise performance results.
Each fund may present its fund number, QuotronTM number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. A class may quote various measures of volatility and
benchmark correlation in advertising. In addition, a fund may compare
these measures to those of other funds. Measures of volatility seek to
compare a class' historical share price fluctuations or total returns
to those of a benchmark. Measures of benchmark correlation indicate
how valid a comparative benchmark may be. All measures of volatility
and correlation are calculated using averages of historical data. In
advertising, a fund may also discuss or illustrate examples of
interest rate sensitivity.
MOMENTUM INDICATORS indicate a class's price movements over specific
periods of time. Each point on the momentum indicator represents the
class's percentage change in price movements over that period.
A class may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a class at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a
$1,000 investment earning a taxable return of 10% annually would have
an after-tax value of $1,949 after ten years, assuming tax was
deducted from the return each year at a 31% rate. An equivalent
tax-deferred investment would have an after-tax value of $2,100 after
ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.
As of December 31, 1996, FMR advised over $28 billion in tax-free fund
assets, $96 billion in money market fund assets, $303 billion in
equity fund assets, $61 billion in international fund assets, and $25
billion in Spartan fund assets. The funds may reference the growth and
variety of money market mutual funds and the adviser's innovation and
participation in the industry. The equity funds under management
figure represents the largest amount of equity fund assets under
management by a mutual fund investment adviser in the United States,
making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each class of each bond fund may
compare its total expense ratio to the average total expense ratio of
similar funds tracked by Lipper. A class's total expense ratio is a
significant factor in comparing bond and money market investments
because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE, AND REDEMPTION INFORMATION
CLASS A SHARES ONLY
Pursuant to Rule 22d-1 under the 1940 Act, FDC exercises its right
to waive Class A's front-end sales charge in connection with a fund's
merger with or acquisition of any investment company or trust. In
addition, FDC has chosen to waive Class A's front-end sales charge in
certain instances because of efficiencies involved in those sales of
shares. The sales charge will not apply:
1. to shares purchased by an insurance company separate account
used to fund annuity contracts purchased by employee benefit plans
(including 403(b) programs, but otherwise as defined in ERISA), which,
in the aggregate, have either more than 200 eligible employees or a
minimum of $1,000,000 in assets invested in Fidelity Advisor
funds;
2. to shares purchased by a trust institution or bank trust
department (excluding employee benefit plan assets) that has executed
a participation agreement with FDC specifying certain asset minimums
and qualifications, and marketing restrictions. Assets managed by
third parties do not qualify for this waiver;
3. to shares purchased for use in a broker-dealer managed account
program, provided the broker-dealer has executed a participation
agreement with FDC specifying certain asset minimums and
qualifications, and marketing, program and trading restrictions.
Employee benefit plan assets do not qualify for this waiver;
4. to shares purchased on a discretionary basis by a registered
investment adviser which is not part of an organization primarily
engaged in the brokerage business, that has executed a participation
agreement with FDC specifying certain asset minimums and
qualifications, and marketing, program and trading restrictions.
Employee benefit plan assets do not qualify for this waiver; or
5. to shares purchased by an employee benefit plan having $25
million or more in plan assets.
For the purpose of load waiver (3), certain broker-dealers that
otherwise meet the qualifications and asset minimums established by
FDC are not required to sign a participation agreement.
A sales load waiver form must accompany these transactions.
CLASS T SHARES ONLY
P ursuant to Rule 22d-1 under the 1940 Act, FDC exercises its right
to waive Class T's front-end sales charge in connection with a fund's
merger with or acquisition of any investment company or trust. In
addition, FDC has chosen to waive Class T's front-end sales charge in
certain instances because of efficiencies involved in those sales of
shares. The sales charge will not apply:
1. to shares purchased by a bank trust officer, registered
representative, or other employee (or a member of one of their
immediate families) of investment professionals having agreements with
FDC;
2. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or FIL or their direct or indirect subsidiaries
(a Fidelity Trustee or employee), the spouse of a Fidelity Trustee or
employee, a Fidelity Trustee or employee acting as custodian for a
minor child, or a person acting as trustee of a trust for the sole
benefit of the minor child of a Fidelity Trustee or employee;
3. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code) investing
$100,000 or more;
4. to shares purchased for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as
defined for purposes of Section 501(c)(3) of the Internal Revenue
Code);
5. to shares in a Fidelity or Fidelity Advisor account purchased
(including purchases by exchange) with the proceeds of a distribution
(i) from an employee benefit plan that qualified for waiver (11) or
had a minimum of $3 million in plan assets invested in Fidelity funds;
or (ii) from an insurance company separate account qualifying under
(6) below or used to fund annuity contracts purchased by employee
benefit plans having in the aggregate at least $3 million in plan
assets invested in Fidelity funds. (Distributions other than those
transferred to an IRA account must be transferred directly into a
Fidelity account.)
6. to shares purchased by an insurance company separate account used
to fund annuity contracts purchased by employee benefit plans
(including 403(b) programs, but otherwise as defined in ERISA)),
which, in the aggregate, have either more than 200 eligible employees
or a minimum of $1,000,000 in assets invested in Fidelity Advisor
funds;
7. to shares purchased for any state, county, or city, or any
governmental instrumentality, department, authority or agency;
8. to shares purchased with redemption proceeds from other mutual fund
complexes on which the investor has paid a front-end or contingent
deferred sales charge;
9. to shares purchased by a trust institution or bank trust department
(excluding assets described in (11) and (12) below) that has executed
a participation agreement with FDC specifying certain asset minimums
and qualifications, and marketing restrictions. Assets managed by
third parties do not qualify for this waiver;
10. to shares purchased for use in a broker-dealer managed account
program, provided the broker-dealer has executed a participation
agreement with FDC specifying certain asset minimums and
qualifications, and marketing, program and trading restrictions.
Employee benefit plan assets do not qualify for this waiver;
11. to shares purchased as part of an employee benefit plan having
more than (i) 200 eligible employees or a minimum of $1,000,000 of
plan assets invested in Fidelity Advisor funds, or (ii) 25 eligible
employees or $250,000 of plan assets invested in Fidelity Advisor
funds that subscribe to the Advisor Retirement Connection or similar
program sponsored by Fidelity Investments Institutional Services
Company, Inc.;
12. to shares purchased as part of an employee benefit plan through an
intermediary that has signed a participation agreement with FDC
specifying certain asset minimums and qualifications, and marketing,
program and trading restrictions;
13. to shares purchased on a discretionary basis by a registered
investment adviser which is not part of an organization primarily
engaged in the brokerage business, that has executed a participation
agreement with FDC specifying certain asset minimums and
qualifications, and marketing, program and trading restrictions.
Employee benefit plan assets do not qualify for this waiver; or
14. to shares purchased with distributions of income, principal, and
capital gains from Fidelity Defined Trusts.
Employee benefit plans that purchased Class T shares load waived prior
to June 30, 1995 but do not meet the qualifications of waiver (12)
will be permitted to make additional purchases of Class T shares on a
load waived basis.
For the purposes of qualifying for waiver (11), employee benefit plans
subscribing to the Premiere Retirement Savings Plan Program offered by
National Financial Correspondent Services may be aggregated.
A sales load waiver form must accompany these transactions.
STRATEGIC OPPORTUNITIES: INITIAL CLASS ONLY
Pursuant to Rule 22d-1 under the 1940 Act, FDC exercises its right to
waive Initial Class's front-end sales charge on shares acquired
through reinvestment of dividends and capital gain distributions or in
connection with the fund's merger with or acquisition of any
investment company or trust. In addition, FDC has chosen to waive
Initial Class's sales charge in certain instances because of
efficiencies involved in those sales of shares. The sales charge will
not apply:
1. to shares purchased in connection with an employee benefit plan
(including the Fidelity-sponsored 403(b) and corporate IRA programs
but otherwise as defined in the Employee Retirement Income Security
Act) maintained by a U.S. employer and having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in
Fidelity mutual funds, or as part of an employee benefit plan
maintained by a U.S. employer that is a member of a parent-subsidiary
group of corporations (within the meaning of Section 1563(a)(1) of the
Internal Revenue Code, with "50%" substituted for "80%") any member of
which maintains an employee benefit plan having more than 200 eligible
employees, or a minimum of $3,000,000 in plan assets invested in
Fidelity mutual funds, or as part of an employee benefit plan
maintained by a non-U.S. employer having 200 or more eligible
employees, or a minimum of $3,000,000 in assets invested in Fidelity
mutual funds, the assets of which are held in a bona fide trust for
the exclusive benefit of employees participating therein;
2. to shares purchased by an insurance company separate account used
to fund annuity contracts purchased by employee benefit plans
(including 403(b) programs, but otherwise as defined in the Employee
Retirement Income Security Act), which, in the aggregate, have either
more than 200 eligible employees or a minimum of $3,000,000 in assets
invested in Fidelity funds;
3. to shares in a Fidelity account purchased (including purchases by
exchange) with the proceeds of a distribution from an employee benefit
plan provided that: (i) at the time of the distribution, the employer,
or an affiliate (as described in exemption 1 above) of such employer,
maintained at least one employee benefit plan that qualified for
exemption (1) and that had at least some portion of its assets
invested in one or more mutual funds advised by FMR, or in one or more
accounts or pools advised by Fidelity Management Trust Company; and
(ii) either (a) the distribution is transferred from the plan to a
Fidelity IRA account within 60 days from the date of the distribution
or (b) the distribution is transferred directly from the plan into
another Fidelity account;
4. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code) investing
$100,000 or more;
5. to shares purchased for a charitable remainder trust or life income
pool established for the benefit of a charitable organization (as
defined for purposes of Section 501(c)(3) of the Internal Revenue
Code);
6. to shares purchased by an investor participating in the Fidelity
Trust Portfolios program (these investors must make initial
investments of $100,000 or more in the Trust Portfolios funds and
must, during the initial six-month period, reach and maintain an
aggregate balance of at least $500,000 in all accounts and subaccounts
purchased through the Trust Portfolios program);
7. to shares purchased by a mutual fund for which FMR or an affiliate
serves as investment manager;
8. to shares purchased through Portfolio Advisory Services or Fidelity
Charitable Advisory Services;
9. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or FIL or their direct or indirect subsidiaries
(a Fidelity Trustee or employee), the spouse of a Fidelity Trustee or
employee, a Fidelity Trustee or employee acting as custodian for a
minor child, or a person acting as trustee of a trust for the sole
benefit of the minor child of a Fidelity Trustee or employee;
10. to shares purchased by a bank trust officer, registered
representative, or other employee of a qualified recipient. Qualified
recipients are securities dealers or other entities, including banks
and other financial institutions, who have sold the fund's shares
under special arrangements in connection with FDC's sales activities;
11. to shares purchased by contributions and exchanges to the
following prototype or prototype-like retirement plans sponsored by
FMR Corp. or FMR and that are marketed and distributed directly to
plan sponsors or participants without any intervention or assistance
from any intermediary distribution channel: The Fidelity IRA, the
Fidelity Rollover IRA, The Fidelity SEP-IRA and SARSEP, The Fidelity
Retirement Plan, Fidelity Defined Benefit Plan, The Fidelity Group
IRA, The Fidelity 403(b) Program, The Fidelity Investments 401(a)
Prototype Plan for Tax-Exempt Employers, and The CORPORATEplan for
Retirement (Profit Sharing and Money Purchase Plan);
12. to shares purchased as part of a pension or profit-sharing plan as
defined in Section 401(a) of the Internal Revenue Code that maintains
all of its mutual fund assets in Fidelity mutual funds, provided the
plan executes a Fidelity non-prototype sales charge waiver request
form confirming its qualification;
13. to shares purchased by a registered investment adviser (RIA) for
his or her discretionary accounts, provided he or she executes a
Fidelity RIA load waiver agreement which specifies certain aggregate
minimum and operating provisions. This waiver is available only for
shares purchased directly from Fidelity, without a broker, unless
purchased through a brokerage firm which is a correspondent of
National Financial Services Corporation (NFSC). The waiver is
unavailable, however, if the RIA is part of an organization
principally engaged in the brokerage business, unless the brokerage
firm in the organization is an NFSC correspondent; or
14. to shares purchased by a trust institution or bank trust
department for its non-discretionary, non-retirement fiduciary
accounts, provided it executes a Fidelity Trust load waiver agreement
which specifies certain aggregate minimum and operating provisions.
This waiver is available only for shares purchased either directly
from Fidelity or through a bank-affiliated broker, and is unavailable
if the trust department or institution is part of an organization not
principally engaged in banking or trust activities.
The fund's sales charge may be reduced to reflect sales charges
previously paid, or that would have been paid absent a reduction for
some purchases made directly with Fidelity as noted in the prospectus,
in connection with investments in other Fidelity funds. This includes
reductions for investments in prototype-like retirement plans
sponsored by FMR or FMR Corp., which are listed above.
A sales load waiver form must accompany these transactions.
CLASS B AND CLASS C SHARES ONLY
The contingent deferred sales charge (CDSC) on Class B and Class C
shares may be waived (1) in the case of disability or death, provided
that the shares are redeemed within one year following the death or
the initial determination of disability; (2) in connection with a
total or partial redemption related to certain distributions from
retirement plans or accounts at age 70 1/2, which are permitted
without penalty pursuant to the Internal Revenue Code; or (3) in
connection with redemptions through the Fidelity Advisor Systematic
Withdrawal Program.
A sales load waiver form must accompany these transactions.
FOR CLASS A AND CLASS T SHARES ONLY
FINDER'S FEE. For all funds except the Short-Term Bond Funds, on
eligible purchases of (i) Class A shares in amounts of $1 million or
more that qualify for a Class A load waiver, (ii) Class A shares in
amounts of $25 million or more, or (iii) Class T shares in amounts of
$1 million or more, investment professionals will be compensated with
a fee at the rate of 0.25% of the purchase amount. Class A eligible
purchases are the following purchases made through broker-dealers and
banks: an individual trade of $25 million or more; an individual trade
of $1 million or more that is load waived; a trade which brings the
value of the accumulated account(s) of an investor (including an
employee benefit plan) past $25 million; a load waived trade that
brings the value of the accumulated account(s) of an investor
(including an employee benefit plan) past $1 million; a trade for an
investor with an accumulated account value of $25 million or more; a
load waived trade for an investor with an accumulated account value of
$1 million or more; an incremental trade toward an investor's $25
million "Letter of Intent"; and an incremental load waived trade
toward an investor's $1 million "Letter of Intent". Class T eligible
purchases are the following purchases made through broker-dealers and
banks: an individual trade of $1 million or more; a trade which brings
the value of the accumulated account(s) of an investor (including an
employee benefit plan) past $1 million; a trade for an investor with
an accumulated account value of $1 million or more; and an incremental
trade toward an investor's $1 million "Letter of Intent."
For the Short-Term Bond Funds, on eligible purchases of (i) Class A
shares in amounts of $1 million or more, or (ii) Class T shares in
amounts of $1 million or more, investment professionals will be
compensated with a fee at the rate of 0.25% of the purchase amount.
Class A eligible purchases are the following purchases made through
broker-dealers and banks: an individual trade of $1 million or more; a
trade which brings the value of the accumulated account(s) of an
investor (including an employee benefit plan) past $1 million; a trade
for an investor with an accumulated account value of $1 million or
more; and an incremental trade toward an investor's $1 million "Letter
of Intent." Class T eligible purchases are the following purchases
made through broker-dealers and banks: an individual trade of $1
million or more; a trade which brings the value of the accumulated
account(s) of an investor (including an employee benefit plan) past $1
million; a trade for an investor with an accumulated account value of
$1 million or more; and an incremental trade toward an investor's $1
million "Letter of Intent."
Any assets on which a finder's fee has been paid will bear a
contingent deferred sales charge (Class A or Class T CDSC) if they do
not remain in Class A or Class T shares of the Fidelity Advisor Funds,
or Daily Money Class shares of Treasury Fund, Prime Fund or Tax-Exempt
Fund, for a period of at least one uninterrupted year. The Class A or
Class T CDSC will be 0.25% of the lesser of the cost of the Class A
or Class T shares , as applicable, at the initial date of
purchase or the value of the Class A or Class T shares , as
applicable, at redemption, not including any reinvested dividends
or capital gains. Class A and Class T shares acquired through
distributions (dividends or capital gains) will not be subject to a
Class A or Class T CDSC. In determining the applicability and rate of
any Class A or Class T CDSC at redemption, Class A or Class T shares
representing reinvested dividends and capital gains, if any, will be
redeemed first, followed by those Class A or Class T shares, as
applicable that have been held for the longest period of time.
With respect to employee benefit plans, the Class A or Class T CDSC
does not apply to the following types of redemptions: (i) plan loans
or distributions or (ii) exchanges to non-Advisor fund investment
options. With respect to Individual Retirement Accounts, the Class A
or Class T CDSC does not apply to redemptions made for disability,
payment of death benefits, or required partial distributions starting
at age 70 1/2.
CLASS A, CLASS T, CLASS B, AND CLASS C SHARES ONLY
QUANTITY DISCOUNTS. To obtain a reduction of the front-end sales
charge on Class A or Class T shares, you or your investment
professional must notify the transfer agent at the time of purchase
whenever a quantity discount is applicable to your purchase. Upon such
notification, you will receive the lowest applicable front-end sales
charge.
For purposes of qualifying for a reduction in front-end sales charges
under the Combined Purchase, Rights of Accumulation or Letter of
Intent programs, the following may qualify as an individual or a
"company" as defined in Section 2(a)(8) of the 1940 Act: an
individual, spouse, and their children under age 21 purchasing for
his, her, or their own account; a trustee, administrator or other
fiduciary purchasing for a single trust estate or a single fiduciary
account or for a single or a parent-subsidiary group of "employee
benefits plans" (as defined in Section 3(3) of ERISA); and tax-exempt
organizations as defined under Section 501(c)(3) of the Internal
Revenue Code.
RIGHTS OF ACCUMULATION permit reduced front-end sales charges on any
future purchases of Class A or Class T shares after you have reached a
new breakpoint in a fund's sales charge schedule. The value of
currently held (i) Fidelity Advisor fund Class A, Class T, Class B and
Class C shares, (ii) Advisor B Class and Advisor C Class shares of
Treasury Fund and (iii) Daily Money Class shares of Treasury Fund,
Prime Fund , and Tax-Exempt Fund acquired by exchange from any
Fidelity Advisor fund, is determined at the current day's NAV at the
close of business, and is added to the amount of your new purchase
valued at the current offering price to determine your reduced
front-end sales charge.
LETTER OF INTENT. You may obtain Class A or Class T shares at the same
reduced front-end sales charge by filing a non-binding Letter of
Intent (Letter) within 90 days of the start of Class A or Class T
purchases. Each Class A or Class T investment you make after signing
the Letter will be entitled to the front-end sales charge applicable
to the total investment indicated in the Letter. For example, a $2,500
purchase of Class A or Class T shares toward a $50,000 Letter would
receive the same reduced sales charge as if the $50,000 ($500,000 for
the Short-Term Bond Funds) had been invested at one time. Purchases
of Class B and Class C shares during the 13-month period also will
count toward the completion of the Letter. To ensure that you receive
a reduced front-end sales charge on future purchases, you or your
investment professional must inform Fidelity that the Letter is in
effect each time Class A or Class T shares are purchased. Reinvested
income and capital gain distributions do not count toward the
completion of the Letter.
Your initial investment must be at least 5% of the total amount you
plan to invest. Out of the initial purchase, Class A or Class T shares
equal to 5% of the dollar amount specified in the Letter will be
registered in your name and held in escrow. The Class A or Class T
shares held in escrow cannot be redeemed or exchanged until the Letter
is satisfied or the additional sales charges have been paid. You will
earn income dividends and capital gain distributions on escrowed Class
A or Class T shares. The escrow will be released when your purchase of
the total amount has been completed. You are not obligated to complete
the Letter.
If you purchase more than the amount specified in the Letter and
qualify for a future front-end sales charge reduction, the front-end
sales charge will be adjusted to reflect your total purchase at the
end of 13 months. Surplus funds will be applied to the purchase of
additional Class A or Class T shares at the then-current offering
price applicable to the total purchase.
If you do not complete your purchase under the Letter within the
13-month period, 30 days' written notice will be provided for you to
pay the increased front-end sales charges due. Otherwise, sufficient
escrowed Class A or Class T shares will be redeemed to pay such
charges.
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM. You can make regular
investments in Class A, Class T, Class B, Class C or Institutional
Class shares of the funds monthly, bimonthly, quarterly, or
semi-annually with the Systematic Investment Program by completing the
appropriate section of the account application and attaching a voided
personal check with your bank's magnetic ink coding number across the
front. If your bank account is jointly owned, be sure that all owners
sign.
You may cancel your participation in the Systematic Investment Program
at any time without payment of a cancellation fee. You will receive a
confirmation from the transfer agent for every transaction, and a
debit entry will appear on your bank statement.
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM. If you own Class A,
Class T, or Institutional Class shares worth $10,000 or more, you can
have monthly, quarterly or semi-annual checks sent from your account
to you, to a person named by you, or to your bank checking account. If
you own Class B or Class C shares worth $10,000 or more you can have
monthly or quarterly checks sent from your account to you, to a person
named by you, or to your bank checking account. Aggregate redemptions
per 12-month period from your Class B or Class C account may not
exceed 10% of the value of the account and are not subject to a CDSC;
and you may set your withdrawal amount as a percentage of the value of
your account or a fixed dollar amount. Your Systematic Withdrawal
Program payments are drawn from Class A, Class T, Class B, Class C, or
Institutional Class share redemptions, as applicable. If Systematic
Withdrawal Plan redemptions exceed income dividends earned on your
shares, your account eventually may be exhausted.
ALL CLASSES
Each fund is open for business and the NAV and, where applicable, the
offering price, for each class is calculated each day the New York
Stock Exchange (NYSE) is open for trading. The NYSE has designated the
following holiday closings for 1997 and 1998: New Year's Day, Martin
Luther King's Birthday (in 1998), Presidents Day, Good Friday,
Memorial Day, Independence Day (observed), Labor Day, Thanksgiving
Day, and Christmas Day. Although FMR expects the same holiday schedule
to be observed in the future, the NYSE may modify its holiday
schedule at any time. In addition, Initial Class shares of Strategic
Opportunities, Mortgage Securities, and Municipal Bond will not
process wire purchases and redemptions on days when the Federal
Reserve System is closed.
FSC normally determines each class's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
SEC. To the extent that portfolio securities are traded in other
markets on days when the NYSE is closed, a class's NAV may be affected
on days when investors do not have access to a fund to purchase or
redeem shares. In addition, trading in some of a fund's portfolio
securities may not occur on days when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing a fund's NAV. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to
give shareholders at least 60 days' notice prior to terminating or
modifying its exchange privilege. Under the Rule, the 60-day
notification requirement may be waived if (i) the only effect of a
modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the
time of an exchange, or (ii) the fund suspends the redemption of the
shares to be exchanged as permitted under the 1940 Act or the rules
and regulations thereunder, or the fund to be acquired suspends the
sale of its shares because it is unable to invest amounts effectively
in accordance with its investment objective and policies.
In the prospectus, each fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your
distributions at the then-current NAV. All subsequent distributions
will then be reinvested until you provide Fidelity with alternate
instructions.
DIVIDENDS. A portion of a 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. For any fund that invests significantly in foreign
securities, corporate shareholders should not expect fund dividends to
qualify for the dividends-received deduction. For those funds that may
earn other types of income, such as interest, income from securities
loans, non-qualifying dividends, and short-term capital gains, the
percentage of dividends from the funds that qualify for the deduction
will generally be less than 100%. For those funds whose income is
primarily derived from interest, dividends will not qualify for the
dividends-received deduction available to corporate shareholders. Each
fund will notify corporate shareholders annually of the percentage of
fund dividends that qualifies for the dividends-received deduction. A
portion of a fund's dividends derived from certain U.S. Government
obligations may be exempt from state and local taxation. Mortgage
security paydown gains (losses) on mortgage securities purchased by
the fund on or prior to June 8, 1997 are generally taxable as ordinary
income, therefor, increase (decrease) taxable dividend distributions.
To the extent that a fund's income is designated as federally
tax-exempt interest, the daily dividends declared by the fund are also
federally tax-exempt. Gains (losses) attributable to foreign currency
fluctuations are generally taxable as ordinary income and, therefore,
will increase (decrease) dividend distributions. As a consequence, FMR
may adjust a fund's income distributions to reflect the effect of
currency fluctuations. However, if foreign currency losses exceed a
fund's net investment income during a taxable year, all or a portion
of the distributions made in the same taxable year would be
recharacterized as a return of capital to shareholders, thereby
reducing each shareholder's cost basis in his or her fund.
Short-term capital gains are distributed as dividend income, but do
not qualify for the dividends-received deduction. These gains will be
taxed as ordinary income.
Each fund will send each of its shareholders a notice in January
describing the tax status of dividends and capital gain distributions,
if any, for the prior year.
Shareholders are required to report tax-exempt income on their federal
tax returns. Shareholders who earn other income, such as Social
Security benefits, may be subject to federal income tax on up to 85%
of such benefits to the extent that their income, including tax-exempt
income, exceeds certain base amounts.
Each municipal fund purchases securities whose interest FMR
believes is free from federal income tax. Generally, issuers or other
parties have entered into covenants requiring continuing compliance
with federal tax requirements to preserve the tax-free status of
interest payments over the life of the security. If at any time the
covenants are not complied with, or if the IRS otherwise determines
that the issuer did not comply with relevant tax requirements,
interest payments from a security could become federally taxable
retroactive to the date the security was issued. For certain types of
structured securities, the tax status of the pass-through of tax-free
income may also be based on the federal and state tax treatment of the
structure.
As a result of The Tax Reform Act of 1986, interest on certain
"private activity" securities (referred to as "qualified bonds" in the
Internal Revenue Code) is subject to the federal alternative minimum
tax (AMT), although the interest continues to be excludable from gross
income for other tax purposes. Interest from private activity
securities will be considered tax-exempt for purposes of High Income
Municipal's, Municipal Bond's, Intermediate Municipal Income's, and
Short-Intermediate Municipal Income's policies of investing 80% of its
net assets in securities whose interest is free from federal income
tax, and New York Municipal Income's and California Municipal Income's
policies of investing 80% of its net assets in securities whose
interest is free from federal and state income tax. Interest from
private activity securities is a tax preference item for the purposes
of determining whether a taxpayer is subject to the AMT and the amount
of AMT tax to be paid, if any. Private activity securities issued
after August 7, 1986 to benefit a private or industrial user or to
finance a private facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after
April 30, 1993 and short-term capital gains distributed by a fund are
federally taxable to shareholders as dividends, not as capital gains.
Dividend distributions resulting from a recharacterization of gain
from the sale of bonds purchased at a discount after April 30, 1993
are not considered income for the purposes of High Income Municipal's,
Municipal Bond's, Intermediate Municipal Income's, and
Short-Intermediate Municipal Income's policies of investing 80% of its
net assets in securities whose interest is free from federal income
tax, and New York Municipal Income's and California Municipal Income's
policies of investing 80% of its net assets in securities whose
interest is free from federal and state personal income tax.
Corporate investors should note that a tax preference item for
purposes of the corporate AMT is 75% of the amount by which adjusted
current earnings (which include tax-exempt interest) exceed the
alternative minimum taxable income of the corporation. If a
shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss
will be disallowed to the extent of the amount of the exempt-interest
dividend.
NEW YORK TAX MATTERS. Individual shareholders of New York Municipal
Income will not be required to include in their gross income for New
York State and City purposes any portion of distributions received
from New York Municipal Income that are directly attributable (i) to
interest earned on tax-exempt obligations issued by New York State or
any political subdivision thereof (including New York City) or (ii)
interest earned on obligations of U.S. possessions or territories that
is exempt from state taxation pursuant to federal law, provided that
New York Municipal Income qualifies as a RIC and satisfies the
requirement that at least 50% of its assets at the close of each
quarter of its taxable year constitute obligations the interest of
which are tax-exempt for federal income tax purposes. Distributions
from New York Municipal Income that are attributable to sources other
than those described in the preceding sentence (including interest on
obligations of other states and their political subdivisions) will
generally be taxable to individual shareholders as ordinary
income.
Shareholders of New York Municipal Income that are subject to the
New York State corporation franchise tax or the New York City general
corporation tax will be required to include exempt-interest dividends
paid by New York Municipal Income in their "entire net income" for
purposes of such taxes and will be required to include their shares of
the New York Municipal Income in their investment capital for purposes
of such taxes.
If a shareholder is subject to unincorporated business taxation by
New York City, income and gains distributed by New York Municipal
Income will be subject to such taxation except to the extent such
distribution are directly attributable to interest earned on
tax-exempt obligations issued by New York State or any political
subdivision thereof (including the New York City). However,
shareholders of New York Municipal Income will not be subject to the
unincorporated business tax imposed by New York City solely by reason
of their ownership of shares in New York Municipal Income.
Shares of New York Municipal Income will not be subject to property
taxes imposed by New York State or City.
Interest on indebtedness incurred tp purchase, or continued to
carry, shares of New York Municipal Income generally will not be
deductible for New York State personal income tax purposes.
Interest income on New York Municipal Income that is distributed to
its shareholders will generally not be taxable to New York Municipal
Income for purposes of the New York State corporation franchise tax or
the New York City general corporation tax.
The forgoing is a general, abbreviated summary of certain of the
provisions of the tax laws of New York State and City presently in
effect as they directly govern the taxation of shareholders of New
York Municipal Income. These provisions are subject to change by
legislative or administrative action, and any such change may be
retroactive with respect to New York Municipal Income transactions.
Shareholders are advised to consult with their own tax advisers for
more detailed information concerning New York State and City
matters.
CALIFORNIA TAX MATTERS. As long as California Municipal Income
continues to qualify as a regulated investment company under the
federal Internal Revenue Code, it will incur no California income or
franchise tax liability on income and capital gains distributed to
shareholders. California personal income tax law provides that
exempt-interest dividends paid by a regulated investment company, or
series thereof, from interest on obligations that are exempt from
California personal income tax are excludable from gross income. For a
fund to qualify to pay exempt-interest dividends under California law,
at least 50% of the value of its assets must consist of such
obligations at the close of each quarter of its fiscal year. For
purposes of California personal income taxation, distributions to
individual shareholders derived from interest on other types of
obligations and short-term capital gains will be taxed as dividends,
and long-term capital gain distributions will be taxed as long-term
capital gains. California has an alternative minimum tax similar to
the federal AMT described above. However, the California AMT does not
include interest from private activity municipal obligations as an
item of tax preference. Interest on indebtedness incurred or continued
by a shareholder in connection with the purchase of shares of a fund
will not be deductible for California personal income tax purposes.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by a fund
on the sale of securities and distributed to shareholders are
federally taxable as capital gains, regardless of the length of time
shareholders have held their shares. If a shareholder receives a
capital gain distribution on shares of a fund, and such shares are
held six months or less and are sold at a loss, the portion of the
loss equal to the amount of the capital gain distribution will be
considered a long-term loss for tax purposes. Short-term capital gains
distributed by each fund are taxable to shareholders as dividends, not
as capital gains.
As of October 31, 1996, Overseas hereby designates approximately
$7,260,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of November 30, 1996, Mid Cap hereby designates approximately
$94,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of November 30, 1996, Equity Growth hereby designates approximately
$26,024,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of October 31, 1996, Growth Opportunities hereby designates
approximately $71,976,000 as a capital gain dividend for the purpose
of the dividend-paid deduction.
As of December 31, 1996, Strategic Opportunities hereby designates
approximately $19,489,000 as a capital gain dividend for the purpose
of the dividend-paid deduction.
As of November 30, 1996, Equity Income hereby designates approximately
$15,681,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of October 31, 1996, Balanced hereby designates approximately
$11,566,000 as a capital gain dividend for the purpose of the
dividend-paid deduction.
As of December 31, 1996, Emerging Markets Income hereby designates
approximately $78,000 as a capital gain dividend for the purpose of
the dividend-paid deduction.
As of December 31, 1996, Strategic Income hereby designates
approximately $369,000 as a capital gain dividend for the purpose of
the dividend-paid deduction.
As of October 31, 1996, Government Investment had a capital loss
carryforward aggregating approximately $5,958,000. This loss
carryforward, of which $3,262,000 and $2,696,000 will expire on
October 31, 2002 and 2004, respectively, is available to offset future
capital gains.
As of November 30, 1996, Intermediate Bond had a capital loss
carryforward aggregating approximately $13,667,000. This loss
carryforward, of which $2,841,000, $1,035,000, $134,000, and
$9,657,000 will expire on November 30, 1998, 1999, 2002, and 2004,
respectively, is available to offset future capital gains.
As of July 31, 1997, Mortgage Securities hereby designates
approximately $ 544,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of October 31, 1996, Short Fixed-Income had a capital loss
carryforward aggregating approximately $40,265,000. This loss
carryforward, of which $128,000, $63,000, $286,000, $38,000, $336,000,
$17,692,000, $19,457,000 and $2,265,000 will expire on October 31,
1997, 1998, 1999, 2000, 2001, 2002, 2003, and 2004, respectively, is
available to offset future capital gains.
As of October 31, 1996, High Income Municipal had a capital loss
carryforward aggregating approximately $16,952,000. This loss
carryforward, of which $3,173,000, $7,511,000 and 6,268,000 will
expire on October 31, 2002, 2003, and 2004, respectively, is available
to offset future capital gains.
As of December 31, 1996, Municipal Bond had a capital loss
carryforward aggregating approximately $19,626,000. This loss
carryforward, all of which will expire on December 31, 2003, is
available to offset future capital gains.
As of November 30, 1996, Intermediate Municipal Income had a capital
loss carryforward aggregating approximately $426,000. This loss
carryforward, all of which will expire on November 30, 2003, is
available to offset future capital gains.
As of November 30, 1996, Short-Intermediate Municipal Bond hereby
designates approximately $31,000 as a capital gain dividend for the
purpose of the dividend-paid deduction.
As of October 31, 1996, California Municipal Income had a capital loss
carryforward aggregating approximately $4,000. This loss carryforward,
all of which will expire on October 31, 2004, is available to offset
future capital gains.
STATE AND LOCAL TAXES. For mutual funds organized as business trusts,
state law provides for a pass-through of the state and local income
tax exemption afforded to direct owners of U.S. Government securities.
Some states limit this to mutual funds that invest a certain amount in
U.S. Government securities, and some types of securities, such as
repurchase agreements and some agency-backed securities, may not
qualify for this benefit. The tax treatment of your dividend
distributions from a fund will be the same as if you directly owned
your proportionate share of the U.S. Government securities in the
fund's portfolio. Because the income earned on most U.S. Government
securities in which each fund invests is exempt from state and local
income taxes, the portion of your dividends from each fund
attributable to these securities will also be free from income taxes.
The exemption from state and local income taxation does not preclude
states from assessing other taxes on the ownership of U.S. Government
securities. In a number of states, corporate franchise (income) tax
laws do not exempt interest earned on U.S. Government securities,
whether such securities are held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments
may also impose taxes on other payments or gains with respect to
foreign securities. If, at the close of its fiscal year, more than 50%
of a fund's total assets are invested in securities of foreign
issuers and the fund meets certain holding period requirements for
such securities, the fund may elect to pass through foreign taxes
paid and thereby allow shareholders to take a credit or deduction on
their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a "
regulated investment company" for tax purposes, so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company
and avoid being subject to federal income or excise taxes at the fund
level, each fund intends to distribute substantially all of its net
investment income and realized capital gains within each calendar year
as well as on a fiscal year basis , and intends to comply with
other tax rules applicable to regulated investment companies .
If a fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the
Internal Revenue Code, it may be subject to U.S. federal income tax on
a portion of any excess distribution or gain from the disposition of
such shares. Interest charges may also be imposed on the fund with
respect to deferred taxes arising from such distributions or gains.
Generally, a fund will elect to mark-to-market any PFIC shares.
Unrealized gains will be recognized as income for tax purposes and
must be distributed to shareholders as dividends.
Each fund is treated as a separate entity from the other funds, if
any, in its trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders of a
fund may be subject to state and local taxes on fund distributions,
and shares may also be subject to state and local personal property
taxes. Investors should consult their tax advisers to determine
whether a fund is suitable for their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the 1940 Act, control of a company is presumed where one individual or
group of individuals owns more than 25% of the voting stock of that
company. Therefore, through their ownership of voting common stock and
the execution of the shareholders' voting agreement, members of the
Johnson family may be deemed, under the 1940 Act, to form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures
for personal investing and restricts certain transactions. For
example, all personal trades in most securities require pre-clearance,
and participation in initial public offerings is prohibited. In
addition, restrictions on the timing of personal investing in relation
to trades by Fidelity funds and on short-term trading have been
adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board and executive officers
of the trust are listed below. Except as indicated, each individual
has held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR. The business address of each Trustee, Member of the
Advisory Board and officer who is an "interested person" (as defined
in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees and Members of the
Advisory Board is Fidelity Investments, P.O. Box 9235, Boston,
Massachusetts 02205-9235. Those Trustees who are "interested persons"
by virtue of their affiliation with either the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (67), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of FMR Texas Inc., Fidelity Management & Research (U.K.)
Inc., and Fidelity Management & Research (Far East) Inc.
J. GARY BURKHEAD (56), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President and Chief Executive Officer of the Fidelity
Institutional Group (1997). Previously, Mr. Burkhead served as
President of Fidelity Management & Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990, Mr. Cox was President
and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of USA Waste Services,
Inc. (non-hazardous waste, 1993), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries
(petroleum measurement equipment manufacturer). In addition, he is a
member of advisory boards of Texas A&M University and the University
of Texas at Austin.
PHYLLIS BURKE DAVIS (65), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (53), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is currently a Trustee for the Forum For
International Policy, a Board Member for the Virginia Neurological
Institute, and a Senior Advisor of the Harvard Journal of World
Affairs. In addition, Mr. Gates also serves as a member of the
corporate board for LucasVarity PLC (automotive components and diesel
engines), Charles Stark Draper Laboratory (non-profit), NACCO
Industries, Inc. (mining and manufacturing), and TRW Inc. (original
equipment and replacement products).
E. BRADLEY JONES (69), Trustee. Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company.
He is a Director of TRW Inc. (original equipment and replacement
products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been a
member of the Executive Committee as well as Chairman of the Board and
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK (64), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of the National Arts Stabilization Fund, Chairman
of the Board of Trustees of the Greenwich Hospital Association, a
Member of the Public Oversight Board of the American Institute of
Certified Public Accountants' SEC Practice Section (1995), and as a
Public Governor of the National Association of Securities Dealers,
Inc. (1996).
*PETER S. LYNCH (54), Trustee, is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive
Vice President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). In addition, he
serves as a Trustee of Boston College, Massachusetts Eye & Ear
Infirmary, Historic Deerfield (1989) and Society for the Preservation
of New England Antiquities, and as an Overseer of the Museum of Fine
Arts of Boston.
WILLIAM O. McCOY (63), Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), and the Kenan Transport Co. (1996).
Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member
of the Board of Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH (68), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director of Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and
refrigeration), Commercial Intertech Corp. (hydraulic systems,
building systems, and metal products, 1992), CUNO, Inc. (liquid and
gas filtration products, 1996), and Associated Estates Realty
Corporation (a real estate investment trust, 1993). Mr. McDonough
served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996.
MARVIN L. MANN (64), Trustee (1993) is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) Imation Corp. (imaging and information storage, 1997) and
Infomart (marketing services, 1991), a Trammell Crow Co. In addition,
he serves as the Campaign Vice Chairman of the Tri-State United Way
(1993) and is a member of the University of Alabama President's
Cabinet.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
President and a Director of FMR (1997); and President and a Director
of FMR Texas Inc. (1997), Fidelity Management & Research (U.K.) Inc.
(1997), and Fidelity Management & Research (Far East) Inc. (1997).
Previously, Mr. Pozen served as General Counsel, Managing Director,
and Senior Vice President of FMR Corp.
THOMAS R. WILLIAMS (68), Trustee, is President of The Wales Group,
Inc. (management and financial advisory services). Prior to retiring
in 1987, Mr. Williams served as Chairman of the Board of First
Wachovia Corporation (bank holding company), and Chairman and Chief
Executive Officer of The First National Bank of Atlanta and First
Atlanta Corporation (bank holding company). He is currently a Director
of ConAgra, Inc. (agricultural products), Georgia Power Company
(electric utility), National Life Insurance Company of Vermont,
American Software, Inc., and AppleSouth, Inc. (restaurants, 1992).
WILLIAM J. HAYES (63), Vice President (1994), is Vice President of
Fidelity's equity funds; Senior Vice President of FMR; and Managing
Director of FMR Corp.
ROBERT LAWRENCE (44), is Vice President of certain Equity Funds,
Vice President of Fidelity Real Estate High Income and Fidelity Estate
High Income Fund II (1994), and Senior Vice President of FMR (1993).
Mr. Lawrence joined Fidelity in 1991 as a Vice President of FMR.
FRED L. HENNING, JR. (59), is Vice President of Fidelity's
F ixed- I ncome Group (1995) and Senior Vice
President of FMR (1995). Before assuming his current
responsibilities, Mr. Henning was head of Fidelity's Money Market
Division.
BART A. GRENIER, is Vice President of certain High-Income Bond
Funds (1997). Mr Grenier rejoined Fidelity in August 1997 from DDJ
Capital Management, LLC, where he had served as Managing Director
since April 1997. Mr. Grenier originally joined Fidelity in 1991 as a
senior analyst. Mr. Grenier served as Director of High-Income Group
Research and as Director of U.S. Equity Research from 1994 to March
1996. He later became Group Leader of the Income-Growth and Asset
Allocation-Income Groups in 1996 and Assistant Equity Division Head in
1997.
JOHN H. CARLSON (47), is Vice President of Emerging Markets Income
(1996) and Strategic Income (1996), and other funds advised by FMR,
and an employee of FMR.
DWIGHT CHURCHILL (43), is Vice President of Bond funds, group
leader of Bond Group, and is Senior Vice President of FMR (1997). Mr.
Churchill joined Fidelity in 1993 as Vice President and Group Leader
of Taxable Fixed-Income Investments. Prior to joining Fidelity, he
spent three years as president and CEO of CSI Asset Management, Inc.
in Chicago, an investment management subsidiary of The Prudential.
BETTINA E. DOULTON (32), is Vice President of Balanced (1996), and
other funds advised by FMR, and an employee of FMR.
MARGARET L. EAGLE (47), is President of High Yield and Strategic
Income (1997), and an employee of FMR.
GEORGE A. FISCHER (36), is Vice President of High Income Municipal
(1997) and Municipal Bond (1997), and other funds advised by FMR, and
an employee of FMR.
KEVIN E. GRANT (36), is Vice President of Balanced (1996) and
Intermediate Bond (1996), and other funds advised by FMR, and an
employee of FMR.
CURTIS HOLLINGSWORTH (39), is Vice President of Government Investment
(1997) and Strategic Income (1997), and other funds advised by FMR,
and an employee of FMR.
HARRIS LEVITON (35), is Vice President of Strategic Opportunities
(1996) and an employee of FMR.
ABIGAIL JOHNSON (36), is Vice President of certain Equity Funds
(1997), and is a Director of FMR Corp (1994). Before assuming her
current responsibilities, Ms. Johnson managed a number of Fidelity
funds.
NORMAN U. LIND (40), is Vice President of New York Municipal Income
(1995), Short-Intermediate Municipal Income (1995), and other funds
advised by FMR, and an employee of FMR.
RICHARD R. MACE Jr. (34), is Vice President of Overseas (1996), and
other funds advised by FMR, and an employee of FMR.
DAVID L. MURPHY (49), is Vice President of Intermediate Municipal
Income (1996), and other funds advised by FMR, and an employee of FMR.
JONATHAN D. SHORT (34), is Vice President of California Municipal
Income (1997), and other funds advised by FMR, and an employee of FMR.
RICHARD A. SPILLANE, JR. (46), is Vice President of certain Equity
Funds , and Senior Vice President of FMR (1997). Since joining
Fidelity Mr. Spillane was Chief Investment Officer for Fidelity
International, Limited. Prior to that position, Mr. Spillane served as
Director of Research.
THOMAS M. SPRAGUE (39), is Vice President of Large Cap (1997), and
another fund advised by FMR, and an employee of FMR.
BETH TERRANA (39), is Vice President of Growth & Income (1997), and
other funds advised by FMR, and an employee of FMR.
JENNIFER S. UHRIG (36), is Vice President of Equity Growth (1997), and
other funds advised by FMR, and an employee of FMR.
GEORGE A. VANDERHEIDEN (50), is Vice President of Growth
Opportunities, and other funds advised by FMR, and an employee of FMR.
ARTHUR S. LORING (49), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
RICHARD A. SILVER (50), Treasurer (1997), is Treasurer of the
Fidelity funds and is an employee of FMR (1997). Before joining FMR,
Mr. Silver served as Executive Vice President, Fund Accounting &
Administration at First Data Investor Services Group, Inc.
(1996-1997). Prior to 1996, Mr. Silver was Senior Vice President and
Chief Financial Officer at The Colonial Group, Inc. Mr. Silver also
served as Chairman of the Accounting/Treasurer's Committee of the
Investment Company Institute (1987-1993).
ROBERT H. MORRISON (57), Manager of Security Transactions of
Fidelity's equity funds is Vice President of FMR.
THOMAS D. MAHER (51), Assistant Vice President, is Assistant Vice
President of Fidelity's municipal bond funds (1996) and of Fidelity's
money market funds and Vice President and Associate General Counsel of
FMR Texas Inc.
JOHN H. COSTELLO (50), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (51), Assistant Treasurer (1994), is an employee of
FMR (1994). Prior to becoming Assistant Treasurer of the Fidelity
funds, Mr. Rush was Chief Compliance Officer of FMR Corp. (1993-1994)
and Chief Financial Officer of Fidelity Brokerage Services, Inc.
(1990-1993).
THOMAS J. SIMPSON (39), Assistant Treasurer, is Assistant Treasurer of
Fidelity's municipal bond funds (1996) and of Fidelity's money market
funds (1996) and an employee of FMR (1996). Prior to joining FMR, Mr.
Simpson was Vice President and Fund Controller of Liberty Investment
Services (1987-1995).
The following table sets forth information describing the
compensation of each Trustee and Member of the Advisory Board of
Mortgage Securities for his or her services for the fiscal year ended
in July 31, 1997, or calendar year ended December 31, 1996, as
applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S>
Agregate
Compensation form
a FundA
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Robert William
M. O.
Richard Gates McCoy Edward
J. (double Edward (double H.
Flynn dagger) C. Peter dagger) Malone
J. Gary (double (double Johnson S. (double (double
Burkhead Ralph Phyllis dagger) dagger) 3d E. Donald Lynch dagger) Gerlad dagger) Marvin
(double F. Burke (double (double (double Bradley J. (double (double C. (double L.
dagger) Cox Davis dagger) dagger) dagger) Jones Kirk dagger) dagger) McDonough dagger) Mann
Mortgage Securities*,B
$ 0 $ 204 $ 199 $ 82 $ 98 $ 0 $ 200 $ 202 $0 $ 202 $ 235 $ 68 $ 204
</TABLE>
<TABLE>
<CAPTION>
<S>
Agregate
Compensation form
a FundA
<C> <C>
Robert
C.
Pozen Thomas
(double R.
dagger) Williams
Mortgage Securities*,B
$ 0 $ 204
</TABLE>
* Fiscal year ended July 31.
(double dagger) Interested trustees of the fund and Mr. Burkhead
are compensated by FMR.
(double dagger)(double dagger) Richard J. Flynn and Edward H.
Malone served on the Board of Trustees through December 31, 1996.
(double dagger)(double dagger)(double dagger) During the period
from May 1, 1996 through December 31, 1996, William O. McCoy served as
a Member of the Advisory Board of Fidelity Income Fund. Mr. McCoy was
appointed to the Board of Trustees of Income Fund effective January 1,
1997.
(double dagger)(double dagger)(double dagger)(double dagger)Mr.
Gates was appointed to the Board of Trustees of Income Fund effective
March 1, 1997.
+ Estimated
++ Information is as of December 31, 1996 for 235 funds in the
complex.
A Compensation figures include cash, a pro rata portion of benefits
accrued under the retirement program for the period ended December 30,
1996 and required to be deferred, and may include amounts deferred at
the election of Trustees.
B The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $6, Phyllis Burke Davis, $6, Richard J. Flynn, $0, Robert M.
Gates, $0, E. Bradley Jones, $6, Donald J. Kirk, $6, William O. McCoy,
$0, Gerald C. McDonough, $6, Edward H. Malone, $6, Marvin L. Mann, $6,
and Thomas R. Williams, $6.
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended in 1996, or calendar year
ended December 31, 1996, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S>
Agregate
Compensation form
a FundA
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
William
O.
Richard McCoy Edward
J. Edward (double H.
Flynn C. Peter dagger) Malone
J. Gary (double Johnson S. (double (double
Burkhead Ralph Phyllis dagger) 3d E. Donald Lynch dagger) Gerlad dagger) Marvin Thomas
(double F. Burke (double (double Bradley J. (double (double C. (double L. R.
dagger) Cox Davis dagger) dagger) Jones Kirk dagger) dagger) McDonough dagger) Mann Williams
TechnoQuant Growth**,+
$ 0 $ 20 $ 20 $ 0 $ 0 $ 20 $ 20 $ 0 $ 20 $ 26 $ 0 $ 20 $ 20
Overseas*,B
0 322 310 394 0 313 316 0 156 314 315 315 317
MidCap**,+
0 44 43 57 0 43 44 0 43 45 43 43 42
Equity Growth**,C,P
0 1,269 1,220 1,554 0 1,232 1,247 0 743 1,239 1,240 1,240 1,235
Growth Opportunities*,D,P
0 4,268 4,105 5,221 0 4,147 4,197 0 2,051 4,159 4,173 4,173 4,203
Strategic Opportunities***,E
0 259 253 315 0 253 256 0 156 256 256 253 256
Large Cap**, +
0 7 7 9 0 7 7 0 7 7 7 7 7
Growth & Income**, +
0 92 92 0 0 92 92 0 92 114 0 92 92
Equity Income**,F,,P
0 679 650 827 0 656 664 0 396 660 664 664 658
Balanced*,G,P
0 1,183 1,157 1,460 0 1,172 1,182 0 492 1,165 1,160 1,160 1,179
Emerging Markets Income***
0 21 20 27 0 20 21 0 15 21 21 21 21
High Yield*,H,P
0 594 561 715 0 567 574 0 283 569 571 571 575
Strategic Income***
0 33 32 42 0 32 33 0 23 33 33 32 32
Government Investment*,I
0 95 91 113 0 92 93 0 43 92 93 93 93
Intermediate Bond**,J
0 170 165 209 0 167 168 0 91 166 167 167 167
Short Fixed-Income*,K
0 182 178 225 0 181 182 0 74 179 178 178 182
High Income Municipal*,L
0 208 203 256 0 205 207 0 87 204 204 204 207
Municipal Bond***,M
0 343 340 422 0 340 343 0 199 343 339 336 344
Intermediate Municipal Income**,N
0 28 27 34 0 27 28 0 14 27 27 27 27
Short-Intermediate Municipal Income**
0 10 10 13 0 10 10 0 6 10 10 10 10
New York Municipal Income*
0 2 2 3 0 2 2 0 1 2 2 2 2
California Municipal Income*
0 1 1 2 0 1 1 0 1 1 1 1 1
Total Compensation from the Fund Complex ++,A
$ 0 137, 134,700 168,000 0 134,700 136,200 0 85,333 136,200 136,200 134,700 136,200
700
</TABLE>
* Fiscal year ended October 31.
** Fiscal year ended November 30.
*** Fiscal year ended December 31.
(double dagger) Interested trustees of each fund and Mr. Burkhead
are compensated by FMR .
(double dagger)(double dagger) Richard J. Flynn and Edward H. Malone
served on the Board of Trustees through December 31, 1996.
(double dagger)(double dagger)(double dagger) During the period from
May 1, 1996 through December 31, 1996, William O. McCoy served as a
Member of the Advisory Board of Fidelity Advisor Series II, III, IV,
V, and VI, and Fidelity Municipal Trust . During the
period from May 1, 1996 through the present, Mr. McCoy has served as a
Member of the Advisory Board of Fidelity Advisor Series I, VII, and
VIII.
+ Estimated
++ Information is as of December 31, 1996 for 235 funds in the
complex.
A Compensation figures include cash, a pro rata portion of benefits
accrued under the retirement program for the period ended December 30,
1996 and required to be deferred, and may include amounts deferred at
the election of Trustees.
B The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $13, Phyllis Burke Davis, $13, Richard J. Flynn, $0, E. Bradley
Jones, $13, Donald J. Kirk, $13, William O. McCoy, $0, Gerald C.
McDonough, $13, Edward H. Malone, $13, Marvin L. Mann, $13, and Thomas
R. Williams, $13.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $50, Phyllis Burke Davis, $50, Richard J. Flynn, $0, E. Bradley
Jones, $50, Donald J. Kirk, $50, William O. McCoy, $0, Gerald C.
McDonough, $50, Edward H. Malone, $50, Marvin L. Mann, $50, and Thomas
R. Williams, $50.
D The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $167, Phyllis Burke Davis, $167, Richard J. Flynn, $0, E. Bradley
Jones, $167, Donald J. Kirk, $167, William O. McCoy, $0, Gerald C.
McDonough, $167, Edward H. Malone, $167, Marvin L. Mann, $167, and
Thomas R. Williams, $167.
E The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $10, Phyllis Burke Davis, $10, Richard J. Flynn, $0, E. Bradley
Jones, $10, Donald J. Kirk, $10, William O. McCoy, $0, Gerald C.
McDonough, $10, Edward H. Malone, $10, Marvin L. Mann, $10, and Thomas
R. Williams, $10.
F The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $27, Phyllis Burke Davis, $27, Richard J. Flynn, $0, E. Bradley
Jones, $27, Donald J. Kirk, $27, William O. McCoy, $0, Gerald C.
McDonough, $27, Edward H. Malone, $27, Marvin L. Mann, $27, and Thomas
R. Williams, $27.
G The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $42, Phyllis Burke Davis, $42, Richard J. Flynn, $0, E. Bradley
Jones, $42, Donald J. Kirk, $42, William O. McCoy, $0, Gerald C.
McDonough, $42, Edward H. Malone, $42, Marvin L. Mann, $42, and Thomas
R. Williams, $42.
H The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $23, Phyllis Burke Davis, $23, Richard J. Flynn, $0, E. Bradley
Jones, $23, Donald J. Kirk, $23, William O. McCoy, $0, Gerald C.
McDonough, $23, Edward H. Malone, $23, Marvin L. Mann, $23, and Thomas
R. Williams, $23.
I The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $4, Phyllis Burke Davis, $4, Richard J. Flynn, $0, E. Bradley
Jones, $4, Donald J. Kirk, $4, William O. McCoy, $0, Gerald C.
McDonough, $4, Edward H. Malone, $4, Marvin L. Mann, $4, and Thomas R.
Williams, $4.
J The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $6, Phyllis Burke Davis, $6, Richard J. Flynn, $0, E. Bradley
Jones, $6, Donald J. Kirk, $6, William O. McCoy, $0, Gerald C.
McDonough, $6, Edward H. Malone, $6, Marvin L. Mann, $6, and Thomas R.
Williams, $6.
K The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $6, Phyllis Burke Davis, $6, Richard J. Flynn, $0, E. Bradley
Jones, $6, Donald J. Kirk, $6, William O. McCoy, $0, Gerald C.
McDonough, $6, Edward H. Malone, $6, Marvin L. Mann, $6, and Thomas R.
Williams, $6.
L The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $7, Phyllis Burke Davis, $7, Richard J. Flynn, $0, E. Bradley
Jones, $7, Donald J. Kirk, $7, William O. McCoy, $0, Gerald C.
McDonough, $7, Edward H. Malone, $7, Marvin L. Mann, $7, and Thomas R.
Williams, $7.
M The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $13, Phyllis Burke Davis, $13, Richard J. Flynn, $0, E. Bradley
Jones, $13, Donald J. Kirk, $13, William O. McCoy, $0, Gerald C.
McDonough, $13, Edward H. Malone, $13, Marvin L. Mann, $13, and Thomas
R. Williams, $13.
N The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $1, Phyllis Burke Davis, $1, Richard J. Flynn, $0, E. Bradley
Jones, $1, Donald J. Kirk, $1, William O. McCoy, $0, Gerald C.
McDonough, $1, Edward H. Malone, $1, Marvin L. Mann, $1, and Thomas R.
Williams, $1.
O For the fiscal period ended in 1996, certain of the
non-interested trustees' aggregate compensation from certain funds
includes accrued voluntary deferred compensation as follows: Equity
Growth (Cox, $1219, Malone, $1,190, Mann, $1,190); Growth
Opportunities (Cox, $3,791, Malone, $3,695, Mann, $3,695); Equity
Income (Cox, $653, Malone, $637, Mann, $637); Balanced (Cox, $1,028,
Malone, $1,005, Mann, $1,005); and High Yield (Cox, $519, Malone,
$506, Mann, $506).
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1996, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a Fidelity
fund during his or her lifetime based on his or her basic trustee fees
and length of service. The obligation of a fund to make such payments
is neither secured nor funded. A Trustee became eligible to
participate in the program at the end of the calendar year in which he
or she reached age 72, provided that, at the time of retirement, he or
she had served as a Fidelity fund Trustee for at least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
existing non-interested Trustee received a credit to his or her Plan
account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
As of September 30, 1997, the following owned of record or
beneficially 5% or more of the outstanding shares of the classes of
the following Fidelity Advisor funds:
ADVISOR BALANCED - CLASS A: EQ Financial Consultants, New York, NY
(16.89%).
ADVISOR BALANCED - CLASS T: CIGNA, Hartford, CT (21.87%); Smith
Barney, New York, NY (5.34%).
ADVISOR BALANCED - CLASS B: Advantage Capital Corp., Houston, TX
(21.00%).
ADVISOR BALANCED - INSTITUTIONAL CLASS: Whitney National Bank, New
Orleans, LA (28.06%); Valley National Bank, Clifton, NJ (14.02%);
Charles Schwab and Co., Inc., San Francisco, CA (9.86%); Moss Lawton,
Chicago, IL (6.96%); Benefit Services Corporation, Atlanta, GA
(6.79%); Donaldson, Lufkin & Jenrette, New York, NY (5.41%).
ADVISOR CALIFORNIA MUNICIPAL INCOME - CLASS A: FMR Corp., Boston,
MA (54.83%); Sunamerica Securities, Inc., Phoenix, AZ (17.82%);
Prudential Securities, New York, NY (11.96%).
ADVISOR CALIFORNIA MUNICIPAL INCOME - CLASS T: First Allied
Securities, Inc., Cokeville, WY (21.58%); Prudential Securities, New
York, NY (17.02%); Hornor Townsend & Kent, Philadelphia, PA (11.92%);
W. S. Griffith & Co., Inc., San Diego, CA (5.17%).
ADVISOR CALIFORNIA MUNICIPAL INCOME - CLASS B: The Union Bank of
California, Panorama City, CA (12.73%); FMR Corp., Boston, MA
(12.04%); Linsco/Private Ledger, San Diego, CA (11.18%); Prudential
Securities, New York, NY (8.30%); Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (6.87%); A. G. Edwards & Sons, St. Louis, MO (6.16%);
PaineWebber, Inc., Weehawken, NJ (5.79%); Commonwealth Equity
Services, Waltham, MA (5.54%); Centaurus Financial Inc., Irvine, CA
(5.45%).
ADVISOR CALIFORNIA MUNICIPAL INCOME - INSTITUTIONAL CLASS: FMR
Corp., Boston, MA (98.71%).
ADVISOR EMERGING MARKETS INCOME - CLASS A: Linsco/Private Ledger,
San Diego, CA (10.73%); FMR Corp., Boston, MA (7.46%); Dain Bosworth,
Inc., Minneapolis, MN (6.53%).
ADVISOR EMERGING MARKETS INCOME - CLASS T: FMR Corp., Boston, MA
(9.13%).
ADVISOR EMERGING MARKETS INCOME - CLASS B: Donaldson, Lufkin &
Jenrette, New York, NY (7.26%); PaineWebber, Inc., Weehawken, NJ
(5.33%).
ADVISOR EMERGING MARKETS INCOME - INSTITUTIONAL CLASS: Robert E.
Jones & Associates, Denver, CO (48.99%); First National Bank La Jolla,
La Jolla, CA (10.53%).
ADVISOR EQUITY GROWTH - CLASS A: FIS Securities, Inc., Providence,
RI (11.48%).
ADVISOR EQUITY GROWTH - CLASS T: CIGNA, Hartford, CT (8.84%); Smith
Barney, New York, NY (5.35%); Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (5.11%).
ADVISOR EQUITY GROWTH - CLASS B: FIS Securities, Inc., Providence,
RI (9.96%).
ADVISOR EQUITY INCOME - CLASS A: FIS Securities, Inc., Providence,
RI (7.56%); Donaldson, Lufkin & Jenrette, New York, NY (5.16%).
ADVISOR EQUITY INCOME - CLASS T: Smith Barney, New York, NY
(5.09%).
ADVISOR EQUITY INCOME - CLASS B: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (7.31%); Smith Barney, New York, NY (7.10%);
Donaldson, Lufkin & Jenrette, New York, NY (5.50%).
ADVISOR EQUITY INCOME - INSTITUTIONAL CLASS: BankBoston, Boston, MA
(31.49%); First National Bank of Ohio, Akron, OH (12.18%); First
Hawaiian Bank, Honolulu, HI (5.58%).
ADVISOR GOVERNMENT INVESTMENT - CLASS A: Walnut Street Securities
Inc., Clayton, MO (34.01%); Vestax Securities, Hudson, OH (8.68%);
Wilmington Trust Company, Wilmington, DE (8.18%); FMR Corp., Boston,
MA (6.85%); EQ Financial Consultants, New York, NY (5.26%).
ADVISOR GOVERNMENT INVESTMENT - CLASS T: Oriental Financial
Services Corp., Hato Rey, PR (7.57%); Smith Barney, New York, NY
(6.45%).
ADVISOR GOVERNMENT INVESTMENT - CLASS B: Donaldson, Lufkin &
Jenrette, New York, NY (7.06%); Royal Alliance Assoc., Inc.,
Birmingham, AL (6.55%); Smith Barney, New York, NY (5.13%).
ADVISOR GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS: First Hawaiian
Bank, Honolulu, HI (70.05%); First Security Trust Company, Coral
Gables, FL (7.35%).
ADVISOR GROWTH & INCOME - CLASS A: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (6.53%); R.K. Grace & Company, Coral Gables,
FL (6.43%); Proequities Inc., Birmingham, AL (6.36%).
ADVISOR GROWTH & INCOME - CLASS T: Securities America, Inc., Omaha,
NE (18.31%); Dain Bosworth, Inc., Minneapolis, MN (6.65%); Royal
Alliance Assoc., Inc., Birmingham, AL (5.16%).
ADVISOR GROWTH & INCOME - CLASS B: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (15.12%); PaineWebber, Inc., Weehawken, NJ
(7.49%); A. G. Edwards & Sons, St. Louis, MO (5.29%).
ADVISOR GROWTH & INCOME - INSTITUTIONAL CLASS: FMR Corp., Boston,
MA (45.56%); Union National Bank and Trust Company, Souderton, PA
(37.59%); Norwest Bank Minnesota, Minneapolis, MN (11.13%); Donaldson,
Lufkin & Jenrette, New York, NY (5.38%).
ADVISOR GROWTH OPPORTUNITIES - CLASS A: Prudential Securities, New
York, NY (5.36%).
ADVISOR GROWTH OPPORTUNITIES - CLASS T: CIGNA, Hartford, CT
(16.25%); Smith Barney, New York, NY (6.60%).
ADVISOR GROWTH OPPORTUNITIES - CLASS B: Merrill Lynch Pierce Fenner
& Smith, Jacksonville, FL (8.86%); A. G. Edwards & Sons, St. Louis, MO
(6.05%); Prudential Securities, New York, NY (6.02%); Smith Barney,
New York, NY (5.64%).
ADVISOR GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS: Charles Schwab
and Co., Inc., San Francisco, CA (10.26%); Frost National Bank, San
Antonio, TX (8.38%); Marshall & Ilsley Trust Co., Milwaukee, WI
(7.34%); Donaldson, Lufkin & Jenrette, New York, NY (5.07%).
ADVISOR HIGH INCOME MUNICIPAL - CLASS A: Northeast Securities Inc.,
Westbury, NY (24.65%); Everen Securities, Inc., West Hartford, CT
(14.20%); Norwest Investment Services Inc., Minneapolis, MN (13.98%);
A.G. Edwards & Sons, St. Louis, MO (9.93%); Mutual Service Corp., Palm
Beach Garden, FL (7.74%); 1717 Capital Management Company, Newark, DE
(7.51%).
ADVISOR HIGH INCOME MUNICIPAL - CLASS T: Smith Barney, New York, NY
(8.74%); A. G. Edwards & Sons, St. Louis, MO (6.49%); Royal Alliance
Assoc., Inc., Birmingham, AL (5.39%).
ADVISOR HIGH INCOME MUNICIPAL - CLASS B: Donaldson, Lufkin &
Jenrette, New York, NY (8.02%); Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (5.75%).
ADVISOR HIGH INCOME MUNICIPAL - INSTITUTIONAL CLASS: Peoples Bank
and Trust Co., Indianapolis, IN (23.04%); Tompkins County Trust
Company, Ithaca, NY (12.11%); FMR Corp., Boston, MA (7.84%);
University Bank, Houston, TX (6.86%); Vermont National Bank,
Brattleboro, VT (5.07%).
ADVISOR HIGH YIELD - CLASS A: FIS Securities, Inc., Providence, RI
(11.09%); Donaldson, Lufkin & Jenrette, New York, NY (5.53%); Wells
Fargo Bank, San Francisco, CA (5.31%).
ADVISOR HIGH YIELD - CLASS T: Manulife Financial, Canada (6.55%);
Smith Barney, New York, NY (6.16%).
ADVISOR HIGH YIELD - CLASS B: Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (10.85%); Prudential Securities, New York, NY
(6.49%); Donaldson, Lufkin & Jenrette, New York, NY (5.86%); Smith
Barney, New York, NY (5.70%).
ADVISOR HIGH YIELD - INSTITUTIONAL CLASS: Charles Schwab and Co.,
Inc., San Francisco, CA (22.94%); Donaldson, Lufkin & Jenrette, New
York, NY (9.43%); Resources Trust Company, Englewood, CO (6.99%);
First Hawaiian Bank, Honolulu, HI (5.34%).
ADVISOR INTERMEDIATE BOND - CLASS A: FIS Securities, Inc.,
Providence, RI (35.09%); Corelink Financial, Providence, RI (10.00%);
Washington Square Securities, Minneapolis, MN (7.58%).
ADVISOR INTERMEDIATE BOND - CLASS T: PaineWebber, Inc., Weehawken,
NJ (6.95%).
ADVISOR INTERMEDIATE BOND - CLASS B: Donaldson, Lufkin & Jenrette,
New York, NY (10.75%); Royal Alliance Assoc., Inc., Birmingham, AL
(5.24%).
ADVISOR INTERMEDIATE BOND - INSTITUTIONAL CLASS: Mercantile Bank,
N.A., St. Louis, MO (13.91%); Amivest Corporation, New York, NY
(6.79%); Marquis Investments Inc., New Orleans, LA (5.15%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS A: FMR Corp., Boston,
MA (21.70%); Summit Trust Company, Summit, NJ (20.86%); Gerson
Horowitz Green Sec. Corp., New York, NY (13.87%); Locust Street
Securities, Inc., Des Moines, IA (13.11%); Corelink Financial,
Providence, RI (9.75%); FSC Securities Corp., Atlanta, GA (7.93%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS T: Royal Alliance
Assoc., Inc., Birmingham, AL (9.22%); Smith Barney, New York, NY
(6.84%); Commonwealth Equity Services, Waltham, MA (5.89%); Merrill
Lynch Pierce Fenner & Smith, Jacksonville, FL (5.08%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS B: Merrill Lynch
Pierce Fenner & Smith, Jacksonville, FL (11.93%); Prudential
Securities, New York NY (6.97%); Royal Alliance Assoc., Inc.,
Birmingham, AL (6.65%); Donaldson, Lufkin & Jenrette, New York, NY
(6.45%); National Financial Services Corporation, Boston, MA (6.16%);
A. G. Edwards & Sons, St. Louis, MO (6.01%).
ADVISOR INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS:
Liberty National Bank & Trust, Oklahoma City, OK (30.80%); South
Holland Bancorp, South Holland, IL (10.11%); Wells Fargo Bank, San
Francisco, CA (8.93%); Laird Norton Co., Seattle, WA (7.09%); Frost
National Bank, San Antonio, TX (6.88%); Citizens National Bank of
Evansville, Evansville, IN (6.71%); Tompkins County Trust Company,
Ithaca, NY (5.24%).
ADVISOR LARGE CAP - CLASS A: A. G. Edwards & Sons, St. Louis, MO
(12.29%); FMR Corp., Boston, MA (6.57%); 1717 Capital Management
Company, Newark, DE (5.23%); LaSalle St. Securities, Inc., Chicago, IL
(5.20%).
ADVISOR LARGE CAP - CLASS T: Dain Bosworth, Inc., Minneapolis, MN
(7.37%); Securities America, Inc., Omaha, NE (5.63%).
ADVISOR LARGE CAP -CLASS B: Dain Bosworth, Inc., Minneapolis, MN
(18.44%); Prudential Securities, New York, NY (8.11%).
ADVISOR LARGE CAP - INSTITUTIONAL CLASS: FMR Corp., Boston, MA
(46.90%); Charles Schwab and Co., Inc., San Francisco, CA (12.75%);
Union Planters National Bank, Memphis, TN (11.38%); First Hawaiian
Bank, Honolulu, HI (7.64%).
ADVISOR MID CAP - CLASS A: Securities America, Inc., Omaha, NE
(7.98%); Prudential Securities, New York, NY (6.92%); A. G. Edwards &
Sons, St. Louis, MO (5.83%); Smith Barney, New York, NY (5.12%).
ADVISOR MID CAP - CLASS T: Dain Bosworth, Inc., Minneapolis, MN
(7.90%); Commonwealth Equity Services, Waltham, MA (7.00%); Smith
Barney, New York, NY (6.59%); Donaldson, Lufkin & Jenrette, New York,
NY (5.26%).
ADVISOR MID CAP - CLASS B: Dain Bosworth, Inc., Minneapolis, MN
(13.49%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(9.48%); Smith Barney, New York, NY (7.72%).
ADVISOR MID CAP - INSTITUTIONAL CLASS: First Hawaiian Bank,
Honolulu, HI (71.03%).
ADVISOR MORTGAGE SECURITIES - CLASS A: CIGNA, Hartford, CT
(92.59%); FMR Corp., Boston, MA (6.60%).
ADVISOR MORTGAGE SECURITIES - CLASS T: Commonwealth Equity
Services, Waltham, MA (36.05%); LaSalle St. Securities, Inc., Chicago,
IL (6.54%); Compass Securities Corp., Newton, MA (6.31%); Reliance
Trust Company, Atlanta, GA (6.02%).
ADVISOR MORTGAGE SECURITIES - CLASS B: 1717 Capital Management
Company, Newark, DE (16.95%); Nathan & Lewis Securities, New York, NY
(12.64%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(12.55%); FMR Corp., Boston, MA (8.08%); Washington Square Securities,
Minneapolis, MN (8.02%); H. Beck Inc., Bethesda, MD (7.38%);
Commercial Federal Bank, Denver, CO (5.16%).
ADVISOR MORTGAGE SECURITIES - INSTITUTIONAL CLASS: Magna Trust
Company, Belleville, IL (31.70%); Drovers Bank, York, PA (11.21%); Oak
Brook Bank, Oak Brook, IL (7.53%); The Rock Island Bank, Rock Island,
IL (6.89%); Thumb National Bank and Trust, Pigeon, MI (5.03%).
ADVISOR MORTGAGE SECURITIES - INITIAL CLASS: National Financial
Services Corporation, Boston, MA (12.27%).
ADVISOR MUNICIPAL BOND - CLASS A: Sigma Financial Corp., Ann Arbor,
MI (61.23%); FMR Corp., Boston, MA (17.50%); Stephens Inc., Little
Rock, AR (8.02%); Donaldson, Lufkin & Jenrette, New York, NY (6.73%);
PaineWebber, Inc., Weehawken, NJ (6.11%).
ADVISOR MUNICIPAL BOND - CLASS T: Lovell Inc., Brentwood, TN
(35.34%); Securities America, Inc., Omaha, NE (7.82%); 1717 Capital
Management Company, Newark, DE (6.56%); FSC Securities Corp., Atlanta,
GA (5.90%).
ADVISOR MUNICIPAL BOND - CLASS B: Prudential Securities, New York,
NY (19.32%); Investment Advisors & Consultants, Inc., Ocean, NJ
(16.94%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(8.06%); EQ Financial Consultants, New York, NY (6.88%); FMR Corp.,
Boston, MA (6.48%); Dain Bosworth, Inc., Minneapolis, MN (6.40%).
ADVISOR MUNICIPAL BOND - INSTITUTIONAL CLASS: Drovers Bank, York,
PA (70.27%); Peoples Bank and Trust Co., Indianapolis, IN (12.60%);
FMR Corp., Boston, MA (11.14%).
ADVISOR NEW YORK - MUNICIPAL INCOME - CLASS A: FMR Corp., Boston,
MA (100.00%).
ADVISOR NEW YORK MUNICIPAL INCOME - CLASS T: FMR Corp., Boston, MA
(20.25%); A. G. Edwards & Sons, St. Louis, MO (12.25%); North Ridge
Securities Corp., Hauppauge, NY (9.13%); First Albany, Albany, NY
(7.68%).
ADVISOR NEW YORK MUNICIPAL INCOME - CLASS B: FMR Corp., Boston, MA
(23.03%); National Financial Services Corporation, Boston, MA
(14.01%); Chase Investment Services, New York, NY (13.36%); Prudential
Securities, New York, NY (12.54%); M. Griffith, Inc., New Hartford, NY
(6.70%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(5.05%).
ADVISOR NEW YORK MUNICIPAL INCOME - INSTITUTIONAL CLASS: FMR Corp.,
Boston, MA (96.92%).
ADVISOR OVERSEAS - CLASS A: EQ Financial Consultants, New York, NY
(6.40%).
ADVISOR OVERSEAS - CLASS T: Smith Barney, New York, NY (7.33%);
Great West Life/Benefits Corp., Englewood, CO (6.45%).
ADVISOR OVERSEAS - CLASS B: Merrill Lynch Pierce Fenner & Smith,
Jacksonville, FL (6.58%); Royal Alliance Assoc., Inc., Birmingham, AL
(5.52%); Smith Barney, New York, NY (5.47%).
ADVISOR OVERSEAS - INSTITUTIONAL CLASS: First National Bank, Iowa
City, IA (19.86%); Bingham, Dana & Gould L.L.P., Boston, MA (11.73%);
Charles Schwab and Co., Inc., San Francisco, CA (11.49%); First
Hawaiian Bank, Honolulu, HI (8.29%); One Valley Bank, N.A.,
Charleston, WV (6.32%).
ADVISOR SHORT FIXED-INCOME - CLASS A: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (93.08%).
ADVISOR SHORT FIXED-INCOME - CLASS T: Smith Barney, New York, NY
(5.96%); Royal Alliance Assoc., Inc., Birmingham, AL (5.41%).
ADVISOR SHORT FIXED-INCOME - INSTITUTIONAL CLASS: First Hawaiian
Bank, Honolulu, HI (56.03%); First National Bank of Springfield,
Springfield, IL (17.36%); Benefit Services Corporation, Atlanta, GA
(13.09%).
ADVISOR SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS A: FIS
Securities, Inc., Providence, RI (49.31%); FMR Corp., Boston, MA
(17.63%); Donaldson, Lufkin & Jenrette, New York, NY (15.89%); Metlife
Securities, Inc., Denver, CO (11.64%); Investment Advisors &
Consultants, Inc., Ocean, NJ (6.10%).
ADVISOR SHORT-INTERMEDIATE MUNICIPAL INCOME - CLASS T: Key
Investments, Cleveland, OH (18.00%); Cowles, Sabol & Co., Inc.,
Encino, CA (9.27%).
ADVISOR SHORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS:
Peoples Bank and Trust Co., Indianapolis, IN (31.18%); First American
Bank & Trust, Fort Atkinson, WI (25.52%); FMR Corp., Boston, MA
(15.96%); University Bank, Houston, TX (11.96%); Drovers Bank, York,
PA (8.01%%).
ADVISOR STRATEGIC INCOME - CLASS A: FIS Securities, Inc.,
Providence, RI (32.24%); Liberty Securities Corp., Boston, MA (5.45%);
PaineWebber, Inc., Weehawken, NJ (5.18%).
ADVISOR STRATEGIC INCOME - CLASS T: Royal Alliance Assoc., Inc.,
Birmingham, AL (8.04%); Donaldson, Lufkin & Jenrette, New York, NY
(6.54%).
ADVISOR STRATEGIC INCOME - CLASS B: G. W. & Wade Asset Management
Co., Wellesley, MA (29.05%); FIS Securities, Inc., Providence, RI
(5.72%); Smith Barney, New York, NY (5.21%).
ADVISOR STRATEGIC INCOME - INSTITUTIONAL CLASS: Charles Schwab and
Co., Inc., San Francisco, CA (81.92%); ESOR & Co., Green Bay, WI
(7.69%); Bingham, Dana & Gould L.L.P., Boston, MA (5.58%).
ADVISOR STRATEGIC OPPORTUNITIES - CLASS A: Fortis Investors, St.
Paul, MN (8.93%); FMR Corp., Boston, MA (7.75%); A. G. Edwards & Sons,
St. Louis, MO (6.91%); Prudential Securities, New York, NY
(6.07%).
ADVISOR STRATEGIC OPPORTUNITIES - CLASS T: Merrill Lynch Pierce
Fenner & Smith, Jacksonville, FL (11.54%); CIGNA, Hartford, CT
(9.24%); A. G. Edwards & Sons, St. Louis, MO (6.04%).
ADVISOR STRATEGIC OPPORTUNITIES - CLASS B: Smith Barney, New York,
NY (6.27%); Donaldson, Lufkin & Jenrette, New York, NY (5.93%);
Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL (5.19%).
ADVISOR STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS: National
Bank of Alaska, Anchorage, AK (9.82%); Calton & Assoc., Tampa, FL
(6.99%); Evergreen Bank, N.A., Glens Falls, NY (6.87%); Whitney
National Bank, New Orleans, LA (6.18%); Equitable Trust Company,
Nashville, TN (5.12%).
ADVISOR STRATEGIC OPPORTUNITIES - INITIAL CLASS: FMR Corp. Boston,
MA (7.50%)
ADVISOR TECHNOQUANT GROWTH - CLASS A: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (47.53%); PaineWebber, Inc., Weehawken, NJ
(9.67%); Piper Jaffrey & Hopwood, Inc., Minneapolis, MN (9.33%).
ADVISOR TECHNOQUANT GROWTH - CLASS T: Offerman & Co., Minneapolis,
MN (7.41%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(6.82%); A. G. Edwards & Sons, St. Louis, MO (6.31%); Securities
America, Inc., Omaha, NE (5.83%); PaineWebber, Inc., Weehawken, NJ
(5.40%).
ADVISOR TECHNOQUANT GROWTH - CLASS B: Merrill Lynch Pierce Fenner &
Smith, Jacksonville, FL (39.02%); Piper Jaffrey & Hopwood, Inc.,
Minneapolis, MN (15.06%).
ADVISOR TECHNOQUANT GROWTH - INSTITUTIONAL CLASS: FMR Corp.,
Boston, MA (57.12%); Donaldson, Lufkin & Jenrette, New York, NY
(14.66%); Merrill Lynch Pierce Fenner & Smith, Jacksonville, FL
(11.99%).
As of September 30, 1997, approximately 41.85% of California
Municipal Income's, 7.17% of Emerging Markets Income's, 4.51% of Large
Cap's, 16.61% of New York Municipal Income's, and 2.90% of TechnoQuant
Growth's, total outstanding shares were held by an FMR affiliate. FMR
Corp. is the ultimate parent company of this FMR affiliate. By virtue
of his ownership interest in FMR Corp., as described in the "FMR"
section on page , Mr. Edward C. Johnson 3d, President and Trustee of
the funds, may be deemed to be a beneficial owner of these shares. As
of the above date, with the exception of Mr. Johnson 3d's deemed
ownership of California Municipal Income's, Emerging Markets Income's,
Large Cap's, New York Municipal Income's and TechnoQuant Growth's
shares, the Trustees, Members of the Advisory Board, and officers of
the funds owned, in the aggregate, less than 1% of each fund's total
outstanding shares.
A shareholder owning of record or beneficially more than 25% of a
fund's outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other
shareholders.
MANAGEMENT CONTRACTS
MANAGEMENT SERVICES. Each fund employs FMR to furnish investment
advisory and other services. Under the terms of its management
contract with each fund, FMR acts as investment adviser and, subject
to the supervision of the Board of Trustees, directs the investments
of the fund in accordance with its investment objective, policies, and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trusts or of FMR, and all personnel of
each fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. In addition to the management fee payable
to FMR and the fees payable to the transfer, dividend disbursing, and
shareholder servicing agent, pricing and bookkeeping agent, and
securities lending agent, as applicable, each fund or each class
thereof, as applicable, pays all of its expenses that are not assumed
by those parties. Each fund pays for the typesetting, printing, and
mailing of its proxy materials to shareholders, legal expenses, and
the fees of the custodian, auditor and non-interested Trustees. Each
fund's management contract further provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of each fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders of the applicable classes. Other expenses paid by each
fund, or each class thereof, as applicable, include interest, taxes,
brokerage commissions, the fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal securities laws and making necessary
filings under state securities laws. Each fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation
to which the fund may be a party, and any obligation it may have to
indemnify its officers and Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under the management
contract, Equity Income pays FMR a monthly management fee at the
annual rate of 0.50% of its average net assets throughout the month.
For the services of FMR under the management contract, TechnoQuant
Growth, International Capital Appreciation, Mid Cap, Equity Growth,
Large Cap, Growth & Income, Balanced, Emerging Markets Income, High
Yield, Strategic Income, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal,
Municipal Bond, Intermediate Municipal Income, Short-Intermediate
Municipal Income, New York Municipal Income, and California Municipal
Income pays FMR a monthly management fee which has two components: a
group fee rate and an individual fund fee rate.
For the services of FMR under the management contract, Overseas,
Growth Opportunities, and Strategic Opportunities each pays FMR a
monthly management fee which has two components: a basic fee, which is
the sum of a group fee rate and an individual fund fee rate, and a
performance adjustment based on a comparison of each fund's
performance to that of S&P 500, and EAFE.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
FMR is each fund's manager pursuant to management contracts dated and
approved by shareholders on the dates shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C>
FUND DATE OF MANAGEMENT CONTRACT DATE OF SHAREHOLDER APPROVAL
TechnoQuant Growth 12/1/96 12/23/96*
International Capital Appreciation 10/16/97 10/31/97*
Overseas 10/1/97 9/17/97
Mid Cap 1/18/96 1/18/96*
Equity Growth 8/1/97 7/16/97
Growth Opportunities 8/1/97 7/16/97
Strategic Opportunities 7/1/97 6/18/97
Large Cap 1/18/96 1/18/96*
Growth & Income 12/1/96 12/23/96*
Equity Income 8/1/86 7/23/86
Balanced 1/1/95 12/14/94
Emerging Markets Income 7/1/97 6/18/97
High Yield 1/1/95 12/14/94
Strategic Income 7/1/97 6/18/97
Mortgage Securities 8/1/94 7/13/94
Government Investment 1/1/95 12/14/94
Intermediate Bond 1/1/95 12/14/94
Short Fixed-Income 1/1/95 12/14/94
High Income Municipal 12/1/94 11/16/94
Municipal Bond 1/1/94 12/15/93
Intermediate Municipal Income 7/1/95 6/14/95
Short-Intermediate Municipal Income 7/1/95 6/14/95
New York Municipal Income 11/17/94 12/8/94
California Municipal Income 12/14/95 12/14/95*
</TABLE>
* Approved by FMR, then the sole shareholder of the fund.
BOND FUNDS
The following fee schedule is the current fee schedule for all bond
funds, except Emerging Markets Income, Strategic Income, Mortgage
Securities, Municipal Bond, and California Municipal Income.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 0 - 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 372 .1200
This fee schedule has been approved by the shareholders of each
bond fund, except Emerging Markets Income, Strategic Income, Mortgage
Securities, Municipal Bond and California Municipal Income.
MORTGAGE SECURITIES AND MUNICIPAL BOND. The following fee schedule is
the current fee schedule for Mortgage Securities and Municipal Bond.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 0 - 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450 400 .1507
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
On August 1, 1994, FMR voluntarily revised the group fee rate schedule
for Mortgage Securities and Municipal Bond, and added new breakpoints,
pending shareholder approval of a new management contract reflecting
the additional breakpoints. The revised group fee rate schedule is
identical to the above schedule for average group assets under $156
billion. For average group assets in excess of $156 billion, the group
fee rate schedule voluntarily adopted by FMR is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 120 - 156 billion .1450% $150 billion .1736%
156 - 192 .1400 175 .1690
192 - 228 .1350 200 .1652
228 - 264 .1300 225 .1618
264 - 300 .1275 250 .1587
300 - 336 .1250 275 .1560
336 - 372 .1225 300 .1536
Over 372 .1200 325 .1514
350 .1494
375 .1476
400 .1459
On January 1, 1996, FMR voluntarily added new breakpoints to the
(revised, in the case of Mortgage Securities and Municipal Bond)
schedule for average group assets in excess of $372 billion, pending
shareholder approval of a new management contract reflecting the
additional breakpoints. The (revised, in the case of Mortgage
Securities and Municipal Bond) group fee rate schedule and its
extensions provide for lower management fee rates as FMR's assets
under management increase. For average group assets in excess of $372
billion, the group fee rate schedule voluntarily adopted by FMR is as
follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 372 - 408 billion .1200% $ 400 billion .1459
408 - 444 .1175 425 .1443
444 - 480 .1150 450 .1427
480 - 516 .1125 475 .1413
Over 516 .1100 500 .1399
525 .1385
550 .1372
EMERGING MARKETS INCOME, STRATEGIC INCOME, AND CALIFORNIA
MUNICIPAL INCOME. The following fee schedule is the current fee
schedule for Emerging Markets Income, Strategic Income, and California
Municipal Income.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 0 - $3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350 425 .1443
228 - 264 .1300 450 .1427
264 - 300 .1275 475 .1413
300 - 336 .1250 500 .1399
336 - 372 .1225 525 .1385
372 - 408 .1200 550 .1372
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
This fee schedule has been approved by the shareholders of Emerging
Markets Income, Strategic Income, and California Municipal Income.
EQUITY FUNDS
The following fee schedule is the current fee schedule for all equity
funds (except Equity Income).
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
$ 0 - 3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2924
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
This fee schedule has been approved by the shareholders of each equity
fund except Equity Income.
The group fee rate is based on the monthly average net assets of
all of the registered investment companies with which FMR has
management contracts and is calculated on a cumulative basis pursuant
to the graduated fee rate schedule shown below on the left. The
schedule below on the right shows the effective annual group fee rate
at various asset levels, which is the result of cumulatively applying
the annualized rates on the left. For example, the effective annual
fee rate at $453.2 billion of group net assets - the approximate level
for December 1996 - was .3021% for equity funds and .1425% for
fixed-income funds, which is the weighted average of the respective
fee rates for each level of group net assets up to $453.2 billion.
The individual fund fee rates for each fund (except Equity Income) are
set forth in the following chart. Based on the average group net
assets of the funds advised by FMR for December 1996, the annual basic
fee rate would be calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Basic Fee Rate
TechnoQuant Growth* 0 .3021% + 0.30% = 0 .6021%
International Capital Appreciation* 0 .3021% + 0.45% = 0 . 7521 %
Overseas 0 .3021% + 0.45% = 0 .7521%
Mid Cap 0 .3021% + 0.30% = 0 .6021%
Equity Growth 0 .3021% + 0.30% = 0 .6021%
Growth Opportunities 0 .3021% + 0.30% = 0 .6021%
Strategic Opportunities 0 .3021% + 0.30% = 0 .6021%
Large Cap 0 .3021% + 0.30% = 0 .6021%
Growth & Income* 0 .3021% + 0.20% = 0 .5021%
Balanced 0 .3021% + 0.15%* * = 0 .4521%
Emerging Markets Income 0 .1425% + 0.55% = 0 .6925%
High Yield 0 .1425% + 0.45% = 0 .5925%
Strategic Income 0 .1425% + 0.45% = 0 .5925%
Mortgage Securities 0.1425 % + 0.30% = 0 . 4425 %
Government Investment 0 .1425% + 0.30% = 0 .4425%
Intermediate Bond 0 .1425% + 0.30% = 0 .4425%
Short Fixed-Income 0 .1425% + 0.30% = 0 .4425%
High Income Municipal 0 .1425% + 0.25% = 0 .3925%
Municipal Bond 0 .1425% + 0.25% = 0 .3925%
Intermediate Municipal Income 0 .1425% + 0.25% = 0 .3925%
Short-Intermediate Municipal Income 0 .1425% + 0.25% = 0 .3925%
New York Municipal Income 0 .1425% + 0.25% = 0 .3925%
California Municipal Income* 0 .1425% + 0.25% = 0 .3925%
</TABLE>
* Estimated
* * Effective August 1, 1996, FMR voluntarily agreed to reduce
the individual fund fee rate from 0.20% to 0.15%. If this reduction
were not in effect, the total management fee would have been
0.5037%.
One-twelfth (1/12) of this annual basic fee or management fee, as
applicable, rate is applied to each fund's net assets averaged for the
most recent month, giving a dollar amount, which is the fee for that
month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for
Overseas, Growth Opportunities, and Strategic Opportunities, is
subject to upward or downward adjustment, depending upon whether, and
to what extent, the investment performance of each applicable fund for
the performance period exceeds, or is exceeded by, the record of the
S&P 500 (Growth Opportunities and Strategic Opportunities), or the
cap-weighted EAFE (Overseas) (the Indices) over the same period. The
performance period consists of the most recent month plus the previous
35 months.
Each percentage point of difference, calculated to the nearest
0.01% for Overseas, Growth Opportunities, and Strategic Opportunities
(up to a maximum difference of (plus/minus)10.00) is multiplied by a
performance adjustment rate of 0.02%. Thus, the maximum annualized
adjustment rate is (plus/minus)0.20%.
This performance comparison is made at the end of each month.
One-twelfth of this rate is then applied to each fund's average net
assets for the entire performance period, giving the dollar amount
which will be added to (or subtracted from) the basic fee. For
Overseas, Growth Opportunities and Strategic Opportunities, investment
performance will be represented by the average performance of all
classes of each fund weighted according to its average assets for each
month.
Each class's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by each class are treated as if
reinvested in that class's shares at the NAV as of the record date for
payment. The record of each Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on each fund's
performance compared to the investment record of the applicable Index,
the controlling factor is not whether each fund's performance is up or
down per se, but whether it is up or down more or less than the record
of the Index. Moreover, the comparative performance of each fund is
based solely on the relevant performance period without regard to the
cumulative performance over a longer or shorter period of time.
The table below shows the management fees paid to FMR (including
the amount of the performance adjustment); the dollar amount of
negative or positive performance adjustments, if applicable; and the
net management fee as a percentage of each fund's average net assets
for the three most recent fiscal years.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FISCAL YEAR MANAGEMENT FEE+ PERFORMANCE ADJUSTMENT MANAGEMENT FEE AS
ENDED A PERCENTAGE OF
AVERAGE NET ASSETS
OVERSEAS 10/31
1996 $ 6,353,206 $ 687,829 (downward) 0.68%
1995 5,589,729 307,727 (upward) 0.81
1994 3,435,695 133,032 (upward) 0.80
MID CAP 11/30
1996* 644,430 N/A 0.60***
EQUITY GROWTH 11/30
1996 23,048,140 N/A 0.61
1995 12,057,390 N/A 0.61
1994 6,567,305 N/A 0.64
GROWTH OPPORTUNITIES 10/31
1996 76,294,260 1,076,788 (upward) 0.61
1995 46,903,758 5,210,490 (upward) 0.69
1994 22,087,985 2,130,192 (upward) 0.69
STRATEGIC OPPORTUNITIES+++ 12/31
1996 3,621,407 962,281 (downward) 0.48
1995 3,510,812 91,269 (upward) 0.62
10/1/94 - 12/31/94 682,856 37,843 (upward) 0.67***
10/1/93 - 9/30/94 2,582,584 359,674 (upward) 0.72
LARGE CAP 11/30
1996* 100,564 N/A 0.60***
EQUITY INCOME 11/30
1996 10,188,385 N/A 0.50
1995 4,257,045 N/A 0.50
1994 1,392,206 N/A 0.50
BALANCED 10/31
1996 16,119,225 N/A 0.50
1995 17,383,377 N/A 0.51
1994 13,325,884 N/A 0.52
EMERGING MARKETS INCOME 12/31
1996 488,344 N/A 0.69
1995 283,122 N/A 0.70
1994++ 122,088 N/A 0.70***
HIGH YIELD 10/31
1996 10,195,539 N/A 0.60
1995 5,796,415 N/A 0.60
1994 3,737,959 N/A 0.60
STRATEGIC INCOME 12/31
1996 641,715 N/A 0.59
1995 277,990 N/A 0.60
1994++ 10,348 N/A 0.60***
GOVERNMENT INVESTMENT 10/31
1996 1,197,929 N/A 0.45
1995 766,114 N/A 0.45
1994 422,255 N/A 0.46
INTERMEDIATE BOND 11/30
1996 2,174,162 N/A 0.45
1995 1,703,722 N/A 0.45
1994 1,180,785 N/A 0.41
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FISCAL YEAR MANAGEMENT FEE+ PERFORMANCE ADJUSTMENT MANAGEMENT FEE AS
ENDED A PERCENTAGE OF
AVERAGE NET ASSETS
MORTGAGE SECURITIES 7/31
1997 $ 2,273,788** N/A 0.44%
1996 2,104,873 N/A 0.45
1995 1,707,178 N/A 0.45
SHORT FIXED-INCOME 10/31
1996 2,203,578 N/A 0.45
1995 2,889,187 N/A 0.45
1994 3,713,144 N/A 0.46
HIGH INCOME MUNICIPAL 10/31
1996 2,266,568 N/A 0.40
1995 2,289,466 N/A 0.40
1994 2,257,113 N/A 0.41
MUNICIPAL BOND 12/31
1996 3,912,000 N/A 0.40
1995 4,282,000 N/A 0.40
1994 4,605,000 N/A 0.41
INTERMEDIATE MUNICIPAL 11/30
INCOME
1996 310,611 N/A 0.40
1995 292,469 N/A 0.40
1994 286,027 N/A 0.41
SHORT-INTERMEDIATE 11/30
MUNICIPAL INCOME
1996 117,532 N/A 0.40
1995 79,349 N/A 0.40
1994++ 31,109 N/A 0.41***
NEW YORK MUNICIPAL INCOME 10/31
1996 24,300** N/A 0.40
1995++ 2,203** N/A 0.39***
CALIFORNIA MUNICIPAL INCOME 10/31
1996* 9,314** N/A 0.39***
</TABLE>
* Mid Cap, Large Cap, and California Municipal Income commenced
operations on February 20, 1996.
** Before reimbursement
*** Annualized
+ Management fee includes performance adjustments for Overseas, Growth
Opportunities, and Strategic Opportunities.
++ Emerging Markets Income, Strategic Income, Short-Intermediate
Municipal Income, and New York Municipal Income commenced operations
on March 10, 1994, October 31, 1994, March 16, 1994, and August 21,
1995, respectively.
+++ Strategic Opportunities' fiscal year end changed from September 30
to December 31 as of November 9, 1994.
FMR may, from time to time, voluntarily reimburse all or a portion of
a class's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year.
Expense reimbursement by FMR will increase each class's total returns
and yield and repayment of the reimbursement by each class will lower
its total returns and yield.
SUB-ADVISERS. On behalf of TechnoQuant Growth, Mid Cap,
Equity Growth, Growth Opportunities, Strategic Opportunities, Large
Cap, Growth & Income, Equity Income, Balanced, High Yield,
Intermediate Bond, Mortgage Securities and Short Fixed-Income, FMR has
entered into sub-advisory agreements with FMR U.K. and FMR Far East.
On behalf of Overseas, International Capital Appreciation, Emerging
Markets Income and Strategic Income, FMR has entered into sub-advisory
agreements with FMR U.K., FMR Far East, FIJ, and FIIA. FIIA, in turn,
has entered into a sub-advisory agreement with FIIA(U.K.)L. Pursuant
to the sub-advisory agreements, FMR may receive investment advice and
research services outside the United States from the sub-advisers.
On behalf of TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth &
Income, Balanced, Emerging Markets Income, High Yield, Intermediate
Bond, Mortgage Securities , and Short Fixed-Income, FMR may also
grant FMR U.K. and FMR Far East investment management authority as
well as the authority to buy and sell securities if FMR believes it
would be beneficial to the funds. On behalf of Strategic Income,
International Capital Appreciation , and Overseas, FMR
may also grant FMR U.K., FMR Far East, FIJ, FIIA and FIIA(U.K.)L
investment management authority to buy and sell securitie s if FMR
believes it would be beneficial to the funds.
Currently, FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L each
focuses on issuers in countries other than the United States such as
those in Europe, Asia, and the Pacific Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. FIJ and FIIA are wholly owned subsidiaries
of Fidelity International Limited (FIL), a Bermuda company formed in
1968 which primarily provides investment advisory services to non-U.S.
investment companies and institutional investors investing in
securities throughout the world. Edward C. Johnson 3d, Johnson family
members, and various trusts for the benefit of the Johnson family own,
directly or indirectly, more than 25% of the voting common stock of
FIL. FIJ was organized in Japan in 1986. FIIA was organized in Bermuda
in 1983. FIIA(U.K.)L was organized in the United Kingdom in 1984, and
is a wholly owned subsidiary of Fidelity International Management
Holdings Limited, an indirect wholly owned subsidiary of FIL.
Under the sub-advisory agreements, FMR pays the fees of FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA, in turn, pays the fees of
FIIA(U.K.)L . For providing non-discretionary investment advice
and research services the sub-advisers are compensated as follows:
FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of FMR U.K.'s and FMR Far East's costs incurred in
connection with providing investment advice and research services.
FMR pays FIIA and FIJ fees equal to 30% of FMR's monthly management
fee with respect to the average net assets held by the fund for which
the sub-adviser has provided FMR with investment advice and research
services.
FIIA pays FIIA(U.K.)L a fee equal to 110% of FIIA(U.K.)L's
costs incurred in connection with providing investment advice and
research services.
On behalf of TechnoQuant Growth, International Capital Appreciation,
Overseas, Mid Cap, Growth Opportunities, Large Cap, Growth & Income,
Balanced, Emerging Markets Income, High Yield, Strategic Income,
Intermediate Bond, Mortgage Securities and Short Fixed-Income, for
providing discretionary investment management and executing portfolio
transactions, the sub-advisers are compensated as follows:
FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to 50% of
its monthly management fee (including any performance adjustment, if
applicable) with respect to the fund's average net assets managed by
the sub-adviser on a discretionary basis.
FIIA pays FIIA(U.K.)L a fee equal to 110% of FIIA(U.K.)L's
costs incurred in connection with providing discretionary investment
management services.
The table on the following page shows the fees paid by FMR to FMR
U.K., FMR Far East, FIIA, and FIJ, and by FIIA to FIIA(U.K.)L
for providing investment advice and research services with respect
to certain of the funds for the fiscal periods ended 1996, 1995, and
1994.
FEES PAID TO FOREIGN SUB-ADVISERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FUND FEES PAID BY FMR TO FMR U.K. FEES PAID BY FMR TO FMR FAR EAST
1996 1995 1994 1996 1995 1994
Overseas $ 541,988 $ 364,803 $ 153,288 $ 550,513 $ 352,004 $ 174,129
Equity Growth 51,150 31,519 13,191 49,497 30,883 15,192
Growth Opportunities 642,845 212,175 67,818 645,049 203,140 82,741
Strategic Opportunities 24,977 5,261 7,794* 23,484 5,862 7,712*
7,352** 7,701**
Equity Income 46,448 23,713 12,197 46,494 23,140 13,970
Balanced 235,847 330,971 248,936 251,109 304,870 299,094
TOTAL $ 1,543,255 $ 968,442 $ 510,576 $ 1,566,146 $ 919,899 $ 600,539
</TABLE>
* From 10/1/93 - 9/30/94.
** From 10/1/94 - 12/31/94.
The other funds paid no investment sub-advisory fees for the fiscal
periods ended 1996, 1995, and 1994.
No fees were paid to FIJ, FIIA, and FIIA(U.K.)L for fiscal periods
ended 1996, 1995 and 1994.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of
each class of shares of the funds, except for Strategic Opportunities:
Initial Class, (the Plans) pursuant to Rule 12b-1 under the 1940 Act
(the Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow Class A, Class T, Class B,
Class C, Institutional Class a nd Initial Class shares of the
funds and FMR to incur certain expenses that might be considered to
constitute direct or indirect payment by the funds of distribution
expenses.
Pursuant to the Class A Plans, FDC is paid a distribution fee as a
percentage of Class A's average net assets at an annual rate of up to
0.75% for each of TechnoQuant Growth, International Capital
Appreciation, Overseas, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
and Balanced (the Equity Funds); and up to 0.40% for each of Emerging
Markets Income, High Yield, Strategic Income, Government Investment,
Mortgage Securities, High Income Municipal, Municipal Bond, New York
Municipal Income, and California Municipal Income (the Bond Funds),
Intermediate Bond and Intermediate Municipal Income (the
Intermediate-Term Bond Funds), and Short-Intermediate Municipal Income
and Short Fixed-Income (the Short-Term Bond Funds). Pursuant to the
Class T Plans, FDC is paid a distribution fee as a percentage of Class
T's average net assets at an annual rate of up to 0.75% for each of
TechnoQuant Growth, International Capital Appreciation, Equity Growth,
Mid Cap, Large Cap, Growth & Income, and Equity Income; up to 0.65%
for each of Overseas, Growth Opportunities, Strategic Opportunities,
and Balanced; up to 0.40% for each of Emerging Markets Income, High
Yield, Strategic Income, Intermediate Bond, Mortgage Securities,
Government Investment, High Income Municipal, Municipal Bond,
Short-Intermediate Municipal Income, Intermediate Municipal Income,
New York Municipal Income, and California Municipal Income; and up to
0.15% for Short Fixed-Income. Pursuant to the Class B Plans, FDC is
paid a distribution fee as a percentage of Class B's average net
assets at an annual rate of up to 0.75% for each fund with Class B
shares. Pursuant to the Class C Plans, FDC is paid a distribution fee
as a percentage of Class C's average net assets at an annual rate of
up to 0.75% for each fund with Class C shares. For the purpose of
calculating the distribution fees, average net assets are determined
at the close of business on each day throughout the month, but
excluding assets attributable to Class T shares of Equity Income
purchased more than 144 months prior to such day and to Class B shares
of Equity Income purchased more than 144 months prior to such day.
Currently, the Trustees have approved a distribution fee for Class
A at an annual rate of 0.25% for each of the Equity Funds and 0.15%
for each of the Bond Funds, the Intermediate-Term Bond Funds, and the
Short-Term Bond Funds; a distribution fee for Class T at an annual
rate of 0.50% for each of the Equity Funds, 0.25% for each of the Bond
Funds and the Intermediate-Term Bond Funds, and 0.15% for each of the
Short-Term Bond Funds; a distribution fee for Class B at an annual
rate of 0.75% for each of the Equity Funds and 0.65% for each of the
Bond Funds and the Intermediate-Term Bond Funds; and a distribution
fee for Class C at an annual rate of 0.75% for each fund. Class A,
Class T (for all funds except Short-Fixed Income) and Class B (for the
Bond Funds and Intermediate Term Bond Funds) fee rates may be
increased only when, in the opinion of the Trustees, it is in the best
interests of the shareholders of the applicable class to do so. Class
B and Class C of each fund also pay FDC a service fee at an annual
rate of 0.25% of Class B's or Class C's, as applicable, average net
assets determined at the close of business on each day throughout the
month.
Currently, the full amount of distribution fees paid by Class A and
Class T is reallowed to investment professionals (including FDC) as
compensation for their services in connection with the distribution of
Class A or Class T shares, as applicable, and for providing support
services to Class A or Class T shareholders, as applicable, based upon
the level of services provided.
Currently, the full amount of distribution fees paid by Class B is
retained by FDC as compensation for its services and expenses in
connection with the distribution of Class B shares, and the full
amount of service fees paid by Class B is reallowed to investment
professionals (including FDC) for providing personal service to and/or
maintenance of Class B shareholder accounts.
Currently, for the first year of investment, the full amount of
distribution fees paid by Class C is retained by FDC as
compensation for its services and expenses in connection with the
distribution of Class C shares, and the full amount of service fees
paid by Class C is retained by FDC for providing personal service to
and/or maintenance of Class C shareholder accounts. After the first
year of investment, the full amount of distribution fees paid by Class
C is reallowed to investment professionals (including FDC) as
compensation for their services in connection with the distribution of
Class C shares, and the full amount of service fees paid by Class
C is reallowed to investment professionals (including FDC) for
providing personal service to and/or maintenance of Class C
shareholder accounts.
For the fiscal period ended July 31, 1997, Mortgage Securities
Class A paid FDC distribution fees of $530, all of which was paid to
investment professionals.
For the fiscal period ended July 31, 1997, Mortgage Securities
Class T paid FDC distribution fees of $2,602, all of which was paid to
investment professionals.
For the fiscal period ended July 31, 1997, Mortgage Securities
Class B, paid FDC distribution fees of $991, all of which was retained
by FDC. In addition, for the fiscal period ended July 31, 1997, Class
B paid FDC shareholder service fees of $380, all of which was paid to
investment professionals.
The tables below show the distribution fees paid for Class A shares
for the fiscal years ended 1996 (Class A shares were not offered prior
to September 3, 1996), for Class T shares for the fiscal years ended
1996, 1995, and 1994, and for Class B shares for the fiscal years
ended 1996, 1995, and 1994 (Class B shares were not offered prior to
June 30, 1994).
CLASS A DISTRIBUTION FEES
1996
FUND PAID TO RETAINED BY
INVESTMENT FDC
PROFESSIONALS
Overseas $ 0 $ 0
Mid Cap 408 0
Equity Growth 1,207 0
Growth Opportunities 1,643 0
Strategic Opportunities 317 0
Large Cap 161 0
Equity Income 924 0
Balanced 232 0
Emerging Markets Income 147 0
High Yield 0 0
Strategic Income 152 0
Government Investment 39 0
Intermediate Bond 153 0
Short Fixed-Income 35 0
High Income Municipal 35 0
Intermediate Municipal Income 37 0
Short-Intermediate Municipal Income 62 0
New York Municipal Income 24 0
California Municipal Income 24 0
CLASS T DISTRIBUTION FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996
FUND PAID TO RETAINED PAID TO RETAINED PAID TO RETAINED
INVESTMENT BY FDC INVESTMENT BY FDC INVESTMENT BY FDC
PROFESSIONALS PROFESSIONALS PROFESSIONALS
Overseas $ 2,139,864 $ 641,958 $ 3,452,001 $ 1,049,755 $ 4,560,000 $ 190,000
Mid Cap N/A N/A N/A N/A 460,775 0
Equity
Growth 3,312,525 999,987 6,750,062 2,123,261 13,897,763 256,052
Growth
Opportunities 16,056,714 4,817,016 33,781,082 10,228,188 61,123,389 2,461,359
Strategic
Opportunities 470,225 141,067 2,377,409 804,604 3,004,411 0
Large Cap N/A N/A N/A N/A 49,326 0
Equity
Income 441,208 132,362 2,339,815 710,240 6,628,000 115,000
Balanced 13,406,000 3,203,000 16,748,635 5,165,858 16,228,668 870,842
Emerging Markets
Income 31,604 8,331 71,061 12,300 138,085 0
High Yield 1,526,214 0 2,185,795 33,785 3,616,000 0
Strategic
Income 1,626 488 62,957 6,002 185,607 0
Government
Investment 227,532 0 391,918 7,088 572,796 0
Intermediate
Bond 264,949 0 463,806 0 637,019 0
Short Fixed-
Income 1,212,008 0 933,777 18,975 725,063 0
High Income
Municipal 1,374,438 0 1,358,027 8,150 1,335,656 0
Municipal
Bond N/A N/A N/A N/A 3,000 0
Intermediate Municipal
Income 138,512 0 143,424 1,599 152,707 0
Short-Intermediate Municipal
Income 11,446 0 27,895 1,646 44,018 0
New York Municipal
Income N/A N/A 368 0 8,737 0
California Municipal
Income N/A N/A N/A N/A 2,066 0
</TABLE>
CLASS B DISTRIBUTION AND SERVICE FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1994
Fund Distrib Retaine Shareh Retaine
ution d by older d by
Fees FDC Service FDC
Fees
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Overseas N/A N/A N/A N/A
Mid Cap N/A N/A N/A N/A
Strategic $ 23,892 $ 23,892 $ 7,964 $ 0
Opportunities
Large Cap N/A N/A N/A N/A
Equity 54,580 54,580 16,215 0
Income
Emerging 9,771 9,771 3,215 0
Markets
Income
High Yield 21,157 21,157 7,052 0
Strategic 6,465 6,465 2,155 0
Income
Government 2,449 2,449 817 0
Investment
Intermediate 5,070 5,070 1,689 0
Bond
High Income 9,713 9,713 3,238 0
Municipal
Municipal N/A N/A N/A N/A
Bond
Intermediate 2,893 2,893 965 0
Municipal
Income
New York N/A N/A N/A N/A
Municipal
Income
California N/A N/A N/A N/A
Municipal
Income
</TABLE>
CLASS B DISTRIBUTION AND SERVICE FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1995
Fund Distribu Retaine Shareho Retaine
tion d by lder d by
Fees FDC Service FDC
Fees
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Overseas $ 3,566 $ 3,566 $ 1,155 $ 0
Mid Cap N/A N/A N/A N/A
Strategic 359,793 359,793 116,312 0
Opportunities
Large Cap N/A N/A N/A N/A
Equity 996,566 996,566 332,413 0
Income
Emerging 52,283 52,283 17,429 0
Markets
Income
High Yield 537,580 537,580 179,328 0
Strategic 139,735 139,735 46,578 0
Income
Government 48,662 48,662 16,159 0
Investment
Intermediate 65,218 65,218 21,738 0
Bond
High Income 163,013 163,013 54,382 0
Municipal
Municipal N/A N/A N/A N/A
Bond
Intermediate 28,714 28,714 9,498 0
Municipal
Income
New York 1,298 1,298 432 0
Municipal
Income
California N/A N/A N/A N/A
Municipal
Income
</TABLE>
CLASS B DISTRIBUTION AND SERVICE FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1996
Fund Distributio Retained Sharehol Retai
n by der ned
Fees FDC Service by
Fee FDC
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Overseas $ 97,000 $ 97,000 $ 22,000 $ 0
Mid Cap 103,330 103,330 34,445 0
Strategic 744,336 744,336 248,724 0
Opportunities
Large Cap 21,680 21,680 7,479 0
Equity 3,015,000 3,015,000 993,000 0
Income
Emerging 32,712 32,712 85,051 0
Markets
Income
High Yield 1,647,000 1,647,000 623,000 0
Strategic 197,706 197,706 76,042 0
Income
Government 99,118 99,118 37,314 0
Investment
Intermediate 119,626 119,626 45,490 0
Bond
High Income 247,210 247,210 92,908 0
Municipal
Municipal 0 0 1,000 0
Bond
Intermediate 47,136 47,136 17,926 0
Municipal
Income
New York 12,795 12,795 4,825 0
Municipal
Income
California 515 515 2,066 0
Municipal
Income
</TABLE>
Under each Plan, if the payment of management fees by the funds to FMR
is deemed to be indirect financing by the funds of the distribution of
their shares, such payment is authorized by the Plans. Each Class A,
Class T, Class B, and Class C Plan specifically recognizes that
FMR may use its management fee revenue, as well as its past profits or
its other resources, to pay FDC for expenses incurred in connection
with the distribution of the applicable class's shares, including
payments made to third parties that engage in the sale of the
applicable class's shares or to third parties, including banks, that
render shareholder support services. Each Institutional Class and
Initial Class Plan specifically recognizes that FMR may use its
management fee revenue, as well as its past profits or its other
resources, to pay FDC for expenses incurred in connection with the
distribution of the applicable class's shares. FMR directly, or
through FDC, may make payments to third parties, such as banks or
broker-dealers, that engage in the sale of Institutional Class or
Initial Class shares or provide shareholder support services.
Currently, the Board of Trustees has authorized such payments for
Class A, Class T, Class B, Class C, and Institutional Class
shares. Currently , the Board of Trustees has not authorized
such payments for Initial Class shares.
For the calendar year ended 1996, payments made by FMR, either
directly or indirectly through FDC, to third parties rounded to the
nearest one thousand dollars, amounted to $0 for Initial Class of
Municipal Bond and $1,000 for Initial Class of Mortgage Securities
and, for Class A, Class T, Class B and Institutional Class of each
fund, amounted to the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FUND CLASS A CLASS T CLASS B INSTITUTIONAL
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TechnoQuant Growth * * * *
Overseas $ 0 $ 89,000 $ 1,000 $ 3,000
Mid Cap 0 5,000 1,000 0
Equity Growth 1,000 144,000 * 56,000
Growth Opportunities 3,000 593,000 * 8,000
Strategic Opportunities 0 9,000 9,000 3,000
Large Cap 0 1,000 0 0
Growth & Income * * * *
Equity Income 1,000 80,000 26,000 13,000
Balanced 0 169,000 * 1,000
Emerging Markets Income 0 6,000 1,000 1,000
High Yield 1,000 84,000 13,000 1,000
Strategic Income 0 4,000 1,000 0
Government Investment 0 16,000 1,000 3,000
Intermediate Bond 0 12,000 1,000 13,000
Mortgage Securities * * * *
Short Fixed-Income 0 36,000 ** 1,000
High Income Municipal 0 25,000 1,000 1,000
Municipal Bond * 0 0 0
Intermediate Municipal Income 0 3,000 0 1,000
Short-Intermediate Municipal Income 0 2,000 ** 0
New York Municipal Income 0 0 0 0
California Municipal Income 0 0 0 0
</TABLE>
* Not applicable.
** Class B is not available for this fund.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of each Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the applicable class of each fund and its shareholders. In
particular, the Trustees noted that the Institutional Class and
Initial Class Plans do not authorize payments by the applicable class
of a fund other than those made to FMR under its management contract
with the fund. To the extent that each Plan gives FMR and FDC greater
flexibility in connection with the distribution of shares of the
applicable class of each fund, additional sales of fund shares may
result. Furthermore, certain shareholder support services may be
provided more effectively under the Plans by local entities with whom
shareholders have other relationships.
The Class A, Class T, Class B, and Class C Plans do not provide for
specific payments by the applicable class of any of the expenses of
FDC, or obligate FDC or FMR to perform any specific type or level of
distribution activities or incur any specific level of expense in
connection with distribution activities. After payments by FDC for
advertising, marketing and distribution, and payments to third
parties, the amounts remaining, if any, may be used as FDC may elect.
The Plans were approved by the shareholders of each class on the
dates shown in the table below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
DATE OF SHAREHOLDER APPROVAL
FUND CLASS A CLASS T CLASS B INSTITUTIONAL
TechnoQuant Growth 12/23/96 12/23/96 12/23/96 12/23/96
Overseas 08/30/96 09/17/97 06/30/95 06/30/95
Mid Cap 08/30/96 01/18/96 01/18/96 01/18/96
Equity Growth 08/30/96 07/16/97 * 09/26/86
Growth
Opportunities 08/30/96 01/01/95 * 06/30/95
Strategic
Opportunities 08/30/96 06/18/97 06/18/97 06/30/95
Large Cap 08/30/96 01/18/96 01/18/96 01/18/96
Growth & Income 12/23/96 12/23/96 12/23/96 12/23/96
Equity Income 08/30/96 09/10/92 06/26/94 07/23/86
Balanced 08/30/96 01/01/95 * 06/30/95
Emerging Markets
Income 08/30/96 06/18/97 06/18/97 06/30/95
High Yield 08/30/96 01/01/95 01/01/95 06/30/95
Strategic Income 08/30/96 10/14/94 10/14/94 06/30/95
Government
Investment 08/30/96 01/01/95 01/01/95 06/30/95
Intermediate Bond 08/30/96 01/01/95 01/01/95 11/26/86
Mortgage Securities * * * *
Short Fixed-Income 08/30/96 01/01/95 ** 06/30/95
High Income
Municipal 08/30/96 12/01/94 12/01/94 06/30/95
Municipal Bond * 07/01/96 07/01/96 07/01/96
Intermediate Municipal
Income 08/30/96 07/01/95 07/01/95 11/05/86
Short-Intermediate
Municipal Income 08/30/96 07/01/95 ** 06/30/95
New York Municipal
Income 08/30/96 12/08/94 12/08/94 06/30/95
California Municipal
Income 08/30/96 11/18/94 11/18/94 06/30/95
</TABLE>
* Not applicable.
** Class B is not available for this fund.
The Plans for the Initial Class of Mortgage Securities and Municipal
Bond were approved by the shareholders of the class on January 21,
1987 and December 31, 1986, respectively.
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling, or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
Clas s A, Class T, Class B, Class C, and Institutional Class of
TechnoQuant Growth, International Capital Appreciation, Overseas, Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities,
Large Cap, Growth & Income, Equity Income, Balanced, Emerging Markets
Income, High Yield, Strategic Income, Mortgage Securities, Government
Investment, Intermediate Bond and Short Fixed-Income has entered into
a transfer agent agreement with FIIOC, an affiliate of FMR. Initial
Class of Strategic Opportunities and Mortgage Securities has entered
into a transfer agent agreement with FSC, an affiliate of FMR. Under
the terms of the agreements, FIIOC and FSC perform transfer agency,
dividend disbursing, and shareholder services for Class A, Class T,
Class B, Class C, Institutional Class and Initial Class of each fund.
Under the terms of the agreements, FSC perform transfer agency,
dividend disbursing, and shareholder services for Initial Class of
each fund.
Each class of High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, New York
Municipal Income and California Municipal Income Municipal has entered
into a transfer agent agreement with UMB. Under the terms of the
agreements, UMB provides transfer agency, dividend disbursing, and
shareholder services for each class of each municipal fund. UMB in
turn has entered into a sub-transfer agent agreements with FIIOC and
FSC. Under the terms of the sub-agreements, FIIOC and FSC perform all
processing activities associated with providing these services for
each class of each municipal fund and receives all related transfer
agency fees paid to UMB.
For providing transfer agency services, FSC and FIIOC receive an
annual account fee and an asset-based fee each based on account size
and fund type for each retail account and certain institutional
accounts. With respect to certain institutional retirement accounts,
FSC and FIIOC receives an annual account fee and an asset-based fee
based on account type or fund type. These annual account fees are
subject to increase based on postal rate changes.
For each Equity Fund, the asset-based fees are subject to
adjustment if the year-to-date total return of the S&P 500 exceeds a
positive or negative 15%.
FIIOC and FSC also collect small account fees from certain accounts
with balances of less than $2,500.
FSC and FIIOC pay out-of-pocket expenses associated with providing
transfer agent services. In addition, FSC and FIIOC bear the expense
of typesetting, printing, and mailing prospectuses, statements of
additional information, and all other reports, notices, and statements
to existing shareholders, with the exception of proxy statements.
Each of the Tax-Free Funds has also entered into a service agent
agreement with UMB. Under the terms of the agreements, UMB provides
pricing and bookkeeping services for each fund. UMB in turn has
entered into a sub-service agent agreements with FSC. Under the terms
of the sub-agreements, FSC performs all processing activities
associated with providing these services, including calculating the
NAV and dividends for each class of each fund and maintaining each
fund's portfolio and general accounting records, and receives all
related pricing and bookkeeping fees paid to UMB.
For providing pricing and bookkeeping services, FSC receives a
monthly fee based on each fund's average daily net assets throughout
the month. The annual fee rates for pricing and bookkeeping services
are .0600% (for equity funds) .0400% (for fixed-income funds) .0750%
(for international funds) .0750% (for high yield funds) of the first
$500 million of average net assets and .0300% (for equity funds)
.0200% (for fixed-income funds) .0375% (for international funds)
.0375% (for high yield funds) of average net assets in excess of $500
million. The fee, not including reimbursement for out-of-pocket
expenses, is limited to a minimum of $60,000 and a maximum of $800,000
per year.
For the fiscal years ended 1997, 1996, and 1995 Mortgage Securities
paid FSC pricing and bookkeeping fees, including reimbursement for
related out-of-pocket expenses, of $208,231, $189,021, and $151,765,
respectively.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND 1996 1995 1994
Overseas $ 523,913 $ 358,827 $ 251,241
Mid Cap 65,738* N/A N/A
Equity Growth 804,585 680,671 461,039
Growth Opportunities 821,769 764,407 758,343
Strategic Opportunities 380,339 315,623 61,356**
215,648***
Large Cap 46,209* N/A N/A
Equity Income 751,619 404,628 168,364
Balanced 800,592 758,290 750,743
Emerging Markets Income 62,296 45,004 36,412*
High Yield 734,437 296,724 223,567
Strategic Income 60,655 45,067 7,500*
Government Investment 109,259 68,665 46,218
Intermediate Bond 198,036 151,940 118,125
Short Fixed-Income 197,893 231,369 264,455
High Income Municipal 239,476 229,551 220,222
Municipal Bond 298,000 346,000 362,000
Intermediate Municipal Income 65,230 48,976 48,062
Short-Intermediate Municipal Income 58,330 46,467 31,953*
New York Municipal Income 58,926 8,710* N/A
California Municipal Income 42,183* N/A N/A
</TABLE>
* Emerging Markets Income, Strategic Income, Short-Intermediate
Municipal Income, and New York Municipal Income commenced operations
on March 10, 1994, October 31, 1994, March 16, 1994, and August 21,
1995, respectively. Mid Cap, Large Cap, and California Municipal
Income commenced operations on February 20, 1996.
** From 10/1/94 - 12/31/94.
*** From 10/1/93 - 9/30/94.
FSC also receives fees for administering each taxable fund's
securities lending program. Securities lending fees are based on the
number and duration of individual securities loans. For the fiscal
year ended 1997, 1996, and 1995 Mortgage Securities incurred no
securities lending fees. For the fiscal years ended 1996, 1995, and
1994, the taxable funds incurred no securities lending fees.
For the municipal funds, the transfer agent fees and charges, and
pricing and bookkeeping fees described above are paid to FIIOC and
FSC, respectively, by UMB, which is entitled to reimbursement from the
class or the fund, as applicable, for these expenses.
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR organized as a Massachusetts corporation on July 18,
1960. FDC is a broker-dealer registered under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. The distribution agreements call for FDC to use all
reasonable efforts, consistent with its other business, to secure
purchasers for shares of each fund, which are continuously offered.
Promotional and administrative expenses in connection with the offer
and sale of shares are paid by FMR. Sales charge revenues
collected, and retained by FDC for the past three fiscal years are
shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SALES CHARGE REVENUE CDSC REVENUE
FISCAL YEAR AMOUNT PAID TO FDC AMOUNT RETAINED BY FDC AMOUNT PAID AMOUNT RETAINED
ENDED TO FDC BY FDC
CLASS T CLASS A CLASS T CLASS A
Overseas Oct. 31,
1996 $ 2,313,000 $ 12,000 $ 375,000 $ 1,000 $ 24,000 $ 24,000
1995 4,446,941 N/A 692,471 N/A 333 333
1994 9,596,831 N/A 1,436,765 N/A N/A N/A
Mid Cap Nov. 30,
1996***** 1,836,711 25,943 304,519 4,434 20,844 20,844
1995 N/A N/A N/A N/A N/A N/A
1994 N/A N/A N/A N/A N/A N/A
Equity
Growth Nov. 30,
1996 11,845,527 151,603 1,998,996 16,099 N/A N/A
1995 13,514,763 N/A 2,048,524 N/A N/A N/A
1994 9,353,000 N/A 1,397,000 N/A N/A N/A
Growth Oct. 31,
1996 49,538,901 399,713 7,961,248 45,606 N/A N/A
Opportunities
1995 73,545,428 N/A 11,459,421 N/A N/A N/A
1994 47,564,000 N/A 7,108,000 N/A N/A N/A
Strategic Dec. 31,
1996 909,434 15,662 145,926 2,958 243,510 243,510
Opportunities
1995 1,883,199 N/A 144,719 N/A 40,916 40,916
Dec. 31,
1994* 553,818 N/A 231,759 N/A 12,307 12,307
Sep. 30,
1994** 2,984,646 N/A 445,526 N/A 409 409
Large Cap Nov. 30,
1996***** 203,839 1,495 32,342 1,476 5,900 5,900
1995 N/A N/A N/A N/A N/A N/A
1994 N/A N/A N/A N/A N/A N/A
Equity
Income Nov. 30,
1996 8,110,513 108,178 1,572,831 10,945 651,390 651,390
1995 10,583,118 N/A 1,676,479 N/A 127,493 127,493
1994 2,450,544 N/A 352,678 N/A 30,093 30,093
Balanced Oct. 31,
1996 3,494,533 38,444 591,963 5,070 N/A N/A
1995 10,070,941 N/A 1,674,121 N/A N/A N/A
1994 37,018,000 N/A 6,291,000 N/A N/A N/A
Emerging Dec. 31,
1996 270,379 9,186 42,424 1,098 46,800 46,800
Markets Income
1995 465,187 N/A 245,371 N/A 12,203 12,203
1994 406,046 N/A 59,134 N/A 2,877 2,877
High
Yield Oct. 31,
1996 8,201,000 116,000 1,356,000 17,000 372,000 372,000
1995 8,787,240 N/A 1,328,830 N/A 75,583 75,583
1994 8,980,127 N/A 1,342,482 N/A 15,765 15,765
Strategic
Income Dec. 31,
1996 $ 558,381 $ 13,287 $ 94,606 $ 1,628 $ 56,783 $ 56,783
1995 842,000 N/A 100,905 N/A 23,689 23,689
1994 197,904 N/A 0 N/A 9,542 9,542
SALES CHARGE REVENUE CDSC REVENUE
FISCAL
YEAR AMOUNT PAID TO FDC AMOUNT RETAINED BY FDC AMOUNT PAID AMOUNT
ENDED TO FDC RETAINED
BY FDC
CLASS T CLASS A CLASS T CLASS A
Short Oct. 31,
1996 553,986 1,525 95,855 231 N/A N/A
Fixed-Income
1995 786,085 N/A 167,907 N/A N/A N/A
1994 4,396,909 N/A 877,639 N/A N/A N/A
Govern
ment Oct. 31,
1996 618,420 5,077 101,833 1,157 38,738 38,738
Investment
1995 954,672 N/A 144,831 N/A 10,268 10,268
1994 996,242 N/A 168,939 N/A 978 978
Intermed
iate Nov. 30,
1996 604,408 10,944 100,654 1,799 56,925 56,925
Bond
1995 1,297,536 N/A 198,826 N/A 20,310 20,310
1994 1,598,883 N/A 237,647 N/A 1,279 1,279
Mortgage July 31,
1997 $ 9,662 $ 7,090 $ 2,170 $ 0 $ 0 $ 0
Securities
1996 N/A N/A N/A N/A N/A N/A
1995 N/A N/A N/A N/A N/A N/A
Munici
pal Dec. 31,
1996 10,000 N/A 3,000 N/A 0 0
Bond
1995 N/A N/A N/A N/A N/A N/A
1994 N/A N/A N/A N/A N/A N/A
Intermed
iate Nov. 30,
1996 78,940 17 12,934 2 35,837 35,837
Municipal
Income
1995 375,591 N/A 141,432 N/A 1,449 1,449
1994 635,031 N/A 96,813 N/A 0 0
Short- Nov. 30,
1996 67,305 1,193 10,218 172 N/A N/A
Intermediate
Municipal
Income
1995 316,185 N/A 239,796 N/A N/A N/A
1994 122,128 N/A 13,369 N/A N/A N/A
High
Income Oct. 31,
1996 918,111 3,984 154,356 599 130,817 130,817
Municipal
New York Oct. 31,
1996 94,802 27 4,180 4 4,097 4,097
Municipal
Income
1995*** 0 N/A 0 N/A 0 0
1994 N/A N/A N/A N/A N/A N/A
Califor
nia Oct. 31, 31,149 27 535 4 0 0
Munici
pal 1996****
Income
1995 N/A N/A N/A N/A N/A N/A
1994 N/A N/A N/A N/A N/A N/A
INITIAL CLASS INITIAL CLASS
Strate
gic Dec. 31, 1996 725 725
Opportunities
1995 1,989 1,989
1994* 152 152
Sep. 30, 1994** 1,485 1,485
</TABLE>
* For the fiscal period October 1, 1994 through December 31, 1994
** For the fiscal period October 1, 1993 through September 30, 1994
*** For the fiscal period August 21, 1995 through October 31, 1995
**** For the fiscal period February 20, 1996 through October 31, 1996
***** For the fiscal period February 20, 1996 through November 30,
1996
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Fidelity Advisor TechnoQuant Growth Fund, Fidelity
Advisor Mid Cap Fund, Fidelity Advisor Equity Growth Fund, Fidelity
Advisor Large Cap Fund, and Fidelity Advisor Growth & Income Fund are
funds of Fidelity Advisor Series I, an open-end management investment
company organized as a Massachusetts business trust by a Declaration
of Trust dated June 24, 1983, as amended and restated October 26,
1984. On January 29, 1992, the name was changed from Equity Portfolio
Growth to Fidelity Broad Street Trust by an amendment to the
Declaration of Trust. On April 15, 1993, its name was changed from
Fidelity Broad Street Trust to Fidelity Advisor Series I by an
amendment to the Declaration of Trust. Currently, there are five funds
of the trust: Fidelity Advisor TechnoQuant Growth Fund, Fidelity
Advisor Mid Cap Fund, Fidelity Advisor Equity Growth Fund, Fidelity
Advisor Large Cap Fund, and Fidelity Advisor Growth & Income Fund.
Fidelity Advisor Strategic Income Fund, Fidelity Advisor Short
Fixed-Income Fund, Fidelity Advisor Government Investment Fund,
Fidelity Advisor High Yield Fund, Fidelity Advisor Growth
Opportunities Fund, and Fidelity Advisor Balanced Fund are funds of
Fidelity Advisor Series II, an open-end management investment company
organized as a Massachusetts business trust by a Declaration of Trust
dated April 24, 1986. On April 7, 1993, the Board of Trustees voted to
change the name of the trust from Fidelity Diversified Trust to
Fidelity Advisor Series II. Currently, there are six funds of the
trust: Fidelity Advisor Strategic Income Fund, Fidelity Advisor Short
Fixed-Income Fund, Fidelity Advisor Government Investment Fund,
Fidelity Advisor High Yield Fund, Fidelity Advisor Growth
Opportunities Fund, and Fidelity Advisor Balanced Fund.
Fidelity Advisor Equity Income Fund is a fund of Fidelity Advisor
Series III, an open-end management investment company organized as a
Massachusetts business trust by a Declaration of Trust dated May 17,
1982. On January 29, 1986, the name was changed from Equity Portfolio:
Income to Fidelity Franklin Street Trust. On April 15, 1993, the
trust's name was changed to Fidelity Advisor Series III. Currently,
there is one fund of the trust: Fidelity Advisor Equity Income Fund.
Fidelity Advisor Intermediate Bond Fund is a fund of Fidelity Advisor
Series IV, an open-end management investment company organized as a
Massachusetts business trust by a Declaration of Trust dated May 6,
1983. On January 29, 1992, the name of the trust was changed from
Income Portfolios to Fidelity Income Trust, and on April 15, 1993, the
Board of Trustees voted to change the trust's name to Fidelity Advisor
Series IV. An amended and restated Declaration of Trust, dated March
16, 1995, was filed on April 12, 1995. Currently, there are three
funds of the trust: Fidelity Advisor Intermediate Bond Fund, Fidelity
Institutional Short-Intermediate Government Portfolio, and Fidelity
Real Estate High Income Fund.
Fidelity Advisor High Income Municipal Fund, Fidelity Advisor New York
Municipal Income Fund, and Fidelity Advisor California Municipal
Income Fund are funds of Fidelity Advisor Series V, an open-end
management investment company organized as a Massachusetts business
trust by a Declaration of Trust dated April 24, 1986, as amended and
restated July 18, 1991, and as supplemented April 15, 1993. On July
18, 1991, the Board of Trustees voted to change the name of the trust
from Plymouth Investment Series to Fidelity Investment Series, and on
April 15, 1993, the Board voted to change the trust's name to Fidelity
Advisor Series V. An amended and restated Declaration of Trust dated
March 16, 1995 was filed on April 12, 1995. Currently, there are
three funds of the trust: Fidelity Advisor High Income
Municipal Fund, Fidelity Advisor New York Municipal Income Fund, and
Fidelity Advisor California Municipal Income Fund.
Fidelity Advisor Short-Intermediate Municipal Income Fund and Fidelity
Advisor Intermediate Municipal Income Fund are funds of Fidelity
Advisor Series VI, an open-end management investment company organized
as a Massachusetts business trust by a Declaration of Trust dated June
1, 1983, as amended and restated October 13, 1995 and supplemented
May 5, 1993. On January 29, 1992, the name of the trust was
changed from Tax-Exempt Funds to Fidelity Oliver Street Trust and on
April 15, 1993, the Board of Trustees voted to change the name of the
trust to Fidelity Advisor Series VI. Currently, there are two funds of
the trust: Fidelity Advisor Short-Intermediate Municipal Income Fund
and Fidelity Advisor Intermediate Municipal Income Fund.
Fidelity Advisor International Capital Appreciation Fund, Fidelity
Advisor Overseas Fund, Fidelity Advisor Strategic Opportunities Fund,
and Fidelity Advisor Emerging Markets Income Fund are funds of
Fidelity Advisor Series VIII, an open-end management investment
company organized as a Massachusetts business trust by a Declaration
of Trust dated September 23, 1983, as amended and restated October 1,
1986, and as supplemented November 29, 1990. On April 15, 1993, the
name of the trust was changed from Fidelity Special Situations Fund to
Fidelity Advisor Series VIII. Currently, there are four funds of the
trust: Fidelity Advisor International Capital Appreciation Fund,
Fidelity Advisor Overseas Fund, Fidelity Advisor Strategic
Opportunities Fund, and Fidelity Advisor Emerging Markets Income
Fund.
Fidelity Advisor Municipal Bond Fund is a fund of Fidelity Municipal
Trust, an open-end management investment company originally organized
as a Maryland corporation on November 22, 1976 and reorganized as a
Massachusetts business trust on June 22, 1984, at which time its name
changed to Fidelity Municipal Bond Portfolio. On March 1, 1986, the
trust's name was changed to Fidelity Municipal Trust. Currently, there
are seven funds of the trust: Fidelity Advisor Municipal Bond Fund,
Fidelity Aggressive Municipal Fund, Fidelity Insured Municipal Income
Fund, Fidelity Ohio Municipal Income Fund, Fidelity Michigan Municipal
Income Fund, Fidelity Minnesota Municipal Income Fund, and Spartan
Pennsylvania Municipal Income Fund.
Fidelity Advisor Mortgage Securities Fund is a fund of Fidelity Income
Fund, an open-end management investment company organized as a
Massachusetts business trust on August 7, 1984. On October 25, 1987,
the trust's name was changed from Fidelity Mortgage Securities Fund to
Fidelity Income Fund. Currently, there are three funds in the trust:
Fidelity Advisor Mortgage Securities Fund, Fidelity Ginnie Mae Fund,
and Spartan Limited Maturity Government Fund.
The Declarations of Trust permit the Trustees to create additional
funds.
In the event that FMR ceases to be the investment adviser to a trust
or a fund, the right of the trust or fund to use the identifying name
"Fidelity" and "Spartan" may be withdrawn. There is a remote
possibility that one fund might become liable for any misstatement in
its prospectus or statement of additional information about another
fund.
The assets of each trust received for the issue or sale of shares of
each of its funds and all income, earnings, profits, and proceeds
thereof, subject only to the rights of creditors, are especially
allocated to such fund, and constitute the underlying assets of such
fund. The underlying assets of each fund are segregated on the books
of account, and are to be charged with the liabilities with respect to
such fund and with a share of the general liabilities of their
respective trusts. Expenses with respect to each trust are to be
allocated in proportion to the asset value of their respective funds,
except where allocations of direct expense can otherwise be fairly
made. The officers of each trust, subject to the general supervision
of the Board of Trustees, have the power to determine which expenses
are allocable to a given fund, or which are general or allocable to
all of the funds of a certain trust. In the event of the dissolution
or liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is an entity of the type
commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable for the obligations of the
trust. Each Declaration of Trust provides that the trust shall not
have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation,
or instrument entered into or executed by the trust or its Trustees
shall include a provision limiting the obligations created thereby to
the trust and its assets. Each Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. Each Declaration of
Trust also provides that its funds shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote.
Each Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their office.
Claims asserted against one class of shares may subject the holders of
another class of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of
beneficial interest. The shares have no preemptive rights, and Class
A, Class T, Class C, Institutional Class, and Initial Class shares
have no conversion rights; the voting and dividend rights, the
conversion rights of Class B shares, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shareholders of
each fund receive one vote for each dollar of net asset value owned.
Shares are fully paid and nonassessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust, a fund, or class of a fund may,
as set forth in the Declaration of Trust, call meetings of the trust,
fund or class, as applicable, for any purpose related to the trust,
fund, or class, as the case may be, including, in the case of a
meeting of an entire trust, the purpose of voting on removal of one or
more Trustees. Each trust or fund may be terminated upon the sale of
its assets to another open-end management investment company, or upon
liquidation and distribution of its assets, as determined by the
current value of each shareholder's investment in the funds or trusts.
If not so terminated, each trust and fund will continue indefinitely.
Each fund (except Equity Income and Municipal Bond) may invest all of
their assets in another investment company.
CUSTODIANS. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of International Capital
Appreciation, Mid Cap, Growth Opportunities, Strategic Opportunities,
and Large Cap. The Chase Manhattan Bank, 4 Chase MetroTech Center,
Brooklyn, New York, is custodian of the assets of TechnoQuant Growth,
Overseas, Equity Growth, Growth & Income, Equity Income, Balanced, and
Emerging Markets Income. The Bank of New York, 110 Washington Street,
New York, New York, is custodian of the assets of High Yield,
Strategic Income, Government Investment, Intermediate Bond, Mortgage
Securities and Short Fixed-Income. UMB Bank, n.a., 1010 Grand Avenue,
Kansas City, Missouri, is custodian of the assets of High Income
Municipal, Municipal Bond, Intermediate Municipal Income, California
Municipal Income, New York Municipal Income, and Short-Intermediate
Municipal Income. Each custodian is responsible for the safekeeping of
the funds' assets and the appointment of subcustodian banks and
clearing agencies. A custodian takes no part in determining the
investment policies of a fund or in deciding which securities are
purchased or sold by a fund. However, a fund may invest in obligations
of its custodian and may purchase securities from or sell securities
to its custodian. The Bank of New York and The Chase Manhattan Bank,
each headquartered in New York, also may serve as special purpose
custodians of certain assets in connection with repurchase agreement
transactions.
FMR, its officers and directors, its affiliated companies, and the
Board of Trustees may, from time to time, conduct transactions with
various banks, including banks serving as custodians for certain of
the funds advised by FMR. The Boston branch of the custodian bank of
Mid Cap, Growth Opportunities, Strategic Opportunities, and Large Cap
leases its office space from an affiliate of FMR at a lease payment
which, when entered into, was consistent with prevailing market rates.
Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Coopers and Lybrand L.L.P., serves as the independent
accountant for Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Equity Income, Balanced, Emerging Markets
Income, High Yield, Strategic Income, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal,
Municipal Bond, Intermediate Municipal Income, and Short-Intermediate
Municipal Income, New York Municipal Income, and California Municipal
Income. The auditor examines financial statements for the funds and
provides other audit, tax, and related services.
Price Waterhouse LLP, serves as the independent accountant for
TechnoQuant Growth, International Capital Appreciation, Overseas,
Growth & Income, and Mortgage Securities. The auditor examines
financial statements for the funds and provides other audit, tax, and
related services.
FINANCIAL STATEMENTS
Mortgage Securities fund's financial statements and financial
highlights for the fiscal period ended July 31, 1997 and report of the
auditor are included in the fund's Annual Report, which is a separate
document supplied with this SAI. Each other fund's financial
statements and financial highlights for the fiscal periods ended
October 31, November 30, or December 31, 1996, as appropriate, and
report of the auditors, are included in the fund's Annual Reports,
which are separate reports supplied with this SAI. The funds'
financial statements, including the financial highlights, and reports
of the auditors are incorporated herein by reference. For a free
additional copy of a fund's Annual Report, contact Fidelity at
1-800-544-8888, 82 Devonshire Street, Boston, MA 02109, or your
investment professional.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the prerefunded bond is considered to
be the number of days to the announced call date of the bonds. Also,
the maturities of mortgage-backed securities, including collateralized
mortgage obligations, and some asset-backed securities, are determined
on a weighted average life basis, which is the average time for
principal to be repaid. For a mortgage security, this average time is
calculated by estimating the timing of principal payments, including
unscheduled prepayments, during the life of the mortgage. The weighted
average life of these securities is likely to be substantially shorter
than their stated final maturity.
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations
when determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF CORPORATE BONDS:
Moody's ratings for obligations with an original remaining maturity in
excess of one year fall within nine categories. They range from Aaa
(highest quality) to C (lowest quality). Moody applies numerical
modifiers of 1, 2, or 3 to each generic rating classification from Aa
through B. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS:
Debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA to CCC may be modified by the addition of a plus sign (+) or minus
sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest-rated issues only in
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
FIDELITY ADVISOR INTERNATIONAL FUNDS
CLASS A, CLASS T, CLASS B, & CLASS C PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; Who May Want to Invest
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance; Appendix B
d .............................. Cover Page; Performance
4 a i............................. Charter
ii........................... Investment Principles and Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Cover Page; Charter
ii........................... Charter; Breakdown of Expenses
iii.......................... Expenses; Breakdown of Expenses
c .............................. Charter
d .............................. Charter; Breakdown of Expenses
e .............................. Charter; Breakdown of Expenses
f .............................. Expenses
g i.............................. Charter
ii.............................. *
5A .............................. Performance
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions; Sales Charge Reductions and Waivers
iii.......................... Charter
b ............................. Charter
c .............................. Transaction Details; Exchange Restrictions
d .............................. *
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Sales Charge Reductions
and Waivers
f, g .............................. Dividends, Capital Gains, and Taxes
h .............................. Who May Want to Invest
7 a .............................. Cover Page; Charter
b .............................. Expenses; How to Buy Shares; Transaction Details
c .............................. Sales Charge Reductions and Waivers
d .............................. How to Buy Shares
e .............................. Breakdown of Expenses; Transaction Details
f .............................. Expenses; Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY ADVISOR
INTERNATIONAL FUNDS
CLASS A, CLASS T, CLASS B, AND
CLASS C
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of a fund's most recent financial report and portfolio listing,
or a copy of the Statement of Additional Information (SAI) dated
October 31, 1997 . The SAI has been filed with the Securities
and Exchange Commission (SEC) and is available along with other
related materials on the SEC's Internet Web site (http:/www.sec.gov).
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). For a free copy of either document, contact Fidelity
Distributors Corporation (FDC), 82 Devonshire Street, Boston, MA
02109, or your investment professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
EMERGING MARKETS INCOME MAY INVEST SIGNIFICANTLY IN LOWER-QUALITY DEBT
SECURITIES, SOMETIMES CALLED "JUNK BONDS." THESE SECURITIES CARRY
GREATER RISKS, SUCH AS THE RISK OF DEFAULT, THAN OTHER DEBT
SECURITIES.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
AINT-pro-0297-01
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation by investing in securities of foreign issuers.
FIDELITY ADVISOR OVERSEAS FUND seeks growth of capital primarily
through investments in foreign securities.
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND seeks a high level of
current income by investing primarily in debt securities and other
instruments of issuers in emerging markets. As a secondary objective,
the fund seeks capital appreciation.
PROSPECTUS
OCTOBER 31, 1997 (FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES EACH CLASS'S SALES CHARGE (LOAD) AND ITS YEARLY
OPERATING EXPENSES.
FINANCIAL HIGHLIGHTS A SUMMARY OF EACH FUND'S FINANCIAL DATA.
PERFORMANCE HOW EACH FUND HAS DONE OVER TIME.
THE FUNDS IN DETAIL CHARTER HOW EACH FUND IS ORGANIZED.
INVESTMENT PRINCIPLES AND RISKS EACH FUND'S OVERALL APPROACH
TO INVESTING.
BREAKDOWN OF EXPENSES HOW OPERATING COSTS ARE CALCULATED
AND WHAT THEY INCLUDE.
YOUR ACCOUNT TYPES OF ACCOUNTS DIFFERENT WAYS TO SET UP YOUR ACCOUNT,
INCLUDING TAX-SHELTERED RETIREMENT PLANS.
HOW TO BUY SHARES OPENING AN ACCOUNT AND MAKING ADDITIONAL
INVESTMENTS.
HOW TO SELL SHARES TAKING MONEY OUT AND CLOSING YOUR ACCOUNT.
INVESTOR SERVICES SERVICES TO HELP YOU MANAGE YOUR ACCOUNT.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS SHARE PRICE CALCULATIONS AND THE TIMING OF
PURCHASES AND REDEMPTIONS.
EXCHANGE RESTRICTIONS
SALES CHARGE REDUCTIONS AND WAIVERS
APPENDIX A
APPENDIX B
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Class A, Class T, Class B, and Class C shares are offered to investors
who engage an investment professional for investment advice.
The funds may be appropriate for investors who want to pursue their
investment goals in markets outside the United States. By including
international investments in your portfolio you can achieve additional
diversification and participate in growth opportunities around the
world.
International Capital Appreciation and Overseas are diversified funds.
Emerging Markets Income is a non-diversified fund. Non-diversified
funds may invest a greater portion of their assets in securities of
individual issuers than diversified funds. As a result, changes in the
market value of a single issuer could cause greater fluctuations in
share value than would occur in a more diversified fund.
International Capital Appreciation is designed for investors who seek
capital appreciation from investments around the world. Overseas is
designed for investors who seek long-term growth of capital primarily
from investments in foreign securities. Each fund may be appropriate
for investors who are willing to ride out stock market fluctuations in
pursuit of potentially high long-term returns.
Emerging Markets Income is designed for investors who want high
current income with some potential for capital growth from a portfolio
of debt instruments with a focus on lower-quality debt securities. The
fund may be appropriate for long-term, aggressive investors who
understand the potential risks and rewards of investing in
lower-quality debt securities, including defaulted securities.
The value of each fund's investments and, as applicable, the income
they generate, will vary from day to day, and generally reflect
changes in market conditions, interest rates and other company,
political, and economic news. In the short term, stock prices can
fluctuate dramatically in response to these factors. The securities of
small, less well-known companies may be more volatile than those of
larger companies. Bond values fluctuate based on changes in interest
rates and the credit quality of the issuer, and may be subject to
prepayment risk, which can limit their price appreciation potential in
periods of declining interest rates. Over time, however, stocks,
although more volatile, have shown greater growth potential than other
types of securities. Investments in foreign securities may involve
risks in addition to those of U.S. investments, including increased
political and economic risk, as well as exposure to currency
fluctuations.
Each fund is not in itself a balanced investment plan. You should
consider your investment objective and tolerance for risk when making
an investment decision. When you sell your fund shares, they may be
worth more or less than what you paid for them.
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
Class A and Class T shares have a front-end sales charge and pay a
12b-1 fee. Class A and Class T shares may be subject to a contingent
deferred sales charge (CDSC). Class B and Class C shares do not have a
front-end sales charge, but do have a CDSC, and pay a 12b-1 fee.
Institutional Class shares have no sales charge, and do not pay a
12b-1 fee, but are available only to certain types of investors. See
"Sales Charge Reductions and Waivers," page , for Institutional Class
eligibility information. You may obtain more information about
Institutional Class shares, which are not offered through this
prospectus, by calling 1-800-843-3001 or from your investment
professional.
The performance of one class of shares of a fund may be different from
the performance of another class of shares of the same fund because of
different sales charges and class expenses. Contact your investment
professional to discuss which class is appropriate for you.
In determining which class of shares is appropriate for you, you
should consider, among other factors, the amount you plan to invest,
the length of time you intend to hold your shares, your eligibility
for a sales charge waiver or reduction, and the package of services
provided to you by your investment professional and the overall costs
of those services.
In general, Class A shares have higher costs than Class T over a short
holding period because Class A shares have a higher front-end sales
charge, and Class A shares have lower costs than Class T shares over a
longer holding period because Class A shares have lower 12b-1 fees. If
you are planning to invest a significant amount either at one time or
through a regular investment program, you should consider the reduced
front-end sales charges available on Class A and Class T shares. If
you are eligible for a front-end sales charge waiver on a purchase of
both Class A and Class T shares, Class A shares generally will have
lower costs than Class T shares because Class A shares have lower
12b-1 fees. However, you should evaluate the overall costs of
purchasing Class A shares or Class T shares in the context of the
package of services provided to you by your investment professional.
See "Transaction Details," page , and "Sales Charge Reductions
and Waivers," page , for sales charge reduction and waiver
information.
If you prefer not to pay a front-end sales charge, you should consider
Class B or Class C shares. While Class B and Class C shares are
subject to higher ongoing costs than Class A or Class T shares, in
general because of their higher 12b-1 fees, Class B and Class C shares
are sold with a CDSC instead of a front-end sales charge so your
entire purchase amount is immediately invested. In general, Class B
shares have higher costs than Class C shares over a short holding
period because Class B shares have a higher CDSC that declines over
six years, and Class B shares have lower costs than Class C shares
over a longer period because Class B shares convert to Class A shares
after seven years. Please note that purchase amounts of more than
$250,000 will not be accepted for Class B shares, that purchase
amounts of more than $1,000,000 will not be accepted for Class C
shares, and that Class A or Class T shares may have lower costs for
investments that qualify for a front-end sales charge reduction or
waiver. If you sell your Class B shares within six years, you will
normally pay a CDSC that varies depending on how long you have held
your shares. If you sell your Class C shares within one year, you will
normally pay a 1.00% CDSC. See "Transaction Details," page ,
for CDSC schedules and related information. Class B shares will
automatically convert to Class A shares after a holding period of
seven years. Class C shares do not convert to another class of shares.
See "Transaction Details," page , for conversion information.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell shares of a fund. In addition, you may be charged an annual
account maintenance fee if your account balance falls below $2,500.
Lower front-end sales charges may be available with purchases of
$50,000 or more. See "Transaction Details," page , for an
explanation of how and when these charges apply.
A CDSC is imposed on Class B shares only if you redeem Class B shares
within six years of purchase. A CDSC is imposed on Class C shares only
if you redeem Class C shares within one year of purchase. See
"Transaction Details," page , for information about the CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CLASS A CLASS T CLASS B CLASS C
MAXIMUM SALES CHARGE (AS A % OF
OFFERING PRICE) ON PURCHASES
OF INTERNATIONAL
CAPITAL APPRECIATION AND
OVERSEAS
(THE EQUITY FUNDS) 5.75% 3.50% NONE NONE
MAXIMUM SALES CHARGE (AS A % OF
OFFERING PRICE) ON PURCHASES OF
EMERGING
MARKETS INCOM E (THE BOND
FUND) 4.75% 3.50% NONE NONE
MAXIMUM CDSC (AS A % OF THE
LESSER OF NONE[A] NONE[A] 5.00%[B] 1.00%[C]
ORIGINAL PURCHASE PRICE OR
REDEMPTION PROCEEDS)
S ALES CHARGE ON NONE NONE NONE NONE
REINVESTED DISTRIBUTIONS
ANNUAL ACCOUNT MAINTENANCE FEE $12.00 $12.00 $12.00 $12.00
(FOR ACCOUNTS UNDER $2,500)
</TABLE>
[A] A CDSC OF 0.25% IS ASSESSED ON CERTAIN REDEMPTIONS OF CLASS A AND
CLASS T SHARES ON WHICH A FINDER'S FEE WAS PAID. SEE "TRANSACTION
DETAILS," PAGE .
[B] DECLINES OVER 6 YEARS FROM 5.00% TO 0%.
[C] ON CLASS C SHARES REDEEMED WITHIN 1 YEAR OF PURCHASE.
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to Fidelity Management & Research Company
(FMR) that, for Overseas, varies based on performance. Each fund also
incurs other expenses for services such as maintaining shareholder
records and furnishing shareholder statements and financial reports.
12b-1 fees for Class A, Class T, Class B, and Class C include a
distribution fee and, for Class B and Class C, a shareholder service
fee. Distribution fees are paid by each class of each fund to FDC for
services and expenses in connection with the distribution of the
applicable class's shares. Shareholder service fees are paid by Class
B and Class C of the funds to FDC for services and expenses in
connection with providing personal service to and/or maintenance of
Class B and Class C shareholder accounts. Long-term shareholders may
pay more than the economic equivalent of the maximum sales charges
permitted by the National Association of Securities Dealers, Inc., due
to 12b-1 fees.
Each class's expenses are factored into its share price or dividends
and are not charged directly to shareholder accounts (see "Breakdown
of Expenses" on page ).
The following figures are based on estimated or historical expenses,
adjusted to reflect current fees, of each class of each fund and are
calculated as a percentage of average net assets of the applicable
class of each fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
OPERATING EXPENSES CLASS A CLASS T CLASS B CLASS C
INTERNATIONAL CAPITAL MANAGEMENT FEE 0.75%[A] 0.75%[A] 0.75%[A] 0.75%[A]
APPRECIATION
12B-1 FEE (INCLUDING
0.25% SHAREHOLDER
SERVICE FEE FOR
CLASS B 0.25% 0.50% 1.00% 1.00%
AND CLASS C SHARES)
OTHER EXPENSES
(AFTER REIMBURSEMENT
CLASS A, CLASS B,
AND CLASS C) 1.00%[A] 0.88%[A] 1.00%[A] 1.00% [A]
TOTAL OPERATING
EXPENSES 2.00% 2.13% 2.75% 2.7 5 %
OVERSEAS MANAGEMENT FEE 0.68% [A] 0.68% [A] 0.68% 0. 77 % [A]
12B-1 FEE (INCLUDING
0.25% SHAREHOLDER
SERVICE FEE FOR
CLASS B 0.25% 0.50% 1.00% 1.00%
AND CLASS C SHARES)
OTHER EXPENSES
(AFTER REIMBURSE
MENT CLASS B AND
CLASS C ) 0.51%[A] 0.43% 0.62% 0. 53 %[A]
TOTAL OPERATING
EXPENSES 1.44% 1.61% 2.30% 2.30%
EMERGING MARKETS INCOME MANAGEMENT FEE 0.70%[B] 0.69 % 0.69 % 0.70 % [A]
12B-1 FEE (INCLUDING
0.25% SHAREHOLDER
SERVICE FEE FOR
CLASS B 0.15% 0.25% 0.90% 1.00%
AND CLASS C SHARES)
OTHER EXPENSES
(AFTER REIMBURSEMENT
CLASS A, CLASS B,
AND CLASS C) 0.55% [B] 0.55% 0.56 % 0.55%[A]
TOTAL OPERATING
EXPENSES 1.40% 1. 49 % 2.15% 2.25%
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
[B] SIX MONTHS ENDED JUNE 30, 1997.
A portion of the brokerage commissions that a fund pays is used to
reduce that fund's expenses. In addition, each fund has entered into
arrangements with its custodian and transfer agent whereby credits
realized as a result of uninvested cash balances are used to reduce
custodian and transfer agent expenses. Including these reductions, the
total operating expenses presented in the table for the applicable
class would have been:
CLASS A CLASS T CLASS B
OVERSEAS (DAGGER) 1.60% 2.3 0 %
EMERGING MARKETS INCOME 1.38% 1.48% 2.15%
(dagger) IMPACT OF CREDITS NOT APPLIED TO FIRST YEAR ESTIMATED
EXPENSES.
EXPENSE TABLE EXAMPLE: You would pay the following amount in total
expenses on a $1,000 investment, assuming a 5% annual return and
either (1) full redemption or (2) no redemption at the end of each
time period . Total expenses shown below include your shareholder
transaction expenses, such as the maximum front-end sales charge or
CDSC, as applicable, and a class's annual operating expenses.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FULL REDEMPTION NO REDEMPTION
CLASS A CLASS T CLASS B CLASS C CLASS B CLASS C
INTERNATIONAL CAPITAL
APPRECIATION 1 YEAR $77 $56 $78[A] $38[A] $28 $28
3 YEARS $117 $99 $115[A] $ 85 $85 $85
OVERSEAS 1 YEAR $71 $51 $7 3 [A] $33[A] $23 $23
3 YEARS $100 $84 $10 2 [A] $72 $72 $72
5 YEARS $132 $120 $14 3 [A] $123 $123 $123
10 YEARS[B] $220 $219 $23 2 $264 $232 $264
EMERGING MARKETS
INCOME 1 YEAR $61 $50 $72[A] $33[A] $22 $23
3 YEARS $90 $8 0 $97[A] $70 $67 $70
5 YEARS $120 $11 3 $135[A] $120 $115 $120
10 YEARS[B] $207 $20 7 $220 $258 $220 $258
</TABLE>
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES AFTER
SEVEN YEARS.
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED EXPENSES OR RETURNS, ALL OF WHICH
MAY VARY.
FMR has voluntarily agreed to reimburse Class A, Class T, Class B, and
Class C of each fund to the extent that total operating expenses, as a
percentage of their respective average net assets, exceed the
following rates:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A EFFECTIVE CLASS T EFFECTIVE CLASS B EFFECTIVE CLASS C EFFECTIVE
DATE DATE DATE DATE
INTERNATIONAL
CAPITAL
APPRECIATION 2.00 % 11/1/97 2.25 % 11/1/97 2.75 % 11/1/97 2.75 % 11/1/97
OVERSEAS 1.55% 11/1/97 1.80% 11/1/97 2.30 % 11/1/97 2.30 % 11/1/97
EMERGING
MARKETS
INCOME 1.40% 8/30/96 1.50% 3/10/94 2.15% 1/1/96 2.25 % 11/1/97
</TABLE>
If these agreements were not in effect, other expenses and total
operating expenses, as a percentage of average net assets, would have
been the following amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER EXPENSES TOTAL OPERATING EXPENSES
CLASS A CLASS T CLASS B CLASS C[A] CLASS A CLASS T CLASS B CLASS C[A]
INTERNATIONAL
CAPITAL
APPRECIATION[A] 1.36% (DAGGER) 1.17% 1.14 % 2.36% (DAGGER) 2.92% 2.89 %
OVERSEAS (DAGGER) (DAGGER) 0.69 % 0.95 % (DAGGER) (DAGGER) 2.37% 2.72 %
EMERGING MARKETS
INCOME 3.84 % (DAGGER) 0.65% 1.73 % 4.69 % (DAGGER) 2.2 4% 3.43 %
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
(dagger) TOTAL OPERATING EXPENSES WERE LESS THAN THE VOLUNTARY EXPENSE
CAPS SHOWN IN THE FIRST TABLE ABOVE.
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, and extraordinary expenses.
FINANCIAL HIGHLIGHTS
The financial highlights tables for Overseas and Emerging Markets
Income contain annual information which has been audited by Price
Waterhouse LLP (Overseas) or Coopers & Lybrand L.L.P.
(Emerging Markets Income), independent accountants. The funds'
financial highlights, financial statements, and reports of the
auditors are included in each fund's Annual Report, and are
incorporated by reference into (are legally a part of) the funds' SAI.
Contact FDC or your investment professional for a free copy of an
Annual Report or the SAI. Each class of International Capital
Appreciation is expected to commence operations on or about November
3 , 1997. Class C of Overseas and Emerging Markets Income is
expected to commence operations on or about November 3 , 1997.
OVERSEAS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
1. YEAR ENDED OCTOBER 31
2.SELECTED PER-SHARE DATA AND RATIOSD 1997 1996G
3.NET ASSET VALUE, BEGINNING OF PERIOD $ 15.29 $ 14.98
4.INCOME FROM INVESTMENT OPERATIONS
5. NET INVESTMENT INCOME .04 .04
6. NET REALIZED AND UNREALIZED GAIN (LOSS) 1.40 .27
7. TOTAL FROM INVESTMENT OPERATIONS 1.44 .31
8.LESS DISTRIBUTIONS
9. FROM NET INVESTMENT INCOME (.25) --
10. FROM NET REALIZED GAIN (.63) --
11. TOTAL DISTRIBUTIONS (.88) --
12.NET ASSET VALUE, END OF PERIOD $ 15.85 $ 15.29
13.TOTAL RETURNB,C 9.75% 2.07%
14.NET ASSETS, END OF PERIOD (000 OMITTED) $ 2,170 $ 637
15.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.89%A,J 1.16%A,J
16.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE
REDUCTIONS 1.88%A,K 1.16%A
17.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .57%A 1.74%A
18.PORTFOLIO TURNOVER 81%A 82%
19.AVERAGE COMMISSION RATE $ .0206 $ .0133
OVERSEAS - CLASS T
20. YEARS ENDED OCTOBER 31
21.SELECTED PER-SHARE DATA AND
RATIOS 1997N 1996 1995 1994I 1993 1992 1991 1990F
22.NET ASSET VALUE, BEGINNING OF
PERIOD $ 15.30 $ 13.92 $ 14.06 $ 12.93 $ 9.07 $ 9.78 $ 9.55 $ 10.00
23.INCOME FROM INVESTMENT OPERATIONS
24. NET INVESTMENT
INCOME .04D .19D,E .07 .01 .03 .05 .14 .05
25. NET REALIZED AND UNREALIZED GAIN (LOSS)
1.41 1.29 (.11) 1.14 3.93 (.62) .17 (.50)
26. TOTAL FROM INVESTMENT OPERATIONS
1.45 1.48 (.04) 1.15 3.96 (.57) .31 (.45)
27.LESS DISTRIBUTIONS
28. FROM NET INVESTMENT INCOME
(.16) (.09) -- -- (.07) (.14) (.07) --
29. FROM NET REALIZED GAIN
(.63) (.01) (.02) (.02) (.03)M -- (.01)M --
30. IN EXCESS OF NET REALIZED GAIN
-- -- (.08) -- -- -- -- --
31. TOTAL DISTRIBUTIONS (.79) (.10) (.10) (.02) (.10) (.14) (.08) --
32.NET ASSET VALUE,
END OF PERIOD $ 15.96 $ 15.30 $ 13.92 $ 14.06 $ 12.93 $ 9.07 $ 9.78 $ 9.55
33.TOTAL RETURNB,C 9.78% 10.69% (.25)% 8.91% 44.13% (5.88)% 3.25% (4.50)%
34.NET ASSETS, END OF PERIOD (000 OMITTED)
$ 1,082,381 $ 995,004 $ 741,928 $ 653,774 $ 221,370 $ 18,652 $ 19,091 $ 18,161
35.RATIO OF EXPENSES TO AVERAGE NET ASSETS
1.65%A 1.61% 1.90% 2.12% 2.38% 2.64% 2.85% 3.07%A,H
36.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS
1.64%A,K 1.60%K 1.90% 2.12% 2.38% 2.64% 2.85% 3.07%A
37.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS
.56%A 1.30% 1.01% .05% (.18)% .48% 1.48% 1.45%A
38.PORTFOLIO TURNOVER
81%A 82% 47% 34% 42% 168% 226% 137%A
39.AVERAGE COMMISSION RATE L $ .0206 $ .0133
</TABLE>
AANNUALIZED
BTHE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
CTOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
DNET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
EINVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
FFOR THE PERIOD APRIL 23, 1990 (COMMENCEMENT OF OPERATIONS) TO OCTOBER
31, 1990.
GFOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
HLIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
IEFFECTIVE NOVEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION
93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION
OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY
INVESTMENT COMPANIES." AS A RESULT, NET INVESTMENT INCOME PER SHARE
MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO TAX
DIFFERENCES.
JFMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
KFMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
LFOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
MINCLUDES AMOUNTS DISTRIBUTED FROM NET REALIZED GAINS ON FOREIGN
CURRENCY RELATED TRANSACTIONS TAXABLE AS ORDINARY INCOME.
NSIX MONTHS ENDED APRIL 30,1997 (UNAUDITED)
OVERSEAS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
40. YEARS ENDED OCTOBER 31
41.SELECTED PER-SHARE DATA AND RATIOS 1997J 1996 1995E
42.NET ASSET VALUE, BEGINNING OF PERIOD $ 15.06 $ 13.92 $ 13.89
43.INCOME FROM INVESTMENT OPERATIONS
44. NET INVESTMENT INCOME (LOSS) .00F .08F,G .01
45. NET REALIZED AND UNREALIZED GAIN (LOSS) 1.39 1.26 .02
46. TOTAL FROM INVESTMENT OPERATIONS 1.39 1.34 .03
47.LESS DISTRIBUTIONS
48. FROM NET INVESTMENT INCOME (.12) (.19) --
49. FROM NET REALIZED GAIN (.63) (.01) --
50. TOTAL DISTRIBUTIONS (.75) (.20) --
51.NET ASSET VALUE, END OF PERIOD $ 15.70 $ 15.06 $ 13.92
52.TOTAL RETURNB,C 9.51% 9.73% .22%
53.NET ASSETS, END OF PERIOD (000 OMITTED) $ 26,135 $ 18,668 $ 2,999
54.RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.33%A 2.37% 1.97%A,D
55.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS 2.32%A,H 2.37% 1.97%A
56.RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE
NET ASSETS (.06)%A .53% .94%A
57.PORTFOLIO TURNOVER 81%A 82% 47%
58.AVERAGE COMMISSION RATEI $ .0206 $ .0133
</TABLE>
AANNUALIZED
BTHE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
CTOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
DFMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
EFOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF CLASS B SHARES)
TO OCTOBER 31, 1995.
FNET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
GINVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
HFMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
IFOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECURTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
JSIX MONTHS ENDED APRIL 30,1997 (UNAUDITED)
EMERGING MARKETS INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C>
59. YEAR ENDED DECEMBER 31
60.SELECTED PER-SHARE DATA AND RATIOSF 1997I 1996D
61.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.720 $ 10.520
62.INCOME FROM INVESTMENT OPERATIONS
63. NET INVESTMENT INCOME .569 .274
64. NET REALIZED AND UNREALIZED GAIN (LOSS) .914 1.574
65. TOTAL FROM INVESTMENT OPERATIONS 1.483 1.848
66.LESS DISTRIBUTIONS
67. FROM NET INVESTMENT INCOME (.373) (.238)
68. FROM NET REALIZED GAIN (.190) (.410)
69. TOTAL DISTRIBUTIONS (.563) (.648)
70.NET ASSET VALUE, END OF PERIOD $ 12.640 $ 11.720
71.TOTAL RETURNB,C 12.97% 17.71%
72.NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,172 $ 478
73.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.40%A,G 1.40%A,G
74.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS 1.38%A,H 1.40%A
75.RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 9.54%A 7.31%A
76.PORTFOLIO TURNOVER 482%A 410%
</TABLE>
EMERGING MARKETS INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
77. YEARS ENDED DECEMBER 31
78.SELECTED PER-SHARE DATA AND
RATIOS 1997I 1996 1995 1994E
79.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.710 $ 9.280 $ 9.520 $ 10.000
80.INCOME FROM INVESTMENT OPERATIONS
81. NET INVESTMENT INCOME .374F .758F .860 .356
82. NET REALIZED AND UNREALIZED GAIN
(LOSS) 1.119 2.832 (.323) (.073)
83. TOTAL FROM INVESTMENT OPERATIONS 1.493 3.590 .537 .283
84.LESS DISTRIBUTIONS
85. FROM NET INVESTMENT INCOME (.373) (.750) (.777) (.503)
86. FROM NET REALIZED GAIN (.190) (.410) -- (.260)
87. TOTAL DISTRIBUTIONS (.563) (1.160) (.777) (.763)
88.NET ASSET VALUE, END OF PERIOD $ 12.640 $ 11.710 $ 9.280 $ 9.520
89.TOTAL RETURNB,C 13.07% 40.41% 6.99% 2.47%
90.NET ASSETS, END OF PERIOD (000 OMITTED)$ 96,484 $ 78,861 $ 36,205 $ 30,029
91.RATIO OF EXPENSES TO AVERAGE NET
ASSETS 1.47% 1.49% 1.50% 1.50%,
92.RATIO OF EXPENSES TO AVERAGE NET
ASSETS AFTER EXPENSE REDUCTIONS 1.45%A,H 1.48%H 1.50% 1.50%A
93.RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 6.27%A 7.23% 9.32% 6.60%A
94.PORTFOLIO TURNOVER 482%A 410% 305% 354%A
</TABLE>
AANNUALIZED
BTHE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
CTOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
DFOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO DECEMBER 31, 1996.
EFOR THE PERIOD MARCH 10, 1994 (COMMENCEMENT OF OPERATIONS ) TO
DECEMBER 31, 1994.
FNET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
GFMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
HFMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
ISIX MONTHS ENDED JUNE 30,1997 (UNAUDITED)
EMERGING MARKETS INCOME - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
95. YEARS ENDED DECEMBER 31
96.SELECTED PER-SHARE DATA AND
RATIOS 1997H 1996 1995 1994D
97.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.750E $ 9.300E $ 9.520 $ 9.700
98.INCOME FROM INVESTMENT OPERATIONS
99. NET INVESTMENT INCOME .359 .686 .835 .167
100. NET REALIZED AND UNREALIZED GAIN
(LOSS) 1.092 2.853 (.342) .227
101. TOTAL FROM INVESTMENT OPERATIONS 1.451 3.539 .493 .394
102.LESS DISTRIBUTIONS
103. FROM NET INVESTMENT INCOME (.331) (.679) (.713) (.314)
104. FROM NET REALIZED GAIN (.190) (.410) -- (.260)
105. TOTAL DISTRIBUTIONS (.521) (1.089) (.713) (.574)
106.NET ASSET VALUE, END OF PERIOD $ 12.680 $ 11.750 $ 9.300 $ 9.520
107.TOTAL RETURNB,C 12.63% 39.61% 6.38% 3.67%
108.NET ASSETS, END OF PERIOD (000
OMITTED) $ 23,169 $ 17,746 $ 9,486 $ 5,034
109.RATIO OF EXPENSES TO AVERAGE NET
ASSETS 2.15%A,F 2.15%F 2.25%F 2.25%A,F
110.RATIO OF EXPENSES TO AVERAGE NET
ASSETS AFTER EXPENSE REDUCTIONS 2.14%A,F 2.15% 2.25% 2.25%A
111.RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 5.99%A 6.56% 8.48% 5.86%A
112.PORTFOLIO TURNOVER 482%A 410% 305% 354%A
</TABLE>
AANNUALIZED
BTHE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
CTOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
DFOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B SHARES)
TO DECEMBER 31, 1994.
ENET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
FFMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
GFMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
HSIX MONTHS ENDED JUNE 30,1997 (UNAUDITED)
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or
YIELD.
For Overseas, the fiscal year runs from November 1 to October 31. For
Emerging Markets Income, the fiscal year runs from January 1 to
December 31. The tables below show the performance of each class of
Overseas and Emerging Markets Income over past fiscal periods ended
April 30, 1997 or June 30, 1997, as indicated. The charts in Appendix
B, beginning on page , present calendar year performance for
each class of Overseas and Emerging Markets Income compared to
different measures, including a competitive funds average.
Performance history will be available for each class of International
Capital Appreciation after the fund has been in operation for six
months.
CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN[D] CUMULATIVE TOTAL RETURN[D]
PAST 1 YEAR PAST 5 YEARS LIFE OF LIFE OF
FUND FUND
(DAGGER) PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS (DAGGER)
OVERSEAS - CLASS
A[B] 9. 90 % 10.77% 8.41% 9.75% 9. 90 % 66.75% 76.42%
OVERSEAS - CLASS A (LOAD
ADJ.)[A][B] 3.58% 9.46% 7.50% 3.4 4 % 3.58% 57.16% 66.27%
EMERGING MARKETS INCOME -
CLASS A[C] 40.11% N/A 18.19% 12.97% 40.11% N/A 73.92%
EMERGING MARKETS INCOME -
CLASS A 33.45% N/A 16.46% 7.61% 33.45% N/A 65.66%
(LOAD ADJ.)[A][C]
</TABLE>
CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN[D] CUMULATIVE TOTAL RETURN[D]
PAST 1 YEAR PAST 5 YEARS LIFE OF LIFE OF
FUND FUND
(DAGGER) PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS (DAGGER)
OVERSEAS - CLASS
T[B] 9.99% 10.79% 8.43% 9.78% 9.9 9 % 66.90% 76.57%
OVERSEAS - CLASS T (LOAD
ADJ.)[A][B] 6.14% 10.00% 7.88% 5.94% 6.14% 61.06% 70.39%
EMERGING MARKETS INCOME -
CLASS T[C] 40.21% N/A 18.21% 13.07% 40.21% N/A 74.05%
EMERGING MARKETS INCOME -
CLASS T 35.31% N/A 16.9 5 % 9.11% 35.31% N/A 67.96%
(LOAD ADJ.)[A][C]
</TABLE>
CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN[D] CUMULATIVE TOTAL RETURN[D]
PAST 1 YEAR PAST 5 YEARS LIFE OF LIFE OF
FUND FUND
(DAGGER) PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS (DAGGER)
OVERSEAS - CLASS
B[B] 9.22% 10.54% 8.26% 9.51% 9.22% 65.04% 74.61%
OVERSEAS - CLASS B (LOAD
ADJ.)[A][B] 4.22% 10.27% 8.26% 4.51% 4.22% 63.04% 74.61%
EMERGING MARKETS INCOME -
CLASS B[C] 39.36% N/A 17.49% 12.63% 39.36% N/A 70.53%
EMERGING MARKETS INCOME -
CLASS B 34.36% N/A 16.86% 7.63% 34.36% N/A 67.53%
(LOAD ADJ.)[A][C]
</TABLE>
CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN[D] CUMULATIVE TOTAL RETURN[D]
PAST 1 YEAR PAST 5 YEARS LIFE OF LIFE OF
FUND FUND
(DAGGER) PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS (DAGGER)
OVERSEAS - CLASS
C[B] 9.22 % 10.54 % 8.26% 9.51 % 9.22 % 65.04 % 74.61 %
OVERSEAS - CLASS C (LOAD
ADJ.)[A][B] 8.22 % 10.54 % 8.26% 8.51 % 8.22 % 65.04 % 74.61 %
EMERGING MARKETS INCOME - CLASS
C[C] 39.36 % N/A 17.49% 12.63 % 39.36 % N/A 70.53 %
EMERGING MARKETS INCOME -
CLASS C 38.36 % N/A 17.49% 11.63 % 38.36 % N/A 70.53 %
(LOAD ADJ.)[A][C]
</TABLE>
(dagger) LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF
OPERATIONS (APRIL 23, 1990 FOR OVERSEAS AND MARCH 10, 1994 FOR
EMERGING MARKETS INCOME).
[A] LOAD ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING CLASS A'S
MAXIMUM FRONT-END SALES CHARGE: 5.75% (OVERSEAS) AND 4.75% (EMERGING
MARKETS INCOME).
LOAD ADJUSTED RETURNS INCLUDE THE EFFECT OF PAYING CLASS T'S MAXIMUM
3.50% FRONT-END SALES CHARGE.
CLASS B'S AND CLASS C'S CDSC INCLUDED IN THE TOTAL RETURN
FIGURES ARE CALCULATED PURSUANT TO THE CDSC INFORMATION FOUND
ON PAGE .
[B] PERIOD ENDED APRIL 30, 1997
[C] PERIOD ENDED JUNE 30, 1997
[D] INITIAL OFFERING OF CLASS A OF OVERSEAS AND EMERGING MARKETS
INCOME TOOK PLACE ON SEPTEMBER 3, 1996. CLASS A RETURNS PRIOR TO
SEPTEMBER 3, 1996 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.50% (0.65% PRIOR TO JANUARY 1, 1996) FOR OVERSEAS AND 0.25% FOR
EMERGING MARKETS INCOME. IF CLASS A'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996 WOULD HAVE BEEN HIGHER.
INITIAL OFFERING OF CLASS B OF OVERSEAS TOOK PLACE ON JULY 3,
1995. CLASS B RETURNS PRIOR TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.65%. IF CLASS B'S 12B-1 FEE HAD BEEN
REFLECTED, TOTAL RETURNS PRIOR TO JULY 3, 1995 WOULD HAVE BEEN
LOWER.
INITIAL OFFERING OF CLASS B OF EMERGING MARKETS INCOME TOOK PLACE
ON JUNE 30, 1994. CLASS B RETURNS PRIOR TO JUNE 30, 1994 ARE THOSE OF
CLASS T WHICH REFLECT A 12B-1 FEE OF 0.25%. IF CLASS B'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN
LOWER.
CLASS C OF OVERSEAS IS EXPECTED TO COMMENCE OPERATIONS ON OR ABOUT
NOVEMBER 3, 1997. CLASS C RETURNS FROM APRIL 30, 1997 THROUGH JULY 3,
1995 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%. CLASS C
RETURNS PRIOR TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH REFLECT A
12B-1 FEE OF 0.65%. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL
RETURNS PRIOR TO JULY 3, 1995 WOULD HAVE BEEN LOWER.
CLASS C OF EMERGING MARKETS INCOME IS EXPECTED TO COMMENCE
OPERATIONS ON OR ABOUT NOVEMBER 3, 1997. CLASS C RETURNS FROM JUNE 30,
1997 THROUGH JUNE 30, 1994 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1
FEE OF 0.90% (1.00% PRIOR TO JANUARY 1, 1996). CLASS C RETURNS PRIOR
TO JUNE 30, 1994 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.25%. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS FROM
JUNE 30, 1997 THROUGH JANUARY 1, 1996 AND PRIOR TO JUNE 30, 1994 WOULD
HAVE BEEN LOWER.
The exclusion of any applicable sales charge from a performance
calculation produces a higher return.
If FMR had not reimbursed certain class expenses during these periods,
total returns would have been lower.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
Average annual and cumulative total returns usually will include the
effect of paying the maximum applicable sales charge.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields
are calculated according to a standard that is required for all stock
and bond funds. Because this differs from other accounting methods,
the quoted yield may not equal the income actually paid to
shareholders.
This difference may be significant for a fund whose investments are
denominated in foreign currencies.
In calculating yield, a fund may from time to time use a security's
coupon rate instead of its yield to maturity in order to reflect the
risk premium on that security. This practice will have the effect of
reducing a fund's yield.
THE COMPETITIVE FUNDS AVERAGES are the Lipper International Funds
Average and the Lipper Emerging Market s Debt Funds Average for
Overseas and Emerging Markets Income, respectively. As of the
applicable semi-annual period end, the averages reflected the
performance of 396 and 23 mutual funds with similar
investment objectives, respectively. These averages, published by
Lipper Analytical Services, Inc., exclude the effect of sales loads.
J.P. MORGAN EMERGING MARKETS BOND INDEX PLUS is a market
capitalization weighted total return index of U.S. dollar- and other
external currency-denominated Brady bonds, loans, Eurobonds, and local
market debt instruments traded in emerging markets.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST
(EAFE(registered trademark)) INDEX is a market capitalization
weighted, unmanaged index of over 1,000 foreign stocks.
Unlike each class's returns, the total returns of each comparative
index do not include the effect of any brokerage commissions,
transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
Each class of Overseas and International Capital Appreciation may
quote its adjusted net asset value including all distributions paid.
This value may be averaged over specified periods and may be used to
calculate a class's moving average.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please contact your
investment professional or, if you are investing through a
broker-dealer or insurance representative, call 1-800-522-7297 or, if
you are investing through a bank representative, call
1-800-843-3001.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. International Capital
Appreciation and Overseas are diversified funds, and Emerging Markets
Income is a non-diversified fund, of Fidelity Advisor Series VIII, an
open-end management investment company organized as a Massachusetts
business trust on September 22, 1983.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
funds' activities, review contractual arrangements with companies that
provide services to the funds, and review the funds' performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials in
advance, including a voting card and information about the proposals
to be voted on. The number of votes you are entitled to is based upon
the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust,
respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business
address at 82 Devonshire Street, Boston, Massachusetts 02109. It
includes a number of different subsidiaries and divisions which
provide a variety of financial services and products. The funds employ
various Fidelity companies to perform activities required for their
operation.
The funds are managed by FMR, which handles each fund's business
affairs and, with the assistance of foreign affiliates, chooses each
fund's investments.
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England serves as a sub-adviser for each fund.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan serves as a sub-adviser for each fund.
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda serves as a sub-adviser for each fund.
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIA (U.K.) L), in London, England serves as a sub-adviser
for each fund.
(small solid bullet) Fidelity Investment Japan Limited (FIJ), in
Tokyo, Japan serves as a sub-adviser for each fund.
As of September 30, 1997, FMR advised funds having approximately 33
million shareholder accounts with a total value of more than
$ 521 billion.
John Carlson is Vice President and manager of Advisor Emerging Markets
Income, which he has managed since June 1995. He also manages several
other Fidelity funds. Prior to joining Fidelity in 1995, Mr. Carlson
was Executive Director of emerging markets at Lehman Brothers
International from 1992 through 1995.
Richard Mace, Jr. is Vice President and manager of Advisor Overseas,
which he has managed since March 1996. He also manages several other
Fidelity funds and serves as a group leader of the international
funds. Since joining Fidelity in 1987, Mr. Mace has worked as a
manager and analyst.
Kevin McCarey is Vice President and manager of Advisor
International Capital Appreciation, which he has managed since
inception. He also manages another Fidelity fund. Since joining
Fidelity in 1986, Mr. McCarey has worked as an analyst and
manager.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services.
Fidelity Investments Institutional Operations Company, Inc. (FIIOC)
performs transfer agent servicing functions for each class of the
funds.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant
owners of a class of shares of common stock representing approximately
49% of the voting power of FMR Corp. Under the Investment Company Act
of 1940 (the 1940 Act), control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company; therefore, the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to FMR
Corp.
Fidelity International Limited (FIL), is the parent company of FIIA,
FIJ, and FIIA (U.K.) L. The Johnson family group also owns, directly
or indirectly, more than 25% of the voting common stock of FIL.
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out a fund's transactions, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
International funds offer the potential for diversification by
spreading investments among securities of both developed and emerging
markets, different countries and geographic regions.
FMR determines where an issuer is located by looking at such
factors as its country of organization, the primary trading market for
its securities, and the location of its assets, personnel, sales, and
earnings.
The value of the funds' domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies and general market and economic
conditions. Bond values fluctuate based on changes in interest rates,
market conditions, other economic and political news, and on the
bonds' quality and maturity. In general, bond prices rise when
interest rates fall, and fall when interest rates rise. This effect is
usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk. Investments
in foreign securities may involve risks in addition to those of U.S.
investments, including increased political and economic risk, as well
as exposure to currency fluctuations.
International funds have increased economic and political risks as
they are exposed to events and factors in the various world markets.
These risks may be greater for funds that invest in emerging markets.
Also, because many of the funds' investments are denominated in
foreign currencies, changes in the value of foreign currencies can
significantly affect a fund's share price. FMR may use a variety of
investment techniques to either increase or decrease a fund's
investment exposure to any currency.
FMR may use various investment techniques to hedge a portion of the
funds' risks, but there is no guarantee that these strategies will
work as FMR intends. When you sell your shares, they may be worth more
or less than what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. The fund may invest in short-term debt securities and money
market instruments for cash management purposes. Each fund also
reserves the right to invest without limitation in preferred stocks
and investment-grade debt instruments for temporary, defensive
purposes.
INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation by investing in securities of foreign issuers. FMR
normally invests at least 65% of the fund's total assets in these
securities. The fund may also invest in U.S. issuers.
The fund normally diversifies its investments across different
countries and regions. In allocating the fund's assets across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
The fund may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The fund, however, expects to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
In general, International Capital Appreciation Fund is more
aggressive than Overseas Fund and may have greater investments in
securities of emerging market issuers.
OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities. FMR normally invests at least 65%
of the fund's total assets in these securities. The fund may also
invest in U.S. issuers.
The fund normally diversifies its investments across different
countries and regions. In allocating the fund's assets across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
The fund may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The fund, however, expects to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
EMERGING MARKETS INCOME FUND seeks a high level of current
income by investing primarily in debt securities and other instruments
of issuers in emerging markets. As a secondary objective, the fund
seeks capital appreciation.
FMR normally invests at least 65% of the fund's total assets in
debt securities and other instruments of emerging market issuers.
Countries with emerging markets include countries (i) that have an
emerging stock market, as defined by the International Finance
Corporation, (ii) with low- to middle-income economies, according to
the World Bank, or (iii) that are listed in World Bank publications as
"developing."
The fund emphasizes countries with relatively low gross national
product per capita compared to the world's major economies, and with
the potential for rapid economic growth. The fund's strategy currently
tends to lead to investments in Latin America and, to a lesser extent,
Asia, Africa, and emerging European nations. There are relatively few
issuers in these markets, which may result in the fund being highly
concentrated in a small number of government issuers. There is no
limit on investments in any one region, country, or currency, although
the fund normally invests in at least three different countries.
The fund may also invest a portion of its assets in common and
preferred stocks of emerging markets issuers, debt securities of
non-emerging market foreign issuers, and lower-quality debt securities
of U.S. issuers. Although the fund may invest up to 35% of its total
assets in these securities, FMR does not currently anticipate that
these investments will exceed approximately 20% of the fund's total
assets. Though common and preferred stocks and convertible securities
present the possibility for significant capital appreciation over the
long-term, they may fluctuate dramatically in the short-term and
entail a high degree of risk.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in
the funds' SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a fund's
investment objective and policies and that doing so will help a fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
your investment professional.
EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's
financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of total assets, each of
International Capital Appreciation and Overseas may not purchase more
than 10% of the outstanding voting securities of a single issuer. This
limitation does not apply to securities of other investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
Lower-quality debt securities are considered to have speculative
characteristics, and involve greater risk of default or price changes
due to changes in the issuer's creditworthiness, or they may already
be in default. The market prices of these securities may fluctuate
more than higher-quality securities and may decline significantly in
periods of general or regional economic difficulty. Lower-quality
securities may be thinly traded, making them difficult to sell
promptly at an acceptable price. Adverse publicity and changing
investor perceptions may affect the ability to obtain prices for, or
to sell these securities.
The tables on pages and provide a summary of ratings assigned to
debt holdings (not including money market instruments) in the funds'
portfolios. These figures are dollar-weighted averages of month-end
portfolio holdings during the fiscal year ended 1996, and are
presented as a percentage of total security investments. These
percentages are historical and do not necessarily indicate a fund's
current or future debt holdings.
EMERGING MARKETS INCOME
FISCAL YEAR ENDED DECEMBER 31, 1996 DEBT HOLDINGS, BY RATING
MOODY'S
INVESTORS SERVICE STANDARD & POOR'S
(AS A % OF INVESTMENTS) (AS A % OF INVESTMENTS)
RATING AVERAGE OF RATING AVERAGE OF
TOTAL INVESTMENTS TOTAL INVESTMENTS
INVESTMENT GRADE
HIGHEST QUALITY AAA -- AAA 0.30%
HIGH QUALITY AA -- AA 0.34%
UPPER-MEDIUM GRADE A 0.04% A --
MEDIUM GRADE BAA 0.83% BBB 2.50%
LOWER QUALITY
MODERATELY SPECULATIVE BA 20.77% BB 26.19%
SPECULATIVE B 27.99% B 26.22%
HIGHLY SPECULATIVE CAA CCC
POOR QUALITY CA -- CC --
LOWEST QUALITY, NO
INTEREST C C
IN DEFAULT, IN ARREARS -- D --
REFER TO THE APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUND DOES NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH ITS DEBT QUALITY POLICY. SECURITIES NOT
RATED BY MOODY'S OR S&P AMOUNTED TO 35.35% OF
THE FUND'S INVESTMENTS. THIS PERCENTAGE MAY INCLUDE SECURITIES RATED
BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS, AS
WELL AS UNRATED SECURITIES. UNRATED LOWER-QUALITY SECURITIES
AMOUNTED TO 35.35% OF THE FUND'S INVESTMENTS.
FOR FOREIGN GOVERNMENT SECURITIES NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE
RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
OVERSEAS
FISCAL YEAR ENDED OCTOBER 31, 1996 DEBT HOLDINGS, BY RATING
MOODY'S
INVESTORS SERVICE STANDARD & POOR'S
(AS A % OF INVESTMENTS) (AS A % OF INVESTMENTS)
RATING AVERAGE OF RATING AVERAGE OF
TOTAL INVESTMENTS TOTAL INVESTMENTS
INVESTMENT GRADE
HIGHEST QUALITY AAA -- AAA --
HIGH QUALITY AA 0.18% AA --
UPPER-MEDIUM GRADE A -- A 0.18%
MEDIUM GRADE BAA -- BBB --
LOWER QUALITY
MODERATELY SPECULATIVE BA -- BB 0.04%
SPECULATIVE B 0.06% B --
HIGHLY SPECULATIVE CAA CCC
POOR QUALITY CA -- CC --
LOWEST QUALITY, NO
INTEREST C C
IN DEFAULT, IN ARREARS -- D --
REFER TO THE FUND'S SAI FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUND DOES NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH ITS DEBT QUALITY POLICY. SECURITIES NOT
RATED BY MOODY'S OR S&P AMOUNTED TO 0.00% OF
THE FUND'S INVESTMENTS. THIS PERCENTAGE MAY INCLUDE SECURITIES RATED
BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS, AS
WELL AS UNRATED SECURITIES. UNRATED LOWER-QUALITY SECURITIES
AMOUNTED TO 0.00% OF THE FUND'S INVESTMENTS.
FOR FOREIGN GOVERNMENT SECURITIES NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE
RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
RESTRICTIONS: For International Capital Appreciation and Overseas,
purchase of a debt security is consistent with a fund's debt quality
policy if it is rated at or above the stated level by Moody's
Investors Service or rated in the equivalent categories by Standard &
Poor's, or is unrated but judged to be of equivalent quality by FMR.
Each of International Capital Appreciation and Overseas currently
intends to limit its investments in lower than Baa-quality debt
securities to less than 35% of its assets.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of
the U.S. Government. Not all U.S. Government securities are backed by
the full faith and credit of the United States. For example, U.S.
Government securities such as those issued by Fannie Mae are supported
by the instrumentality's right to borrow money from the U.S. Treasury
under certain circumstances. Other U.S. Government securities, such as
those issued by the Federal Farm Credit Banks Funding Corporation, are
supported only by the credit of the entity that issued them.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve additional risks and considerations. These
include risks relating to political or economic conditions in foreign
countries, fluctuations in foreign currencies, withholding or other
taxes, operational risks, increased regulatory burdens, and the
potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile than U.S.
investments.
EXPOSURE TO EMERGING MARKETS. Investing in emerging markets involves
risks in addition to those generally associated with foreign
investing. The extent of economic development, political stability,
and market depth varies widely in comparison to more developed
markets. Emerging market economies may be subject to greater social,
economic, and political uncertainties or may be based on only a few
industries. All of these factors can make emerging market securities
more volatile and potentially less liquid than domestic securities.
AMERICAN DEPOSITARY RECEIPTS AND EUROPEAN DEPOSITARY RECEIPTS (ADRS
AND EDRS) are certificates evidencing ownership of shares of a
foreign-based issuer held in trust by a bank or similar financial
institution. Designed for use in U.S. and European securities markets,
respectively, ADRs and EDRs are alternatives to the purchase of the
underlying securities in their national markets and currencies.
ASSET-BACKED SECURITIES include interests in pools of debt securities,
commercial or consumer loans, or other receivables. The value of these
securities depends on many factors, including changes in interest
rates, the availability of information concerning the pool and its
structure, the credit quality of the underlying assets, the market's
perception of the servicer of the pool, and any credit enhancement
provided. In addition, these securities may be subject to prepayment
risk.
MORTGAGE SECURITIES include interests in pools of commercial or
residential mortgages, and may include complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed
securities. Mortgage securities may be issued by agencies or
instrumentalities of the U.S. Government or by private entities.
The price of a mortgage security may be significantly affected by
changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other
factors difficult to predict, making their price highly volatile.
Also, mortgage securities, especially stripped mortgage-backed
securities, are subject to prepayment risk. Securities subject to
prepayment risk generally offer less potential for gains during a
declining interest rate environment, and similar or greater potential
for loss in a rising interest rate environment.
STRIPPED SECURITIES are the separate income or principal components of
a debt security. The risks associated with stripped securities are
similar to those of other debt securities, although stripped
securities may be more volatile, and the value of certain types of
stripped securities may move in the same direction as interest rates.
U.S. Treasury securities that have been stripped by a Federal Reserve
Bank are obligations issued by the U.S. Treasury.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a
security at one price and simultaneously agrees to sell it back at a
higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S.
repurchase agreements, and may be denominated in foreign currencies.
They also may involve greater risk of loss if the counterparty
defaults. Some counterparties in these transactions may be less
creditworthy than those in U.S. markets.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors
such as changes in real estate values and property taxes, interest
rates, cash flow of underlying real estate assets, overbuilding, and
the management skill and creditworthiness of the issuer. Real
estate-related instruments may also be affected by tax and regulatory
requirements, such as those relating to the environment.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap
agreements, purchasing indexed securities, and selling securities
short.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other
borrower. They have additional risks beyond conventional debt
securities because they may entail less legal protection for a fund,
or there may be a requirement that the fund supply additional cash to
a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more
than 15% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading
practices in which payment and delivery for the security take place at
a later date than is customary for that type of security. The market
value of the security could change during this period.
WARRANTS are instruments which entitle the holder to buy underlying
equity securities at a specific price for a specific period of time. A
warrant tends to be more volatile than its underlying securities and
ceases to have value if it is not exercised prior to its expiration
date. In addition, changes in the value of a warrant do not
necessarily correspond to changes in the value of its underlying
securities.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income while maintaining a stable $1.00
share price. A major change in interest rates or a default on the
money market fund's investments could cause its share price to change.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one
industry. Economic, business, or political changes can affect all
securities of a similar type. A fund that is not diversified may be
more sensitive to changes in the market value of a single issuer or
industry.
RESTRICTIONS: With respect to 75% of its total assets, each of
International Capital Appreciation and Overseas may not purchase a
security if, as a result, more than 5% would be invested in the
securities of any issuer. This limitation does not apply to U.S.
Government securities or to securities of other investment companies.
Emerging Markets Income is considered non-diversified. Generally, to
meet federal tax requirements at the close of each quarter, the fund
does not invest more than 25% of its total assets in any issuer and,
with respect to 50% of total assets, does not invest more than 5% of
its total assets in any issuer. These limitations do not apply to U.S.
Government securities or to securities of other investment companies.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If a fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a
delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a
fund's total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital appreciation.
OVERSEAS FUND seeks growth of capital primarily through investments in
foreign securities.
EMERGING MARKETS INCOME FUND seeks a high level of current income by
investing primarily in debt securities and other instruments of
issuers in emerging markets. As a secondary objective, the fund seeks
capital appreciation.
With respect to 75% of its total assets, each of International Capital
Appreciation and Overseas may not purchase a security if, as a result,
more than 5% would be invested in the securities of any one issuer and
may not purchase more than 10% of the outstanding voting securities of
a single issuer. These limitations do not apply to U.S. Government
securities or to securities of other investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in
that class's share price or dividends; they are neither billed
directly to shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. Each fund also pays OTHER EXPENSES,
which are explained on page .
FMR may, from time to time, agree to reimburse a fund for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a fund if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be terminated at any time without notice, can decrease a
fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee
for each of International Capital Appreciation and Emerging Markets
Income is calculated by adding a group fee rate to an individual fund
fee rate, and multiplying the result by the fund's average net assets.
For Overseas, the fee is calculated by taking a basic fee and then
applying a performance adjustment. The performance adjustment either
increases or decreases the management fee, depending on how well the
fund has performed relative to the EAFE Index.
The basic fee rate (calculated monthly) is calculated by adding a
group fee rate to an individual fund fee rate, and multiplying the
result by the fund's average net assets.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52% for
International Capital Appreciation and Overseas or 0.37% for Emerging
Markets Income, and it drops as total assets under management
increase.
The performance adjustment rate is calculated monthly by comparing
Overseas's performance to that of the EAFE Index over the most recent
36-month period. The difference is translated into a dollar amount
that is added to or subtracted from the basic fee. The maximum
annualized performance adjustment rate is (plus/minus)0.20% of the
fund's average net assets over the performance period.
For the purposes of calculating the performance adjustment for
Overseas, the fund's investment performance will be based on the
average performance of all classes of the fund weighted according to
their average assets for each month in the performance period.
The following table states the management fee rates for Overseas and
Emerging Markets Income for the fiscal year ended 1996, and the
estimated management fee rate for International Capital Appreciation.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
GROUP FEE INDIVIDUAL TOTAL MANAGEMENT
RATE FUND FEE RATE FEE RATE
INTERNATIONAL CAPITAL APPRECIATION[A] 0.30% 0.45% 0.75%
OVERSEAS[B] 0.30% 0.45% 0.68%
EMERGING MARKETS INCOME 0.14% 0.55% 0.69%
</TABLE>
[A] ESTIMATED
[B] THE BASIC FEE RATE FOR THE FISCAL YEAR ENDED 1996 WAS 0.75% FOR
OVERSEAS.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR
Far East, FIJ and FIIA. FIIA in turn has a sub-advisory agreement with
FIIA (U.K.) L. These sub-advisers are compensated for providing FMR
with investment research and advice on issuers based outside the
United States. FMR pays FMR U.K. and FMR Far East fees equal to 110%
and 105%, respectively, of the costs of providing these services. FMR
pays FIJ and FIIA a fee equal to 30% of its management fee rate
associated with investments for which the sub-adviser provided
investment advice.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to
50% of its management fee rate with respect to a fund's investments
that the sub-adviser manages on a discretionary basis. FIIA pays FIIA
(U.K.) L a fee equal to 110% of the cost of providing these services.
For the fiscal year ended 1996, FMR, on behalf of Overseas, paid FMR
U.K., FMR Far East, and FIIA fees equal to less than 0.06% of the
fund's average net assets.
OTHER EXPENSES
While the management fee is a significant component of each fund's
annual operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for each class of each fund. Fidelity Service
Company, Inc. (FSC) calculates the net asset value per share (NAV) and
dividends for each class of each fund, and maintains the general
accounting records and administers the securities lending program for
each fund. For the fiscal year ended 1996, transfer agency and pricing
and bookkeeping fees paid (as a percentage of average net assets)
amounted to the following. These amounts are before expense
reductions, if any.
TRANSFER AGENCY FEES PRICING AND
PAID BY BOOKKEEPING FEES
PAID BY
CLASS T CLASS B FUND
OVERSEAS 0.25% 0.32% 0.06%
EMERGING MARKETS INCOME 0.27% 0.31% 0.09%
Class A shares of each fund have adopted a DISTRIBUTION AND SERVICE
PLAN. Under the plans, Class A of each fund is authorized to pay FDC a
monthly distribution fee as compensation for its services and expenses
in connection with the distribution of Class A shares. Class A of
International Capital Appreciation, Overseas, and Emerging Markets
Income may pay FDC a distribution fee at an annual rate of 0.75%,
0.75%, and 0.40%, respectively, of its average net assets, or such
lesser amount as the Trustees may determine from time to time. Class A
of International Capital Appreciation, Overseas, and Emerging Markets
Income currently pays FDC a monthly distribution fee at an annual rate
of 0.25%, 0.25%, and 0.15%, respectively, of its average net assets
throughout the month. Class A distribution fee rates may be increased
only when the Trustees believe that it is in the best interests of
Class A shareholders to do so.
Class T shares of each fund have adopted a DISTRIBUTION AND SERVICE
PLAN. Under the plans, Class T of each fund is authorized to pay FDC a
monthly distribution fee as compensation for its services and expenses
in connection with the distribution of Class T shares. Class T of
International Capital Appreciation, Overseas, and Emerging Markets
Income may pay FDC a distribution fee at an annual rate of 0.75%,
0.65%, and 0.40%, respectively, of its average net assets, or such
lesser amount as the Trustees may determine from time to time. Class T
of International Capital Appreciation, Overseas, and Emerging Markets
Income currently pays FDC a monthly distribution fee at an annual rate
of 0.50%, 0.50%, and 0.25%, respectively, of its average net assets
throughout the month. Class T distribution fee rates may be increased
only when the Trustees believe that it is in the best interests of
Class T shareholders to do so.
Up to the full amount of the Class A and Class T distribution fees may
be reallowed to investment professionals, as compensation for their
services in connection with the distribution of Class A and Class T
shares and for providing support services to Class A and Class T
shareholders, based upon the level of such services provided. These
services may include, without limitation, answering investor inquiries
regarding the funds; providing assistance to investors in changing
dividend options, account designations, and addresses; performing
subaccounting and maintaining Class A and Class T shareholder
accounts; processing purchase and redemption transactions, including
automatic investment and redemption of investor account balances;
providing periodic statements showing an investor's account balance
and integrating other transactions into such statements; and
performing other administrative services in support of the
shareholder.
Class B shares of each fund have adopted a DISTRIBUTION AND SERVICE
PLAN. Under the plans, Class B of each fund is authorized to pay FDC a
monthly distribution fee as compensation for its services and expenses
in connection with the distribution of Class B shares. Class B of each
fund may pay FDC a distribution fee at an annual rate of 0.75% of its
average net assets, or such lesser amount as the Trustees may
determine from time to time. Class B of International Capital
Appreciation, Overseas, and Emerging Markets Income currently pays FDC
a monthly distribution fee at an annual rate of 0.75%, 0.75%, and
0.65%, respectively, of its average net assets throughout the month.
Class B distribution fee rates for Emerging Markets Income may be
increased only when the Trustees believe that it is in the best
interests of Class B shareholders to do so.
In addition, pursuant to each Class B plan, Class B of each fund pays
FDC a monthly service fee at an annual rate of 0.25% of Class B's
average net assets throughout the month. The full amount of the Class
B service fee is reallowed to investment professionals for providing
personal service to and/or maintenance of Class B shareholder
accounts.
Class C shares of each fund have adopted a DISTRIBUTION AND SERVICE
PLAN. Under the plans, Class C of each fund is authorized to pay FDC a
monthly distribution fee as compensation for its services and expenses
in connection with the distribution of Class C shares. Class C of each
fund may pay FDC a distribution fee at an annual rate of 0.75% of its
average net assets, or such lesser amount as the Trustees may
determine from time to time. Class C of each fund currently pays FDC a
monthly distribution fee at an annual rate of 0.75% of its average net
assets throughout the month. After the first year of investment, up to
the full amount of the Class C distribution fee may be reallowed to
investment professionals as compensation for their services in
connection with the distribution of Class C shares.
In addition, pursuant to each Class C plan, Class C of each fund pays
FDC a monthly service fee at an annual rate of 0.25% of Class C's
average net assets throughout the month. After the first year of
investment, the full amount of the Class C service fee is reallowed to
investment professionals for providing personal service to and/or
maintenance of Class C shareholder accounts.
The Class A, Class T, Class B, and Class C plans specifically
recognize that FMR may make payments from its management fee revenue,
past profits, or other resources to FDC for expenses incurred in
connection with the distribution of the applicable class's shares,
including payments made to investment professionals that provide
shareholder support services or engage in the sale of the applicable
class's shares. Currently, the Board of Trustees of each fund has
authorized such payments.
Each fund also pays other expenses, such as legal, audit, and
custodian fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
The portfolio turnover rate for International Capital Appreciation is
not expected to exceed 200% for its first fiscal period ending October
31, 1998. The portfolio turnover rate for Overseas and Emerging
Markets Income for the fiscal year ended 1996 was 82% and 410%,
respectively. These rates will vary from year to year. High turnover
rates increase transaction costs and may increase taxable capital
gains. FMR considers these effects when evaluating the anticipated
benefits of short-term investing.
YOUR ACCOUNT
TYPES OF ACCOUNTS
When you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of
fund shares. Read your investment professional's program materials in
conjunction with this prospectus for additional service features or
fees that may apply. Certain features of the funds, such as minimum
initial or subsequent investment amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If you are investing through a retirement account or if your
employer offers a fund through a retirement program, you may be
subject to additional fees. For more information, please refer to your
program materials, contact your employer, or call your retirement
benefits number or your investment professional directly, as
appropriate.
If you have selected Fidelity Advisor funds as an investment option
through an insurance company group pension program, please contact the
provider directly.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have
two or more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of
legal age and under 70 1/2(checkmark)(solid club) with earned income
to invest up to $2,000 per tax year. Individuals can also invest in a
spouse's IRA if the spouse has earned income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) 401(K) PLANS allow employees of corporations of all
sizes to contribute a percentage of their wages on a tax-deferred
basis. These accounts need to be established by the trustee of the
plan.
(solid bullet) MONEY PURCHASE/PROFIT SHARING PLANS (KEOGH PLANS) are
tax-deferred pension accounts designated for employees of
unincorporated businesses or for persons who are self-employed.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide
small business owners or those with self-employed income (and their
eligible employees) with many of the same advantages as a Keogh, but
with fewer administrative requirements.
(solid bullet) SIMPLE IRAS provide small business owners and those
with self-employed income (and their eligible employees) with many of
the advantages of a 401(k) plan, but with fewer administrative
requirements.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you
can set up a custodial account under the Uniform Gifts to Minors Act
(UGMA) or the Uniform Transfers to Minors Act (UTMA). Contact your
investment professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
Contact your investment professional.
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of Class A or Class T is the class's
offering price or the class's net asset value per share (NAV),
depending on whether you pay a front-end sales charge. If you pay a
front-end sales charge, your price will be Class A's or Class T's
offering price. When you buy Class A or Class T shares at the offering
price, Fidelity deducts the appropriate sales charge and invests the
rest in Class A or Class T shares of the fund. If you qualify for a
front-end sales charge waiver, your price will be Class A's or Class
T's NAV. See "Transaction Details", page , and "Sales Charge
Reductions and Waivers", page , for explanations of how and when the
sales charge and waivers apply.
For Class B and Class C, the PRICE TO BUY ONE SHARE is
the class 's NAV. Class B and Class C shares are sold without a
front-end sales charge , but may be subject to a CDSC upon
redemption. See "Transaction Details," page , f or information
on how the CDSC is calculated .
Your s hares will be purchased at the next offering price
or NAV, as applicable, calculated after your order is received and
accepted. Each class's offering price and NAV , as
applicable, are normally calculated each business day at
4:00 p.m. Eastern time.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Fidelity must receive payment within three business days after an
order for shares is placed; otherwise your purchase order may be
canceled and you could be held liable for resulting fees and/or
losses.
Share certificates are not available for Class A, Class T, Class B, or
Class C shares.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an
account application and mail it along with your check. If there is no
account application accompanying this prospectus, call your investment
professional or, if you are investing through a broker-dealer or
insurance representative, call 1-800-522-7297 or, if you are investing
through a bank representative, call 1-800-843-3001.
If you are investing through a tax-sheltered retirement plan, such as
an IRA, for the first time, you will need a special application.
Contact your investment professional for more information and a
retirement account application.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you
can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place an order and wire money into your account,
(small solid bullet) Open your account by exchanging from the same
class of another Fidelity Advisor fund or from another Fidelity fund,
or
(small solid bullet) Contact your investment professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity Advisor IRA, Rollover IRA,
SEP-IRA and Keogh accounts $500
Through regular investment plans* $1,000
TO ADD TO AN ACCOUNT $250
For Fidelity Advisor IRA, Rollover IRA,
SEP-IRA and Keogh accounts $100
Through regular investment plans* $100
MINIMUM BALANCE $1,000
For Fidelity Advisor IRA, Rollover IRA,
SEP-IRA and Keogh accounts None
*An account may be opened with a minimum of $1,000, provided that a
regular investment plan is established at the time the account is
opened. For more information about regular investment plans, please
refer to "Investor Services," page .
Investment and account minimums are waived for purchases of Class T
shares with distributions from a Fidelity Defined Trust account.
There is no minimum account balance or initial or subsequent
investment minimum for certain retirement accounts funded through
salary deduction, or accounts opened with the proceeds of
distributions from such Fidelity retirement accounts. Refer to the
program materials for details.
PURCHASE AMOUNTS OF MORE THAN $250,000 WILL NOT BE ACCEPTED FOR CLASS
B SHARES.
PURCHASE AMOUNTS OF MORE THAN $1 MILLION WILL NOT BE ACCEPTED FOR
CLASS C SHARES.
For further information on opening an account, please consult your
investment professional or refer to the account application.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE (SMALL SOLID BULLET) CONTACT YOUR INVESTMENT
PROFESSIONAL OR, IF YOU ARE INVESTING (SMALL SOLID BULLET) CONTACT YOUR INVESTMENT
PROFESSIONAL OR, IF YOU ARE INVESTING
YOUR
INVESTMENT
PROFESSIONAL THROUGH A BROKER-DEALER OR INSURANCE REPRESENTATIVE,
CALL THROUGH A BROKER-DEALER OR INSURANCE REPRESENTATIVE,
CALL
1-800-522-7297. IF YOU ARE INVESTING THROUGH A BANK 1-800-522-7297. IF YOU ARE INVESTING THROUGH A
BANK
REPRESENTATIVE, CALL 1-800-843-3001. REPRESENTATIVE, CALL 1-800-843-3001.
(SMALL SOLID BULLET) EXCHANGE FROM THE SAME CLASS OF
ANOTHER FIDELITY ADVISOR FUND (SMALL SOLID BULLET) EXCHANGE FROM THE SAME CLASS OF
ANOTHER FIDELITY ADVISOR FUND
OR FROM ANOTHER FIDELITY FUND ACCOUNT WITH THE SAME OR FROM ANOTHER FIDELITY FUND ACCOUNT WITH THE
SAME
REGISTRATION, INCLUDING NAME, ADDRESS, AND TAXPAYER
ID NUMBER. REGISTRATION, INCLUDING NAME, ADDRESS, AND TAXPAYER
ID NUMBER.
MAIL
(MAIL_
GRAPHIC) (SMALL SOLID BULLET) COMPLETE AND SIGN THE ACCOUNT
APPLICATION. MAKE YOUR CHECK (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE TO THE
COMPLETE NAME OF THE FUND OF
PAYABLE TO THE COMPLETE NAME OF THE FUND OF YOUR
CHOICE AND YOUR CHOICE AND NOTE THE APPLICABLE CLASS. INDICATE
YOUR FUND
NOTE THE APPLICABLE CLASS. MAIL TO THE ADDRESS
INDICATED ON THE ACCOUNT NUMBER ON YOUR CHECK AND MAIL TO THE ADDRESS
PRINTED
APPLICATION. ON YOUR ACCOUNT STATEMENT.
(SMALL SOLID BULLET) EXCHANGE BY MAIL: CALL YOUR
INVESTMENT PROFESSIONAL FOR INSTRUCTIONS.
IN PERSON
(HAND_
GRAPHIC) (SMALL SOLID BULLET) BRING YOUR ACCOUNT APPLICATION
AND CHECK TO YOUR INVESTMENT (SMALL SOLID BULLET) BRING YOUR CHECK TO YOUR
INVESTMENT PROFESSIONAL.
PROFESSIONAL.
WIRE
(WIRE_
GRAPHIC) (SMALL SOLID BULLET) NOT AVAILABLE (SMALL SOLID BULLET) WIRE TO:
BANKER'S TRUST CO.
ROUTING # 021001033
FIDELITY DART DEPOSITORY
ACCOUNT # 00159759
FBO: (ACCOUNT NAME)
(ACCOUNT NUMBER)
SPECIFY THE COMPLETE NAME OF THE FUND OF YOUR CHOICE,
NOTE THE
APPLICABLE CLASS, AND INCLUDE YOUR ACCOUNT NUMBER AND
YOUR
NAME.
AUTOMATICALLY
(AUTOMATIC_
GRAPHIC) (SMALL SOLID BULLET) NOT AVAILABLE. (SMALL SOLID BULLET) USE FIDELITY ADVISOR SYSTEMATIC
INVESTMENT PROGRAM. SIGN UP
FOR THIS SERVICE WHEN OPENING YOUR ACCOUNT, OR CALL
YOUR
INVESTMENT PROFESSIONAL TO BEGIN THE PROGRAM.
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of each class is the class's NAV, minus
any applicable CDSC.
Your shares will be sold at the next NAV, minus any applicable
CDSC, calculated after your order is received and accepted. Each
class's NAV is normally calculated each business day at 4:00 p.m.
Eastern time.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the
methods described on these two pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request
must be made in writing, except for exchanges to shares of the same
class of another Fidelity Advisor fund or shares of other Fidelity
funds, which can be requested by phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least
$1,000 worth of shares in the account to keep it open (account minimum
balances do not apply to retirement and Fidelity Defined Trust
accounts).
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service
in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner,
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity Advisor account with a different registration,
(small solid bullet) You wish to set up the bank wire feature, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, signed certificates (if previously issued), and
(small solid bullet) Any other applicable requirements listed in the
table on page .
Deliver your letter to your investment professional, or mail it to the
following address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
Unless otherwise instructed, Fidelity will send a check to the record
address.
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ACCOUNT TYPE SPECIAL REQUIREMENTS
PHONE ALL ACCOUNT TYPES EXCEPT RETIREMENT (SMALL SOLID BULLET) MAXIMUM CHECK REQUEST: $100,000.
YOUR
INVESTMENT
PROFESSIONAL
(PHONE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) YOU MAY EXCHANGE TO THE SAME CLASS OF
OTHER FIDELITY ADVISOR
FUNDS OR TO OTHER FIDELITY FUNDS IF BOTH ACCOUNTS ARE
REGISTERED
WITH THE SAME NAME(S), ADDRESS, AND TAXPAYER ID NUMBER.
MAIL OR IN PERSON
(MAIL_GRAPHIC)
(HAND_GRAPHIC) INDIVIDUAL, JOINT TENANT, SOLE
PROPRIETORSHIP, UGMA, UTMA (SMALL SOLID BULLET) THE LETTER OF INSTRUCTION MUST BE SIGNED
BY ALL PERSONS REQUIRED
TO SIGN FOR TRANSACTIONS, EXACTLY AS THEIR NAMES APPEAR ON
THE
ACCOUNT AND SENT TO YOUR INVESTMENT PROFESSIONAL.
(SMALL SOLID BULLET) THE ACCOUNT OWNER SHOULD COMPLETE A
RETIREMENT DISTRIBUTION
RETIREMENT ACCOUNT FORM. CONTACT YOUR INVESTMENT PROFESSIONAL OR, IF YOU
PURCHASED YOUR SHARES THROUGH A BROKER-DEALER OR
INSURANCE
REPRESENTATIVE, CALL 1-800-522-7297. IF YOU PURCHASED
YOUR
SHARES THROUGH A BANK REPRESENTATIVE, CALL
1-800-843-3001.
TRUST (SMALL SOLID BULLET) THE TRUSTEE MUST SIGN THE LETTER
INDICATING CAPACITY AS TRUSTEE. IF
THE TRUSTEE'S NAME IS NOT IN THE ACCOUNT REGISTRATION,
PROVIDE A
COPY OF THE TRUST DOCUMENT CERTIFIED WITHIN THE LAST 60
DAYS.
BUSINESS OR ORGANIZATION (SMALL SOLID BULLET) AT LEAST ONE PERSON AUTHORIZED BY
CORPORATE RESOLUTION TO ACT
ON THE ACCOUNT MUST SIGN THE LETTER.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR/GUARDIAN (SMALL SOLID BULLET) FOR INSTRUCTIONS, CONTACT YOUR
INVESTMENT PROFESSIONAL OR, IF
YOU PURCHASED YOUR SHARES THROUGH A BROKER-DEALER OR
INSURANCE REPRESENTATIVE, CALL 1-800-522-7297. IF YOU
PURCHASED YOUR SHARES THROUGH A BANK REPRESENTATIVE, CALL
1-800-843-3001.
WIRE (WIRE_GRAPHIC) ALL ACCOUNT TYPES EXCEPT RETIREMENT (SMALL SOLID BULLET) YOU MUST SIGN UP FOR THE WIRE FEATURE
BEFORE USING IT. TO
VERIFY THAT IT IS IN PLACE, CONTACT YOUR INVESTMENT
PROFESSIONAL
OR, IF YOU PURCHASED YOUR SHARES THROUGH A BROKER-DEALER OR
INSURANCE REPRESENTATIVE, CALL 1-800-522-7297. IF YOU
PURCHASED YOUR SHARES THROUGH A BANK REPRESENTATIVE, CALL
1-800-843-3001. MINIMUM WIRE: $500.
(SMALL SOLID BULLET) YOUR WIRE REDEMPTION REQUEST MUST BE
RECEIVED AND ACCEPTED
BY FIDELITY BEFORE 4:00 P.M. EASTERN TIME FOR MONEY TO BE
WIRED ON THE NEXT BUSINESS DAY.
</TABLE>
INVESTOR SERVICES
Fidelity Advisor funds provide a variety of services to help you
manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements after certain
transactions
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
a fund. Call your investment professional if you need additional
copies of financial reports and prospectuses.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your Class A or Class T shares and
buy the same class of shares of other Fidelity Advisor funds or Daily
Money Class shares of Treasury Fund, Prime Fund, and Tax-Exempt Fund
by telephone or in writing. You may sell your Class B shares and buy
Class B shares of other Fidelity Advisor funds or Advisor B Class
shares of Treasury Fund by telephone or in writing. You may sell your
Class C shares and buy Class C shares of other Fidelity Advisor funds
or Advisor C Class shares of Treasury Fund by telephone or in writing.
The shares you exchange will carry credit for any front-end sales
charge you previously paid in connection with their purchase.
Note that exchanges out of a fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see "Exchange Restrictions," page .
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM lets you set up
periodic redemptions from your Class A, Class T, Class B, or Class C
account. Accounts with a value of $10,000 or more in Class A, Class T,
Class B, or Class C shares are eligible for this program. Aggregate
redemptions per 12-month period from your Class B or Class C account
may not exceed 10% of the account value and are not subject to a CDSC.
Because of Class A's and Class T's front-end sales charge, you may not
want to set up a systematic withdrawal plan during a period when you
are buying Class A or Class T shares on a regular basis.
One easy way to pursue your financial goals is to invest money
regularly. Fidelity Advisor funds offer convenient services that let
you transfer money into your fund account, or between fund accounts,
automatically. While regular investment plans do not guarantee a
profit and will not protect you against loss in a declining market,
they can be an excellent way to invest for retirement, a home,
educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call your investment
professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY ADVISOR FUND
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MINIMUM MINIMUM
INITIAL ADDITIONAL FREQUENCY SETTING UP OR CHANGING
$1,000 $100 MONTHLY, BIMONTHLY,
QUARTERLY, (SMALL SOLID BULLET) FOR A NEW ACCOUNT, COMPLETE THE APPROPRIATE SECTION ON THE
APPLICATION.
OR SEMI-ANNUALLY (SMALL SOLID BULLET) FOR EXISTING ACCOUNTS, CALL YOUR INVESTMENT PROFESSIONAL FOR AN
APPLICATION.
(SMALL SOLID BULLET) TO CHANGE THE AMOUNT OR FREQUENCY OF YOUR INVESTMENT, CONTACT
YOUR INVESTMENT PROFESSIONAL DIRECTLY
OR, IF YOU PURCHASED YOUR SHARES THROUGH A BROKER-DEALER OR INSURANCE
REPRESENTATIVE, CALL
1-800-522-7297. IF YOU PURCHASED YOUR SHARES THROUGH A BANK REPRESENTATIVE, CALL
1-800-843-3001.
CALL AT LEAST 10 BUSINESS DAYS PRIOR TO YOUR NEXT SCHEDULED INVESTMENT DATE (20
BUSINESS DAYS IF YOU
PURCHASED YOUR SHARES THROUGH A BANK).
TO DIRECT DISTRIBUTIONS FROM A FIDELITY DEFINED TRUST TO CLASS T OF A
FIDELITY ADVISOR FUND
MINIMUM MINIMUM
INITIAL ADDITIONAL SETTING UP OR CHANGING
NOT NOT (SMALL SOLID BULLET) FOR A NEW OR EXISTING ACCOUNT, ASK YOUR INVESTMENT PROFESSIONAL
FOR THE APPROPRIATE ENROLLMENT FORM.
APPLICABLE APPLICABLE (SMALL SOLID BULLET) TO CHANGE THE FUND TO WHICH YOUR DISTRIBUTIONS ARE DIRECTED,
CONTACT YOUR INVESTMENT PROFESSIONAL FOR
INSTRUCTIONS.
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND OR A FIDELITY ADVISOR
FUND TO ANOTHER FIDELITY ADVISOR FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, quarterly, (small solid bullet) To establish, call your investment professional after both
accounts are opened.
semi-annually, or annually (small solid bullet) To change the amount or frequency of your investment, contact
your investment professional directly
or, if you purchased your shares through a broker-dealer or insurance representative,
call
1-800-522-7297. If you purchased your shares through a bank representative, call
1-800-843-3001.
(small solid bullet) The account from which the exchanges are to be processed must
have a minimum balance of
$10,000. The account into which the exchange is being processed must have a minimum
of $1,000.
(small solid bullet) Both accounts must have the same registrations and taxpayer ID
numbers.
(small solid bullet) Call at least 2 business days prior to your next scheduled
exchange date.
</TABLE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital
gains to shareholders each year. Each fund pays capital gains, if any,
in December and may pay additional capital gains after the close of
its fiscal year. Normally, dividends for International Capital
Appreciation and Overseas are distributed in December; dividends for
Emerging Markets Income are declared daily and paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you
want to receive your distributions. The funds offer four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
4. DIRECTED DIVIDENDS(registered trademark) PROGRAM. Your dividend
distributions will be automatically invested in the same class of
shares of another identically registered Fidelity Advisor fund. You
will be sent a check for your capital gain distributions or your
capital gain distributions will be automatically reinvested in
additional shares of the same class of the fund.
If you select distribution option 2, 3, or 4 and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed
for six months, those checks will be reinvested in your account at the
current NAV and your election may be converted to the Reinvestment
Option. To change your distribution option, call your investment
professional directly or, if you purchased your shares through a
broker-dealer or insurance representative, call 1-800-522-7297. If you
purchased your shares through a bank representative, call
1-800-843-3001.
For retirement accounts, all distributions are automatically
reinvested. When you are over 59 years old, you can receive
distributions in cash.
Shares purchased through reinvestment of dividend and capital gain
distributions are not subject to a sales charge. If you direct Class A
or Class T distributions to a fund with a front-end sales charge, you
will not pay a sales charge on those purchases.
When each of International Capital Appreciation and Overseas deducts a
distribution from its NAV, the reinvestment price is the applicable
class's NAV at the close of business that day. Dividends from Emerging
Markets Income will be reinvested at the applicable class's NAV on the
last day of the month. Capital gain distributions from Emerging
Markets Income will be reinvested at the NAV as of the date the fund
deducts the distributions from its NAV. The mailing of distribution
checks will begin within seven days, or longer for a December
ex-dividend date.
TAXES
As with any investment, you should consider how your investment in a
fund will be taxed. If your account is not a tax-deferred retirement
account, you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income
tax, and may also be subject to state or local taxes. If you live
outside the United States, your distributions could also be taxed by
the country in which you reside. Your distributions are taxable when
they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are
taxable as if they were paid on December 31.
For federal tax purposes, each fund's income and short-term capital
gains are distributed as dividends and taxed as ordinary
income; capital gain distributions are taxed as long-term capital
gains.
Every January, Fidelity will send you and the IRS a statement showing
the tax characterization of distributions paid to you in the
previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges - are
subject to capital gains tax. A capital gain or loss is the difference
between the cost of your shares and the price you receive when you
sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price.
You will also receive a consolidated transaction statement at least
quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of
tax to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount
of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a class has realized but
not yet distributed income or capital gains, you will pay the full
price for the shares and then receive a portion of the price back in
the form of a taxable distribution.
CURRENCY CONSIDERATIONS. If a fund's dividends exceed its taxable
income in any year, which is sometimes the result of currency-related
losses, all or a portion of the fund's dividends may be treated as a
return of capital to shareholders for tax purposes. To minimize the
risk of a return of capital, each fund may adjust its dividends to
take currency fluctuations into account, which may cause the dividends
to vary. Any return of capital will reduce the cost basis of your
shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. The statement you
receive in January will specify if any distributions included a return
of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on
a fund and its investments, and these taxes generally will
reduce a fund's distributions. However, if you meet certain
holding period requirements with respect to your fund shares, an
offsetting tax credit may be available to you. If you do not meet
such holding period requirements, you may still be entitled to a
deduction for certain foreign taxes. In either case, your tax
statement will show more taxable income or capital gains than were
actually distributed by the fund, but will also show the amount of the
available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements,
a fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates each class's NAV and offering
price, as applicable , as of the close of business of the NYSE,
normally 4:00 p.m. Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class is
computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting
that class's pro rata share of the value of the applicable fund's
liabilities, subtracting the liabilities allocated to that class, and
dividing the result by the number of shares of that class that are
outstanding.
Each fund's assets are valued primarily on the basis of market
quotations or on the basis of information furnished by a pricing
service. Short-term securities with remaining maturities of sixty days
or less for which quotations and information furnished by a pricing
service are not readily available are valued on the basis of amortized
cost. This method minimizes the effect of changes in a security's
market value. Foreign securities are valued on the basis of quotations
from the primary market in which they are traded, and are translated
from the local currency into U.S. dollars using current exchange
rates. In addition, if quotations and information furnished by a
pricing service are not readily available, or if the values have been
materially affected by events occurring after the closing of a foreign
market, assets may be valued by another method that the Board of
Trustees believes accurately reflects fair value.
THE OFFERING PRICE of Class A or Class T is its NAV divided by the
difference between one and the applicable front-end sales
charge percentage. Class A has a maximum front-end sales charge
of 5.75% of the offering price for International Capital Appreciation
and Overseas and 4.75% of the offering price for Emerging Markets
Income. Class T has a maximum front-end sales charge of 3.50%
of the offering price for each fund.
SALES CHARGES AND INVESTMENT PROFESSIONAL
CONCESSIONS - CLASS A
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INTERNATIONAL CAPITAL APPRECIATION AND OVERSEAS: Sales Charge: Investment
Professional
Concession as %
of Offering Price
As a % of As an
Offering approximat
Price e % of Net
Amount
Invested
Up to $49,999 5.75% 6.10% 5.00%
$50,000 to $99,999 4.50% 4.71% 3.75%
$100,000 to $249,999 3.50% 3.63% 2.75%
$250,000 to $499,999 2.50% 2.56% 2.00%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 to $24,999,999 1.00% 1.01% 0.75%
$25,000,000 or more None* None* *
</TABLE>
EMERGING MARKETS INCOME: Sales Charge: Investment
Professional
Concession as %
of Offering Price
As a % of As an
Offering approximat
Price e % of Net
Amount
Invested
Up to $49,999 4.75% 4.99% 4.25%
$50,000 to $99,999 4.50% 4.71% 4.00%
$100,000 to $249,999 3.50% 3.63% 3.00%
$250,000 to $499,999 2.50% 2.56% 2.25%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 to $24,999,999 0.50% 0.53% 0.50%
$25,000,000 or more None* None* *
SALES CHARGES AND INVESTMENT PROFESSIONAL
CONCESSIONS - CLASS T
<TABLE>
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INTERNATIONAL CAPITAL APPRECIATION, OVERSEAS,
AND EMERGING MARKETS INCOME: Sales Charge: Investment
Professional
Concession as %
of Offering Price
As a % of As an
Offering approximat
Price e % of Net
Amount
Invested
Up to $49,999 3.50% 3.63% 3.00%
$50,000 to $99,999 3.00% 3.09% 2.50%
$100,000 to $249,999 2.50% 2.56% 2.00%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
* SEE SECTION ENTITLED FINDER'S FEE.
FINDER'S FEE. On eligible purchases of (i) Class A shares in amounts
of $1 million or more that qualify for a Class A load waiver, (ii)
Class A shares in amounts of $25 million or more, or (iii) Class T
shares in amounts of $1 million or more, investment professionals will
be compensated with a fee at the rate of 0.25% of the purchase
amount.
Any assets on which a finder's fee has been paid will bear a CDSC
(Class A or Class T CDSC) if they do not remain in Class A or Class T
shares of the Fidelity Advisor funds, or Daily Money Class shares of
Treasury Fund, Prime Fund, or Tax-Exempt Fund, for a period of at
least one uninterrupted year. The Class A or Class T CDSC will be
0.25% of the lesser of the cost of the Class A or Class T
shares, as applicable, at the initial date of purchase or the
value of the Class A or Class T shares, as applicable,
at redemption, not including any reinvested dividends or capital
gains. Class A and Class T shares acquired through distributions
(dividends or capital gains) will not be subject to a Class A or Class
T CDSC. In determining the applicability and rate of any Class A or
Class T CDSC at redemption, Class A or Class T shares representing
reinvested dividends and capital gains, if any, will be redeemed
first, followed by those Class A or Class T shares that have
been held for the longest period of time.
Shares held by an insurance company separate account will be
aggregated at the client (e.g., the contract holder or plan sponsor)
level, not at the separate account level. Upon request, anyone
claiming eligibility for the 0.25% fee with respect to shares held by
an insurance company separate account must provide FDC access to
records detailing purchases at the client level.
With respect to employee benefit plans, the Class A or Class T CDSC
does not apply to the following types of redemptions: (i) plan loans
or distributions or (ii) exchanges to non-Advisor fund investment
options. With respect to Individual Retirement Accounts, the Class A
or Class T CDSC does not apply to redemptions made for disability,
payment of death benefits, or required partial distributions starting
at age 70. Your investment professional should advise Fidelity at the
time your redemption order is placed if you qualify for a waiver of
the Class A or Class T CDSC.
CONTINGENT DEFERRED SALES CHARGE. Class B shares may, upon
redemption, be assessed a CDSC based on the following schedule:
From Date of Purchase Contingent Deferred
Sales Charge
Less than 1 year 5%
1 year to less than 2 years 4%
2 years to less than 3 years 3%
3 years to less than 4 years 3%
4 years to less than 5 years 2%
5 years to less than 6 years 1%
6 years to less than 7 years [A] 0%
[A] AFTER A HOLDING PERIOD OF SEVEN YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND. SEE
"CONVERSION FEATURE" BELOW FOR MORE INFORMATION.
When exchanging Class B shares of one fund for Class B shares of
another Fidelity Advisor fund or Advisor B Class shares of Treasury
Fund, your Class B shares retain the CDSC schedule in effect when they
were originally purchased.
At the time of sale, investment professionals with whom FDC has
agreements receive as compensation from FDC a concession equal to
4.00% of your purchase of Class B shares.
Class C shares may, upon redemption within one year of purchase, be
assessed a CDSC of 1.00%.
At the time of sale, investment professionals with whom FDC has
agreements receive as compensation from FDC a concession equal to
1.00% of your purchase of Class C shares.
The CDSC for Class B and Class C shares will be calculated based on
the lesser of the cost of the Class B or Class C shares, as
applicable, at the initial date of purchase or the value of those
Class B or Class C shares, as applicable, at redemption,
not including any reinvested dividends or capital gains. Class B and
Class C shares acquired through distributions (dividends or capital
gains) will not be subject to a CDSC. In determining the applicability
and rate of any CDSC at redemption, Class B or Class C shares
representing reinvested dividends and capital gains, if any, will be
redeemed first, followed by those Class B or Class C shares
that have been held for the longest period of time.
CONVERSION FEATURE. After a holding period of seven years from the
initial date of purchase, Class B shares and any capital appreciation
associated with those shares, convert automatically to Class A shares
of the same Fidelity Advisor fund. Conversion to Class A shares will
be made at NAV. At the time of conversion, a portion of the Class B
shares purchased through the reinvestment of dividends or capital
gains (Dividend Shares) will also convert to Class A shares. The
portion of Dividend Shares that will convert is determined by the
ratio of your converting Class B non-Dividend Shares to your total
Class B non-Dividend Shares.
For more information about the CDSC, including the conversion feature
and the permitted circumstances for CDSC waivers, contact your
investment professional.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class A,
Class T, Class B, or Class C shares of a fund, you may reinvest an
amount equal to all or a portion of the redemption proceeds in the
same class of the fund or any of the other Fidelity Advisor funds, at
the NAV next determined after receipt and acceptance of your
investment order, provided that such reinvestment is made within 90
days of redemption. Under these circumstances, the dollar amount of
the CDSC, if any, you paid on Class A, Class T, Class B, or Class C
shares will be reimbursed to you by reinvesting that amount in Class
A, Class T, Class B, or Class C shares, as applicable. You must
reinstate your shares into an account with the same registration. This
privilege may be exercised only once by a shareholder with respect to
a fund and certain restrictions may apply. For purposes of the CDSC
holding period schedule, the holding period of your Class A, Class T,
Class B, or Class C shares will continue as if the shares had not been
redeemed.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does
not follow 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 the confirmation statements immediately after receipt. If you do
not want the ability to redeem and exchange by telephone, call
Fidelity for instructions. Additional documentation may be required
from corporations, associations, and certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a
period of time. Each fund also reserves the right to reject any
specific purchase order, including certain purchases by exchange. See
"Exchange Restrictions" on page . Purchase orders may be
refused if, in FMR's opinion, they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased
at the next offering price or NAV, as applicable, calculated after
your order is received and accepted. Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.
(small solid bullet) Automated Purchase Orders: For shares of Emerging
Markets Income, you begin to earn dividends as of the day your funds
are received.
(small solid bullet) Other Purchases: For shares of Emerging Markets
Income, you begin to earn dividends as of the first business day
following the day your funds are received.
AUTOMATED PURCHASE ORDERS. Class A, Class T, Class B, and Class C
shares can be purchased or sold through investment professionals
utilizing an automated order placement and settlement system that
guarantees payment for orders on a specified date.
CONFIRMED PURCHASES. Certain financial institutions that meet FDC's
creditworthiness criteria may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow no later than
close of business on the next business day. If payment is not received
by the next business day, the order will be canceled and the financial
institution will be liable for any losses.
TO AVOID THE COLLECTION PERIOD associated with check purchases,
consider buying shares by bank wire, U.S. Postal money order, U.S.
Treasury check, Federal Reserve check, or automatic investment plans.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received and accepted,
minus any applicable CDSC . Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares of Emerging Markets Income will earn
dividends through the date of redemption; however, shares redeemed on
a Friday or prior to a holiday will continue to earn dividends until
the next business day.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check have been
collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500 (including any
amount paid as a sales charge), subject to an annual maximum charge of
$60.00 per shareholder. Accounts opened after September 30 will not be
subject to the fee for that year. The fee, which is payable to the
transfer agent, is designed to offset in part the relatively higher
costs of servicing smaller accounts. The fee will not be deducted from
retirement accounts (except non-prototype retirement accounts),
accounts using a systematic investment program, certain (Network Level
I and III) accounts which are maintained through National Securities
Clearing Corporation (NSCC), or if total assets in Fidelity mutual
funds exceed $50,000. Eligibility for the $50,000 waiver is determined
by aggregating Fidelity mutual fund accounts (excluding contractual
plans) maintained (i) by FIIOC and (ii) through NSCC; provided those
accounts are registered under the same primary social security number.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000, you will be
given 30 days' notice to reestablish the minimum balance. If you do
not increase your balance, Fidelity reserves the right to close your
account and send the proceeds to you. Your shares will be redeemed at
the NAV, minus any applicable CDSC, on the day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC will, at its expense, provide promotional incentives such as sales
contests and luxury trips to investment professionals who support the
sale of shares of the funds. In some instances, these incentives will
be offered only to certain types of investment professionals, such as
bank-affiliated or non-bank affiliated broker-dealers, or to
investment professionals whose representatives provide services in
connection with the sale or expected sale of significant amounts of
shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging Class A, Class
T, Class B, or Class C shares of a fund for the same class of shares
of other Fidelity Advisor funds; Class A or Class T shares for Daily
Money Class shares of Treasury Fund, Prime Fund, or Tax-Exempt Fund;
Class B shares for Advisor B Class shares of Treasury Fund; and Class
C shares for Advisor C Class shares of Treasury Fund. If you purchased
your Class T shares through certain investment professionals that have
signed an agreement with FDC, you also have the privilege of
exchanging your Class T shares for shares of Fidelity Capital
Appreciation Fund. However, you should note the following:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of a fund per calendar
year. Accounts under common ownership or control, including accounts
with the same taxpayer identification number, will be counted together
for purposes of the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
in certain institutional retirement plans to conform to plan exchange
limits and Department of Labor regulations. See your plan materials
for further information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to a
fund.
(small solid bullet) Any exchanges of Class A, Class T, Class B, or
Class C shares are not subject to a CDSC.
Although the funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify these
exchange privileges in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
trading fees of up to 1.00% on exchanges. Check each fund's
prospectus for details.
SALES CHARGE REDUCTIONS AND WAIVERS
If your purchase qualifies for one of the following reduction
plans, the front-end sales charge will be reduced for purchases of
Class A and Class T shares according to the Sales Charge schedule
shown on page . Please refer to the funds' SAI for more details about
each plan or call your investment professional.
If you purchased your shares through a broker-dealer or insurance
representative, call 1-800-522-7297. If you purchased your shares
through a bank representative, call 1-800-843-3001.
Your purchases and existing balances of Class A, Class T, Class B, and
Class C shares may be included in the following programs for purposes
of qualifying for a Class A or Class T front-end sales charge
reduction.
QUANTITY DISCOUNTS apply to purchases of Class A or Class T shares of
a single Fidelity Advisor fund or to combined purchases of (i) Class
A, Class T, Class B, and Class C shares of any Fidelity Advisor fund,
(ii) Advisor B Class shares and Advisor C Class shares of Treasury
Fund, and (iii) Daily Money Class shares of Treasury Fund, Prime Fund,
and Tax-Exempt Fund acquired by exchange from any Fidelity Advisor
fund. The minimum investment eligible for a quantity discount is
$50,000.
To qualify for a quantity discount, investing in a fund's Class A,
Class T, Class B, and Class C shares for several accounts at the same
time will be considered a single transaction (Combined Purchase), as
long as shares are purchased through one investment professional and
the total is at least $50,000.
RIGHTS OF ACCUMULATION let you determine your front-end sales charge
on Class A and Class T shares by adding to your new purchase of Class
A and Class T shares the value of all of the Fidelity Advisor fund
Class A, Class T, Class B, and Class C shares held by you, your
spouse, and your children under age 21. You can also add the value of
Advisor B Class shares and Advisor C Class shares of Treasury Fund,
and Daily Money Class shares of Treasury Fund, Prime Fund, and
Tax-Exempt Fund acquired by exchange from any Fidelity Advisor fund.
A LETTER OF INTENT (Letter) lets you receive the same reduced
front-end sales charge on purchases of Class A and Class T shares made
during a 13-month period as if the total amount invested during the
period had been invested in a single lump sum (see Quantity Discounts
above). Purchases of Class B and Class C shares during the 13-month
period will count toward the completion of your Letter. You must file
your non-binding Letter with Fidelity within 90 days of the start of
your purchases. Your initial investment must be at least 5% of the
amount you plan to invest. Out of the initial investment, Class A or
Class T shares equal to 5% of the dollar amount specified in your
Letter will be registered in your name and held in escrow. You will
earn income dividends and capital gain distributions on escrowed Class
A and Class T shares. Reinvested income and capital gain distributions
do not count toward the completion of your Letter. The escrow will be
released when your purchase of the total amount has been completed.
You are not obligated to complete your Letter, and in such a case,
sufficient escrowed Class A or Class T shares will be redeemed to pay
any applicable front-end sales charges.
A FRONT-END SALES CHARGE WILL NOT APPLY TO THE FOLLOWING CLASS A
SHARES:
1. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans which, in the aggregate,
have more than 200 eligible employees or a minimum of $1 million in
plan assets invested in Fidelity Advisor funds;
2. Purchased by a trust institution or bank trust department
(excluding employee benefit plan assets) that has executed a
participation agreement with FDC specifying certain asset minimums and
qualifications, and marketing restrictions. Assets managed by third
parties do not qualify for this waiver;
3. Purchased for use in a broker-dealer managed account program,
provided the broker-dealer has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing, program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver;
4. Purchased on a discretionary basis by a registered investment
advisor which is not part of an organization primarily engaged in the
brokerage business, that has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing, program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver; or
5. Purchased as part of an employee benefit plan having $25 million or
more in plan assets.
For the purpose of load waiver (3), certain broker-dealers that
otherwise meet the qualifications and asset minimums established by
FDC are not required to sign a participation agreement.
A FRONT-END SALES CHARGE WILL NOT APPLY TO THE FOLLOWING CLASS T
SHARES:
1. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC;
2. Purchased by a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director or regular employee of
FMR Corp. or FIL or their direct or indirect subsidiaries (a Fidelity
trustee or employee), the spouse of a Fidelity trustee or employee, a
Fidelity trustee or employee acting as custodian for a minor child, or
a person acting as trustee of a trust for the sole benefit of the
minor child of a Fidelity trustee or employee;
3. Purchased by a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or
more;
4. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined
for purposes of Section 501(c)(3) of the Internal Revenue Code);
5. Purchased for a Fidelity or Fidelity Advisor account with the
proceeds of a distribution (i) from an employee benefit plan that
qualified for waiver (11) below or had a minimum of $3 million in plan
assets invested in Fidelity funds; or (ii) from an insurance company
separate account qualifying under (6) below, or used to fund annuity
contracts purchased by employee benefit plans having in the aggregate
at least $3 million in plan assets invested in Fidelity funds.
(Distributions other than those transferred to an IRA account must be
transferred directly into a Fidelity account);
6. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans which, in the aggregate,
have more than 200 eligible employees or a minimum of $1 million in
plan assets invested in Fidelity Advisor funds;
7. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency;
8. Purchased with redemption proceeds from other mutual fund complexes
on which you have previously paid a front-end sales charge or CDSC;
9. Purchased by a trust institution or bank trust department
(excluding assets described in (11) and (12) below) that has executed
a participation agreement with FDC specifying certain asset minimums
and qualifications, and marketing restrictions. Assets managed by
third parties do not qualify for this waiver;
10. Purchased for use in a broker-dealer managed account program,
provided the broker-dealer has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing, program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver;
11. Purchased as part of an employee benefit plan having more than (i)
200 eligible employees or a minimum of $1 million of plan assets
invested in Fidelity Advisor funds; or (ii) 25 eligible employees or
$250,000 of plan assets invested in Fidelity Advisor funds that
subscribe to the Advisor Retirement Connection or similar
FIIS-sponsored program;
12. Purchased as part of an employee benefit plan through an
intermediary that has executed a participation agreement with FDC
specifying certain asset minimums and qualifications, and marketing,
program and trading restrictions;
13. Purchased on a discretionary basis by a registered investment
advisor which is not part of an organization primarily engaged in the
brokerage business, that has executed a participation agreement with
FDC specifying certain asset minimums and qualifications, and
marketing, program and trading restrictions. Employee benefit plan
assets do not qualify for this waiver; or
14. Purchased with distributions of income, principal, and capital
gains from Fidelity Defined Trusts.
Employee benefits plans that purchased Class T shares load waived
prior to June 30, 1995 but do not meet the qualifications of waiver
(12) will be permitted to make additional purchases of Class T shares
on a load waived basis.
You must notify FDC in advance if you qualify for a front-end sales
charge waiver. Employee benefit plan investors must meet additional
requirements specified in the funds' SAI.
If you are investing through an insurance company separate
account, if you are investing through a trust department, if you
are investing through an account managed by a broker-dealer, or if you
have authorized an investment adviser to make investment decisions for
you, you may qualify to purchase Class A shares without a sales charge
(as described in (1), (2), (3) and (4) on page ), Class
T shares without a sales charge (as described in (6), (9), (10)
and (13) on page ), or Institutional Class shares. Because
Institutional Class shares have no sales charge, and do not pay a
12b-1 fee, Institutional Class shares are expected to have a higher
total return than Class A, Class T, Class B, and Class C shares.
Contact your investment professional to discuss if you qualify.
THE CDSC ON CLASS B AND CLASS C SHARES MAY BE WAIVED:
1. In cases of disability or death, provided that the shares are
redeemed within one year following the death or the initial
determination of disability;
2. In connection with a total or partial redemption related to certain
distributions from retirement plans or accounts at age 701/2, which
are permitted without penalty pursuant to the Internal Revenue Code;
or
3. In connection with redemptions through the Fidelity Advisor
Systematic Withdrawal Program.
Your investment professional should call Fidelity for more
information.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related SAI,
in connection with the offer contained in this Prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the funds or FDC. This Prospectus
and the related SAI do not constitute an offer by the funds or by FDC
to sell or to buy shares of the funds to any person to whom it is
unlawful to make such offer.
APPENDIX A
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF CORPORATE BONDS
Moody's ratings for obligations with an original remaining maturity in
excess of one year fall within nine categories. They range from Aaa
(highest quality) to C (lowest quality). Moody applies numerical
modifiers of 1, 2, or 3 to each generic rating classification from Aa
through B. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS
Debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA to CCC may be modified by the addition of a plus sign (+) or minus
sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
APPENDIX B
OVERSEAS - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total
returns+ 1991 1992 1993 1994 1995 1996
OVERSEAS - CLASS A[C] 6.78% -4.83% 41.84% 1.98% 8.64% 12.35%
Morgan Stanley EAFE Index 12.13% -12.17% 32.56% 7.78% 11.21% 6.05%
Lipper International Funds Average[A] 12.73% -4.85% 36.69% -0.71% 9.41% 11.78%
Consumer Price Index 3.06% 2.90% 2.75% 2. 67 % 2. 54 % 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 6.78
ROW: 6, COL: 1, VALUE: -4.83
ROW: 7, COL: 1, VALUE: 41.84
ROW: 8, COL: 1, VALUE: 1.98
ROW: 9, COL: 1, VALUE: 8.639999999999999
ROW: 10, COL: 1, VALUE: 12.35
(LARGE SOLID BOX) OVERSEAS - CLASS A
EMERGING MARKETS INCOME - CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1995 1996
EMERGING MARKETS INCOME - CLASS A 6.99% 40.43%
JP Morgan Emerging Markets Bond Index Plus 26.78% 39.30%
Lipper Emerging Markets Debt Funds Average[B] 18.05% 40.70%
Consumer Price Index 2.54% 3.32%
</TABLE>
OVERSEAS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1991 1992 1993 1994 1995 1996
OVERSEAS - CLASS T[C] 6.78% -4.83% 41.84% 1.98% 8.64% 12.41%
Morgan Stanley EAFE Index 12.13% -12.17% 32.56% 7.78% 11.21% 6.05%
Lipper International Funds Average[A] 12.73% -4.85% 36.69% -0.71% 9.41% 11.78%
Consumer Price Index 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 6.78
ROW: 6, COL: 1, VALUE: -4.33
ROW: 7, COL: 1, VALUE: 41.84
ROW: 8, COL: 1, VALUE: 1.98
ROW: 9, COL: 1, VALUE: 8.639999999999999
ROW: 10, COL: 1, VALUE: 12.41
(LARGE SOLID BOX) OVERSEAS - CLASS T
EMERGING MARKETS INCOME - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1995 1996
EMERGING MARKETS INCOME - CLASS T 6.99% 40.41%
JP Morgan Emerging Markets Bond Index Plus 26.78% 39.30%
Lipper Emerging Markets Debt Funds Average[B] 18.05% 40.70%
Consumer Price Index 2.54% 3.32%
</TABLE>
OVERSEAS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1991 1992 1993 1994 1995 1996
OVERSEAS - CLASS B[C] 6.78% -4.83% 41.84% 1.98% 8.58% 11.45%
Morgan Stanley EAFE Index 12.13% -12.17% 32.56% 7.78% 11.21% 6.05%
Lipper International Funds Average[A] 12.73% -4.85% 36.69% -0.71% 9.41% 11.78%
Consumer Price Index 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: 6.78
ROW: 6, COL: 1, VALUE: -4.83
ROW: 7, COL: 1, VALUE: 41.84
ROW: 8, COL: 1, VALUE: 1.98
ROW: 9, COL: 1, VALUE: 8.58
ROW: 10, COL: 1, VALUE: 11.45
(LARGE SOLID BOX) OVERSEAS - CLASS B
EMERGING MARKETS INCOME - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1995 1996
EMERGING MARKETS INCOME - CLASS B 6.38% 39.61%
JP Morgan Emerging Markets Bond Index Plus 26.78% 39.30%
Lipper Emerging Markets Debt Funds Average[B] 18.05% 40.70%
Consumer Price Index 2.54% 3.32%
</TABLE>
OVERSEAS - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1991 1992 1993 1994 1995 1996
OVERSEAS - CLASS C[C] 6.78% - 4.83% 41.84% 1.98% 8.58% 11.45%
Morgan Stanley EAFE Index 12.13% -12.17% 32.56% 7.78% 11.21% 6.05%
Lipper International Funds Average[A] 12.73% -4.85% 36.69% -0.71% 9.41% 11.78%
Consumer Price Index 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: 6.78
ROW: 6, COL: 1, VALUE: -4.83
ROW: 7, COL: 1, VALUE: 41.84
ROW: 8, COL: 1, VALUE: 1.98
ROW: 9, COL: 1, VALUE: 8.58
ROW: 10, COL: 1, VALUE: 11.45
(LARGE SOLID BOX) OVERSEAS - CLASS C
EMERGING MARKETS INCOME - CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1995 1996
EMERGING MARKETS INCOME - CLASS C 6.38% 39.61%
JP Morgan Emerging Markets Bond Index Plus 26.78% 39.30%
Lipper Emerging Markets Debt Funds Average[B] 18.05% 40.70%
Consumer Price Index 2.54% 3.32%
</TABLE>
+ RETURNS DO NOT INCLUDE THE EFFECT OF PAYING CLASS A OR CLASS T'S
MAXIMUM FRONT-END SALES CHARGE OR CLASS B'S OR CLASS C'S APPLICABLE
CONTINGENT DEFERRED SALES CHARGE.
INITIAL OFFERING OF CLASS A OF OVERSEAS AND EMERGING MARKETS
INCOME TOOK PLACE ON SEPTEMBER 3, 1996. CLASS A RETURNS PRIOR TO
SEPTEMBER 3, 1996 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE OF
0.50% (0.65% PRIOR TO JANUARY 1, 1996) FOR OVERSEAS AND 0.25% FOR
EMERGING MARKETS INCOME. IF CLASS A'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO SEPTEMBER 3, 1996 WOULD HAVE BEEN HIGHER.
INITIAL OFFERING OF CLASS B OF OVERSEAS TOOK PLACE ON JULY 3,
1995. CLASS B RETURNS PRIOR TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH
REFLECT A 12B-1 FEE OF 0.65%. IF CLASS B'S 12B-1 FEE HAD BEEN
REFLECTED, TOTAL RETURNS PRIOR TO JULY 3, 1995 WOULD HAVE BEEN
LOWER.
INITIAL OFFERING OF CLASS B OF EMERGING MARKETS INCOME TOOK PLACE
ON JUNE 30, 1994. CLASS B RETURNS PRIOR TO JUNE 30, 1994 ARE THOSE OF
CLASS T WHICH REFLECT A 12B-1 FEE OF 0.25%. IF CLASS B'S 12B-1 FEE HAD
BEEN REFLECTED, TOTAL RETURNS PRIOR TO JUNE 30, 1994 WOULD HAVE BEEN
LOWER.
CLASS C OF OVERSEAS IS EXPECTED TO COMMENCE OPERATIONS ON OR ABOUT
NOVEMBER 3, 1997. CLASS C RETURNS FROM DECEMBER 31, 1996 THROUGH JULY
3, 1995 ARE THOSE OF CLASS B WHICH REFLECT A 12B-1 FEE OF 1.00%. CLASS
C RETURNS PRIOR TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH REFLECT A
12B-1 FEE OF 0.65%. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL
RETURNS PRIOR TO JULY 3, 1995 WOULD HAVE BEEN LOWER.
CLASS C OF EMERGING MARKETS INCOME IS EXPECTED TO COMMENCE
OPERATIONS ON OR ABOUT NOVEMBER 3, 1997. CLASS C RETURNS FROM DECEMBER
31, 1996 THROUGH JUNE 30, 1994 ARE THOSE OF CLASS B WHICH REFLECT A
12B-1 FEE OF 0.90% (1.00% PRIOR TO JANUARY 1, 1996). CLASS C RETURNS
PRIOR TO JUNE 30, 1994 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE
OF 0.25%. IF CLASS C'S 12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS
FROM DECEMBER 31, 1996 THROUGH JANUARY 1, 1996 AND PRIOR TO JUNE 30,
1994 WOULD HAVE BEEN LOWER.
[A] THE LIPPER INTERNATIONAL FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 396 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[B] THE LIPPER EMERGING MARKETS DEBT FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 23 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[C] PRIOR TO DECEMBER 1, 1992, OVERSEAS OPERATED UNDER A DIFFERENT
INVESTMENT OBJECTIVE. ACCORDINGLY, THE FUND'S HISTORICAL PERFORMANCE
MAY NOT REPRESENT ITS CURRENT INVESTMENT POLICIES.
FIDELITY ADVISOR INTERNATIONAL FUNDS
INSTITUTIONAL CLASS PROSPECTUS
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; Who May Want to Invest
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance; Appendix B
d .............................. Cover Page; Performance
4 a i............................. Charter
ii........................... Investment Principles and Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Cover Page; Charter
ii........................... Charter; Breakdown of Expenses
iii.......................... Expenses; Breakdown of Expenses
c .............................. Charter
d .............................. Charter; Breakdown of Expenses
e .............................. Charter; Breakdown of Expenses
f .............................. Expenses
g i.............................. Charter
ii.............................. *
5A .............................. Performance
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions
iii.......................... Charter
b ............................. Charter
c .............................. Transaction Details; Exchange Restrictions
d .............................. *
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
h .............................. Who May Want to Invest
7 a .............................. Cover Page; Charter
b .............................. Expenses; How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. Breakdown of Expenses; Transaction Details
f .............................. Expenses; Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY ADVISOR
INTERNATIONAL FUNDS
INSTITUTIONAL CLASS
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of a fund's most recent financial report and portfolio listing,
or a copy of the Statement of Additional Information (SAI) dated
October 31, 1997. The SAI has been filed with the Securities and
Exchange Commission (SEC) and is available along with other related
materials on the SEC's Internet Web site (http://www.sec.gov). The SAI
is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity
Distributors Corporation (FDC), 82 Devonshire Street, Boston, MA
02109, or your investment professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY
THE FDIC, FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
EMERGING MARKETS INCOME MAY INVEST SIGNIFICANTLY IN LOWER-QUALITY DEBT
SECURITIES, SOMETIMES CALLED "JUNK BONDS." THESE SECURITIES CARRY
GREATER RISKS, SUCH AS THE RISK OF DEFAULT, THAN OTHER DEBT
SECURITIES.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
AINTI-pro-0297-01
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation by investing in securities of foreign issuers.
FIDELITY ADVISOR OVERSEAS FUND seeks growth of capital primarily
through investments in foreign securities.
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND seeks a high level of
current income by investing primarily in debt securities and other
instruments of issuers in emerging markets. As a secondary objective,
the fund seeks capital appreciation.
PROSPECTUS
OCTOBER 31, 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON,
MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES INSTITUTIONAL CLASS'S YEARLY OPERATING EXPENSES.
FINANCIAL HIGHLIGHTS A SUMMARY OF EACH FUND'S FINANCIAL DATA.
PERFORMANCE HOW EACH FUND HAS DONE OVER TIME.
THE FUNDS IN DETAIL CHARTER HOW EACH FUND IS ORGANIZED.
INVESTMENT PRINCIPLES AND RISKS EACH FUND'S OVERALL APPROACH
TO INVESTING.
BREAKDOWN OF EXPENSES HOW OPERATING COSTS ARE CALCULATED
AND WHAT THEY INCLUDE.
YOUR ACCOUNT TYPES OF ACCOUNTS DIFFERENT WAYS TO SET UP YOUR ACCOUNT,
INCLUDING TAX-SHELTERED RETIREMENT PLANS.
HOW TO BUY SHARES OPENING AN ACCOUNT AND MAKING ADDITIONAL
INVESTMENTS.
HOW TO SELL SHARES TAKING MONEY OUT AND CLOSING YOUR ACCOUNT.
INVESTOR SERVICES SERVICES TO HELP YOU MANAGE YOUR ACCOUNT.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS SHARE PRICE CALCULATIONS AND THE TIMING OF
PURCHASES AND REDEMPTIONS.
EXCHANGE RESTRICTIONS
APPENDIX A
APPENDIX B
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Institutional Class shares are offered to accounts managed (i) by a
bank trust department and other trust institutions, (ii) by a
broker-dealer, and (iii) by a registered investment advisor (RIA) on a
discretionary basis (collectively, eligible intermediaries).
Institutional Class shares are available through eligible
intermediaries that have signed a participation agreement with FDC.
The participation agreement specifies certain aggregate asset minimums
and asset qualifications, trading guidelines, marketing restrictions,
and program requirements. In addition, Institutional Class shares are
available through certain eligible intermediaries that meet
qualifications established by FDC but have not signed a participation
agreement.
Institutional Class shares are also offered to insurance company
separate accounts used to fund annuity contracts for employee benefit
plans which, in the aggregate, have more than 200 eligible employees
or a minimum of $1 million in plan assets invested in Fidelity Advisor
Funds.
Investors (including employee benefit plans) and intermediaries (other
than eligible intermediaries) that established Institutional Class
accounts prior to June 30, 1995, may continue to purchase
Institutional Class shares.
The funds may be appropriate for investors who want to pursue their
investment goals in markets outside the United States. By including
international investments in your portfolio you can achieve additional
diversification and participate in growth opportunities around the
world.
International Capital Appreciation and Overseas are diversified funds.
Emerging Markets Income is a non-diversified fund. Non-diversified
funds may invest a greater portion of their assets in securities of
individual issuers than diversified funds. As a result, changes in the
market value of a single issuer could cause greater fluctuations in
share value than would occur in a more diversified fund.
International Capital Appreciation is designed for investors who seek
capital appreciation from investments around the world. Overseas is
designed for investors who seek long-term growth of capital primarily
from investments in foreign securities. Each fund may be appropriate
for investors who are willing to ride out stock market fluctuations in
pursuit of potentially high long-term returns.
Emerging Markets Income is designed for investors who want high
current income with some potential for capital growth from a portfolio
of debt instruments with a focus on lower-quality debt securities. The
fund may be appropriate for long-term, aggressive investors who
understand the potential risks and rewards of investing in
lower-quality debt securities, including defaulted securities.
The value of each fund's investments and, as applicable, the income
they generate, will vary from day to day, and generally reflect
changes in market conditions, interest rates and other company,
political, and economic news. In the short term, stock prices can
fluctuate dramatically in response to these factors. The securities of
small, less well-known companies may be more volatile than those of
larger companies. Bond values fluctuate based on changes in interest
rates and the credit quality of the issuer, and may be subject to
prepayment risk, which can limit their price appreciation potential in
periods of declining interest rates. Over time, however, stocks,
although more volatile, have shown greater growth potential than other
types of securities. Investments in foreign securities may involve
risks in addition to those of U.S. investments, including increased
political and economic risk, as well as exposure to currency
fluctuations.
Each fund is not in itself a balanced investment plan. You should
consider your investment objective and tolerance for risk when making
an investment decision. When you sell your fund shares, they may be
worth more or less than what you paid for them.
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
Each fund offers Institutional Class shares, Class A shares, Class T
shares, Class B shares, and Class C shares. Class A and Class T
shares have a front-end sales charge and pay a 12b-1 fee. Class A and
Class T shares may be subject to a contingent deferred sales charge
(CDSC). Class B and Class C shares do not have a front-end sales
charge, but do have a CDSC, and pay a 12b-1 fee. You may obtain more
information about Class A, Class T, Class B, and Class C shares, which
are not offered through this prospectus, by calling 1-800-843-3001 or
from your investment professional.
The performance of one class of shares of a fund may be different from
the performance of another class of shares of the same fund because of
different sales charges and class expenses. For example, because
Institutional Class shares have no sales charge, and do not pay a
12b-1 fee, Institutional Class shares are expected to have a higher
total return than Class A, Class T, Class B, and Class C
shares.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy
or sell Institutional Class shares of a fund. In addition, you may be
charged an annual account maintenance fee if your account balance
falls below $2,500. See "Transaction Details," page , for an
explanation of how and when these charges apply.
<TABLE>
<CAPTION>
<S> <C>
INSTITUTIONAL CLASS
S ALES CHARGE ON PURCHASES AND REINVESTED DISTRIBUTIONS NONE
DEFERRED SALES CHARGE ON REDEMPTIONS NONE
ANNUAL ACCOUNT MAINTENANCE FEE (FOR ACCOUNTS UNDER $2,500) $12.00
</TABLE>
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to Fidelity Management & Research Company
(FMR) that, for Overseas, varies based on performance. Each fund also
incurs other expenses for services such as maintaining shareholder
records and furnishing shareholder statements and financial reports.
Institutional Class's expenses are factored into its share price or
dividends and are not charged directly to shareholder accounts (see
"Breakdown of Expenses" on page ).
The following figures are based on estimated or historical expenses,
adjusted to reflect current fees, of the Institutional Class of each
fund and are calculated as a percentage of average net assets of the
Institutional Class of each fund.
EXPENSE TABLE EXAMPLE: You would pay the following amount in total
expenses on a $1,000 investment in Institutional Class shares of a
fund , assuming a 5% annual return and full redemption at the end
of each time period. Total expenses shown below include any
shareholder transaction expenses and Institutional Class's annual
operating expenses.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INTERNATIONAL CAPITAL APPRECIATION MANAGEMENT FEE 0.75%[A] 1 YEAR $18
12B-1 FEE NONE 3 YEARS $55
OTHER EXPENSES (AFTER REIMBURSEMENT) 1.00%[A]
TOTAL OPERATING EXPENSES 1.75%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
OVERSEAS MANAGEMENT FEE 0.68% 1 YEAR $1 3
12B-1 FEE NONE 3 YEARS $4 1
OTHER EXPENSES (AFTER REIMBURSEMENT) 0. 62 % 5 YEARS $7 1
TOTAL OPERATING EXPENSES 1. 30 % 10 YEARS $1 57
EMERGING MARKETS INCOME MANAGEMENT FEE 0. 69 % 1 YEAR $13
12B-1 FEE NONE 3 YEARS $40
OTHER EXPENSES (AFTER REIMBURSEMENT) 0.5 6 % 5 YEARS $69
TOTAL OPERATING EXPENSES 1.25% 10 YEARS $151
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED EXPENSES OR RETURNS, ALL OF WHICH
MAY VARY.
A portion of the brokerage commissions that a fund pays is used to
reduce that fund's expenses. In addition, each fund has entered into
arrangements with its custodian and transfer agent whereby credits
realized as a result of uninvested cash balances are used to reduce
custodian and transfer agent expenses. Including these reductions, the
total Institutional Class operating expenses presented in the
preceding table would have been 1. 29 % and 1.25%, respectively,
for Overseas and Emerging Market s Income.
FMR has voluntarily agreed to reimburse the Institutional Class of
each fund to the extent that total operating expenses, as a percentage
of their respective average net assets, exceed the following rates:
EFFECTIVE
DATE
INTERNATIONAL CAPITAL APPRECIATION 1.75 % 11/1/97
OVERSEAS 1. 30 % 11/1/97
EMERGING MARKETS INCOME 1.25% 7/1/95
If these agreements were not in effect, the other expenses and total
operating expenses of the Institutional Class of each fund, as a
percentage of average net assets, would have been the following
amounts (estimated for International Capital Appreciation):
OTHER TOTAL
EXPENSES OPERATING
EXPENSES
INTERNATIONAL CAPITAL APPRECIATION[A] 1.30% 2.05%
OVERSEAS 0.76% 1.44%
EMERGING MARKETS INCOME 1.58% 2.2 7 %
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, and extraordinary expenses.
FINANCIAL HIGHLIGHTS
The financial highlights tables for Overseas and Emerging Markets
Income contain annual information which has been audited by Price
Waterhouse LLP (Over seas) or Coopers & Lybrand L.L.P.
(Emerging Markets Income), independent accountants. The funds'
financial highlights, financial statements, and reports of the
auditors are included in each fund's Annual Report, and are
incorporated by reference into (are legally a part of) the funds' SAI.
Contact FDC or your investment professional for a free copy of an
Annual Report or the SAI. The Institutional Class of International
Capital Appreciation will commence operations on or about November
3 , 1997.
OVERSEAS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. YEARS ENDED OCTOBER 31
2.SELECTED PER-SHARE DATA AND RATIOS 1997J 1996 1995F
3.NET ASSET VALUE, BEGINNING OF PERIOD $ 15.20 $ 13.97 $ 13.89
4.INCOME FROM INVESTMENT OPERATIONS
5. NET INVESTMENT INCOME .08D .21D,E .05
6. NET REALIZED AND UNREALIZED GAIN (LOSS) 1.41 1.24 .03
7. TOTAL FROM INVESTMENT OPERATIONS 1.49 1.45 .08
8.LESS DISTRIBUTIONS
9. FROM NET INVESTMENT INCOME (.23) (.21) --
10. FROM NET REALIZED GAIN (.63) (.01) --
11. TOTAL DISTRIBUTIONS (.86) (.22) --
12.NET ASSET VALUE, END OF PERIOD $ 15.83 $ 15.20 $ 13.97
13.TOTAL RETURN B,C 10.15% 10.51% .58%
14.NET ASSETS, END OF PERIOD (000 OMITTED) $ 29,380 $ 16,247 $ 1,482
15.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.18% A 1.44% .97% A,G
16.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS 1.17% A,H 1.43% H .97 % A
17.RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 1.13%A 1.46% 1.94%A
18.PORTFOLIO TURNOVER 81%A 82% 47%
19.AVERAGE COMMISSION RATEI $ .0206 $ .0133
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.04 PER SHARE.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY
VARY FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF
TRADES EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND
COMMISSION RATE STRUCTURES MAY DIFFER.
J SIX MONTHS ENDED APRIL 30,1997 (UNAUDITED)
EMERGING MARKETS INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
20. YEARS ENDED DECEMBER 31
21.SELECTED PER-SHARE DATA AND RATIO 1997H 1996 1995D
22.NET ASSET VALUE, BEGINNING OF PERIOD $ 11.650 $ 9.280 $ 8.400
23.INCOME FROM INVESTMENT OPERATIONS
24. NET INVESTMENT INCOME .552E .786E .393
25. NET REALIZED AND UNREALIZED GAIN (LOSS) .947 2.779 .876
26. TOTAL FROM INVESTMENT OPERATIONS 1.499 3.565 1.269
27.LESS DISTRIBUTIONS
28. FROM NET INVESTMENT INCOME (.379) (.785) (.389)
29. FROM NET REALIZED GAIN (.190) (.410) --
30. TOTAL DISTRIBUTIONS (.569) (1.195) (.389)
31.NET ASSET VALUE, END OF PERIOD $ 12.580 $ 11.650 $ 9.280
32.TOTAL RETURNB,C 13.19% 40.21% 15.52%
33.NET ASSETS, END OF PERIOD (000 OMITTED) $ 5,223 $ 2,639 $ 201
34.RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.25%A,F 1.25%F 1.25%A,F
35.RATIO OF EXPENSES TO AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS 1.23%A,G 1.25% 1.25%A
36.RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 9.18%A 7.46% 9.09%A
37.PORTFOLIO TURNOVER 482%A 410% 305%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO DECEMBER 31, 1995.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
G FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
H SIX MONTHS ENDED JUNE 30,1997 (UNAUDITED)
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or
YIELD.
For Overseas, the fiscal year runs from November 1 through October 31.
For Emerging Markets Income, the fiscal year runs from January 1
through December 31. The tables below show the performance of the
Institutional Class of Overseas and Emerging Markets Income over past
fiscal periods ended April 30, 1997 or June 30, 1997, as indicated.
The charts in Appendix B on page , present calendar year
performance for the Institutional Class of Overseas and Emerging
Markets Income compared to different measures, including a competitive
funds average.
Performance history will be available for the Institutional Class of
International Capital Appreciation after the fund has been in
operation for six months.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN[C] CUMULATIVE TOTAL RETURN[C]
PAST 1 YEAR PAST 5 YEARS LIFE OF FUND+ PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND+
OVERSEAS [A] 10. 15% 10.90 % 8.51 % 10. 15 % 10. 15 % 67.78 % 7 7.51 %
EMERGING MARKETS
INCOME [B] 40.37% N/A 18.23 % 13.19 % 40.37 % N/A 74.14 %
</TABLE>
+ LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS (APRIL 23,
1990 FOR OVERSEAS AND MARCH 10, 1994 FOR EMERGING MARKETS INCOME).
[A] PERIOD ENDED APRIL 30, 1997
[B] PERIOD ENDED JUNE 30, 1997
[C] INITIAL OFFERING OF INSTITUTIONAL CLASS OF OVERSEAS AND
EMERGING MARKETS INCOME TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL
CLASS RETURNS PRIOR TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH REFLECT
A 12B-1 FEE OF 0.65% FOR OVERSEAS AND 0.25% FOR EMERGING MARKETS
INCOME. TOTAL RETURNS FOR INSTITUTIONAL CLASS PRIOR TO JULY 3, 1995
WOULD HAVE BEEN HIGHER IF CLASS T'S 12B-1 FEE HAD NOT BEEN
REFLECTED.
If FMR had not reimbursed certain class expenses during these
periods, total returns would have been lower.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields
are calculated according to a standard that is required for all stock
and bond funds. Because this differs from other accounting methods,
the quoted yield may not equal the income actually paid to
shareholders.
This difference may be significant for a fund whose investments are
denominated in foreign currencies.
In calculating yield, a fund may from time to time use a security's
coupon rate instead of its yield to maturity in order to reflect the
risk premium on that security. This practice will have the effect of
reducing a fund's yield.
THE COMPETITIVE FUNDS AVERAGES are the Lipper International Funds
Average and the Lipper Emerging Market s Debt Funds Average for
Overseas and Emerging Markets Income, respectively. As of the
applicable semi-annual period end, the averages reflected the
performance of 396 and 23 mutual funds with similar investment
objectives, respectively. These averages, published by Lipper
Analytical Services, Inc., exclude the effect of sales loads.
J.P. MORGAN EMERGING MARKETS BOND INDEX PLUS is a market
capitalization weighted total return index of U.S. dollar- and other
external currency-denominated Brady bonds, loans, Eurobonds, and local
market debt instruments traded in emerging markets.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA, FAR EAST
(EAFE(registered trademark)) INDEX is a market capitalization
weighted, unmanaged index of over 1,000 foreign stocks.
Unlike Institutional Class's returns, the total returns of each
comparative index do not include the effect of any brokerage
commissions, transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
Institutional Class of Overseas and International Capital Appreciation
may quote its adjusted net asset value including all distributions
paid. This value may be averaged over specified periods and may be
used to calculate a class's moving average.
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, please contact your
investment professional or call 1-800-843-3001 .
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. International Capital
Appreciation and Overseas are diversified funds, and Emerging Markets
Income is a non-diversified fund, of Fidelity Advisor Series VIII, an
open-end management investment company organized as a Massachusetts
business trust on September 22, 1983.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee the
funds' activities, review contractual arrangements with companies that
provide services to the funds, and review the funds' performance. The
trustees serve as trustees for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials in
advance, including a voting card and information about the proposals
to be voted on. The number of votes you are entitled to is based upon
the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust,
respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business
address at 82 Devonshire Street, Boston, Massachusetts 02109. It
includes a number of different subsidiaries and divisions which
provide a variety of financial services and products. The funds employ
various Fidelity companies to perform activities required for their
operation.
The funds are managed by FMR, which handles each fund's business
affairs and, with the assistance of foreign affiliates, chooses each
fund's investments.
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England serves as a sub-adviser for each fund.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR
Far East), in Tokyo, Japan serves as a sub-adviser for each fund.
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda serves as a sub-adviser for each fund.
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIA (U.K.) L), in London, England serves as a sub-adviser
for each fund.
(small solid bullet) Fidelity Investment Japan Limited (FIJ), in
Tokyo, Japan serves as a sub-adviser for each fund.
As of September 30, 1997, FMR advised funds having approximately 33
million shareholder accounts with a total value of more than $521
billion.
John Carlson is Vice President and manager of Advisor Emerging Markets
Income, which he has managed since June 1995. He also manages several
other Fidelity funds. Prior to joining Fidelity in 1995, Mr. Carlson
was Executive Director of emerging markets at Lehman Brothers
International from 1992 through 1995.
Richard Mace, Jr. is Vice President and manager of Advisor Overseas,
which he has managed since March 1996. He also manages several other
Fidelity funds and serves as a group leader of the international
funds. Since joining Fidelity in 1987, Mr. Mace has worked as a
manager and analyst.
Kevin McCarey is Vice President and manager of Advisor
International Capital Appreciation, which he has managed since
inception. He also manages another Fidelity fund. Since joining
Fidelity in 1986, Mr. McCarey has worked as an analyst and
manager.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services.
Fidelity Investments Institutional Operations Company, Inc. (FIIOC)
performs transfer agent servicing functions for the Institutional
Class of each fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant
owners of a class of shares of common stock representing approximately
49% of the voting power of FMR Corp. Under the Investment Company Act
of 1940 (the 1940 Act), control of a company is presumed where one
individual or group of individuals owns more than 25% of the voting
stock of that company; therefore, the Johnson family may be deemed
under the 1940 Act to form a controlling group with respect to FMR
Corp.
Fidelity International Limited (FIL), is the parent company of FIIA,
FIJ, and FIIA (U.K.) L. The Johnson family group also owns, directly
or indirectly, more than 25% of the voting common stock of FIL.
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out a fund's transactions, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
International funds offer the potential for diversification by
spreading investments among securities of both developed and emerging
markets, different countries and geographic regions.
FMR determines where an issuer is located by looking at such
factors as its country of organization, the primary trading market for
its securities, and the location of its assets, personnel, sales, and
earnings.
The value of the funds' domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies and general market and economic
conditions. Bond values fluctuate based on changes in interest rates,
market conditions, other economic and political news, and on the
bonds' quality and maturity. In general, bond prices rise when
interest rates fall, and fall when interest rates rise. This effect is
usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk. Investments
in foreign securities may involve risks in addition to those of U.S.
investments, including increased political and economic risk, as well
as exposure to currency fluctuations.
International funds have increased economic and political risks as
they are exposed to events and factors in the various world markets.
These risks may be greater for funds that invest in emerging markets.
Also, because many of the funds' investments are denominated in
foreign currencies, changes in the value of foreign currencies can
significantly affect a fund's share price. FMR may use a variety of
investment techniques to either increase or decrease a fund's
investment exposure to any currency.
FMR may use various investment techniques to hedge a portion of the
funds' risks, but there is no guarantee that these strategies will
work as FMR intends. When you sell your shares, they may be worth more
or less than what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. The fund may invest in short-term debt securities and money
market instruments for cash management purposes. Each fund also
reserves the right to invest without limitation in preferred stocks
and investment-grade debt instruments for temporary, defensive
purposes.
INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation by investing in securities of foreign issuers. FMR
normally invests at least 65% of the fund's total assets in these
securities. The fund may also invest in U.S. issuers.
The fund normally diversifies its investments across different
countries and regions. In allocating the fund's assets across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
The fund may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The fund, however, expects to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
In general, International Capital Appreciation Fund is more
aggressive than Overseas Fund and may have greater investments in
securities of emerging market issuers.
OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities. FMR normally invests at least 65%
of the fund's total assets in these securities. The fund may also
invest in U.S. issuers.
The fund normally diversifies its investments across different
countries and regions. In allocating the fund's assets across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the international
market as a whole.
The fund may invest in the securities of any issuer, including
companies and other business organizations as well as governments and
government agencies. The fund, however, expects to invest primarily in
equity securities, but may also invest in debt securities of any
quality.
EMERGING MARKETS INCOME FUND seeks a high level of current
income by investing primarily in debt securities and other instruments
of issuers in emerging markets. As a secondary objective, the fund
seeks capital appreciation.
FMR normally invests at least 65% of the fund's total assets in
debt securities and other instruments of emerging market issuers.
Countries with emerging markets include countries (i) that have an
emerging stock market, as defined by the International Finance
Corporation, (ii) with low- to middle-income economies, according to
the World Bank, or (iii) that are listed in World Bank publications as
"developing."
The fund emphasizes countries with relatively low gross national
product per capita compared to the world's major economies, and with
the potential for rapid economic growth. The fund's strategy currently
tends to lead to investments in Latin America and, to a lesser extent,
Asia, Africa, and emerging European nations. There are relatively few
issuers in these markets, which may result in the fund being highly
concentrated in a small number of government issuers. There is no
limit on investments in any one region, country, or currency, although
the fund normally invests in at least three different countries.
The fund may also invest a portion of its assets in common and
preferred stocks of emerging markets issuers, debt securities of
non-emerging market foreign issuers, and lower-quality debt securities
of U.S. issuers. Although the fund may invest up to 35% of its total
assets in these securities, FMR does not currently anticipate that
these investments will exceed approximately 20% of the fund's total
assets. Though common and preferred stocks and convertible securities
present the possibility for significant capital appreciation over the
long-term, they may fluctuate dramatically in the short-term and
entail a high degree of risk.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in
the funds' SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a fund's
investment objective and policies and that doing so will help a fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
your investment professional.
EQUITY SECURITIES may include common stocks, preferred stocks,
convertible securities, and warrants. Common stocks, the most familiar
type, represent an equity (ownership) interest in a corporation.
Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's
financial condition and on overall market and economic conditions.
Smaller companies are especially sensitive to these factors.
RESTRICTIONS: With respect to 75% of total assets, each of
International Capital Appreciation and Overseas may not purchase more
than 10% of the outstanding voting securities of a single issuer. This
limitation does not apply to securities of other investment companies.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
Lower-quality debt securities are considered to have speculative
characteristics, and involve greater risk of default or price changes
due to changes in the issuer's creditworthiness, or they may already
be in default. The market prices of these securities may fluctuate
more than higher-quality securities and may decline significantly in
periods of general or regional economic difficulty. Lower-quality
securities may be thinly traded, making them difficult to sell
promptly at an acceptable price. Adverse publicity and changing
investor perceptions may affect the ability to obtain prices for, or
to sell these securities.
The tables on pages and provide a summary ratings assigned to debt
holdings (not including money market instruments) in the funds'
portfolios. These figures are dollar-weighted averages of month-end
portfolio holdings during the fiscal year ended 1996, and are
presented as a percentage of total security investments. These
percentages are historical and do not necessarily indicate a fund's
current or future debt holdings.
RESTRICTIONS: For International Capital Appreciation and Overseas,
purchase of a debt security is consistent with a fund's debt quality
policy if it is rated at or above the stated level by Moody's
Investors Service or rated in the equivalent categories by Standard &
Poor's, or is unrated but judged to be of equivalent quality by FMR.
Each of International Capital Appreciation and Overseas currently
intends to limit its investments in lower than Baa-quality debt
securities to less than 35% of its assets.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of
the U.S. Government. Not all U.S. Government securities are backed by
the full faith and credit of the United States. For example, U.S.
Government securities such as those issued by Fannie Mae are supported
by the instrumentality's right to borrow money from the U.S. Treasury
under certain circumstances. Other U.S. Government securities, such as
those issued by the Federal Farm Credit Banks Funding Corporation, are
supported only by the credit of the entity that issued them.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve additional risks and considerations. These
include risks relating to political or economic conditions in foreign
countries, fluctuations in foreign currencies, withholding or other
taxes, operational risks, increased regulatory burdens, and the
potentially less stringent investor protection and disclosure
standards of foreign markets. Additionally, governmental issuers of
foreign debt securities may be unwilling to pay interest and repay
principal when due and may require that the conditions for payment be
renegotiated. All of these factors can make foreign investments,
especially those in developing countries, more volatile than U.S.
investments.
EMERGING MARKETS INCOME
Fiscal Year Ended December 31, 1996 Debt Holdings, by Rating
MOODY'S
INVESTORS SERVICE STANDARD & POOR'S
(AS A % OF INVESTMENTS) (AS A % OF INVESTMENTS)
Rating Average of Rating Average of
total total
investments investments
INVESTMENT GRADE
Highest quality Aaa -- AAA 0.30%
High quality Aa -- AA 0.34%
Upper-medium grade A 0.04% A --
Medium grade Baa 0.83% BBB 2.50%
LOWER QUALITY
Moderately
speculative Ba 20.77% BB 26.19%
Speculative B 27.99% B 26.22%
Highly speculative Caa CCC
Poor quality Ca -- CC --
Lowest quality, no
interest C C
In default, in
arrears -- D --
REFER TO THE APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUND DOES NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH ITS DEBT QUALITY POLICY. SECURITIES NOT
RATED BY MOODY'S OR S&P AMOUNTED TO 35.35%
OF THE FUND'S INVESTMENTS. THIS PERCENTAGE MAY INCLUDE SECURITIES
RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS,
AS WELL AS UNRATED SECURITIES. UNRATED LOWER-QUALITY
SECURITIES AMOUNTED TO 35.35% OF THE FUND'S INVESTMENTS.
FOR FOREIGN GOVERNMENT SECURITIES NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE
RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
OVERSEAS
Fiscal Year Ended October 31, 1996 Debt Holdings, by Rating
MOODY'S
INVESTORS SERVICE STANDARD & POOR'S
(AS A % OF INVESTMENTS) (AS A % OF INVESTMENTS)
Rating Average of Rating Average of
total total
investments investments
INVESTMENT GRADE
Highest quality Aaa -- AAA --
High quality Aa 0.18% AA --
Upper-medium grade A -- A 0.18%
Medium grade Baa -- BBB --
LOWER QUALITY
Moderately speculative Ba -- BB 0.04%
Speculative B 0.06% B --
Highly speculative Caa CCC
Poor quality Ca -- CC --
Lowest quality, no interest C C
In default, in arrears -- D --
REFER TO THE FUND'S SAI FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
THE FUND DOES NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH ITS DEBT QUALITY POLICY. SECURITIES NOT
RATED BY MOODY'S OR S&P AMOUNTED TO 0.00%
OF THE FUND'S INVESTMENTS. THIS PERCENTAGE MAY INCLUDE SECURITIES
RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS,
AS WELL AS UNRATED SECURITIES. UNRATED LOWER-QUALITY
SECURITIES AMOUNTED TO 0.00% OF THE FUND'S INVESTMENTS.
FOR FOREIGN GOVERNMENT SECURITIES NOT INDIVIDUALLY RATED BY A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, FMR ASSIGNS THE
RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
EXPOSURE TO EMERGING MARKETS. Investing in emerging markets involves
risks in addition to those generally associated with foreign
investing. The extent of economic development, political stability,
and market depth varies widely in comparison to more developed
markets. Emerging market economies may be subject to greater social,
economic, and political uncertainties or may be based on only a few
industries. All of these factors can make emerging market securities
more volatile and potentially less liquid than domestic securities.
AMERICAN DEPOSITARY RECEIPTS AND EUROPEAN DEPOSITARY RECEIPTS (ADRS
AND EDRS) are certificates evidencing ownership of shares of a
foreign-based issuer held in trust by a bank or similar financial
institution. Designed for use in U.S. and European securities markets,
respectively, ADRs and EDRs are alternatives to the purchase of the
underlying securities in their national markets and currencies.
ASSET-BACKED SECURITIES include interests in pools of debt securities,
commercial or consumer loans, or other receivables. The value of these
securities depends on many factors, including changes in interest
rates, the availability of information concerning the pool and its
structure, the credit quality of the underlying assets, the market's
perception of the servicer of the pool, and any credit enhancement
provided. In addition, these securities may be subject to prepayment
risk.
MORTGAGE SECURITIES include interests in pools of commercial or
residential mortgages, and may include complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed
securities. Mortgage securities may be issued by agencies or
instrumentalities of the U.S. Government or by private entities.
The price of a mortgage security may be significantly affected by
changes in interest rates. Some mortgage securities may have a
structure that makes their reaction to interest rates and other
factors difficult to predict, making their price highly volatile.
Also, mortgage securities, especially stripped mortgage-backed
securities, are subject to prepayment risk. Securities subject to
prepayment risk generally offer less potential for gains during a
declining interest rate environment, and similar or greater potential
for loss in a rising interest rate environment.
STRIPPED SECURITIES are the separate income or principal components of
a debt security. The risks associated with stripped securities are
similar to those of other debt securities, although stripped
securities may be more volatile, and the value of certain types of
stripped securities may move in the same direction as interest rates.
U.S. Treasury securities that have been stripped by a Federal Reserve
Bank are obligations issued by the U.S. Treasury.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a
security at one price and simultaneously agrees to sell it back at a
higher price. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.
FOREIGN REPURCHASE AGREEMENTS may be less well secured than U.S.
repurchase agreements, and may be denominated in foreign currencies.
They also may involve greater risk of loss if the counterparty
defaults. Some counterparties in these transactions may be less
creditworthy than those in U.S. markets.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors
such as changes in real estate values and property taxes, interest
rates, cash flow of underlying real estate assets, overbuilding, and
the management skill and creditworthiness of the issuer. Real
estate-related instruments may also be affected by tax and regulatory
requirements, such as those relating to the environment.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, currency exchange rates, commodity prices, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts, entering into currency exchange contracts or swap
agreements, purchasing indexed securities, and selling securities
short.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other
borrower. They have additional risks beyond conventional debt
securities because they may entail less legal protection for a fund,
or there may be a requirement that the fund supply additional cash to
a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more
than 15% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading
practices in which payment and delivery for the security take place at
a later date than is customary for that type of security. The market
value of the security could change during this period.
WARRANTS are instruments which entitle the holder to buy underlying
equity securities at a specific price for a specific period of time. A
warrant tends to be more volatile than its underlying securities and
ceases to have value if it is not exercised prior to its expiration
date. In addition, changes in the value of a warrant do not
necessarily correspond to changes in the value of its underlying
securities.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to
funds and accounts managed by FMR or its affiliates, whose goal is to
seek a high level of current income while maintaining a stable $1.00
share price. A major change in interest rates or a default on the
money market fund's investments could cause its share price to change.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one
industry. Economic, business, or political changes can affect all
securities of a similar type. A fund that is not diversified may be
more sensitive to changes in the market value of a single issuer or
industry.
RESTRICTIONS: With respect to 75% of its total assets, each of
International Capital Appreciation and Overseas may not purchase a
security if, as a result, more than 5% would be invested in the
securities of any issuer. This limitation does not apply to U.S.
Government securities or to securities of other investment companies.
Emerging Markets Income is considered non-diversified. Generally, to
meet federal tax requirements at the close of each quarter, the fund
does not invest more than 25% of its total assets in any issuer and,
with respect to 50% of total assets, does not invest more than 5% of
its total assets in any issuer. These limitations do not apply to U.S.
Government securities or to securities of other investment companies.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
BORROWING. Each fund may borrow from banks or from other funds advised
by FMR, or through reverse repurchase agreements. If a fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If a fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including
Fidelity Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a
means of earning income. This practice could result in a loss or a
delay in recovering a fund's securities. A fund may also lend money to
other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a
fund's total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital appreciation.
OVERSEAS FUND seeks growth of capital primarily through investments in
foreign securities.
EMERGING MARKETS INCOME FUND seeks a high level of current income by
investing primarily in debt securities and other instruments of
issuers in emerging markets. As a secondary objective, the fund seeks
capital appreciation.
With respect to 75% of its total assets, each of International Capital
Appreciation and Overseas may not purchase a security if, as a result,
more than 5% would be invested in the securities of any one issuer and
may not purchase more than 10% of the outstanding voting securities of
a single issuer. These limitations do not apply to U.S. Government
securities or to securities of other investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government
securities.
Each fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in
that class's share price or dividends; they are neither billed
directly to shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. Each fund also pays OTHER EXPENSES,
which are explained on page .
FMR may, from time to time, agree to reimburse a fund for management
fees and other expenses above a specified limit. FMR retains the
ability to be repaid by a fund if expenses fall below the specified
limit prior to the end of the fiscal year. Reimbursement arrangements,
which may be terminated at any time without notice, can decrease a
fund's expenses and boost its performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee
for each of International Capital Appreciation and Emerging Markets
Income is calculated by adding a group fee rate to an individual fund
fee rate, and multiplying the result by the fund's average net assets.
For Overseas, the fee is calculated by taking a basic fee and then
applying a performance adjustment. The performance adjustment either
increases or decreases the management fee, depending on how well the
fund has performed relative to the EAFE Index.
The basic fee rate (calculated monthly) is calculated by adding a
group fee rate to an individual fund fee rate, and multiplying the
result by the fund's average net assets.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.52% for
International Capital Appreciation and Overseas or 0.37% for Emerging
Markets Income, and it drops as total assets under management
increase.
THE PERFORMANCE ADJUSTMENT rate is calculated monthly by comparing
Overseas performance to that of the EAFE Index over the most recent
36-month period. The difference is translated into a dollar amount
that is added to or subtracted from the basic fee. The maximum
annualized performance adjustment rate is (plus/minus)0.20% of the
fund's average net assets over the performance period.
For the purposes of calculating the performance adjustment for
Overseas, the fund's investment performance will be based on the
average performance of all classes of the fund weighted according to
their average assets for each month in the performance period.
The following table states the management fee rates for Overseas and
Emerging Markets Income for the fiscal year ended 1996, and the
estimated management fee rate for International Capital Appreciation.
GROUP FEE INDIVIDUAL TOTAL
RATE FUND MANAGEMENT
FEE RATE FEE RATE
INTERNATIONAL CAPITAL APPRECIATION[A] 0.30% 0.45% 0.75%
OVERSEAS[B] 0.30% 0.45% 0.68%
EMERGING MARKETS INCOME 0.14% 0.55% 0.69%
[A] ESTIMATED
[B] THE BASIC FEE RATE FOR THE FISCAL YEAR ENDED 1996 WAS 0.75% FOR
OVERSEAS.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR
Far East, FIJ and FIIA. FIIA in turn has a sub-advisory agreement with
FIIA (U.K.) L. These sub-advisers are compensated for providing FMR
with investment research and advice on issuers based outside the
United States. FMR pays FMR U.K. and FMR Far East fees equal to 110%
and 105%, respectively, of the costs of providing these services. FMR
pays FIJ and FIIA a fee equal to 30% of its management fee rate
associated with investments for which the sub-adviser provided
investment advice.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to
50% of its management fee rate with respect to a fund's investments
that the sub-adviser manages on a discretionary basis. FIIA pays FIIA
(U.K.) L a fee equal to 110% of the cost of providing these services.
For the fiscal year ended 1996, FMR, on behalf of Overseas, paid FMR
U.K., FMR Far East, and FIIA fees equal to less than 0.06% of the
fund's average net assets.
OTHER EXPENSES
While the management fee is a significant component of each fund's
annual operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for the Institutional Class shares of each fund.
Fidelity Service Company, Inc. (FSC) calculates the net asset value
per share (NAV) and dividends for the Institutional Class of each
fund, and maintains the general accounting records and administers the
securities lending program for each fund. For the fiscal year ended
1996, transfer agency and pricing and bookkeeping fees paid (as a
percentage of average net assets) amounted to the following. These
amounts are before expense reductions, if any.
TRANSFER AGENCY PRICING AND
FEES PAID BY BOOKKEEPING FEES
INSTITUTIONAL CLASS PAID BY FUND
OVERSEAS 0.21% 0.06%
EMERGING MARKETS INCOME 0.24% 0.09%
The Institutional Class of each fund has adopted a DISTRIBUTION AND
SERVICE PLAN. Each plan recognizes that FMR may use its management fee
revenues, as well as its past profits or its resources from any other
source, to pay FDC for expenses incurred in connection with the
distribution of Institutional Class shares. FMR, directly or through
FDC, may make payments to third parties, such as banks or
broker-dealers, that engage in the sale of, or provide shareholder
support services for, Institutional Class shares. Currently, the Board
of Trustees of each fund has authorized such payments.
Each fund also pays other expenses, such as legal, audit, and
custodian fees; in some instances, proxy solicitation costs; and the
compensation of trustees who are not affiliated with Fidelity. A
broker-dealer may use a portion of the commissions paid by a fund to
reduce that fund's custodian or transfer agent fees.
The portfolio turnover rate for International Capital Appreciation is
not expected to exceed 200% for its first fiscal period ending October
31, 1998. The portfolio turnover rate for Overseas and Emerging
Markets Income for the fiscal year ended 1996 was 82% and 410%,
respectively. These rates will vary from year to year. High turnover
rates increase transaction costs and may increase taxable capital
gains. FMR considers these effects when evaluating the anticipated
benefits of short-term investing.
YOUR ACCOUNT
TYPES OF ACCOUNTS
When you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of
fund shares. Read your investment professional's program materials in
conjunction with this prospectus for additional service features or
fees that may apply. Certain features of the funds, such as minimum
initial or subsequent investment amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If you are investing through a retirement account or if your
employer offers a fund through a retirement program, you may be
subject to additional fees. For more information, please refer to your
program materials, contact your employer, or call your retirement
benefits number or your investment professional directly, as
appropriate.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have
two or more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of
legal age and under 70 1/2(checkmark)(solid club) with earned income
to invest up to $2,000 per tax year. Individuals can also invest in a
spouse's IRA if the spouse has earned income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) 401(K) PLANS allow employees of corporations of all
sizes to contribute a percentage of their wages on a tax-deferred
basis. These accounts need to be established by the trustee of the
plan.
(solid bullet) MONEY PURCHASE/PROFIT SHARING PLANS (KEOGH PLANS) are
tax-deferred pension accounts designated for employees of
unincorporated businesses or for persons who are self-employed.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide
small business owners or those with self-employed income (and their
eligible employees) with many of the same advantages as a Keogh, but
with fewer administrative requirements.
(solid bullet) SIMPLE IRAS provide small business owners and those
with self-employed income (and their eligible employees) with many of
the advantages of a 401(k) plan, but with fewer administrative
requirements.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you
can set up a custodial account under the Uniform Gifts to Minors Act
(UGMA) or the Uniform Transfers to Minors Act (UTMA). Contact your
investment professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
Contact your investment professional.
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of Institutional Class is the class's
net asset value per share (NAV). Institutional Class's shares are sold
without a sales charge.
Your s hares will be purchased at the next NAV calculated
after your order is received and accepted. Institutional
Class's NAV is normally calculated each business day at
4:00 p.m. Eastern time.
It is the responsibility of your investment professional to transmit
your order to buy shares to Fidelity before the close of business on
the day you place your order.
Fidelity must receive payment within three business days after an
order for shares is placed; otherwise your purchase order may be
canceled and you could be held liable for resulting fees and/or
losses.
Share certificates are not available for Institutional Class shares.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an
account application and mail it along with your check. You may also
open your account by wire as described on page . If there is no
account application accompanying this prospectus, call 1-800-843-3001
or your investment professional.
If you are investing through a tax-sheltered retirement plan, such as
an IRA, for the first time, you will need a special application.
Contact your investment professional for more information and a
retirement account application.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you
can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place an order and wire money into your account,
(small solid bullet) Open your account by exchanging from the same
class of another Fidelity Advisor fund or from another Fidelity fund,
or
(small solid bullet) Contact your investment professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and
Keogh accounts $500
Through regular investment plans* $1,000
TO ADD TO AN ACCOUNT $250
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and
Keogh accounts $100
Through regular investment plans* $100
MINIMUM BALANCE $1,000
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and
Keogh accounts None
*AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $1,000, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED. FOR MORE INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE
REFER TO "INVESTOR SERVICES," PAGE .
There is no minimum account balance or initial or subsequent
investment minimum for certain retirement accounts funded through
salary deduction, or accounts opened with the proceeds of
distributions from such Fidelity retirement accounts. Refer to the
program materials for details.
For further information on opening an account, please consult your
investment professional or refer to the account application.
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
<TABLE>
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PHONE (SMALL SOLID BULLET) EXCHANGE FROM THE SAME CLASS OF
ANOTHER FIDELITY ADVISOR FUND (SMALL SOLID BULLET) EXCHANGE FROM THE SAME CLASS OF
ANOTHER FIDELITY ADVISOR FUND
1-800-843-3001
OR YOUR OR FROM ANOTHER FIDELITY FUND ACCOUNT WITH THE SAME OR FROM ANOTHER FIDELITY FUND ACCOUNT WITH THE SAME
INVESTMENT
PROFESSIONAL REGISTRATION, INCLUDING NAME, ADDRESS, AND TAXPAYER
ID NUMBER. REGISTRATION, INCLUDING NAME, ADDRESS, AND TAXPAYER
ID NUMBER.
MAIL (MAIL_
GRAPHIC) (SMALL SOLID BULLET) COMPLETE AND SIGN THE ACCOUNT
APPLICATION. MAKE YOUR CHECK (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE TO THE
COMPLETE NAME OF THE FUND OF
PAYABLE TO THE COMPLETE NAME OF THE FUND OF YOUR
CHOICE AND YOUR CHOICE AND NOTE THE APPLICABLE CLASS. INDICATE
YOUR FUND
NOTE THE APPLICABLE CLASS. MAIL TO THE ADDRESS
INDICATED ON THE ACCOUNT NUMBER ON YOUR CHECK AND MAIL TO THE ADDRESS
PRINTED
APPLICATION. ON YOUR ACCOUNT STATEMENT.
(SMALL SOLID BULLET) EXCHANGE BY MAIL: CALL
1-800-843-3001 OR YOUR INVESTMENT
PROFESSIONAL FOR INSTRUCTIONS.
IN PERSON
(HAND_
GRAPHIC) (SMALL SOLID BULLET) BRING YOUR ACCOUNT APPLICATION
AND CHECK TO YOUR INVESTMENT (SMALL SOLID BULLET) BRING YOUR CHECK TO YOUR
INVESTMENT PROFESSIONAL.
PROFESSIONAL.
WIRE (WIRE_
GRAPHIC) (SMALL SOLID BULLET) CALL 1-800-843-3001 TO SET UP
YOUR ACCOUNT AND TO ARRANGE A (SMALL SOLID BULLET) NOT AVAILABLE FOR RETIREMENT
ACCOUNTS.
WIRE TRANSACTION. NOT AVAILABLE FOR RETIREMENT ACCOUNTS.
(SMALL SOLID BULLET) WIRE TO: (SMALL SOLID BULLET) WIRE TO:
BANKER'S TRUST CO. BANKER'S TRUST CO.
ROUTING # 021001033 ROUTING # 021001033
FIDELITY DART DEPOSITORY FIDELITY DART DEPOSITORY
ACCOUNT T# 00159759 ACCOUNT # 00159759
FBO: (ACCOUNT NAME) FBO: (ACCOUNT NAME)
(ACCOUNT NUMBER) (ACCOUNT NUMBER)
SPECIFY THE COMPLETE NAME OF THE FUND OF YOUR CHOICE,
NOTE SPECIFY THE COMPLETE NAME OF THE FUND OF YOUR CHOICE,
NOTE THE
THE APPLICABLE CLASS AND INCLUDE YOUR NEW ACCOUNT
NUMBER AND APPLICABLE CLASS AND INCLUDE YOUR ACCOUNT NUMBER AND
YOUR
YOUR NAME. NAME.
AUTOMATICALLY
(AUTOMATIC_
GRAPHIC) (SMALL SOLID BULLET) NOT AVAILABLE. (SMALL SOLID BULLET) USE FIDELITY ADVISOR SYSTEMATIC
INVESTMENT PROGRAM. SIGN UP
FOR THIS SERVICE WHEN OPENING YOUR ACCOUNT, OR CALL
YOUR
INVESTMENT PROFESSIONAL TO BEGIN THE PROGRAM.
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HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of Institutional Class is the class's
NAV.
Your shares will be sold at the next NAV calculated after your
order is received and accepted. Institutional Class's NAV is normally
calculated each business day at 4:00 p.m. Eastern time.
It is the responsibility of your investment professional to transmit
your order to sell shares to Fidelity before the close of business on
the day you place your order.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the
methods described on these two pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request
must be made in writing, except for exchanges to shares of the same
class of another Fidelity Advisor fund or shares of other Fidelity
funds, which can be requested by phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least
$1,000 worth of shares in the account to keep it open (account minimum
balances do not apply to retirement accounts).
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service
in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner,
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity Advisor account with a different registration,
(small solid bullet) You wish to set up the bank wire feature, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union (if authorized under state law),
securities exchange or association, clearing agency, or savings
association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, and
(small solid bullet) Any other applicable requirements listed in the
table on page .
Deliver your letter to your investment professional, or mail it to the
following address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
Unless otherwise instructed, Fidelity will send a check to the record
address.
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ACCOUNT TYPE SPECIAL REQUIREMENTS
PHONE (SMALL SOLID BULLET) ALL ACCOUNT TYPES EXCEPT RETIREMENT (SMALL SOLID BULLET) MAXIMUM CHECK REQUEST:
$100,000.
1-800-843-3001
OR YOUR (SMALL SOLID BULLET) ALL ACCOUNT TYPES (SMALL SOLID BULLET) YOU MAY EXCHANGE TO THE
SAME CLASS OF OTHER FIDELITY ADVISOR
INVESTMENT
PROFESSIONAL FUNDS OR TO OTHER FIDELITY FUNDS IF BOTH
ACCOUNTS ARE REGISTERED
WITH THE SAME NAME(S), ADDRESS, AND TAXPAYER
ID NUMBER.
MAIL (MAIL_
GRAPHIC) (SMALL SOLID BULLET) INDIVIDUAL, JOINT TENANT, SOLE
PROPRIETORSHIP, UGMA, UTMA (SMALL SOLID BULLET) THE LETTER OF
INSTRUCTION MUST BE SIGNED BY ALL PERSONS
REQUIRED TO
SIGN FOR TRANSACTIONS, EXACTLY AS THEIR
NAMES APPEAR ON THE
ACCOUNT.
(SMALL SOLID BULLET) RETIREMENT ACCOUNT (SMALL SOLID BULLET) THE ACCOUNT OWNER
SHOULD COMPLETE A RETIREMENT DISTRIBUTION
FORM. CALL 1-800-843-3001 OR YOUR INVESTMENT
PROFESSIONAL TO
(SMALL SOLID BULLET) TRUST REQUEST ONE.
(SMALL SOLID BULLET) THE TRUSTEE MUST SIGN
THE LETTER INDICATING CAPACITY AS TRUSTEE.
IF THE
TRUSTEE'S NAME IS NOT IN THE ACCOUNT
REGISTRATION, PROVIDE A COPY OF
(SMALL SOLID BULLET) BUSINESS OR ORGANIZATION THE TRUST DOCUMENT CERTIFIED WITHIN THE LAST
60 DAYS.
(SMALL SOLID BULLET) EXECUTOR, ADMINISTRATOR, CONSERVATOR/GUARDIAN (SMALL SOLID BULLET) AT LEAST ONE PERSON
AUTHORIZED BY CORPORATE RESOLUTION TO ACT ON
THE ACCOUNT MUST SIGN THE LETTER.
(SMALL SOLID BULLET) CALL 1-800-843-3001 OR
YOUR INVESTMENT PROFESSIONAL FOR
INSTRUCTIONS.
WIRE (WIRE_
GRAPHIC) ALL ACCOUNT TYPES EXCEPT RETIREMENT (SMALL SOLID BULLET) YOU MUST SIGN UP FOR
THE WIRE FEATURE BEFORE USING IT. TO VERIFY
THAT IT IS IN PLACE, CALL 1-800-843-3001.
MINIMUM WIRE: $500.
(SMALL SOLID BULLET) YOUR WIRE REDEMPTION
REQUEST MUST BE RECEIVED AND ACCEPTED BY
FIDELITY BEFORE 4:00 P.M. EASTERN TIME FOR
MONEY TO BE WIRED ON
THE NEXT BUSINESS DAY.
</TABLE>
INVESTOR SERVICES
Fidelity Advisor funds provide a variety of services to help you
manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements after certain
transactions
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
a fund. Call your investment professional if you need additional
copies of financial reports and prospectuses.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your Institutional Class shares and
buy Institutional Class shares of other Fidelity Advisor funds or
shares of other Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see "Exchange Restrictions," page .
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM lets you set up
periodic redemptions from your account. Accounts with a value of
$10,000 or more in Institutional Class shares are eligible for this
program.
One easy way to pursue your financial goals is to invest money
regularly. Fidelity Advisor funds offer convenient services that let
you transfer money into your fund account, or between fund accounts,
automatically. While regular investment plans do not guarantee a
profit and will not protect you against loss in a declining market,
they can be an excellent way to invest for retirement, a home,
educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call your investment
professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY ADVISOR FUND
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MINIMUM MINIMUM
INITIAL ADDITIONAL FREQUENCY SETTING UP OR CHANGING
$1,000 $100 Monthly, bimonthly,
quarterly, (small solid bullet) For a new account, complete the appropriate section on the
application.
or semi-annually (small solid bullet) For existing accounts, call your investment professional for an
application.
(small solid bullet) To change the amount or frequency of your investment, contact
your investment professional directly,
or call 1-800-843-3001. Call at least 10 business days prior to your next scheduled
investment date.
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SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital
gains to shareholders each year. Each fund pays capital gains, if any,
in December and may pay additional capital gains after the close of
its fiscal year. Normally, dividends for International Capital
Appreciation and Overseas are distributed in December; dividends for
Emerging Markets Income are declared daily and paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you
want to receive your distributions. The funds offer four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
4. DIRECTED DIVIDENDS(registered trademark) PROGRAM. Your dividend
distributions will be automatically invested in the same class of
shares of another identically registered Fidelity Advisor fund. You
will be sent a check for your capital gain distributions or your
capital gain distributions will automatically be reinvested in
additional shares of the same class of the fund.
If you select distribution option 2, 3, or 4 and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed
for six months, those checks will be reinvested in your account at the
current NAV and your election may be converted to the Reinvestment
Option. To change your distribution option, call your investment
professional directly or call 1-800-843-3001.
For retirement accounts, all distributions are automatically
reinvested. When you are over 59 years old, you can receive
distributions in cash.
When each of International Capital Appreciation and Overseas deducts a
distribution from its NAV, the reinvestment price is the applicable
class's NAV at the close of business that day. Dividends from Emerging
Markets Income will be reinvested at the applicable class's NAV on the
last day of the month. Capital gain distributions from Emerging
Markets Income will be reinvested at the NAV as of the date the class
deducts the distributions from its NAV. The mailing of distribution
checks will begin within seven days, or longer for a December
ex-dividend date.
TAXES
As with any investment, you should consider how your investment in a
fund will be taxed. If your account is not a tax-deferred
retirement account, you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income
tax, and may also be subject to state or local taxes. If you live
outside the United States, your distributions could also be taxed by
the country in which you reside. Your distributions are taxable when
they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are
taxable as if they were paid on December 31.
For federal tax purposes, each fund's income and short-term capital
gains are distributed as dividends and taxed as ordinary
income; capital gain distributions are taxed as long-term capital
gains.
Every January, Fidelity will send you and the IRS a statement showing
the tax characterization of distributions paid to you in the
previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges - are
subject to capital gains tax. A capital gain or loss is the difference
between the cost of your shares and the price you receive when you
sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price.
You will also receive a consolidated transaction statement at least
quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of
tax to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount
of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a class has realized but
not yet distributed income or capital gains, you will pay the full
price for the shares and then receive a portion of the price back in
the form of a taxable distribution.
CURRENCY CONSIDERATIONS. If a fund's dividends exceed its taxable
income in any year, which is sometimes the result of currency-related
losses, all or a portion of the fund's dividends may be treated as a
return of capital to shareholders for tax purposes. To minimize the
risk of a return of capital, each fund may adjust its dividends to
take currency fluctuations into account, which may cause the dividends
to vary. Any return of capital will reduce the cost basis of your
shares, which will result in a higher reported capital gain or a lower
reported capital loss when you sell your shares. The statement you
receive in January will specify if any distributions included a return
of capital.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a
fund and its investments, and these taxes generally will
reduce a fund's distributions. However, if you meet certain
holding period requirements with respect to your fund shares, an
offsetting tax credit may be available to you. If you do not meet
such holding period requirements, you may still be entitled to a
deduction for certain foreign taxes. In either case, your tax
statement will show more taxable income or capital gains than were
actually distributed by the fund, but will also show the amount of the
available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to
avoid federal taxation. In its effort to adhere to these requirements,
a fund may have to limit its investment activity in some types of
instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates Institutional C lass's
NAV as of the close of business of the NYSE, normally 4:00 p.m.
Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class is
computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting
that class's pro rata share of the value of the applicable fund's
liabilities, subtracting the liabilities allocated to that class, and
dividing the result by the number of shares of that class that are
outstanding.
Each fund's assets are valued primarily on the basis of market
quotations or on the basis of information furnished by a pricing
service. Short-term securities with remaining maturities of sixty days
or less for which quotations and information furnished by a pricing
service are not readily available are valued on the basis of amortized
cost. This method minimizes the effect of changes in a security's
market value. Foreign securities are valued on the basis of quotations
from the primary market in which they are traded, and are translated
from the local currency into U.S. dollars using current exchange
rates. In addition, if quotations and information furnished by a
pricing service are not readily available, or if the values have been
materially affected by events occurring after the closing of a foreign
market, assets may be valued by another method that the Board of
Trustees believes accurately reflects fair value.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does
not follow 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 the confirmation statements immediately after receipt. If you do
not want the ability to redeem and exchange by telephone, call
Fidelity for instructions. Additional documentation may be required
from corporations, associations, and certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a
period of time. Each fund also reserves the right to reject any
specific purchase order, including certain purchases by exchange. See
"Exchange Restrictions" on page . Purchase orders may be
refused if, in FMR's opinion, they would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased
at the next NAV calculated after your order is received and accepted.
Note the following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.
(small solid bullet) Automated Purchase Orders: For shares of Emerging
Markets Income, you begin to earn dividends as of the day your funds
are received.
(small solid bullet) Other Purchases: For shares of Emerging Markets
Income, you begin to earn dividends as of the first business day
following the day your funds are received.
AUTOMATED PURCHASE ORDERS. Institutional Class shares can be purchased
or sold through investment professionals utilizing an automated order
placement and settlement system that guarantees payment for orders on
a specified date.
CONFIRMED PURCHASES. Certain financial institutions that meet FDC's
creditworthiness criteria may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow no later than
close of business on the next business day. If payment is not received
by the next business day, the order will be canceled and the financial
institution will be liable for any losses.
TO AVOID THE COLLECTION PERIOD associated with check purchases,
consider buying shares by bank wire, U.S. Postal money order, U.S.
Treasury check, Federal Reserve check, or automatic investment plans.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received and accepted.
Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares of Emerging Markets Income will earn
dividends through the date of redemption; however, shares redeemed on
a Friday or prior to a holiday will continue to earn dividends until
the next business day.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check have been
collected, which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500, subject to an
annual maximum charge of $60.00 per shareholder. Accounts
opened after September 30 will not be subject to the fee for that
year. The fee, which is payable to the transfer agent, is designed to
offset in part the relatively higher costs of servicing smaller
accounts. The fee will not be deducted from retirement accounts
(except non-prototype retirement accounts), accounts using a
systematic investment program, certain (Network Level I and III)
accounts which are maintained through National Securities Clearing
Corporation (NSCC), or if total assets in Fidelity mutual funds exceed
$50,000. Eligibility for the $50,000 waiver is determined by
aggregating Fidelity mutual fund accounts (excluding contractual
plans) maintained (i) by FIIOC and (ii) through NSCC; provided those
accounts are registered under the same primary social security number.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000 you will be
given 30 days' notice to reestablish the minimum balance. If you do
not increase your balance, Fidelity reserves the right to close your
account and send the proceeds to you. Your shares will be redeemed at
the NAV on the day your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC will, at its expense, provide promotional incentives such as sales
contests and luxury trips to investment professionals who support the
sale of shares of the funds. In some instances, these incentives will
be offered only to certain types of investment professionals, such as
bank-affiliated or non-bank affiliated broker-dealers, or to
investment professionals whose representatives provide services in
connection with the sale or expected sale of significant amounts of
shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging your
Institutional Class shares for Institutional Class shares of other
Fidelity Advisor funds or for shares of other Fidelity funds. However,
you should note the following:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage difference between that fund's sales charge and
any sales charge you may have previously paid in connection with the
shares you are exchanging. For example, if you had already paid a
sales charge of 2% on your shares and you exchange them into a fund
with a 3% sales charge, you would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of a fund per calendar
year. Accounts under common ownership or control, including accounts
with the same taxpayer identification number, will be counted together
for purposes of the four exchange limit.
(small solid bullet) The exchange limit may be modified for accounts
in certain institutional retirement plans to conform to plan exchange
limits and Department of Labor regulations. See your plan materials
for further information.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to a
fund.
Although the funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify these
exchange privileges in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
fees of up to 1.00% on purchases, administrative fees of up to $7.50,
and trading fees of up to 1.50% on exchanges. Check each fund's
prospectus for details.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related SAI,
in connection with the offer contained in this Prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the funds or FDC. This Prospectus
and the related SAI do not constitute an offer by the funds or by FDC
to sell or to buy shares of the funds to any person to whom it is
unlawful to make such offer.
APPENDIX A
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF CORPORATE BONDS
Moody's ratings for obligations with an original remaining maturity in
excess of one year fall within nine categories. They range from Aaa
(highest quality) to C (lowest quality). Moody applies numerical
modifiers of 1, 2, or 3 to each generic rating classification from Aa
through B. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
on the lower end of its generic rating category.
AAA - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect
to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF CORPORATE BONDS
Debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA to CCC may be modified by the addition of a plus sign (+) or minus
sign (-) to show relative standing within the major rating categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition
has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The
D rating will also be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
APPENDIX B
OVERSEAS - INSTITUTIONAL CLASS
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Calendar year total returns+ 1991 1992 1993 1994 1995 1996
OVERSEAS - INSTITUTIONAL CLASS[C] 6.78% -4.83% 41.84% 1.98% 9.11% 12.34%
Morgan Stanley EAFE Index 12.13% -12.17% 32.56% 7.78% 11.21% 6.05%
Lipper International Funds Average[A] 12.73% -4.85% 36.69% -0.71% 9.41% 11.78%
Consumer Price Index 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
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PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 6.78
ROW: 6, COL: 1, VALUE: -4.83
ROW: 7, COL: 1, VALUE: 41.84
ROW: 8, COL: 1, VALUE: 1.98
ROW: 9, COL: 1, VALUE: 9.109999999999999
ROW: 10, COL: 1, VALUE: 12.34
(LARGE SOLID BOX) OVERSEAS - INSTITUTIONAL CLASS
EMERGING MARKETS INCOME - INSTITUTIONAL CLASS
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Calendar year total returns+ 1995 1996
EMERGING MARKETS INCOME - INSTITUTIONAL CLASS 7.09% 40.21%
JP Morgan Emerging Markets Bond Index Plus 26.78% 39.30%
Lipper Emerging Markets Debt Funds Average[B] 18.05% 40.70%
Consumer Price Index 2.54% 3.32%
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+ INITIAL OFFERING OF INSTITUTIONAL CLASS OF OVERSEAS AND EMERGING
MARKETS INCOME TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS RETURNS
PRIOR TO JULY 3, 1995 ARE THOSE OF CLASS T WHICH REFLECT A 12B-1 FEE
OF 0.65% FOR OVERSEAS AND 0.25% FOR EMERGING MARKETS INCOME. TOTAL
RETURNS FOR INSTITUTIONAL CLASS PRIOR TO JULY 3, 1995 WOULD HAVE BEEN
HIGHER IF CLASS T'S 12B-1 FEE HAD NOT BEEN REFLECTED.
[A] THE LIPPER INTERNATIONAL FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 396 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[B] THE LIPPER EMERGING MARKETS DEBT FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 23 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[C] PRIOR TO DECEMBER 1, 1992, OVERSEAS OPERATED UNDER A DIFFERENT
INVESTMENT OBJECTIVE. ACCORDINGLY, THE FUND'S HISTORICAL PERFORMANCE
MAY NOT REPRESENT ITS CURRENT INVESTMENT POLICIES.
Fidelity Advisor Series VIII
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1) Financial Statements and Financial Highlights
included in the Annual Reports for Fidelity Advisor Series VIII on
behalf of Fidelity Advisor Emerging Markets Income Fund and Fidelity
Advisor Strategic Opportunities Fund for the fiscal year ended
December 31, 1996 are included in the funds' prospectuses, are
incorporated by reference into the funds' Statement of Additional
Information, and were filed on February 24, 1997 pursuant to Rule
30d-1 under the Investment Company Act of 1940. Each fund's unaudited
financial statements and financial highlights included in the
Semiannual Reports for the period ended June 30, 1997 are included in
the funds' prospectuses, are incorporated by reference into the funds'
Statement of Additional Information, and were filed on August 22, 1997
pursuant to Rule 30d-1 under the Investment Company Act of 1940. Each
fund's audited and unaudited financial statements and financial
highlights are incorporated herein by reference.
(2) Financial Statements and Financial Highlights
reflecting the Registrant's succession to the business of Fidelity
Advisor Overseas Fund, a fund of Fidelity Advisor Series VII (a
Massachusetts business trust) for the fiscal year ended October 31,
1996 are included in the fund's prospectus, are incorporated by
reference into the fund's Statement of Additional Information, and
were filed on December 20, 1996 pursuant to Rule 30d-1 under the
Investment Company Act of 1940. The fund's unaudited financial
statements and financial highlights included in the Semiannual Reports
for the period ended April 30, 1997 are included in the fund's
prospectus, are incorporated by reference into the fund's Statement of
Additional Information, and were filed on June 19, 1997 pursuant to
Rule 30d-1 under the Investment Company Act of 1940. The fund's
audited and unaudited financial statements and financial highlights
are incorporated herein by reference.
(b) Exhibits:
(1) (a) Amended and Restated Declaration of Trust, dated October
1, 1986, is incorporated herein by reference to Exhibit 1(a) of
Post-Effective Amendment No. 37.
(b) Supplement to the Declaration of Trust, dated November
29, 1990, is incorporated herein by reference to Exhibit 1(b) of
Post-Effective Amendment No. 37.
(c) Amendment to the Declaration of Trust, dated July 15,
1993, is incorporated herein by reference to Exhibit 1(c) of
Post-Effective Amendment No. 37.
(d) Supplement to the Declaration of Trust, dated July 17,
1997, is incorporated herein by reference to Exhibit 1(d) of
Post-Effective Amendment No. 45.
(2) (a) Amended By-Laws of the Trust are incorporated herein by
reference to Exhibit 2(a) of Post-Effective Amendment No. 45.
(3) Not applicable.
(4) Not applicable.
(5) (a) Management Contract between Fidelity Advisor Strategic
Opportunities Fund and Fidelity Management & Research Co., dated July
1, 1997, is incorporated herein by reference to Exhibit 5(a) of
Post-Effective Amendment No. 45.
(b) Management Contract between Fidelity Advisor Emerging
Markets Income Fund and Fidelity Management & Research Co., dated July
1, 1997, is incorporated herein by reference to Exhibit 5(b) of
Post-Effective Amendment No. 45.
(c) Sub-Advisory agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Strategic Opportunities
Fund, and Fidelity Management & Research (U.K.) Inc., dated July 1,
1997, is incorporated herein by reference to Exhibit 5(c) of
Post-Effective Amendment No. 45.
(d) Sub-advisory agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Strategic Opportunities
Fund, and Fidelity Management & Research (Far East) Inc., dated July
1, 1997, is incorporated herein by reference to Exhibit 5(d) of
Post-Effective Amendment No. 45.
(e) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Emerging Markets Income
Fund, and Fidelity Management and Research (U.K.) Inc., dated January
20, 1994, is incorporated herein by reference to Exhibit 5(e) of
Post-Effective Amendment No. 32.
(f) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Emerging Markets Income
Fund, and Fidelity Management and Research (Far East) Inc., dated
January 20, 1994, is incorporated herein by reference to Exhibit 5(f)
of Post-Effective Amendment No. 32.
(g) Sub-Advisory Agreement between Fidelity International
Investment Advisors (U.K.) Limited and Fidelity International
Investment Advisors, on behalf of Fidelity Advisor Emerging Markets
Income Fund, dated January 20, 1994, is incorporated herein by
reference to Exhibit 5(g) of Post-Effective Amendment No. 32.
(h) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Emerging Markets Income
Fund, and Fidelity International Investment Advisors, dated January
20, 1994, is incorporated herein by reference to Exhibit 5(h) of
Post-Effective Amendment No. 32.
(i) Sub-Advisory Agreement, on behalf of Fidelity Advisor
Emerging Markets Income Fund, Fidelity Investments Japan Limited, and
Fidelity Management & Research Co., dated January 20, 1994, is
incorporated herein by reference to Exhibit 5(i) of Post-Effective
Amendment No. 32.
(j) Form of Management Contract between Fidelity Advisor
International Capital Appreciation Fund and Fidelity Management &
Research Company, dated October 16, 1997, is filed herein as Exhibit
5(j).
(k) Form of Sub-Advisory Agreement between Fidelity
Management & Research Company, on behalf of Fidelity Advisor
International Capital Appreciation Fund, and Fidelity Management &
Research (U.K.) Inc., dated October 16, 1997, is filed herein as
Exhibit 5(k).
(l) Form of Sub-Advisory Agreement between Fidelity
Management & Research Company, on behalf of Fidelity Advisor
International Capital Appreciation Fund, and Fidelity Management &
Research (Far East) Inc., dated October 16, 1997, is filed herein as
Exhibit 5(l).
(m) Form of Sub-Advisory Agreement between Fidelity
Management & Research Company, on behalf of Fidelity Advisor
International Capital Appreciation Fund, and Fidelity International
Investment Advisors, dated October 16, 1997, is filed herein as
Exhibit 5(m).
(n) Form of Sub-Advisory Agreement between Fidelity
International Investment Advisors (U.K.) Limited and Fidelity
International Investment Advisors, on behalf of Fidelity Advisor
International Capital Appreciation Fund, dated October 16, 1997, is
filed herein as Exhibit 5(n).
(o) Form of Sub-Advisory Agreement between Fidelity
Management & Research Company, on behalf of Fidelity Advisor
International Capital Appreciation Fund, and Fidelity Investments
Japan Limited, dated October 16, 1997, is filed herein as Exhibit
5(o).
(p) Management Contract between Fidelity Advisor Overseas
Fund and Fidelity Management & Research Co., dated October 31, 1997,
is filed herein as Exhibit 5(p).
(q) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Overseas Fund, and
Fidelity Management & Research (U.K.) Inc., dated October 31, 1997, is
filed herein as Exhibit 5 (q).
(r) Sub-Advisory Agreement between Fidelity Management and
Research Co., on behalf of Fidelity Advisor Overseas Fund, and
Fidelity Management & Research (Far East) Inc., dated October 31,
1997, is filed herein as Exhibit 5(r).
(s) Form of Sub-Advisory Agreement between Fidelity
International Investment Advisors (U.K.) Limited and Fidelity
International Investment Advisors, on behalf of Fidelity Advisor
Overseas Fund, dated October 31, 1997, is filed herein as Exhibit
5(s).
(t) Form of Sub-Advisory Agreement between Fidelity
Management & Research Co., on behalf of Fidelity Advisor Overseas
Fund, and Fidelity International Investment Advisors, dated October
31, 1997, is filed herein as Exhibit 5(t).
(u) Form of Sub-Advisory Agreement between Fidelity
Management & Research Company, on behalf of Fidelity Advisor Overseas
Fund, and Fidelity Investments Japan Limited, dated October 31, 1997,
is filed herein as Exhibit 5(u).
(6) (a) General Distribution Agreement between Fidelity Advisor
Strategic Opportunities Fund and Fidelity Distributors Corporation,
dated April 1, 1987, is incorporated herein by reference to Exhibit 6
of Post-Effective Amendment No. 35.
(b) Amendment to the General Distribution Agreement between
Fidelity Advisor Strategic Opportunities Fund and Fidelity
Distributors Corporation, dated January 1, 1988, is incorporated
herein by reference to Exhibit 6 of Post-Effective Amendment No. 35.
(c) General Distribution Agreement between Fidelity Advisor
Emerging Markets Income Fund and Fidelity Distributors Corporation,
dated January 20, 1994, is incorporated herein by reference to Exhibit
6(c) of Post-Effective Amendment No. 32.
(d) Amendments to the General Distribution Agreement between
Fidelity Advisor Series VIII on behalf of Fidelity Advisor Strategic
Opportunities Fund and Fidelity Advisor Emerging Markets Income Fund,
and Fidelity Distributors Corporation, dated March 14, 1996 and July
15, 1996, are incorporated herein by reference to Exhibit 6(a) of
Fidelity Court Street Trust's (File No. 2-58774) Post-Effective
Amendment No. 61.
(e) Form of Bank Agency Agreement (most recently revised
January, 1997) is filed herein as Exhibit 6(e).
(f) Form of Selling Dealer Agreement (most recently revised
January, 1997) is filed herein as Exhibit 6(f).
(g) Form of Selling Dealer Agreement for Bank-Related
Transactions (most recently revised January, 1997) is filed herein as
Exhibit 6(g).
(h) Form of General Distribution Agreement between Fidelity
Advisor International Capital Appreciation Fund and Fidelity
Distributors Corporation, dated October 16, 1997, is filed herein as
Exhibit 6(h).
(i) Form of General Distribution Agreement between Fidelity
Advisor Overseas Fund and Fidelity Distributors Corporation, dated
October 31, 1997, is filed herein as Exhibit 6(i).
(7) (a) Retirement Plan for Non-Interested Person Trustees,
Directors or General Partners, as amended on November 16, 1995, is
incorporated herein by reference to Exhibit 7(a) of Fidelity Select
Portfolio's (File No. 2-69972) Post-Effective Amendment No. 54.
(b) The Fee Deferral Plan for Non-Interested Person
Directors and Trustees of the Fidelity Funds, effective as of
September 14, 1995 and amended through November 14, 1996, is
incorporated herein by reference to Exhibit 7(b) of Fidelity Aberdeen
Street Trust's (File No. 33-43528) Post-Effective Amendment No. 19.
(8) (a) Custodian Agreement and Appendix C, dated September 1,
1994, between Brown Brothers Harriman & Company and Fidelity Advisor
Series VIII on behalf of Fidelity Advisor Strategic Opportunities Fund
is incorporated herein by reference to Exhibit 8(a) of Fidelity
Commonwealth Trust's (File No. 2-52322) Post-Effective Amendment No.
56 .
(b) Appendix A, dated January 18, 1996, to the Custodian
Agreement, dated September 1, 1994, between Brown Brothers Harriman &
Company and Fidelity Advisor Series VIII on behalf of Fidelity Advisor
Strategic Opportunities Fund is incorporated herein by reference to
Exhibit 8(d) of Fidelity Investment Trust's (File No. 2-90649)
Post-Effective Amendment No. 65.
(c) Appendix B, dated June 19, 1997, to the Custodian
Agreement, dated September 1, 1994, between Brown Brothers Harriman &
Company and Fidelity Advisor Series VIII on behalf of Fidelity Advisor
Strategic Opportunities Fund is incorporated herein by reference to
Exhibit 8(f) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 36.
(d) Custodian Agreement and Appendix C, dated August 1, 1994,
between The Chase Manhattan Bank, N.A. and Fidelity Advisor Series
VIII on behalf of Fidelity Advisor Emerging Markets Income Fund is
incorporated herein by reference to Exhibit 8(a) of Fidelity
Investment Trust's (File No. 2-90649) Post-Effective Amendment No. 59
.
(e) Appendix A, dated October 17, 1996, to the Custodian
Agreement, dated August 1, 1994, between The Chase Manhattan Bank,
N.A. and Fidelity Advisor Series VIII on behalf of Fidelity Advisor
Emerging Markets Income Fund is incorporated herein by reference to
Exhibit 8(c) of Fidelity Charles Street Trust's (File No. 2-73133)
Post-Effective Amendment No. 57.
(f) Appendix B, dated June 19, 1997, to the Custodian
Agreement, dated August 1, 1994, between The Chase Manhattan Bank,
N.A. and Fidelity Advisor Series VIII on behalf of Fidelity Advisor
Emerging Markets Income Fund is incorporated herein by reference to
Exhibit 8(c) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 36.
(g) Fidelity Group Repo Custodian Agreement among The Bank of
New York, J. P. Morgan Securities, Inc., and Fidelity Advisor Series
VIII on behalf of Fidelity Advisor Strategic Opportunities Fund and
Fidelity Advisor Emerging Markets Income Fund, dated February 12,
1996, is incorporated herein by reference to Exhibit 8(d) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(h) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between The Bank of New York and Fidelity Advisor Series VIII on
behalf of Fidelity Advisor Strategic Opportunities Fund and Fidelity
Advisor Emerging Markets Income Fund, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(e) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(i) Fidelity Group Repo Custodian Agreement among Chemical
Bank, Greenwich Capital Markets, Inc., and Fidelity Advisor Series
VIII on behalf of Fidelity Advisor Strategic Opportunities Fund and
Fidelity Advisor Emerging Markets Income Fund, dated November 13,
1995, is incorporated herein by reference to Exhibit 8(f) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(j) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between Chemical Bank and Fidelity Advisor Series VIII on behalf of
Fidelity Advisor Strategic Opportunities Fund and Fidelity Advisor
Emerging Markets Income Fund, dated November 13, 1995, is incorporated
herein by reference to Exhibit 8(g) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(k) Joint Trading Account Custody Agreement between the The
Bank of New York and Fidelity Advisor Series VIII on behalf of
Fidelity Advisor Strategic Opportunities Fund and Fidelity Advisor
Emerging Markets Income Fund, dated May 11, 1995, is incorporated
herein by reference to Exhibit 8(h) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(l) First Amendment to Joint Trading Account Custody
Agreement between the The Bank of New York and Fidelity Advisor Series
VIII on behalf of Fidelity Advisor Strategic Opportunities Fund and
Fidelity Advisor Emerging Markets Income Fund, dated July 14, 1995, is
incorporated herein by reference to Exhibit 8(i) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(m) Custodian Agreement and Appendix C, dated August 1,
1994, between The Chase Manhattan Bank, N.A. and Fidelity Advisor
Series VII on behalf of Fidelity Advisor Overseas Fund is incorporated
herein by reference to Exhibit 8(a) of Fidelity Investment Trust's
(File No. 2-90649) Post-Effective Amendment No. 59.
(n) Appendix A, dated October 17, 1996, to the Custodian
Agreement, dated August 1, 1994, between The Chase Manhattan Bank,
N.A. and Fidelity Advisor Series VII on behalf of Fidelity Advisor
Overseas Fund is incorporated herein by reference to Exhibit 8(c) of
Fidelity Charles Street Trust's (File No. 2-73133) Post-Effective
Amendment No. 57.
(o) Appendix B, dated June 19, 1997, to the Custodian
Agreement, dated August 1, 1994, between The Chase Manhattan Bank,
N.A. and Fidelity Advisor Series VII Fidelity Advisor Overseas Fund is
incorporated herein by reference to Exhibit 8(c) of Fidelity
Securities Fund's (File No. 2-93601) Post-Effective Amendment No. 36.
(p) Fidelity Group Repo Custodian Agreement among The Bank of
New York, J. P. Morgan Securities, Inc., and Fidelity Advisor Series
VII on behalf of Fidelity Advisor Overseas Fund, dated February 12,
1996, is incorporated herein by reference to Exhibit 8(d) of Fidelity
Institutional Cash Portfolios' Trust's (File No. 2-74708)
Post-Effective Amendment No. 31.
(q) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between The Bank of New York and Fidelity Advisor Series VII on behalf
of Fidelity Advisor Overseas Fund, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(e) of Fidelity
Institutional Cash Portfolios'(File No. 2-74808) Post-Effective
Amendment No. 31.
(r) Fidelity Group Repo Custodian Agreement among Chemical
Bank, Greenwich Capital Markets, Inc., and Fidelity Advisor Series VII
on behalf of Fidelity Advisor Overseas Fund, dated November 13, 1995,
is incorporated herein by reference to Exhibit 8(f) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(s) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between Chemical Bank and Fidelity Advisor Series VII on behalf of
Fidelity Advisor Overseas Fund, dated November 13, 1995, is
incorporated herein by reference to Exhibit 8(g) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(t) Joint Trading Account Custody Agreement between the The
Bank of New York and Fidelity Advisor Series VII on behalf of Fidelity
Advisor Overseas Fund, dated May 11, 1995, is incorporated herein by
reference to Exhibit 8(h) of Fidelity Institutional Cash Portfolios'
(File No. 2-74808) Post-Effective Amendment No. 31.
(u) First Amendment to Joint Trading Account Custody
Agreement between the The Bank of New York and Fidelity Advisor Series
VII on behalf of Fidelity Advisor Overseas Fund, dated July 14, 1995,
is incorporated herein by reference to Exhibit 8(i) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(9) Not applicable.
(10) Not applicable.
(11) (a) Consent of Coopers & Lybrand L.L.P. is filed herein as
Exhibit 11(a).
(b) Consent of Price Waterhouse LLP is filed herein as
Exhibit 11(b).
(12) Not applicable.
(13) Not applicable.
(14) (a) Fidelity Individual Retirement Account Custodial
Agreement and Disclosure Statement, as currently in effect, is
incorporated herein by reference to Exhibit 14(a) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(b) Fidelity Institutional Individual Retirement Account
Custodial Agreement and Disclosure Statement, as currently in effect,
is incorporated herein by reference to Exhibit 14(d) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(c) National Financial Services Corporation Individual
Retirement Account Custodial Agreement and Disclosure Statement, as
currently in effect, is incorporated herein by reference to Exhibit
14(h) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(d) Fidelity Portfolio Advisory Services Individual
Retirement Account Custodial Agreement and Disclosure Statement, as
currently in effect, is incorporated herein by reference to Exhibit
14(i) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as
currently in effect, is incorporated herein by reference to Exhibit
14(e) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(f) National Financial Services Corporation Defined
Contribution Retirement Plan and Trust Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(k) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective
Amendment No. 87.
(g) The CORPORATEplan for Retirement Profit Sharing/401K
Plan, as currently in effect, is incorporated herein by reference to
Exhibit 14(l) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(h) The CORPORATEplan for Retirement Money Purchase Pension
Plan, as currently in effect, is incorporated herein by reference to
Exhibit 14(m) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(i) Fidelity Investments Section 403(b)(7) Individual
Custodial Account Agreement and Disclosure Statement, as currently in
effect, is incorporated herein by reference to Exhibit 14(f) of
Fidelity Commonwealth Trust's (File No. 2-52322) Post-Effective
Amendment No. 57.
(j) Plymouth Investments Defined Contribution Retirement
Plan and Trust Agreement, as currently in effect, is incorporated
herein by reference to Exhibit 14(o) of Fidelity Commonwealth Trust's
(File No. 2-52322) Post-Effective Amendment No. 57.
(k) The Fidelity Prototype Defined Benefit Pension Plan and
Trust Basic Plan Document and Adoption Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(d) of
Fidelity Securities Fund's (File No. 2-93601) Post-Effective Amendment
No. 33.
(l) The Institutional Prototype Plan Basic Plan Document,
Standardized Adoption Agreement, and Non-Standardized Adoption
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(o) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 33.
(m) The CORPORATEplan for Retirement 100SM Profit
Sharing/401(k) Basic Plan Document, Standardized Adoption Agreement,
and Non-Standardized Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(f) of Fidelity
Securities Fund's (File No. 2-93601) Post-Effective Amendment No. 33.
(n) The Fidelity Investments 401(a) Prototype Plan for
Tax-Exempt Employers Basic Plan Document, Standardized Profit Sharing
Plan Adoption Agreement, Non-Standardized Discretionary Contribution
Plan No. 002 Adoption Agreement, and Non-Standardized Discretionary
Contribution Plan No. 003 Adoption Agreement, as currently in effect,
is incorporated herein by reference to Exhibit 14(g) of Fidelity
Securities Fund's (File No. 2-93601) Post-Effective Amendment No. 33.
(o) Fidelity Investments 403(b) Sample Plan Basic Plan
Document and Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(p) of Fidelity
Securities Fund's (File No. 2-93601) Post-Effective Amendment No. 33.
(p) Fidelity Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference
to Exhibit 14(c) of Fidelity Securities Fund's (File No. 2-93601)
Post-Effective Amendment No. 33.
(q) Fidelity SIMPLE-IRAPlan Adoption Agreement, Company
Profile Form, and Plan Document, as currently in effect, is
incorporated herein by reference to Exhibit 14(q) of Fidelity Aberdeen
Street Trust's (File No. 33-43529) Post-Effective Amendment No. 19.
(15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Strategic Opportunities Fund: Class T is incorporated
herein by reference to Exhibit 15(a) of Post-Effective Amendment No.
45.
(b) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Emerging Markets Income Fund: Class B is
incorporated herein by reference to Exhibit 15(b) of Post-Effective
Amendment No. 45.
(c) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Strategic Opportunities Fund: Class B is
incorporated herein by reference to Exhibit 15(c) of Post-Effective
Amendment No. 45.
(d) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Emerging Markets Income Fund: Class T is
incorporated herein by reference to Exhibit 15(g) of Post-Effective
Amendment No. 45.
(e) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Strategic Opportunities Fund: Institutional Class
is incorporated herein by reference to Exhibit 15(h) of Post-Effective
Amendment No. 41.
(f) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Emerging Markets Income Fund: Institutional Class
is incorporated herein by reference to Exhibit 15(i) of Post-Effective
Amendment No. 41.
(g) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Strategic Opportunities Fund: Class A is
incorporated herein by reference to Exhibit 15(j) of Post-Effective
Amendment No. 39.
(h) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Emerging Markets Income Fund: Class A is
incorporated herein by reference to Exhibit 15(l) of Post-Effective
Amendment No. 39.
(i) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor International Capital Appreciation Fund: Class A
is filed herein as Exhibit 15(i).
(j) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor International Capital Appreciation Fund: Class T
is filed herein as Exhibit 15(j).
(k) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor International Capital Appreciation Fund: Class B
is filed herein as Exhibit 15(k).
(l) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor International Capital Appreciation Fund:
Institutional Class is filed herein as Exhibit 15(l).
(m) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor International Capital Appreciation Fund: Class C
is filed herein as Exhibit 15(m).
(n) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Emerging Markets Income Fund: Class C is filed
herein as Exhibit 15(n).
(o) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Overseas Fund: Class C is filed herein as Exhibit
15(o).
(p) Distribution and Service Plan pursuant to Rule 12b-1
Plan for Fidelity Advisor Overseas Fund: Class T is filed herein as
Exhibit 15(p).
(q) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Overseas Fund: Class B is filed herein as Exhibit
15(q).
(r) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Overseas Fund: Institutional Class is filed
herein as Exhibit 15(r).
(s) Distribution and Service Plan pursuant to Rule 12b-1
for Fidelity Advisor Overseas Fund: Class A is filed herein as Exhibit
15(s).
(16) Schedules for computation of cumulative total returns, average
annual returns, 30-day yield, tax-equivalent yield, adjusted net asset
value, and moving averages are incorporated herein by reference to
Exhibit 16 of Post-Effective Amendment No. 35.
(17) Financial Data Schedules for Fidelity Advisor Emerging Markets
Income Fund, Fidelity Overseas Fund, and Fidelity Advisor Strategic
Opportunities Fund are filed herein as Exhibit 27.
(18) Rule 18f-3 Plan, dated October 16, 1997, is filed herein as
Exhibit 18.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Board of Trustees of the Registrant is substantially the same as
the Boards of other Fidelity funds each of which has Fidelity
Management & Research Company as its investment adviser. In addition
the officers of these funds are substantially identical. Nonetheless,
the Registrant takes the position that it is not under common control
with these other funds since the power residing in the respective
Boards and officers arises as the result of an official position with
the respective funds.
Item 26. Number of Holders of Securities
As of September 30, 1997
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
<TABLE>
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<S> <C>
Fidelity Advisor Strategic Opportunities Fund - Initial Shares 1,065
Fidelity Advisor Strategic Opportunities Fund - Class A 312
Fidelity Advisor Strategic Opportunities Fund - Class T 58,117
Fidelity Advisor Strategic Opportunities Fund - Class B 16,456
Fidelity Advisor Strategic Opportunities Fund-Institutional Class 421
Fidelity Advisor Emerging Markets Income Fund - Class A 326
Fidelity Advisor Emerging Markets Income Fund - Class T 14,248
Fidelity Advisor Emerging Markets Income Fund - Class B 4,547
Fidelity Advisor Emerging Markets Income Fund - Class C 0
Fidelity Advisor Emerging Markets Income Fund - Institutional 170
Fidelity Advisor International Capital Appreciation Fund - Class A 0
Fidelity Advisor International Capital Appreciation Fund - Class T 0
Fidelity Advisor International Capital Appreciation Fund - Class B 0
Fidelity Advisor International Capital Appreciation Fund - Class C 0
Fidelity Advisor International Capital Appreciation Fund -
Institutional Class 0
Fidelity Advisor Overseas Fund - Class A 756
Fidelity Advisor Overseas Fund - Class T 107,966
Fidelity Advisor Overseas Fund - Class B 6,680
Fidelity Advisor Overseas Fund - Class C 0
Fidelity Advisor Overseas Fund - Institutional Class 455
</TABLE>
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It states
that the Registrant shall indemnify any present or past Trustee or
officer to the fullest extent permitted by law against liability and
all expenses reasonably incurred by him in connection with any claim,
action, suit, or proceeding in which he is involved by virtue of his
service as a Trustee, an officer, or both. Additionally, amounts paid
or incurred in settlement of such matters are covered by this
indemnification. Indemnification will not be provided in certain
circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of
the duties involved in the conduct of the particular office involved.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against
any loss, liability, claim, damages or expense arising by reason of
any person acquiring any shares, based upon the ground that the
registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Registrant included a materially misleading statement or
omission. However, the Registrant does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with,
information furnished to the Registrant by or on behalf of the
Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of
willful misfeasance, bad faith, gross negligence, and reckless
disregard of the obligations and duties under the Distribution
Agreement.
Pursuant to the agreement by which Fidelity Investments Institutional
Operations Company, Inc. ("FIIOC") is appointed transfer agent, the
Registrant agrees to indemnify and hold FIIOC harmless against any
losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names FIIOC
and/or the Registrant as a party and is not based on and does not
result from FIIOC's willful misfeasance, bad faith or negligence or
reckless disregard of duties, and arises out of or in connection with
FIIOC's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by FIIOC's willful misfeasance, bad faith or negligence
or reckless disregard of duties) which results from the negligence of
the Registrant, or from FIIOC's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of FIIOC's
acting in reliance upon advice reasonably believed by FIIOC to have
been given by counsel for the Registrant, or as a result of FIIOC's
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("Service") is appointed transfer agent, the Registrant agrees to
indemnify and hold Service harmless against any losses, claims,
damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names the
Service and/or the Registrant as a party and is not based on and does
not result from Service's willful misfeasance, bad faith or negligence
or reckless disregard of duties, and arises out of or in connection
with Service's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by Service's willful misfeasance, bad faith or
negligence or reckless disregard of duties) which results from the
negligence of the Registrant, or from Service's acting upon any
instruction(s) reasonably believed by it to have been executed or
communicated by any person duly authorized by the Registrant, or as a
result of Service's acting in reliance upon advice reasonably believed
by Service to have been given by counsel for the Registrant, or as a
result of Service's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held,
during the past two fiscal years, the following positions of a
substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the
Board and Director of FMR, FMR Corp., FMR Texas
Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.;
Chairman of the Board and Representative Director of
Fidelity Investments Japan Limited; President and
Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FMR Texas Inc., FMR (U.K.) Inc., and
FMR (Far East) Inc.; General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
J. Gary Burkhead President of FIIS; President and Director of FMR, FMR
Texas Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.;
Managing Director of FMR Corp.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
Marta Amieva Vice President of FMR.
John Carlson Vice President of FMR.
Dwight D. Churchill Senior Vice President of FMR.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR.
William Danoff Senior Vice President of FMR and of a fund advised by
FMR.
Scott E. DeSano Vice President of FMR.
Craig P. Dinsell Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
George C. Domolky Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and a fund advised by FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR
(U.K.) Inc., and FMR (Far East) Inc.; Secretary of FMR
Texas Inc.
Robert Gervis Vice President of FMR.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Kevin E. Grant Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Senior Vice President of FMR.
Bart A. Grenier Vice President of FMR and of High-Income Funds
advised by FMR; Vice President of FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
William J. Hayes Senior Vice President of FMR; Vice President of Equity
funds advised by FMR.
Richard Hazlewood Vice President of FMR and of a fund advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR; Vice President of
Fixed-Income funds advised by FMR.
Bruce Herring Vice President of FMR.
John R. Hickling Vice President of FMR and of a fund advised by FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curt Hollingsworth Vice President of FMR and of funds advised by FMR.
Abigail P. Johnson Senior Vice President of FMR and of a fund advised by
FMR; Associate Director and Senior Vice President of
Equity funds advised by FMR.
David B. Jones Vice President of FMR.
Steven Kaye Vice President of FMR and of a fund advised by FMR.
Francis V. Knox Vice President of FMR; Compliance Officer of FMR
(U.K.) Inc.
David P. Kurrasch Vice President of FMR.
Robert A. Lawrence Senior Vice President of FMR and Vice President of
Fidelity Real Estate High Income and Fidelity Real
Estate High Income II funds advised by FMR;
Associate Director and Senior Vice President of Equity
funds advised by FMR; Vice President of High Income
funds advised by FMR.
Harris Leviton Vice President of FMR and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Mark G. Lohr Vice President of FMR; Treasurer of FMR, FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR Texas Inc.
Arthur S. Loring Senior Vice President, Clerk, and General Counsel of
FMR; Vice President/Legal, and Assistant Clerk of
FMR Corp.; Secretary of funds advised by FMR.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Charles Mangum Vice President of FMR.
Kevin McCarey Vice President of FMR.
Diane McLaughlin Vice President of FMR.
Neal P. Miller Vice President of FMR.
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David L. Murphy Vice President of FMR and of funds advised by FMR.
Scott Orr Vice President of FMR.
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR.
Kenneth A. Rathgeber Vice President of FMR; Treasurer of funds advised by
FMR.
Kennedy P. Richardson Vice President of FMR.
Mark Rzepczynski Vice President of FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Carol Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Senior Vice President and Director of Operations and
Compliance of FMR (U.K.) Inc.
Thomas Sprague Vice President of FMR.
Robert E. Stansky Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Scott Stewart Vice President of FMR.
Cythia Straus Vice President of FMR.
Thomas Sweeney Vice President of FMR and of a fund advised by FMR.
Beth F. Terrana Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
25 Lovat Lane, London, EC3R 8LL, England
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board and Director of FMR U.K.,
FMR, FMR Corp., FMR Texas Inc., and FMR (Far
East) Inc.; Chairman of the Executive Committee of
FMR; President and Chief Executive Officer of FMR
Corp.; Chairman of the Board and Representative
Director of Fidelity Investments Japan Limited;
President and Trustee of funds advised by FMR.
J. Gary Burkhead President of FIIS; President and Director of FMR U.K.,
FMR, FMR (Far East) Inc., and FMR Texas Inc.;
Managing Director of FMR Corp.; Senior Vice
President and Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FMR Texas Inc., FMR (U.K.) Inc., and
FMR (Far East) Inc.; General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
Mark G. Lohr Treasurer of FMR U.K., FMR, FMR (Far East) Inc., and
FMR Texas Inc.; Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR U.K., FMR, FMR (Far
East) Inc., and FMR Texas Inc.; Treasurer of FMR
Corp.
Francis V. Knox Compliance Officer of FMR U.K.; Vice President of
FMR.
Jay Freedman Clerk of FMR U.K., FMR (Far East) Inc., and FMR
Corp.; Assistant Clerk of FMR; Secretary of FMR
Texas Inc.
(3) FIDELITY MANAGEMENT & RESEARCH COMPANY (FAR EAST) INC. (FMR FAR
EAST)
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
FMR Far East provides investment advisory services to Fidelity
Management & Research Company and Fidelity Management Trust Company.
The directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FMR Far
East, FMR, FMR Corp., FMR Texas Inc., and
FMR (U.K.) Inc.; Chairman of the Executive
Committee of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of
the Board and Representative Director of Fidelity
Investments Japan Limited; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President of FIIS; President and Director of FMR
Far East, FMR Texas Inc., FMR, and FMR
(U.K.) Inc.; Managing Director of FMR Corp.;
Senior Vice President and Trustee of funds
advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice
President and Trustee of funds advised by FMR;
President and Director of FMR Texas Inc., FMR
(U.K.) Inc., and FMR (Far East) Inc.; General
Counsel, Managing Director, and Senior Vice
President of FMR Corp.
Bill Wilder Vice President of FMR Far East; President and
Representative Director of Fidelity Investments
Japan Limited.
Mark G. Lohr Treasurer of FMR Far East, FMR, FMR (U.K.)
Inc., and FMR Texas Inc.; Vice President of
FMR.
Stephen G. Manning Assistant Treasurer of FMR Far East, FMR,
FMR (U.K.) Inc., and FMR Texas Inc.; Vice
President and Treasurer of FMR Corp.
Jay Freedman Clerk of FMR Far East, FMR (U.K.) Inc., and
FMR Corp.; Assistant Clerk of FMR; Secretary
of FMR Texas Inc.
Robert Auld Vice President of FMR Far East.
(4) FIDELITY INTERNATIONAL INVESTMENT ADVISORS
Pembroke Hall, 42 Crow Lane, Pembroke HM19, 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.
Anthony J. Bolton Director of FIIA, FIIA (U.K.) L, FIML (U.K.),
FISL (U.K.), and Fidelity Investments
International.
Charles T. Collis Director of FIIA and numerous other companies
in the Fidelity International Group of Companies
(FIL); Partner in Conyers, Dill & Pearman,
Hamilton, Bermuda.
William R. Ebsworth Director of FIIA and numerous Fidelity
Investment Far East Companies; Vice President
of FMR (Far East) Inc.
Brett P. Goodin Director, Vice President, Secretary and Chief
Legal Officer of many FIL companies.
Simon Haslam Director of FIIA, FISL (U.K.), and FII; Chief
Financial Officer of FIL; Company Secretary of
Fidelity Investments Group of Companies
(U.K.).
K.C. Lee Director of FIIA and Fidelity Investments
Management (Hong Kong) Limited.
Peter Phillips Director of FIIA and Fidelity Investments
Management (Hong Kong) Limited.
Terrence V. Richards Assistant Secretary of FIIA.
David J. Saul President and Director of FIIA; Director of
Fidelity International Limited; and numerous
companies and funds in the FIL group.
(5) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
26 Lovat Lane, London, EC3R 8LL, England
The directors and officers of Fidelity International Investment
Advisors (U.K.) Limited (FIIA (U.K.) L) have held, during the past two
fiscal years, the following positions of a substantial nature.
Anthony J. Bolton Director of FIIA (U.K.) L, FIIA, FIML (U.K.),
FISL (U.K.), and Fidelity Investments
International.
Pamela Edwards Director of FIIA (U.K.) L, FISL (U.K.), and FII;
Director of Legal Services for Europe.
Simon Haslam Director of FIIA, FISL (U.K.), and FII; Chief
Financial Officer of FIL (U.K.); Company
Secretary of Fidelity Investments Group of
Companies (U.K.).
Sally Walden Director of FIIA (U.K.) L and FISL (U.K.).
Sally Williams Assistant Company Secretary of Fidelity
International Group of Companies (U.K.).
Emma Barratt Assistant Company Secretary of Fidelity
International Group of Companies (U.K.).
(6) FIDELITY INVESTMENTS JAPAN LIMITED
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
The directors and officers of Fidelity Investments Japan Limited
(FIJ) have held, during the past two fiscal years, the following
positions of a substantial nature.
Edward C. Johnson 3d Chairman of the Board and Representative
Director of FIJ; Chairman of the Board and
Director of FMR (Far East) Inc., FMR, FMR
Corp., FMR (U.K.) Inc., and FMR Texas Inc.;
Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR
Corp.; President and Trustee of funds advised
by FMR.
Yasuo Kuramoto Vice Chairman, Representative Director of FIJ.
Billy Wilder President and Representative Director of FIJ;
Vice President of FMR (Far East) Inc.
Simon Fraser Director and Chief Investment Officer of FIJ.
Simon Haslam Director of FIJ; Chief Financial Officer of
Fidelity International Limited.
Nobuhide Kamiyama Director and General Manager of Planning and
Marketing of FIJ.
Noboru Kawai Director and General Manager of
Administration of FIJ.
Lawrence Repeta Director and General Manager of Information
Systems and Trading of FIJ.
Hiroshi Yamashita Managing Director and Portfolio Manager of
FIJ.
Item 29. Principal Underwriters.
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
most funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Arthur S. Loring Vice President and Clerk Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records.
</TABLE>
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the
funds' respective custodian: Brown Brothers Harriman & Co., 40 Water
Street, Boston, MA. or The Chase Manhattan Bank, 1 Chase Manhattan
Plaza, New York, N.Y.
Item 31. Management Services.
Not Applicable.
Item 32. Undertakings
The Registrant undertakes, so long as the Staff of the Securities
and Exchange Commission continues to require such an undertaking in
the registration statement for a new portfolio, to file a
Post-Effective Amendment, using financial statements from Fidelity
Advisor International Capital Appreciation Fund, which need not be
certified, within six months of each fund's effectiveness, unless
permitted by the SEC to extend this period.
The Registrant undertakes for Fidelity Advisor Strategic
Opportunities Fund, Fidelity Advisor Emerging Markets Income Fund, and
Fidelity Advisor International Capital Appreciation Fund: (1) to call
a meeting of shareholders for the purpose of voting upon the questions
of removal of a trustee or trustees, when requested to do so by record
holders of not less than 10% of its outstanding shares; and (2) to
assist in communications with other shareholders pursuant to Section
16(c)(1) and (2) of the 1934 Act, whenever shareholders meeting the
qualifications set forth in Section 16(c) seek the opportunity to
communicate with other shareholders with a view toward requesting a
meeting.
The Registrant, on behalf of Fidelity Advisor Strategic Opportunities
Fund, Fidelity Advisor Emerging Markets Income Fund, Fidelity Advisor
Overseas Fund, and Fidelity Advisor International Capital Appreciation
Fund provided the information required by Item 5A is contained in the
annual report, undertakes to furnish to each person to whom a
prospectus has been delivered, upon their request and without charge,
a copy of the Registrant's latest annual report to shareholders.
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. 46 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 30th day of October 1997.
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>
/s/Edward C. Johnson 3d (dagger) President and Trustee October 30, 1997
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer October 30, 1997
Richard A. Silver
/s/Robert C. Pozen Trustee October 30 , 1997
Robert C. Pozen
/s/Ralph F. Cox * Trustee October 30, 1997
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee October 30, 1997
Phyllis Burke Davis
/s/Robert M. Gates ** Trustee October 30, 1997
Robert M. Gates
/s/E. Bradley Jones * Trustee October 30, 1997
E. Bradley Jones
/s/Donald J. Kirk * Trustee October 30, 1997
Donald J. Kirk
/s/Peter S. Lynch * Trustee October 30, 1997
Peter S. Lynch
/s/Marvin L. Mann * Trustee October 30, 1997
Marvin L. Mann
/s/William O. McCoy * Trustee October 30, 1997
William O. McCoy
/s/Gerald C. McDonough * Trustee October 30, 1997
Gerald C. McDonough
/s/Thomas R. Williams * Trustee October 30, 1997
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson 3d___________ /s/Peter S. Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead_______________ /s/William O. McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox __________________ /s/Gerald C. McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis_____________ /s/Marvin L. Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley Jones________________ /s/Thomas R. Williams ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk __________________
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash Portfolios
Fidelity Advisor Series III Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series IV Fidelity Investment Trust
Fidelity Advisor Series V Fidelity Magellan Fund
Fidelity Advisor Series VI Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VII Fidelity Money Market Trust
Fidelity Advisor Series VIII Fidelity Mt. Vernon Street Trust
Fidelity Beacon Street Trust Fidelity Municipal Trust
Fidelity Boston Street Trust Fidelity Municipal Trust II
Fidelity California Municipal Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust II Fidelity New York Municipal Trust II
Fidelity Capital Trust Fidelity Phillips Street Trust
Fidelity Charles Street Trust Fidelity Puritan Trust
Fidelity Commonwealth Trust Fidelity Revere Street Trust
Fidelity Concord Street Trust Fidelity School Street Trust
Fidelity Congress Street Fund Fidelity Securities Fund
Fidelity Contrafund Fidelity Select Portfolios
Fidelity Corporate Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Court Street Trust Fidelity Summer Street Trust
Fidelity Court Street Trust II Fidelity Trend Fund
Fidelity Covington Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Daily Money Fund Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Union Street Trust II
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Newbury Street Trust
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund Variable Insurance Products Fund III
Fidelity Hastings Street Trust
</TABLE>
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d_ July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
Exhibit 5(j)
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY ADVISOR SERIES VIII:
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 16th day of October, 1997, by and between
Fidelity Advisor Series VIII, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of Fidelity Advisor International
Capital Appreciation Fund (hereinafter called the "Portfolio"), and
Fidelity Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser") as set forth in its entirety below.
1. (a) Investment Advisory Services. The Adviser undertakes to act
as investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or
dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other
accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Group Fee
and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the fund's Declaration of
Trust or other organizational document) determined as of the close of
business on each business day throughout the month. The Group Fee
Rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .5200%
3 - 6 .4900
6 - 9 .4600
9 - 12 .4300
12 - 15 .4000
15 - 18 .3850
18 - 21 .3700
21 - 24 .3600
24 - 30 .3500
30 - 36 .3450
36 - 42 .3400
42 - 48 .3350
48 - 66 .3250
66 - 84 .3200
84 - 102 .3150
102 - 138 .3100
138 - 174 .3050
174 - 210 .3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over - 534 .2500
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
0.45%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute
the Annual Management Fee Rate. One-twelfth of the Annual Management
Fee Rate shall be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration
of Trust or other organizational document) determined as of the close
of business on each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the
number of business days during which it is in effect, and the fee
computed upon the average net assets for the business days it is so in
effect for that month.
4. It is understood that the Portfolio will pay all its expenses,
which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and
other costs in connection with the purchase or sale of securities and
other investment instruments; (iii) fees and expenses of the Fund's
Trustees other than those who are "interested persons" of the Fund or
the Adviser; (iv) legal and audit expenses; (v) custodian, registrar
and transfer agent fees and expenses; (vi) fees and expenses related
to the registration and qualification of the Fund and the Portfolio's
shares for distribution under state and federal securities laws; (vii)
expenses of printing and mailing reports and notices and proxy
material to shareholders of the Portfolio; (viii) all other expenses
incidental to holding meetings of the Portfolio's shareholders,
including proxy solicitations therefor; (ix) a pro rata share, based
on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management
Contracts with the Adviser, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security or other investment
instrument.
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority
of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY ADVISOR SERIES VIII
on behalf of Fidelity Advisor International Capital
Appreciation Fund
By _______________________________________
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By ________________________________________
President
Exhibit 5(k)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY ADVISOR SERIES VIII ON BEHALF OF FIDELITY ADVISOR
INTERNATIONAL CAPITAL APPRECIATION FUND
AGREEMENT made this 16th day of October, 1997, by and between
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research
(U.K.) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity
Advisor Series VIII, a Massachusetts business trust which may issue
one or more series of shares of beneficial interest (hereinafter
called the "Trust") on behalf of Fidelity Advisor International
Capital Appreciation Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and securities of issuers located in such
countries, and providing investment advisory services in connection
therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the
extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 110% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers or reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1)
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio subject to the provisions of Section
15 of the 1940 Act, as modified by or interpreted by any applicable
order or orders of the Securities and Exchange Commission (the
"Commission") or any rules or regulations adopted by, or
interpretative releases of, the Commission.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust or other organizational document of the
Trust and agrees that any obligations of the Trust or the Portfolio
arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
BY: ____________________________________________
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: ____________________________________________
President
FIDELITY ADVISOR SERIES VIII ON BEHALF OF
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
BY: ____________________________________________
Senior Vice President
Exhibit 5(l)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR SERIES VIII ON BEHALF OF FIDELITY ADVISOR
INTERNATIONAL CAPITAL APPRECIATION FUND
AGREEMENT made this 16th day of October, 1997, by and between
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research
(Far East) Inc. (hereinafter called the "Sub-Advisor"); and Fidelity
Advisor Series VIII, a Massachusetts business trust which may issue
one or more series of shares of beneficial interest (hereinafter
called the "Trust") on behalf of Fidelity Advisor International
Capital Appreciation Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and securities of issuers located in such
countries, and providing investment advisory services in connection
therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the
extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 105% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio subject to the provisions of Section
15 of the 1940 Act, as modified by or interpreted by any applicable
order or orders of the Securities and Exchange Commission (the
"Commission") or any rules or regulations adopted by, or
interpretative releases of, the Commission.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust or other organizational document of the
Trust and agrees that any obligations of the Trust or the Portfolio
arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
BY: ____________________________________________
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: ____________________________________________
President
FIDELITY ADVISOR SERIES VIII ON BEHALF OF
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
BY: ____________________________________________
Senior Vice President
Exhibit 5(m)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY ADVISOR SERIES VIII ON BEHALF OF FIDELITY ADVISOR
INTERNATIONAL CAPITAL APPRECIATION FUND
AGREEMENT made this 16th day of October, 1997 by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity International Investment
Advisors, a Bermuda company with principal offices at Pembroke Hall,
Pembroke, Bermuda (hereinafter called the "Sub-Advisor"); and Fidelity
Advisor Series VIII, a Massachusetts business trust which may issue
one or more series of shares of beneficial interest (hereinafter
called the "Trust") on behalf of Fidelity Advisor International
Capital Appreciation Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and securities of issuers located in such
countries, and providing investment advisory services in connection
therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Trust or Advisor may impose with respect
to the Portfolio by notice to the Sub-Advisor. With respect to the
portion of the investments of the Portfolio under its management, the
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the
extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to: (i) 30% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by (ii) the fraction equal to the net assets of
the Portfolio as to which the Sub-Advisor shall have provided
investment advice divided by the net assets of the Portfolio for that
month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio subject to the provisions of Section
15 of the 1940 Act, as modified by or interpreted by any applicable
order or orders of the Securities and Exchange Commission (the
"Commission") or any rules or regulations adopted by, or
interpretative releases of, the Commission.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust or other organizational document of the
Trust and agrees that any obligations of the Trust or the Portfolio
arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
By: _________________________________________________
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
By: _________________________________________________
Title
FIDELITY ADVISOR SERIES VIII ON BEHALF OF
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
By: __________________________________________________
Title
Exhibit 5(n)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
AND
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
AGREEMENT made this 16th day of October, 1997, by and between
Fidelity International Investment Advisors (U.K.) Limited, 27-28 Lovat
Lane, London, England (hereinafter called the "U.K. Sub-Advisor") and
Fidelity International Investment Advisors, a Bermuda company with
principal offices at Pembroke Hall, Pembroke, Bermuda (hereinafter
called the "Sub-Advisor").
WHEREAS Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Advisor"), has entered into a
Management Contract with Fidelity Advisor Series VIII, a Massachusetts
business trust which may issue one or more series of shares of
beneficial interest (hereinafter called the "Trust"), on behalf of
Fidelity Advisor International Capital Appreciation Fund (hereinafter
called the "Portfolio"), pursuant to which the Advisor is to act as
investment advisor to the Portfolio, and
WHEREAS, the Sub-Advisor has entered into a Sub-Advisory Agreement
with the Advisor (the "Sub-Advisory Agreement") pursuant to which the
Sub-Advisor, directly or through certain of its subsidiaries or other
affiliated persons, shall provide investment advice or investment
management and order execution services to the Portfolio, and
WHEREAS the U.K. Sub-Advisor has personnel in Western Europe and has
been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, and securities of issuers located outside of North
America, principally in the U.K. and Europe.
NOW THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Sub-Advisor and the U.K.
Sub-Advisor agree as follows:
1. Duties: The Sub-Advisor may, in its discretion, appoint the U.K.
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio, in
connection with the Sub-Advisor's duties under the Sub-Advisory
Agreement. The services and the portion of the investments of the
Portfolio advised or managed by the U.K. Sub-Advisor shall be as
agreed upon from time to time by the Sub-Advisor and the U.K.
Sub-Advisor. The U.K. Sub-Advisor shall pay the salaries and fees of
all personnel of the U.K. Sub-Advisor performing services for the
Portfolio relating to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Sub-Advisor, the U.K. Sub-Advisor shall provide investment advice to
the Sub-Advisor with respect to all or a portion of the investments of
the Portfolio, and in connection with such advice shall furnish the
Sub-Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such
information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Sub-Advisor, the U.K. Sub-Advisor shall manage all or a portion of the
investments of the Portfolio in accordance with the investment
objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to
time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations
as the Trust or Advisor may impose with respect to the Portfolio by
notice to the U.K. Sub-Advisor. With respect to the portion of the
investments of the Portfolio under its management, the U.K.
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the U.K. Sub-Advisor
may select. The U.K. Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign
currency investments, purchasing and selling or writing futures and
options contracts, borrowing money or lending securities on behalf of
the Portfolio. All investment management and any other activities of
the U.K. Sub-Advisor shall at all times be subject to the control and
direction of the Sub-Advisor, the Advisor and the Trust's Board of
Trustees.
2. Information to be Provided to the Trust and the Advisor: The
U.K. Sub-Advisor shall furnish such reports, evaluations, information
or analyses to the Trust, the Advisor, and the Sub-Advisor as the
Trust's Board of Trustees, the Advisor or the Sub-Advisor may
reasonably request from time to time, or as the U.K. Sub-Advisor may
deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the U.K.
Sub-Advisor shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or
dealers selected by the U.K. Sub-Advisor, which may include brokers or
dealers affiliated with the Advisor, Sub-Advisor or U.K. Sub-Advisor.
The U.K. Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to
the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected
who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of l934) to
the Portfolio and/or to the other accounts over which the U.K.
Sub-Advisor, the Sub-Advisor or Advisor exercise investment
discretion. The U.K. Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the U.K. Sub-Advisor
determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed
in terms of either that particular transaction or the overall
responsibilities which the U.K. Sub-Advisor and the Sub-Advisor have
with respect to accounts over which they exercise investment
discretion. The Trustees of the Trust shall periodically review the
commissions paid by the Portfolio to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits to the Portfolio.
4. Compensation: The Sub-Advisor shall compensate the U.K.
Sub-Advisor on the following basis for the services to be furnished
hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Sub-Advisor
agrees to pay the U.K. Sub-Advisor a monthly U.K. Sub-Advisory Fee.
The U.K. Sub-Advisory Fee shall be equal to 110% of the U.K.
Sub-Advisor's costs incurred in connection rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement.
The U.K. Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Sub-Advisor or Advisor, if any,
in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
agrees to pay the U.K. Sub-Advisor a monthly Investment Management
Fee. The Investment Management Fee shall be equal to 110% of the U.K.
Sub-Advisor's costs incurred in connection rendering the services
referred to in subparagraph (b) of paragraph 1 of this Agreement.
The U.K. Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Sub-Advisor or Advisor, if any,
in effect from time to time.
(c) PROVISION OF MULTIPLE SERVICES: If the U.K. Sub-Advisor shall
have provided both investment advisory services under subparagraph (a)
and investment management services under subparagraph (b) of paragraph
1 for the same portion of the investments of the Portfolio for the
same period, the fees paid to the U.K. Sub-Advisor with respect to
such investments shall be calculated exclusively under subparagraph
(b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the U.K.
Sub-Advisor hereunder, by the Sub-Advisor under the Sub-Advisory
Agreement or by the Advisor under the Management Contract with the
Portfolio.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor, the Sub-Advisor or the U.K. Sub-Advisor as directors,
officers or otherwise and that directors, officers and stockholders of
the Advisor, the Sub-Advisor or the U.K. Sub-Advisor are or may be or
become similarly interested in the Trust, and that the Advisor, the
Sub-Advisor or the U.K. Sub-Advisor may be or become interested in the
Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The Services of the
U.K. Sub-Advisor to the Sub-Advisor are not to be deemed to be
exclusive, the U.K. Sub-Advisor being free to render services to
others and engage in other activities, provided, however, that such
other services and activities do not, during the term of this
Agreement, interfere, in a material manner, with the U.K.
Sub-Advisor's ability to meet all of its obligations hereunder. The
U.K. Sub-Advisor shall for all purposes be an independent contractor
and not an agent or employee of the Advisor, the Sub-Advisor or the
Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the U.K. Sub-Advisor, the U.K. Sub-Advisor
shall not be subject to liability to the Sub-Advisor, the Advisor, the
Trust or to any shareholder of the Portfolio for any act or omission
in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale
of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the U.K. Sub-Advisor, the Sub-Advisor and the Portfolio subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor, the U.K. Sub-Advisor or the
Portfolio may, at any time on sixty (60) days' prior written notice to
the other parties, terminate this Agreement, without payment of any
penalty, by action of its Board of Trustees or Directors, or with
respect to the Portfolio by vote of a majority of its outstanding
voting securities. This Agreement shall terminate automatically in
the event of its assignment.
10. Limitation of Liability: The U.K. Sub-Advisor is hereby
expressly put on notice of the limitation of shareholder liability as
set forth in the Declaration of Trust or other organizational document
of the Trust and agrees that any obligations of the Trust or the
Portfolio arising in connection with this Agreement shall be limited
in all cases to the Portfolio and its assets, and the U.K. Sub-Advisor
shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio. Nor shall the U.K.
Sub-Advisor seek satisfaction of any such obligation from the Trustees
or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
BY:_____________________________________________________
Title
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
BY: ___________________________________________
Title
Exhibit 5(o)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INVESTMENTS JAPAN LIMITED
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY ADVISOR SERIES VIII ON BEHALF OF
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
AGREEMENT made this 16th day of October, 1997, by and between
Fidelity Management & Research Company, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Investments Japan
Limited, a Japanese company with principal offices at Shiroyama JT
Mori Building, 19th Floor, 3-1 Toranomon 4-chome, Minato-ku, Tokyo
105, Japan (hereinafter called the "Sub-Advisor"); and Fidelity
Advisor Series VIII, a Massachusetts business trust which may issue
one or more series of shares of beneficial interest (hereinafter
called the "Trust") on behalf of Fidelity Advisor International
Capital Appreciation Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect
to the portion of the investments of the Portfolio under its
management, the Sub-Advisor is authorized to make investment decisions
on behalf of the Portfolio with regard to any stock, bond, other
security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as
the Sub-Advisor may select. The Sub-Advisor may also be authorized,
but only to the extent such duties are delegated in writing by the
Advisor, to provide additional investment management services to the
Portfolio, including but not limited to services such as managing
foreign currency investments, purchasing and selling or writing
futures and options contracts, borrowing money, or lending securities
on behalf of the Portfolio. All investment management and any other
activities of the Sub-Advisor shall at all times be subject to the
control and direction of the Advisor and the Trust's Board of
Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to: (i) 30% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by (ii) the fraction equal to the net assets of
the Portfolio as to which the Sub-Advisor shall have provided
investment advice divided by the net assets of the Portfolio for that
month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio subject to the provisions of Section
15 of the 1940 Act, as modified by or interpreted by any applicable
order or orders of the Securities and Exchange Commission (the
"Commission") or any rules or regulations adopted by, or
interpretative releases of, the Commission.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust or other organizational document of the
Trust and agrees that any obligations of the Trust or the Portfolio
arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the Sub-Advisor shall not
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
BY:_____________________________________________________
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: ___________________________________________
Title
FIDELITY ADVISOR SERIES VIII
ON BEHALF OF FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
BY: ____________________________________________
Title
Exhibit 5(p)
MANAGEMENT CONTRACT
BETWEEN
FIDELITY ADVISOR SERIES VIII:
FIDELITY ADVISOR OVERSEAS FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 31st day of October 1997, by and between Fidelity
Advisor Series VIII, a Massachusetts business trust which may issue
one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of Fidelity Advisor Overseas Fund
(hereinafter called the "Portfolio"), and Fidelity Management &
Research Company, a Massachusetts corporation (hereinafter called the
"Adviser") as set forth in its entirety below.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the
supervision of the Fund's Board of Trustees, direct the investments of
the Portfolio in accordance with the investment objective, policies
and limitations as provided in the Portfolio's Prospectus or other
governing instruments, as amended from time to time, the Investment
Company Act of 1940 and rules thereunder, as amended from time to time
(the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also
furnish for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the
investments of the Portfolio; and shall pay the salaries and fees of
all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to
research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds
and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the
Portfolio are and shall at all times be subject to the control and
direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for
the performance by its affiliates of) the management and
administrative services necessary for the operation of the Fund. The
Adviser shall, subject to the supervision of the Board of Trustees,
perform various services for the Portfolio, including but not limited
to: (i) providing the Portfolio with office space, equipment and
facilities (which may be its own) for maintaining its organization;
(ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and
pricing agents, accountants, attorneys, underwriters, brokers and
dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered,
maintaining the registration and qualification of the Portfolio's
shares under federal and state law; and (vii) investigating the
development of and developing and implementing, if appropriate,
management and shareholder services designed to enhance the value or
convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information
or analyses to the Fund as the Fund's Board of Trustees may request
from time to time or as the Adviser may deem to be desirable. The
Adviser shall make recommendations to the Fund's Board of Trustees
with respect to Fund policies, and shall carry out such policies as
are adopted by the Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to perform
its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or
dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. The Adviser shall use its best efforts to
seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other
accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Basic Fee
and a Performance Adjustment. The Performance Adjustment is added to
or subtracted from the Basic Fee depending on whether the Portfolio
experienced better or worse performance than the Morgan Stanley
Capital International Europe, Australasia, Far East Index (the
"Index"). The Performance Adjustment is not cumulative. An increased
fee will result even though the performance of the Portfolio over some
period of time shorter than the performance period has been behind
that of the Index, and, conversely, a reduction in the fee will be
made for a month even though the performance of the Portfolio over
some period of time shorter than the performance period has been ahead
of that of the Index. The Basic Fee and the Performance Adjustment
will be computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of
the Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows:
(i) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the fund's Declaration of
Trust or other organizational document determined as of the close of
business on each business day throughout the month. The Group Fee Rate
shall be determined on a cumulative basis pursuant to the following
schedule:
Average Net Assets Annualized Fee Rate (for each level)
$ 0 - 3 billion .5200%
3 - 6 .4900
6 - 9 .4600
9 - 12 .4300
12 - 15 .4000
15 - 18 .3850
18 - 21 .3700
21 - 24 .3600
24 - 30 .3500
30 - 36 .3450
36 - 42 .3400
42 - 48 .3350
48 - 66 .3250
66 - 84 .3200
84 - 102 .3150
102 - 138 .3100
138 - 174 .3050
174 - 210 .3000
210 - 246 .2950
246 - 282 .2900
282 - 318 .2850
318 - 354 .2800
354 - 390 .2750
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
(ii) Individual Fund Fee Rate. The individual fund fee rate shall
be .45%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner
set forth in the Fund's Declaration of Trust or other organizational
document) determined as of the close of business on each business day
throughout the month. The resulting dollar amount comprises the Basic
Fee.
(c) Performance Adjustment Rate: The Performance Adjustment Rate is
0.02% for each percentage point (the performance of the Portfolio and
the Index each being calculated to the nearest 0.01%) that the
Portfolio's investment performance for the performance period was
better or worse than the record of the Index as then constituted. The
maximum Performance Adjustment rate is 0.20%.
The performance period will commence with the first day of the first
full month following the Portfolio's commencement of operations.
During the first eleven months of the performance period for the
Portfolio, there will be no performance adjustment. Starting with the
twelfth month of the performance period, the performance adjustment
will take effect. Following the twelfth month a new month will be
added to the performance period until the performance period equals 36
months. Thereafter the performance period will consist of the current
month plus the previous 35 months.
The Portfolio's investment performance for the period shall be the
cumulative monthly asset-weighted investment performance of all
classes of shares of the Portfolio over the performance period. The
asset-weighted investment performance for the Portfolio for a given
month will be calculated by multiplying the investment performance of
each class for the month by its average net assets (determined as of
the close of business on each business day of the month), adding the
results together and dividing the sum by the aggregate net assets of
all classes of the Portfolio for that month. Any class that does not
complete a full month of operations in a given month will be excluded
from the calculation of the Portfolio's investment performance for
that month, and its assets will be excluded from the aggregate net
assets of the Portfolio in determining the Portfolio's investment
performance for that month.
The investment performance of each class will be measured by
comparing (i) the opening net asset value of one share of the class on
the first business day of the month with (ii) the closing net asset
value of one share of the class as of the last business day of such
month. In computing the investment performance of each class and the
investment record of the Index, distributions of realized capital
gains, the value of capital gains taxes per share paid or payable on
undistributed realized long-term capital gains accumulated to the end
of such period and dividends paid out of investment income on the part
of the Portfolio, and all cash distributions of the securities
included in the Index, will be treated as reinvested in accordance
with Rule 205-1 or any other applicable rules under the Investment
Advisers Act of 1940, as the same from time to time may be amended.
Although the investment performance of the Portfolio for the
performance period shall be rounded to the nearest 0.01%, this shall
not prevent the monthly investment performance of the classes or of
the Portfolio from being rounded to a greater number of decimal
places.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will be applied to the average of the net assets of
the Portfolio (computed in the manner set forth in the Fund's
Declaration of Trust or other organizational document) determined as
of the the close of business on each business day throughout the month
and the performance period.
(e) In case of termination of this Contract during any month, the
fee for that month shall be reduced proportionately on the basis of
the number of business days during which it is in effect for that
month. The Basic Fee Rate will be computed on the basis of and applied
to net assets averaged over that month ending on the last business day
on which this Contract is in effect. The amount of this Performance
Adjustment to the Basic Fee will be computed on the basis of and
applied to net assets averaged over the 36-month period ending on the
last business day on which this Contract is in effect provided that if
this Contract has been in effect less than 36 months, the computation
will be made on the basis of the period of time during which it has
been in effect.
4. It is understood that the Portfolio will pay all its expenses
which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and
other costs in connection with the purchase or sale of securities and
other investment instruments; (iii) fees and expenses of the Fund's
Trustees other than those who are "interested persons" of the Fund or
the Adviser; (iv) legal and audit expenses; (v) custodian, registrar
and transfer agent fees and expenses; (vi) fees and expenses related
to the registration and qualification of the Fund and the Portfolio's
shares for distribution under state and federal securities laws; (vii)
expenses of printing and mailing reports and notices and proxy
material to shareholders of the Portfolio; (viii) all other expenses
incidental to holding meetings of the Portfolio's shareholders,
including proxy solicitations therefor; (ix) a pro rata share, based
on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management
Contracts with the Adviser, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security or other investment
instrument
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority
of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on
the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
or other organizational document and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, as now in effect or
as hereafter amended, and subject to such orders as may be granted by
the Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY ADVISOR SERIES VIII
On Behalf Of Fidelity Advisor Overseas FUND
By /s/ Robert C. Pozen_________
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ Robert C. Pozen_________
President
Exhibit 5(q)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY (U.K.) INC.
AND
FIDELITY ADVISOR SERIES VIII ON BEHALF OF
FIDELITY ADVISOR OVERSEAS FUND
AGREEMENT made this 31st day of October 1997, by and between Fidelity
Management & Research Company, a Massachusetts corporation with
principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Advisor"); Fidelity Management & Research
Company (U.K.) Inc. (hereinafter called the "Sub-Advisor"); and
Fideilty Advisor Series VIII, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund") on behalf of Fidelity Advisor Overseas Fund
(hereinafter called the "Portfolio").
WHEREAS the Fund and the Advisor have entered into a Management
Contract on behalf of Portfolio, pursuant to which the Advisor is to
act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries and securities of issuers located in such countries,
and providing investment advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Fund, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services. The
portion of the investments of the Portfolio advised or managed by the
Sub-Advisor shall be agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of
all personnel of the Sub-Advisor performing services for the Portfolio
relating to research, statistical and investment activities.
(a) Investment Advice: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and to the Advisor, and, in connection with such advice,
shall furnish the Portfolio and the Advisor factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) Investment Management: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and
such other limitations as the Fund may impose with respect to the
Portfolio by notice to the Advisor and the Sub-Advisor. The
provision of investment management services shall also include the
provision of investment advisory services described under subparagraph
(a) hereof. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any
stock, bond, other security or investment instrument, and to place
orders for purchase and sale of such securities through such
broker-dealers as the Sub-Advisor may select. The Sub-Advisor may
also be authorized, to the extent such duties are delegated in writing
by the Advisor, to provide additional investment management services
to the Portfolio, including but not limited to providing currency
management services (including entering into currency forward, futures
and options contracts on behalf of the Portfolio); trading futures and
options contracts on securities or indexes; and borrowing or lending
Portfolio securities. All investment management and any other actions
of the Sub-Advisor shall at all times be subject to the control and
direction of the Advisor and the Fund's Board of Trustees.
(c) Order Execution Services : The Sub-Advisor may provide order
execution services with respect to investments of the Portfolio with
or without providing investment advice or investment management
services with respect to such investments; however, the provision of
order execution services with respect to investments of the Portfolio
shall not constitute provision of investment advice under subarea (a)
or investment management under subparagraph (b) with respect to such
investments for the purpose of calculating the Investment Management
Fee unless the Sub-Advisor also provides investment advice or
investment management services with respect to such investments.
(d) Subsidiaries and Affiliates: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Fund to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Fund and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Fund and the Advisor as the Fund's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under Section
1(b) of this Agreement, the Sub-Advisor, at its own expense, shall
place all orders for the purchase and sale of portfolio securities for
the Portfolio's account with brokers or dealers selected by the
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to
seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor and the Advisor have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) Investment Advisory Fee: For services provided under
sub-paragraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 110% of the Sub-Advisor's costs incurred in
connection with sub-paragraph (a) of paragraph 1 of this Agreement.
The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) Investment Management Fee: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to 50% of the monthly
management fee rate that the Portfolio is obligated to pay the Advisor
under its Management Contract with the Advisor, times the average
daily market value of investments held by the Portfolio as to which
the Sub-Advisor shall have provided investment management services;
provided, however, that in no event shall the Investment Management
Fee exceed 50% of such monthly management fee rate times the
Portfolio's average daily net assets. If in any fiscal year the
aggregate expenses of the Portfolio exceed any applicable expense
limitation imposed by any state or federal securities laws or
regulations, and the Advisor waives all or a portion of its management
fee or reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the management fee rate referred to in the
preceding sentence shall be proportionately reduced for the purpose of
calculating the Investment Management Fee, and shall be equal to the
monthly management fee amount that the Portfolio is obligated to pay
the Advisor under its Management Contract with the Advisor, minus the
amount of such waivers or reimbursements, divided by the Portfolio's
average daily net assets. To the extent that waivers and
reimbursements by the Advisor required by such limitations are in
excess of the Advisor's management fee, the Sub-Advisor shall
reimburse the Advisor in an amount equal to the amount of such excess
reimbursements, times the average daily market value of investments
held by the Portfolio as to which the Sub-Advisor shall have provided
investment management services, divided by the Portfolio's average
daily net assets; provided, however, that in no event shall the
Sub-Advisor reimburse the Advisor for more than 100% of the amount
reimbursed by the Advisor.
(c) Provision of Multiple Services: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) of
paragraph 1 and order execution services under subparagraph (c) of the
same paragraph, the fees of the Sub-Advisor with respect to such
investments shall be calculated solely under subparagraph (a) of this
paragraph 4. If the Sub-Advisor shall have provided both investment
advisory services under subparagraph (a) of paragraph 1 and investment
management services under subparagraph (b) of the same paragraph, the
fees of the Sub-Advisor with respect to such investments (including
any reimbursements to the Advisor) shall be calculated exclusively
under subparagraph (b) of this paragraph 4, and the Sub-Advisor shall
not be entitled to received any Sub-Advisory Fee with respect to such
assets.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Fund's Trustees other than those who are "interested persons"
of the Fund, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Fund's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Fund are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Fund,
and that the Advisor or the Sub-Advisor may be or become interested in
the Fund as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations with respect to rendering investment advice hereunder.
The Sub-Advisor shall for all purposes be an independent contractor
and not an agent or employee of the Advisor or the Fund.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Fund or to any shareholder of
the Portfolio for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Fund's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or by vote of a majority of its
outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust of the Fund and agrees that any obligations
of the Fund or the Portfolio arising in connection with this Agreement
shall be limited in all cases to the Portfolio and its assets, and the
Sub-Advisor shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Portfolio. Nor shall the
Sub-Advisor seek satisfaction of any such obligation from the Trustees
or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ Robert C. Pozen_______________
President
FIDELITY MANAGEMENT & RESEARCH COMPANY(U.K.) INC.
By /s/ Robert C. Pozen_______________
President
FIDELITY ADVISOR SERIES VIII
on behalf of Fidelity Advisor Overseas Fund
By /s/ Robert C. Pozen_______________
Senior Vice President
Exhibit 5(r)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR SERIES VIII ON BEHALF OF
FIDELITY ADVISOR OVERSEAS FUND
AGREEMENT made this 31st day of October 1997 by Fidelity Management &
Research Company, a Massachusetts corporation with principal offices
at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity Management & Research Company (Far East) Inc.
(hereinafter called the "Sub-Advisor"); and Fidelity Advisor Series
VIII, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the
"Trust") on behalf of Fidelity Advisor Overseas Fund (hereinafter
called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of Portfolio, pursuant to which the Advisor acts as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, including securities issued in and issuers located
in such countries, and providing investment advisory services in
connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect
to the portion of the investments of the Portfolio under its
management, the Sub-Advisor is authorized to make investment decisions
on behalf of the Portfolio with regard to any stock, bond, other
security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as
the Sub-Advisor may select. The Sub-Advisor may also be authorized,
but only to the extent such duties are delegated in writing by the
Advisor, to provide additional investment management services to the
Portfolio, including but not limited to services such as managing
foreign currency investments, purchasing and selling or writing
futures and options contracts, borrowing money, or lending securities
on behalf of the Portfolio. All investment management and any other
activities of the Sub-Advisor shall at all times be subject to the
control and direction of the Advisor and the Trust's Board of
Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor, at
its own expense, shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or
dealers selected by the Sub-Advisor, which may include brokers or
dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and to
any other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker
or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio
which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the
Sub-Advisor determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts
over which it exercises investment discretion. The Trustees of the
Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of
time were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to 105% of the Sub-Advisor's costs incurred in
connection with rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be
reduced to reflect expense reimbursements or fee waivers by the
Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust of the Trust and agrees that any
obligations of the Trust or the Portfolio arising in connection with
this Agreement shall be limited in all cases to the Portfolio and its
assets, and the Sub-Advisor shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio.
Nor shall the Sub-Advisor seek satisfaction of any such obligation
from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ Robert C. Pozen_______________
President
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
By /s/ Robert C. Pozen_______________
President
FIDELITY ADVISOR SERIES VIII
on behalf of Fidelity Advisor Overseas Fund
By /s/ Robert C. Pozen_______________
Senior Vice President
Exhibit 5(s)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
AND
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
AGREEMENT made this _____________, by Fidelity International
Investment Advisors (U.K.) Limited, 27-28 Lovat Lane, London, England
(hereinafter called the "U.K. Sub-Advisor") and Fidelity International
Investment Advisors, a Bermuda company with principal offices at
Pembroke Hall, Pembroke, Bermuda (hereinafter called the
"Sub-Advisor").
WHEREAS Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Advisor"), has entered into a
Management Contract with Fidelity Advisor Series VIII, a Massachusetts
business trust which may issue one or more series of shares of
beneficial interest (hereinafter called the "Trust"), on behalf of
Fidelity Advisor Overseas Fund (hereinafter called the "Portfolio"),
pursuant to which the Advisor acts as investment advisor to the
Portfolio, and
WHEREAS, the Sub-Advisor has entered into a Sub-Advisory Agreement
with the Advisor (the "Sub-Advisory Agreement") pursuant to which the
Sub-Advisor, directly or through certain of its subsidiaries or other
affiliated persons, shall provide investment advice or investment
management and order execution services to the Portfolio, and
WHEREAS the U.K. Sub-Advisor has personnel in Western Europe and has
been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, including securities issued and issuers located
outside of North America, principally in the U.K. and Europe.
NOW THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Sub-Advisor and the U.K.
Sub-Advisor agree as follows:
1. Duties: The Sub-Advisor may, in its discretion, appoint the U.K.
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio, in
connection with the Sub-Advisor's duties under the Sub-Advisory
Agreement. The services and the portion of the investments of the
Portfolio advised or managed by the U.K. Sub-Advisor shall be as
agreed upon from time to time by the Sub-Advisor and the U.K.
Sub-Advisor. The U.K. Sub-Advisor shall pay the salaries and fees of
all personnel of the U.K. Sub-Advisor performing services for the
Portfolio relating to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Sub-Advisor, the U.K. Sub-Advisor shall provide investment advice to
the Sub-Advisor with respect to all or a portion of the investments of
the Portfolio, and in connection with such advice shall furnish the
Sub-Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such
information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Sub-Advisor, the U.K. Sub-Advisor shall manage all or a portion of the
investments of the Portfolio in accordance with the investment
objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to
time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations
as the Trust or Advisor may impose with respect to the Portfolio by
notice to the U.K. Sub-Advisor. With respect to the portion of the
investments of the Portfolio under its management, the U.K.
Sub-Advisor is authorized to make investment decisions on behalf of
the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the U.K. Sub-Advisor
may select. The U.K. Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to
provide additional investment management services to the Portfolio,
including but not limited to services such as managing foreign
currency investments, purchasing and selling or writing futures and
options contracts, borrowing money or lending securities on behalf of
the Portfolio. All investment management and any other activities of
the U.K. Sub-Advisor shall at all times be subject to the control and
direction of the Sub-Advisor, the Advisor and the Trust's Board of
Trustees.
2. Information to be Provided to the Trust and the Advisor: The
U.K. Sub-Advisor shall furnish such reports, evaluations, information
or analyses to the Trust, the Advisor, and the Sub-Advisor as the
Trust's Board of Trustees, the Advisor or the Sub-Advisor may
reasonably request from time to time, or as the U.K. Sub-Advisor may
deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the U.K.
Sub-Advisor, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account
with brokers or dealers selected by the U.K. Sub-Advisor, which may
include brokers or dealers affiliated with the Advisor, Sub-Advisor or
U.K. Sub-Advisor. The U.K. Sub-Advisor shall use its best efforts to
seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and to any other
accounts over which the U.K. Sub-Advisor, the Sub-Advisor or Advisor
exercise investment discretion. The U.K. Sub-Advisor is authorized to
pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if
the U.K. Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular
transaction or the overall responsibilities which the U.K. Sub-Advisor
and the Sub-Advisor have with respect to accounts over which they
exercise investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Sub-Advisor shall compensate the U.K.
Sub-Advisor on the following basis for the services to be furnished
hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Sub-Advisor
agrees to pay the U.K. Sub-Advisor a monthly U.K. Sub-Advisory Fee.
The U.K. Sub-Advisory Fee shall be equal to 110% of the U.K.
Sub-Advisor's costs incurred in connection rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement.
The U.K. Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Sub-Advisor or Advisor, if any,
in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
agrees to pay the U.K. Sub-Advisor a monthly Investment Management
Fee. The Investment Management Fee shall be equal to 110% of the U.K.
Sub-Advisor's costs incurred in connection rendering the services
referred to in subparagraph (b) of paragraph 1 of this Agreement.
The U.K. Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Sub-Advisor or Advisor, if any,
in effect from time to time.
(c) PROVISION OF MULTIPLE SERVICES: If the U.K. Sub-Advisor shall
have provided both investment advisory services under subparagraph (a)
and investment management services under subparagraph (b) of paragraph
1 for the same portion of the investments of the Portfolio for the
same period, the fees paid to the U.K. Sub-Advisor with respect to
such investments shall be calculated exclusively under subparagraph
(b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the U.K.
Sub-Advisor hereunder, by the Sub-Advisor under the Sub-Advisory
Agreement or by the Advisor under the Management Contract with the
Portfolio.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor, the Sub-Advisor or the U.K. Sub-Advisor as directors,
officers or otherwise and that directors, officers and stockholders of
the Advisor, the Sub-Advisor or the U.K. Sub-Advisor are or may be or
become similarly interested in the Trust, and that the Advisor, the
Sub-Advisor or the U.K. Sub-Advisor may be or become interested in the
Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The Services of the
U.K. Sub-Advisor to the Sub-Advisor are not to be deemed to be
exclusive, the U.K. Sub-Advisor being free to render services to
others and engage in other activities, provided, however, that such
other services and activities do not, during the term of this
Agreement, interfere, in a material manner, with the U.K.
Sub-Advisor's ability to meet all of its obligations hereunder. The
U.K. Sub-Advisor shall for all purposes be an independent contractor
and not an agent or employee of the Advisor, the Sub-Advisor or the
Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the U.K. Sub-Advisor, the U.K. Sub-Advisor
shall not be subject to liability to the Sub-Advisor, the Advisor, the
Trust or to any shareholder of the Portfolio for any act or omission
in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale
of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the U.K. Sub-Advisor, the Sub-Advisor and the Portfolio, such consent
on the part of the Portfolio to be authorized by vote of a majority of
the outstanding voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor, the U.K. Sub-Advisor or the
Portfolio may, at any time on sixty (60) days' prior written notice to
the other parties, terminate this Agreement, without payment of any
penalty, by action of its Board of Trustees or Directors, or with
respect to the Portfolio by vote of a majority of its outstanding
voting securities. This Agreement shall terminate automatically in
the event of its assignment.
10. Limitation of Liability: The U.K. Sub-Advisor is hereby
expressly put on notice of the limitation of shareholder liability as
set forth in the Declaration of Trust of the Trust and agrees that any
obligations of the Trust or the Portfolio arising in connection with
this Agreement shall be limited in all cases to the Portfolio and its
assets, and the U.K. Sub-Advisor shall not seek satisfaction of any
such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the U.K. Sub-Advisor seek satisfaction of any
such obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
By ________________________________
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
By _______________________________
Exhibit 5(t)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY ADVISOR SERIES VIII ON BEHALF OF
FIDELITY ADVISOR OVERSEAS FUND
AGREEMENT made this ____________, by Fidelity Management & Research
Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity International Investment Advisors, a Bermuda
company with principal offices at Pembroke Hall, Pembroke, Bermuda
(hereinafter called the "Sub-Advisor"): and Fidelity Advisor Series
VIII, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the
"Trust") on behalf of Fidelity Advisor Overseas Fund (hereinafter
called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of Portfolio, pursuant to which the Advisor acts as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and
have been formed in part for the purpose of researching and compiling
information and recommendations with respect to the economies of
various countries, including securities issued in and issuers located
in such countries, and providing investment advisory services in
connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect
to the portion of the investments of the Portfolio under its
management, the Sub-Advisor is authorized to make investment decisions
on behalf of the Portfolio with regard to any stock, bond, other
security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as
the Sub-Advisor may select. The Sub-Advisor may also be authorized,
but only to the extent such duties are delegated in writing by the
Advisor, to provide additional investment management services to the
Portfolio, including but not limited to services such as managing
foreign currency investments, purchasing and selling or writing
futures and options contracts, borrowing money, or lending securities
on behalf of the Portfolio. All investment management and any other
activities of the Sub-Advisor shall at all times be subject to the
control and direction of the Advisor and the Trust's Board of
Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor, at
its own expense, shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or
dealers selected by the Sub-Advisor, which may include brokers or
dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor
shall use its best efforts to seek to execute portfolio transactions
at prices which are advantageous to the Portfolio and at commission
rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and to
any other accounts over which the Sub-Advisor or Advisor exercise
investment discretion. The Sub-Advisor is authorized to pay a broker
or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio
which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the
Sub-Advisor determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts
over which it exercises investment discretion. The Trustees of the
Trust shall periodically review the commissions paid by the Portfolio
to determine if the commissions paid over representative periods of
time were reasonable in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to (i) 30% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by: (ii) the fraction equal to the net assets of
the Portfolio as to which the Sub-Advisor shall have provided
investment advise divided by the net assets of the Portfolio for that
month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefore; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers,
and shareholders of the Trust are or may be or become interested in
the Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly
put on notice of the limitation of shareholder liability as set forth
in the Declaration of Trust of the Trust and agrees that any
obligations of the Trust or the Portfolio arising in connection with
this Agreement shall be limited in all cases to the Portfolio and its
assets, and the Sub-Advisor shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio.
Nor shall the Sub-Advisor seek satisfaction of any such obligation
from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as
of the date written above.
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
By ______________________________________
FIDELITY MANAGEMENT & RESEARCH COMPANY
By _____________________________________
FIDELITY ADVISOR SERIES VIII
on behalf of Fidelity Advisor Overseas Fund
By _____________________________________
Exhibit 5(u)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INVESTMENTS JAPAN LIMITED
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY ADVISOR SERIES VIII ON BEHALF OF
FIDELITY ADVISOR OVERSEAS FUND
AGREEMENT made this ___________, by and between Fidelity Management &
Research Company, a Massachusetts corporation with principal offices
at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity Investments Japan Limited, a Japanese company
with principal offices at Shiroyama JT Mori Bldg., 4-3-1 Toranomon,
Minato-ku, Tokyo 105, Japan (hereinafter called the "Sub-Advisor");
and Fidelity Advisor Series VIII, a Massachusetts business trust which
may issue one or more series of shares of beneficial interest
(hereinafter called the "Trust") on behalf of Fidelity Advisor
Overseas Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is
to act as investment manager of the Portfolio; and
WHEREAS the Sub-Advisor has been formed in part for the purpose of
researching and compiling information and recommendations with respect
to the economies of various countries, and securities of issuers
located in such countries, and providing investment advisory services
in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Trust, the Advisor and the
Sub-Advisor agree as follows:
1. Duties: The Advisor may, in its discretion, appoint the
Sub-Advisor to perform one or more of the following services with
respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be
advised or managed by the Sub-Advisor shall be as agreed upon from
time to time by the Advisor and the Sub-Advisor. The Sub-Advisor shall
pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research,
statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the
Advisor, the Sub-Advisor shall provide investment advice to the
Portfolio and the Advisor with respect to all or a portion of the
investments of the Portfolio, and in connection with such advice shall
furnish the Portfolio and the Advisor such factual information,
research reports and investment recommendations as the Advisor may
reasonably require. Such information may include written and oral
reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio
in accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940
(the"1940 Act") and rules thereunder, as amended from time to time,
and such other limitations as the Trust or Advisor may impose with
respect to the Portfolio by notice to the Sub-Advisor. With respect to
the portion of the investments of the Portfolio under its management,
the Sub-Advisor is authorized to make investment decisions on behalf
of the Portfolio with regard to any stock, bond, other security or
investment instrument, and to place orders for the purchase and sale
of such securities through such broker-dealers as the Sub-Advisor may
select. The Sub-Advisor may also be authorized, but only to the extent
such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including
but not limited to services such as managing foreign currency
investments, purchasing and selling or writing futures and options
contracts, borrowing money, or lending securities on behalf of the
Portfolio. All investment management and any other activities of the
Sub-Advisor shall at all times be subject to the control and direction
of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or
all of the services contemplated by this Agreement directly or through
such of its subsidiaries or other affiliated persons as the
Sub-Advisor shall determine; provided, however, that performance of
such services through such subsidiaries or other affiliated persons
shall have been approved by the Trust to the extent required pursuant
to the 1940 Act and rules thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees
or the Advisor may reasonably request from time to time, or as the
Sub-Advisor may deem to be desirable.
3. Brokerage: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor
shall place all orders for the purchase and sale of portfolio
securities for the Portfolio's account with brokers or dealers
selected by the Sub-Advisor, which may include brokers or dealers
affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which
are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of l934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Advisor determines
in good faith that such amount of commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically
review the commissions paid by the Portfolio to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under
subparagraph (a) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory
Fee shall be equal to: (i) 30% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by (ii) the fraction equal to the net assets of
the Portfolio as to which the Sub-Advisor shall have provided
investment advice divided by the net assets of the Portfolio for that
month. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from
time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Advisor agrees
to pay the Sub-Advisor a monthly Investment Management Fee. The
Investment Management Fee shall be equal to: (i) 50% of the monthly
management fee rate (including performance adjustments, if any) that
the Portfolio is obligated to pay the Advisor under its Management
Contract with the Advisor, multiplied by: (ii) the fraction equal to
the net assets of the Portfolio as to which the Sub-Advisor shall have
provided investment management services divided by the net assets of
the Portfolio for that month. If in any fiscal year the aggregate
expenses of the Portfolio exceed any applicable expense limitation
imposed by any state or federal securities laws or regulations, and
the Advisor waives all or a portion of its management fee or
reimburses the Portfolio for expenses to the extent required to
satisfy such limitation, the Investment Management Fee paid to the
Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements
and the Advisor subsequently recovers all or any portion of such
waivers and reimbursements, then the Sub-Advisor shall be entitled to
receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the
Advisor required by such limitations are in excess of the Advisor's
management fee, the Investment Management Fee paid to the Sub-Advisor
will be reduced to zero for that month, but in no event shall the
Sub-Advisor be required to reimburse the Advisor for all or a portion
of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1
for the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the
Sub-Advisor hereunder or by the Advisor under the Management Contract
with the Portfolio, which expenses payable by the Portfolio shall
include, without limitation, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses
of the Trust's Trustees other than those who are "interested persons"
of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (vii) expenses of printing
and mailing reports and notices and proxy material to shareholders of
the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net
assets of the Portfolio and other registered investment companies
having Advisory and Service or Management Contracts with the Advisor,
of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of
typesetting for printing Prospectuses and Statements of Additional
Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to
indemnify the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor or the
Sub-Advisor are or may be or become similarly interested in the Trust,
and that the Advisor or the Sub-Advisor may be or become interested in
the Trust as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in
other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the Sub-Advisor's ability to meet all of its
obligations hereunder. The Sub-Advisor shall for all purposes be an
independent contractor and not an agent or employee of the Advisor or
the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder
of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until July
31, 1998 and indefinitely thereafter, but only so long as the
continuance after such period shall be specifically approved at least
annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other parties,
terminate this Agreement, without payment of any penalty, by action of
its Board of Trustees or Directors, or with respect to the Portfolio
by vote of a majority of its outstanding voting securities. This
Agreement shall terminate automatically in the event of its
assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put
on notice of the limitation of shareholder liability as set forth in
the Declaration of Trust or other organizational document of the Trust
and agrees that any obligations of the Trust or the Portfolio arising
in connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested
persons," when used herein, shall have the respective meanings
specified in the 1940 Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to
be signed in their behalf by their respective officers thereunto duly
authorized, all as of the date written above.
FIDELITY INVESTMENTS JAPAN LIMITED
By:________________________________
FIDELITY MANAGEMENT & RESEARCH COMPANY
By:________________________________
FIDELITY ADVISOR SERIES VIII
on behalf of Fidelity Advisor Overseas Fund
By:________________________________
Exhibit 6(e)
FORM OF
BANK AGENCY AGREEMENT
We at Fidelity Distributors Corporation offer to make available to
your customers shares of the mutual funds, or the separate series or
classes of the mutual funds, listed on Schedules A and B attached to
this Agreement (the "Portfolios"). We may periodically change the
list of Portfolios by giving you written notice of the change. We are
the Portfolios' principal underwriter and act as agent for the
Portfolios. You (____________________________________) are a division
or affiliate of a bank (____________________________________) and
desire to make Portfolio shares available to your customers on the
following terms:
1. Certain Defined Terms: As used in this Agreement, the term
"Prospectus" means the applicable Portfolio's prospectus and related
statement of additional information, whether in paper format or
electronic format, included in the Portfolio's then currently
effective registration statement (or post-effective amendment
thereto), and any information that we or the Portfolio may issue to
you as a supplement to such prospectus or statement of additional
information (a "sticker"), all as filed with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of
1933.
2. Making Portfolio Shares Available to Your Customers: (a) In all
transactions covered by this Agreement: (i) you will act as agent for
your customers; in no transaction are you authorized to act as agent
for us or for any Portfolio; (ii) you will initiate transactions only
upon your customers' orders; (iii) we will execute transactions only
upon receiving instructions from you acting as agent for your
customers; and (iv) each transaction will be for your customer's
account and not for your own account. Each transaction will be
without recourse to you, provided that you act in accordance with the
terms of this Agreement.
(b) You agree to make Portfolio shares available to your customers
only at the applicable public offering price in accordance with the
Prospectus. If your customer qualifies for a reduced sales charge
pursuant to a special purchase plan (for example, a quantity discount,
letter of intent, or right of accumulation) as described in the
Prospectus, you agree to make Portfolio shares available to your
customer at the applicable reduced sales charge. You agree to deliver
or cause to be delivered to each customer, at or prior to the time of
any purchase of shares, a copy of the then current prospectus
(including any stickers thereto), unless such prospectus has already
been delivered to the customer, and to each customer who so requests,
a copy of the then current statement of additional information
(including any stickers thereto).
(c) You agree to order Portfolio shares from us only to cover
purchase orders that you have already received from your customers, or
for your own investment. You will not withhold placing customers'
orders so as to profit yourself as a result of such withholding (for
example, by a change in a Portfolio's net asset value from that used
in determining the offering price to your customers).
(d) We will accept your purchase orders only at the public offering
price applicable to each order, as determined in accordance with the
Prospectus. We will not accept from you a conditional order for
Portfolio shares. All orders are subject to acceptance or rejection
by us in our sole discretion. We may, without notice, suspend sales
or withdraw the offering of Portfolio shares, or make a limited
offering of Portfolio shares.
(e) The placing of orders with us will be governed by instructions
that we will periodically issue to you. You must pay for Portfolio
shares in New York or Boston clearing house funds or in federal funds
in accordance with such instructions, and we must receive your payment
on or before the settlement date established in accordance with Rule
15c6-1 under the Securities Exchange Act of 1934 (the "1934 Act").
(f) You agree to comply with all applicable state and federal laws
and with the rules and regulations of authorized regulatory agencies
thereunder. You agree to make Portfolio shares available to your
customers only in states where you may legally make such Portfolio's
shares available. You will not make available shares of any Portfolio
unless such shares are registered under the applicable state and
federal laws and the rules and regulations thereunder.
(g) Certificates evidencing Portfolio shares are not available; any
transaction in Portfolio shares will be effected and evidenced by
book-entry on the records maintained by Fidelity Investments
Institutional Operations Company, Inc. ("FIIOC"). A confirmation
statement evidencing transactions in Portfolio shares will be
transmitted to you.
(h) You may designate FIIOC to execute your customers' transactions
in Portfolio shares in accordance with the terms of any account,
program, plan, or service established or used by your customers, and
to confirm each transaction to your customers on your behalf on a
fully disclosed basis. At the time of the transaction, you guarantee
the legal capacity of your customers and any co-owners of such shares
so transacting in such shares.
3. Your Compensation: (a) Your fee, if any, for acting as agent
with respect to sales of Portfolio shares will be as provided in the
Prospectus or in the applicable schedule of agency fees issued by us
and in effect at the time of the sale. Upon written notice to you, we
or any Portfolio may change or discontinue any schedule of agency
fees, or issue a new schedule.
(b) If a Portfolio has adopted a plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (a "Plan"), we may make
distribution payments or service payments to you under the Plan. If a
Portfolio does not have a currently effective Plan, we or Fidelity
Management & Research Company may make distribution payments or
service payments to you from our own funds. Any distribution payments
or service payments will be made in the amount and manner set forth in
the Prospectus or in the applicable schedule of distribution payments
or service payments issued by us and then in effect. Upon written
notice to you, we or any Portfolio may change or discontinue any
schedule of distribution payments or service payments, or issue a new
schedule. A schedule of distribution payments or service payments
will be in effect with respect to a Portfolio that has a Plan only so
long as that Portfolio's Plan remains in effect.
(c) After the effective date of any change in or discontinuance of
any schedule of agency fees, distribution payments, or service
payments, or the termination of a Plan, any agency fees, distribution
payments, or service payments will be allowable or payable to you only
in accordance with such change, discontinuance, or termination. You
agree that you will have no claim against us or any Portfolio by
virtue of any such change, discontinuance, or termination. In the
event of any overpayment by us of any agency fee, distribution
payment, or service payment, you will remit such overpayment.
(d) If, within seven (7) business days after our confirmation of
the original purchase order for shares of a Portfolio, such shares are
redeemed by the issuing Portfolio or tendered for redemption by the
customer, you agree (i) to refund promptly to us the full amount of
any agency fee, distribution payment, or service payment paid to you
on such shares, and (ii) if not yet paid to you, to forfeit the right
to receive any agency fee, distribution payment, or service payment
payable to you on such shares. We will notify you of any such
redemption within ten (10) days after the date of the redemption.
4. Certain Types of Accounts: (a) You may instruct FIIOC to
register purchased shares in your name and account as nominee for your
customers. If you hold Portfolio shares as nominee for your
customers, all Prospectuses, proxy statements, periodic reports, and
other printed material will be sent to you, and all confirmations and
other communications to shareholders will be transmitted to you. You
will be responsible for forwarding such printed material,
confirmations, and communications, or the information contained
therein, to all customers for whose account you hold any Portfolio
shares as nominee. However, we or FIIOC on behalf of itself or the
Portfolios will be responsible for the costs associated with your
forwarding such printed material, confirmations, and communications.
You will be responsible for complying with all reporting and tax
withholding requirements with respect to the customers for whose
account you hold any Portfolio shares as nominee.
(b) With respect to accounts other than those accounts referred to
in paragraph 4(a) above, you agree to provide us with all information
(including certification of taxpayer identification numbers and
back-up withholding instructions) necessary or appropriate for us to
comply with legal and regulatory reporting requirements.
(c) Accounts opened or maintained pursuant to the NETWORKING system
of the National Securities Clearing Corporation ("NSCC") will be
governed by applicable NSCC rules and procedures and any agreement or
other arrangement with us relating to NETWORKING.
(d) If you hold Portfolio shares in an omnibus account for two or
more customers, you will be responsible for determining, in accordance
with the Prospectus, whether, and the extent to which, a CDSC is
applicable to a purchase of Portfolio shares from such a customer, and
you agree to transmit immediately to us any CDSC to which such
purchase was subject. You hereby represent that if you hold Portfolio
shares subject to a CDSC, you have the capability to track and account
for such charge, and we reserve the right, at our discretion, to
verify that capability by inspecting your tracking and accounting
system or otherwise.
5. Status as Registered Broker/Dealer or "Bank": (a) Each party to
this Agreement represents to the other party that it is either (i) a
registered broker/dealer under the 1934 Act, or (ii) a "bank" as
defined in Section 3(a)(6) of the 1934 Act.
(b) If a party is a registered broker/dealer, such party represents
that it is qualified to act as a broker/dealer in the states where it
transacts business, and it is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"). It agrees
to maintain its broker/dealer registration and qualifications and its
NASD membership in good standing throughout the term of this
Agreement. It agrees to abide by all of the NASD's rules and
regulations, including the NASD's Conduct Rules -- in particular,
Section 2830 of such Rules, which section is deemed a part of and is
incorporated by reference in this Agreement. This Agreement will
terminate automatically without notice in the event that a party's
NASD membership is terminated.
(c) If you are a "bank", you represent that you are duly authorized
to engage in the transactions to be performed under this Agreement,
and you agree to comply with all applicable federal and state laws,
including the rules and regulations of all applicable federal and
state bank regulatory agencies and authorities. This Agreement will
terminate automatically without notice in the event that you cease to
be a "bank" as defined in Section 3(a)(6) of the 1934 Act.
(d) Nothing in this Agreement shall cause you to be our partner,
employee, or agent, or give you any authority to act for us or for any
Portfolio. Neither we nor any Portfolio shall be liable for any of
your acts or obligations as a dealer under this Agreement.
6. Information Relating to the Portfolios: (a) No person is
authorized to make any representations concerning shares of a
Portfolio other than those contained in the Portfolio's Prospectus.
In ordering Portfolio shares from us under this Agreement, you will
rely only on the representations contained in the Prospectus. Upon
your request, we will furnish you with a reasonable number of copies
of the Portfolios' current prospectuses or statements of additional
information or both (including any stickers thereto).
(b) Any printed or electronic information that we furnish you
(other than the Portfolios' Prospectuses and periodic reports) is our
sole responsibility and not the responsibility of the respective
Portfolios. You agree that the Portfolios will have no liability or
responsibility to you with respect to any such printed or electronic
information. We or the respective Portfolio will bear the expense of
qualifying its shares under the state securities laws.
(c) You may not use any sales literature or advertising material
(including material disseminated through radio, television, or other
electronic media) concerning Portfolio shares, other than the printed
or electronic information referred to in paragraph 6(b) above, in
connection with making Portfolio shares available to your customers
without obtaining our prior written approval. You may not distribute
or make available to investors any information that we furnish you
marked "FOR DEALER USE ONLY" or that otherwise indicates that it is
confidential or not intended to be distributed to investors.
7. Indemnification: (a) We will indemnify and hold you harmless
from any claim, demand, loss, expense, or cause of action resulting
from the misconduct or negligence, as measured by industry standards,
of us, our agents and employees, in carrying out our obligations under
this Agreement. Such indemnification will survive the termination of
this Agreement.
(b) You will indemnify and hold us harmless from any claim, demand,
loss, expense, or cause of action resulting from the misconduct or
negligence, as measured by industry standards, of you, your agents and
employees, in carrying out your obligations under this Agreement.
Such indemnification will survive the termination of this Agreement.
8. Customer Lists: We hereby agree that we shall not use any list of
your customers which may be obtained in connection with this Agreement
for the purpose of solicitation of any product or service without your
express written consent. However, nothing in this paragraph or
otherwise shall be deemed to prohibit or restrict us or our affiliates
in any way from solicitations of any product or service directed at,
without limitation, the general public, any segment thereof, or any
specific individual, provided such solicitation is not based upon such
list.
9. Duration of Agreement: This Agreement, with respect to any Plan,
will continue in effect for one year from its effective date, and
thereafter will continue automatically for successive annual periods;
provided, however, that such continuance is subject to termination at
any time without penalty if a majority of a Portfolio's Trustees who
are not interested persons of the Portfolio (as defined in the
Investment Company Act of 1940 (the "1940 Act")), or a majority of the
outstanding shares of the Portfolio, vote to terminate or not to
continue the Plan. This Agreement, other than with respect to a Plan,
will continue in effect from year to year after its effective date,
unless terminated as provided herein.
10. Amendment and Termination of Agreement: (a) We may amend any
provision of this Agreement by giving you written notice of the
amendment. Either party to this Agreement may terminate the Agreement
without cause by giving the other party at least thirty (30) days'
written notice of its intention to terminate. This Agreement will
terminate automatically in the event of its assignment (as defined in
the 1940 Act).
(b) In the event that (i) an application for a protective decree
under the provisions of the Securities Investor Protection Act of 1970
is file against you; (ii) you file a petition in bankruptcy or a
petition seeking similar relief under any bankruptcy, insolvency, or
similar law, or a proceeding is commenced against you seeking such
relief; or (iii) you are found by the SEC, the NASD, or any other
federal or state regulatory agency or authority to have violated any
applicable federal or state law, rule or regulation arising out of
your activities as a broker/dealer or in connection with this
Agreement, this Agreement will terminate effective immediately upon
our giving notice of termination to you. You agree to notify us
promptly and to immediately suspend making Portfolio shares available
to your customers in the event of any such filing or violation, or in
the event that you cease to be a member in good standing of the NASD
or you cease to be a "bank" as defined in Section 3(a)(6) of the 1934
Act.
(c) Your or our failure to terminate this Agreement for a
particular cause will not constitute a waiver of the right to
terminate this Agreement at a later date for the same or another
cause. The termination of this Agreement with respect to any one
Portfolio will not cause its termination with respect to any other
Portfolio.
11. Arbitration: In the event of a dispute, such dispute will be
settled by arbitration before arbitrators sitting in Boston,
Massachusetts in accordance with the NASD's Code of Arbitration
Procedure in effect at the time of the dispute. The arbitrators will
act by majority decision and their award may allocate attorneys' fees
and arbitration costs between us. Their award will be final and
binding between us, and such award may be entered as a judgment in any
court of competent jurisdiction.
12. Notices: All notices required or permitted to be given under this
Agreement shall be given in writing and delivered by personal
delivery, by postage prepaid mail, or by facsimile machine or a
similar means of same day delivery (with a confirming copy by mail).
All notices to us shall be given or sent to us at our offices located
at 82 Devonshire Street, Mail Zone L12A, Boston, Massachusetts 02109,
Attn: Bank Wholesale Market. All notices to you shall be given or
sent to you at the address specified by you below. Each of us may
change the address to which notices shall be sent by giving notice to
the other party in accordance with this paragraph 12.
13. Miscellaneous: This Agreement, as it may be amended from time to
time, shall become effective as of the date when it is accepted and
dated below by us. This Agreement is to be construed in accordance
with the laws of the Commonwealth of Massachusetts. This Agreement
supersedes and cancels any prior agreement between us, whether oral or
written, relating to the sale of shares of the Portfolios or any other
subject covered by this Agreement. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions of this Agreement or otherwise affect
their construction or effect.
Very truly yours,
FIDELITY DISTRIBUTORS
CORPORATION
Please return two signed copies of this Agreement to Fidelity
Distributors Corporation. Upon acceptance, one countersigned copy
will be returned to you for your files.
_____________________________________
Name of Firm
Address: _____________________________
_____________________________________
_____________________________________
By __________________________________
Authorized Representative
_____________________________________
Name and Title (please print or type)
ACCEPTED AND AGREED:
FIDELITY DISTRIBUTORS CORPORATION
By __________________________________
Dated: ________________
** DISCARD THIS PAGE AND ATTACH REVISED SCHEDULES A AND B **
Exhibit 6(f)
FORM OF
SELLING DEALER AGREEMENT
We at Fidelity Distributors Corporation invite you
(______________________________) to distribute shares of the mutual
funds, or the separate series or classes of the mutual funds, listed
on Schedule A attached to this Agreement (the "Portfolios"). We may
periodically change the list of Portfolios by giving you written
notice of the change. We are the Portfolios' principal underwriter
and, as agent for the Portfolios, we offer to sell Portfolio shares to
you on the following terms:
1. Certain Defined Terms: As used in this Agreement, the term
"Prospectus" means the applicable Portfolio's prospectus and related
statement of additional information, whether in paper format or
electronic format, included in the Portfolio's then currently
effective registration statement (or post-effective amendment
thereto), and any information that we or the Portfolio may issue to
you as a supplement to such prospectus or statement of additional
information (a "sticker"), all as filed with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of
1933.
2. Purchases of Portfolio Shares for Sale to Customers: (a) In
offering and selling Portfolio shares to your customers, you agree to
act as dealer for your own account; you are not authorized to act as
agent for us or for any Portfolio.
(b) You agree to offer and sell Portfolio shares to your customers
only at the applicable public offering price in accordance with the
Prospectus. If your customer qualifies for a reduced sales charge
pursuant to a special purchase plan (for example, a quantity discount,
letter of intent, or right of accumulation) as described in the
Prospectus, you agree to offer and sell Portfolio shares to your
customer at the applicable reduced sales charge. You agree to deliver
or cause to be delivered to each customer, at or prior to the time of
any purchase of shares, a copy of the then current prospectus
(including any stickers thereto), unless such prospectus has already
been delivered to the customer, and to each customer who so requests,
a copy of the then current statement of additional information
(including any stickers thereto).
(c) You agree to purchase Portfolio shares from us only to cover
purchase orders that you have already received from your customers, or
for your own investment. You also agree not to purchase any Portfolio
shares from your customers at a price lower than the applicable
redemption price, determined in the manner described in the
Prospectus. You will not withhold placing customers' orders so as to
profit yourself as a result of such withholding (for example, by a
change in a Portfolio's net asset value from that used in determining
the offering price to your customers).
(d) We will accept your purchase orders only at the public offering
price applicable to each order, as determined in accordance with the
Prospectus. We will not accept from you a conditional order for
Portfolio shares. All orders are subject to acceptance or rejection
by us in our sole discretion. We may, without notice, suspend sales
or withdraw the offering of Portfolio shares, or make a limited
offering of Portfolio shares.
(e) The placing of orders with us will be governed by instructions
that we will periodically issue to you. You must pay for Portfolio
shares in New York or Boston clearing house funds or in federal funds
in accordance with such instructions, and we must receive your payment
on or before the settlement date established in accordance with Rule
15c6-1 under the Securities Exchange Act of 1934 (the "1934 Act"). If
we do not receive your payment on or before such settlement date, we
may, without notice, cancel the sale, or, at our option, sell the
shares that you ordered back to the issuing Portfolio, and we may hold
you responsible for any loss suffered by us or the issuing Portfolio
as a result of your failure to make payment as required.
(f) You agree to comply with all applicable state and federal laws
and with the rules and regulations of authorized regulatory agencies
thereunder. You agree to offer and sell Portfolio shares only in
states where you may legally offer and sell such Portfolio's shares.
You will not offer shares of any Portfolio for sale unless such shares
are registered for sale under the applicable state and federal laws
and the rules and regulations thereunder.
(g) Certificates evidencing Portfolio shares are not available; any
transaction in Portfolio shares will be effected and evidenced by
book-entry on the records maintained by Fidelity Investments
Institutional Operations Company, Inc. ("FIIOC"). A confirmation
statement evidencing transactions in Portfolio shares will be
transmitted to you.
(h) You may designate FIIOC to execute your customers' transactions
in Portfolio shares in accordance with the terms of any account,
program, plan, or service established or used by your customers, and
to confirm each transaction to your customers on your behalf. At the
time of the transaction, you guarantee the legal capacity of your
customers and any co-owners of such shares so transacting in such
shares.
3. Your Compensation: (a) Your concession, if any, on your sales of
Portfolio shares will be as provided in the Prospectus or in the
applicable schedule of concessions issued by us and in effect at the
time of our sale to you. Upon written notice to you, we or any
Portfolio may change or discontinue any schedule of concessions, or
issue a new schedule.
(b) If a Portfolio has adopted a plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (a "Plan"), we may make
distribution payments or service payments to you under the Plan. If a
Portfolio does not have a currently effective Plan, we or Fidelity
Management & Research Company may make distribution payments or
service payments to you from our own funds. Any distribution payments
or service payments will be made in the amount and manner set forth in
the Prospectus or in the applicable schedule of distribution payments
or service payments issued by us and then in effect. Upon written
notice to you, we or any Portfolio may change or discontinue any
schedule of distribution payments or service payments, or issue a new
schedule. A schedule of distribution payments or service payments
will be in effect with respect to a Portfolio that has a Plan only so
long as that Portfolio's Plan remains in effect.
(c) After the effective date of any change in or discontinuance of
any schedule of concessions, distribution payments, or service
payments, or the termination of a Plan, any concessions, distribution
payments, or service payments will be allowable or payable to you only
in accordance with such change, discontinuance, or termination. You
agree that you will have no claim against us or any Portfolio by
virtue of any such change, discontinuance, or termination. In the
event of any overpayment by us of any concession, distribution
payment, or service payment, you will remit such overpayment.
(d) If any Portfolio shares sold to you by us under the terms of
this Agreement are redeemed by the issuing Portfolio or tendered for
redemption by the customer within seven (7) business days after the
date of our confirmation of your original purchase order for such
shares, you agree (i) to refund promptly to us the full amount of any
concession, distribution payment, or service payment allowed or paid
to you on such shares, and (ii) if not yet allowed or paid to you, to
forfeit the right to receive any concession, distribution payment, or
service payment allowable or payable to you on such shares. We will
notify you of any such redemption within ten (10) days after the date
of the redemption.
4. Certain Types of Accounts: (a) You may instruct FIIOC to
register purchased shares in your name and account as nominee for your
customers. If you hold Portfolio shares as nominee for your
customers, all Prospectuses, proxy statements, periodic reports, and
other printed material will be sent to you, and all confirmations and
other communications to shareholders will be transmitted to you. You
will be responsible for forwarding such printed material,
confirmations, and communications, or the information contained
therein, to all customers for whose account you hold any Portfolio
shares as nominee. However, we or FIIOC on behalf of itself or the
Portfolios will be responsible for the costs associated with your
forwarding such printed material, confirmations, and communications.
You will be responsible for complying with all reporting and tax
withholding requirements with respect to the customers for whose
account you hold any Portfolio shares as nominee.
(b) With respect to accounts other than those accounts referred to
in paragraph 4(a) above, you agree to provide us with all information
(including certification of taxpayer identification numbers and
back-up withholding instructions) necessary or appropriate for us to
comply with legal and regulatory reporting requirements.
(c) Accounts opened or maintained pursuant to the NETWORKING system
of the National Securities Clearing Corporation ("NSCC") will be
governed by applicable NSCC rules and procedures and any agreement or
other arrangement with us relating to NETWORKING.
(d) If you hold Portfolio shares in an omnibus account for two or
more customers, you will be responsible for determining, in accordance
with the Prospectus, whether, and the extent to which, a CDSC is
applicable to a purchase of Portfolio shares from such a customer, and
you agree to transmit immediately to us any CDSC to which such
purchase was subject. You hereby represent that if you hold Portfolio
shares subject to a CDSC, you have the capability to track and account
for such charge, and we reserve the right, at our discretion, to
verify that capability by inspecting your tracking and accounting
system or otherwise.
5. Status as Registered Broker/Dealer: (a) Each party to this
Agreement represents to the other party that (i) it is registered as a
broker/dealer under the 1934 Act, (ii) it is qualified to act as a
broker/dealer in the states where it transacts business, and (iii) it
is a member in good standing of the National Association of Securities
Dealers, Inc. ("NASD"). Each party agrees to maintain its
broker/dealer registration and qualifications and its NASD membership
in good standing throughout the term of this Agreement. Each party
agrees to abide by all of the NASD's rules and regulations, including
the NASD's Conduct Rules -- in particular, Section 2830 of such Rules,
which section is deemed a part of and is incorporated by reference in
this Agreement. This Agreement will terminate automatically without
notice in the event that either party's NASD membership is terminated.
(b) Nothing in this Agreement shall cause you to be our partner,
employee, or agent, or give you any authority to act for us or for any
Portfolio. Neither we nor any Portfolio shall be liable for any of
your acts or obligations as a dealer under this Agreement.
6. Information Relating to the Portfolios: (a) No person is
authorized to make any representations concerning shares of a
Portfolio other than those contained in the Portfolio's Prospectus.
In buying Portfolio shares from us under this Agreement, you will rely
only on the representations contained in the Prospectus. Upon your
request, we will furnish you with a reasonable number of copies of the
Portfolios' current prospectuses or statements of additional
information or both (including any stickers thereto).
(b) Any printed or electronic information that we furnish you
(other than the Portfolios' Prospectuses and periodic reports) is our
sole responsibility and not the responsibility of the respective
Portfolios. You agree that the Portfolios will have no liability or
responsibility to you with respect to any such printed or electronic
information. We or the respective Portfolio will bear the expense of
qualifying its shares under the state securities laws.
(c) You may not use any sales literature or advertising material
(including material disseminated through radio, television, or other
electronic media) concerning Portfolio shares, other than the printed
or electronic information referred to in paragraph 6(b) above, in
connection with the offer or sale of Portfolio shares without
obtaining our prior written approval. You may not distribute or make
available to investors any information that we furnish you marked "FOR
DEALER USE ONLY" or that otherwise indicates that it is confidential
or not intended to be distributed to investors.
7. Indemnification: (a) We will indemnify and hold you harmless
from any claim, demand, loss, expense, or cause of action resulting
from the misconduct or negligence, as measured by industry standards,
of us, our agents and employees, in carrying out our obligations under
this Agreement. Such indemnification will survive the termination of
this Agreement.
(b) You will indemnify and hold us harmless from any claim, demand,
loss, expense, or cause of action resulting from the misconduct or
negligence, as measured by industry standards, of you, your agents and
employees, in carrying out your obligations under this Agreement.
Such indemnification will survive the termination of this Agreement.
8. Customer Lists: We hereby agree that we shall not use any list of
your customers which may be obtained in connection with this Agreement
for the purpose of solicitation of any product or service without your
express written consent. However, nothing in this paragraph or
otherwise shall be deemed to prohibit or restrict us or our affiliates
in any way from solicitations of any product or service directed at,
without limitation, the general public, any segment thereof, or any
specific individual, provided such solicitation is not based upon such
list.
9. Duration of Agreement: This Agreement, with respect to any Plan,
will continue in effect for one year from its effective date, and
thereafter will continue automatically for successive annual periods;
provided, however, that such continuance is subject to termination at
any time without penalty if a majority of a Portfolio's Trustees who
are not interested persons of the Portfolio (as defined in the
Investment Company Act of 1940 (the "1940 Act")), or a majority of the
outstanding shares of the Portfolio, vote to terminate or not to
continue the Plan. This Agreement, other than with respect to a Plan,
will continue in effect from year to year after its effective date,
unless terminated as provided herein.
10. Amendment and Termination of Agreement: (a) We may amend any
provision of this Agreement by giving you written notice of the
amendment. Either party to this Agreement may terminate the Agreement
without cause by giving the other party at least thirty (30) days'
written notice of its intention to terminate. This Agreement will
terminate automatically in the event of its assignment (as defined in
the 1940 Act).
(b) In the event that (i) an application for a protective decree
under the provisions of the Securities Investor Protection Act of 1970
is filed against you; (ii) you file a petition in bankruptcy or a
petition seeking similar relief under any bankruptcy, insolvency, or
similar law, or a proceeding is commenced against you seeking such
relief; or (iii) you are found by the SEC, the NASD, or any other
federal or state regulatory agency or authority to have violated any
applicable federal or state law, rule or regulation arising out of
your activities as a broker/dealer or in connection with this
Agreement, this Agreement will terminate effective immediately upon
our giving notice of termination to you. You agree to notify us
promptly and to immediately suspend sales of Portfolio shares in the
event of any such filing or violation, or in the event that you cease
to be a member in good standing of the NASD.
(c) Your or our failure to terminate this Agreement for a
particular cause will not constitute a waiver of the right to
terminate this Agreement at a later date for the same or another
cause. The termination of this Agreement with respect to any one
Portfolio will not cause its termination with respect to any other
Portfolio.
11. Arbitration: In the event of a dispute, such dispute will be
settled by arbitration before arbitrators sitting in Boston,
Massachusetts in accordance with the NASD's Code of Arbitration
Procedure in effect at the time of the dispute. The arbitrators will
act by majority decision and their award may allocate attorneys' fees
and arbitration costs between us. Their award will be final and
binding between us, and such award may be entered as a judgment in any
court of competent jurisdiction.
12. Notices: All notices required or permitted to be given under this
Agreement shall be given in writing and delivered by personal
delivery, by postage prepaid mail, or by facsimile machine or a
similar means of same day delivery (with a confirming copy by mail).
All notices to us shall be given or sent to us at our offices located
at 82 Devonshire Street, Mail Zone L10A, Boston, Massachusetts 02109,
Attn: Broker Dealer Services Group. All notices to you shall be given
or sent to you at the address specified by you below. Each of us may
change the address to which notices shall be sent by giving notice to
the other party in accordance with this paragraph 12.
13. Miscellaneous: This Agreement, as it may be amended from time to
time, shall become effective as of the date when it is accepted and
dated below by us. This Agreement is to be construed in accordance
with the laws of the Commonwealth of Massachusetts. This Agreement
supersedes and cancels any prior agreement between us, whether oral or
written, relating to the sale of shares of the Portfolios or any other
subject covered by this Agreement. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions of this Agreement or otherwise affect
their construction or effect.
Very truly yours,
FIDELITY DISTRIBUTORS
CORPORATION
Please return two signed copies of this Agreement to Fidelity
Distributors Corporation. Upon acceptance, one countersigned copy
will be returned to you for your files.
_____________________________________
Name of Firm
Address: _____________________________
_____________________________________
_____________________________________
By __________________________________
Authorized Representative
_____________________________________
Name and Title (please print or type)
CRD # _______________________________
ACCEPTED AND AGREED:
FIDELITY DISTRIBUTORS CORPORATION
By __________________________________
Dated: _________________
BEFORE MAILING: DISCARD THIS PAGE AND ATTACH REVISED SCHEDULE A
Exhibit 6(g)
FORM OF
SELLING DEALER AGREEMENT
(FOR BANK-RELATED TRANSACTIONS)
We at Fidelity Distributors Corporation invite you to distribute
shares of the mutual funds, or the separate series or classes of the
mutual funds, listed on Schedules A and B attached to this Agreement
(the "Portfolios"). We may periodically change the list of Portfolios
by giving you written notice of the change. We are the Portfolios'
principal underwriter and, as agent for the Portfolios, we offer to
sell Portfolio shares to you on the following terms:
1. Certain Defined Terms: (a) You
(_____________________________________) are registered as a
broker/dealer under the Securities Exchange Act of 1934 (the "1934
Act") and have executed a written agreement with a bank or bank
affiliate to provide brokerage services to that bank, bank affiliate
and/or their customers. As used in this Agreement, the term "Bank"
means a bank as defined in Section 3(a)(6) of the 1934 Act, or an
affiliate of such a bank, with which you have entered into a written
agreement to provide brokerage services; and the term "Bank Client"
means a customer of such a Bank.
(b) As used in this Agreement, the term "Prospectus" means the
applicable Portfolio's prospectus and related statement of additional
information, whether in paper format or electronic format, included in
the Portfolio's then currently effective registration statement (or
post-effective amendment thereto), and any information that we or the
Portfolio may issue to you as a supplement to such prospectus or
statement of additional information (a "sticker"), all as filed with
the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act of 1933.
2. Purchases of Portfolio Shares for Sale to Customers: (a) In
offering and selling Portfolio shares to your customers, you agree to
act as dealer for your own account; you are not authorized to act as
agent for us or for any Portfolio.
(b) You agree to offer and sell Portfolio shares to your customers
only at the applicable public offering price in accordance with the
Prospectus. If your customer qualifies for a reduced sales charge
pursuant to a special purchase plan (for example, a quantity discount,
letter of intent, or right of accumulation) as described in the
Prospectus, you agree to offer and sell Portfolio shares to your
customer at the applicable reduced sales charge. You agree to deliver
or cause to be delivered to each customer, at or prior to the time of
any purchase of shares, a copy of the then current prospectus
(including any stickers thereto), unless such prospectus has already
been delivered to the customer, and to each customer who so requests,
a copy of the then current statement of additional information
(including any stickers thereto).
(c) You agree to purchase Portfolio shares from us only to cover
purchase orders that you have already received from your customers, or
for your own investment. You also agree not to purchase any Portfolio
shares from your customers at a price lower than the applicable
redemption price, determined in the manner described in the
Prospectus. You will not withhold placing customers' orders so as to
profit yourself as a result of such withholding (for example, by a
change in a Portfolio's net asset value from that used in determining
the offering price to your customers).
(d) We will accept your purchase orders only at the public offering
price applicable to each order, as determined in accordance with the
Prospectus. We will not accept from you a conditional order for
Portfolio shares. All orders are subject to acceptance or rejection
by us in our sole discretion. We may, without notice, suspend sales
or withdraw the offering of Portfolio shares, or make a limited
offering of Portfolio shares.
(e) The placing of orders with us will be governed by instructions
that we will periodically issue to you. You must pay for Portfolio
shares in New York or Boston clearing house funds or in federal funds
in accordance with such instructions, and we must receive your payment
on or before the settlement date established in accordance with Rule
15c6-1 under the 1934 Act. If we do not receive your payment on or
before such settlement date, we may, without notice, cancel the sale,
or, at our option, sell the shares that you ordered back to the
issuing Portfolio, and we may hold you responsible for any loss
suffered by us or the issuing Portfolio as a result of your failure to
make payment as required.
(f) You agree to comply with all applicable state and federal laws
and with the rules and regulations of authorized regulatory agencies
thereunder. You agree to offer and sell Portfolio shares only in
states where you may legally offer and sell such Portfolio's shares.
You will not offer shares of any Portfolio for sale unless such shares
are registered for sale under the applicable state and federal laws
and the rules and regulations thereunder.
(g) Certificates evidencing Portfolio shares are not available; any
transaction in Portfolio shares will be effected and evidenced by
book-entry on the records maintained by Fidelity Investments
Institutional Operations Company, Inc. ("FIIOC"). A confirmation
statement evidencing transactions in Portfolio shares will be
transmitted to you.
(h) You may designate FIIOC to execute your customers' transactions
in Portfolio shares in accordance with the terms of any account,
program, plan, or service established or used by your customers, and
to confirm each transaction to your customers on your behalf on a
fully disclosed basis. At the time of the transaction, you guarantee
the legal capacity of your customers and any co-owners of such shares
so transacting in such shares.
3. Your Compensation: (a) Your concession, if any, on your sales of
Portfolio shares will be as provided in the Prospectus or in the
applicable schedule of concessions issued by us and in effect at the
time of our sale to you. Upon written notice to you, we or any
Portfolio may change or discontinue any schedule of concessions, or
issue a new schedule.
(b) If a Portfolio has adopted a plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (a "Plan"), we may make
distribution payments or service payments to you under the Plan. If a
Portfolio does not have a currently effective Plan, we or Fidelity
Management & Research Company may make distribution payments or
service payments to you from our own funds. Any distribution payments
or service payments will be made in the amount and manner set forth in
the Prospectus or in the applicable schedule of distribution payments
or service payments issued by us and then in effect. Upon written
notice to you, we or any Portfolio may change or discontinue any
schedule of distribution payments or service payments, or issue a new
schedule. A schedule of distribution payments or service payments
will be in effect with respect to a Portfolio that has a Plan only so
long as that Portfolio's Plan remains in effect.
(c) Concessions, distribution payments, and service payments apply
only with respect to (i) shares of the "Fidelity Funds" (as designated
on Schedule A attached to this Agreement) purchased or maintained for
the account of Bank Clients, and (ii) shares of the "Fidelity Advisor
Funds" (as designated on Schedule B attached to this Agreement).
Anything to the contrary notwithstanding, neither we nor any Portfolio
will provide to you, nor may you retain, concessions on your sales of
shares of, or distribution payments or service payments with respect
to assets of, the Fidelity Funds attributable to you or any of your
clients, other than Bank Clients. When you place an order in shares
of the Fidelity Funds with us, you will identify the Bank on behalf of
whose Clients you are placing the order; and you will identify as a
non-Bank Client Order, any order in shares of the Fidelity Funds
placed for the account of a non-Bank Client.
(d) After the effective date of any change in or discontinuance of
any schedule of concessions, distribution payments, or service
payments, or the termination of a Plan, any concessions, distribution
payments, or service payments will be allowable or payable to you only
in accordance with such change, discontinuance, or termination. You
agree that you will have no claim against us or any Portfolio by
virtue of any such change, discontinuance, or termination. In the
event of any overpayment by us of any concession, distribution
payment, or service payment, you will remit such overpayment.
(e) If any Portfolio shares sold to you by us under the terms of
this Agreement are redeemed by the issuing Portfolio or tendered for
redemption by the customer within seven (7) business days after the
date of our confirmation of your original purchase order for such
shares, you agree (i) to refund promptly to us the full amount of any
concession, distribution payment, or service payment allowed or paid
to you on such shares, and (ii) if not yet allowed or paid to you, to
forfeit the right to receive any concession, distribution payment, or
service payment allowable or payable to you on such shares. We will
notify you of any such redemption within ten (10) days after the date
of the redemption.
4. Certain Types of Accounts: (a) You may instruct FIIOC to
register purchased shares in your name and account as nominee for your
customers. If you hold Portfolio shares as nominee for your
customers, all Prospectuses, proxy statements, periodic reports, and
other printed material will be sent to you, and all confirmations and
other communications to shareholders will be transmitted to you. You
will be responsible for forwarding such printed material,
confirmations, and communications, or the information contained
therein, to all customers for whose account you hold any Portfolio
shares as nominee. However, we or FIIOC on behalf of itself or the
Portfolios will be responsible for the costs associated with your
forwarding such printed material, confirmations, and communications.
You will be responsible for complying with all reporting and tax
withholding requirements with respect to the customers for whose
account you hold any Portfolio shares as nominee.
(b) With respect to accounts other than those accounts referred to
in paragraph 4(a) above, you agree to provide us with all information
(including certification of taxpayer identification numbers and
back-up withholding instructions) necessary or appropriate for us to
comply with legal and regulatory reporting requirements.
(c) Accounts opened or maintained pursuant to the NETWORKING system
of the National Securities Clearing Corporation ("NSCC") will be
governed by applicable NSCC rules and procedures and any agreement or
other arrangement with us relating to NETWORKING.
(d) If you hold Portfolio shares in an omnibus account for two or
more customers, you will be responsible for determining, in accordance
with the Prospectus, whether, and the extent to which, a CDSC is
applicable to a purchase of Portfolio shares from such a customer, and
you agree to transmit immediately to us any CDSC to which such
purchase was subject. You hereby represent that if you hold Portfolio
shares subject to a CDSC, you have the capability to track and account
for such charge, and we reserve the right, at our discretion, to
verify that capability by inspecting your tracking and accounting
system or otherwise.
5. Status as Registered Broker/Dealer: (a) Each party to this
Agreement represents to the other party that (i) it is registered as a
broker/dealer under the 1934 Act, (ii) it is qualified to act as a
broker/dealer in the states where it transacts business, and (iii) it
is a member in good standing of the National Association of Securities
Dealers, Inc. ("NASD"). Each party agrees to maintain its
broker/dealer registration and qualifications and its NASD membership
in good standing throughout the term of this Agreement. Each party
agrees to abide by all of the NASD's rules and regulations, including
the NASD's Conduct Rules -- in particular, Section 2830 of such Rules,
which section is deemed a part of and is incorporated by reference in
this Agreement. This Agreement will terminate automatically without
notice in the event that either
party's NASD membership is terminated.
(b) Nothing in this Agreement shall cause you to be our partner,
employee, or agent, or give you any authority to act for us or for any
Portfolio. Neither we nor any Portfolio shall be liable for any of
your acts or obligations as a dealer under this Agreement.
6. Information Relating to the Portfolios: (a) No person is
authorized to make any representations concerning shares of a
Portfolio other than those contained in the Portfolio's Prospectus.
In buying Portfolio shares from us under this Agreement, you will rely
only on the representations contained in the Prospectus. Upon your
request, we will furnish you with a reasonable number of copies of the
Portfolios' current prospectuses or statements of additional
information or both (including any stickers thereto).
(b) Any printed or electronic information that we furnish you
(other than the Portfolios' Prospectuses and periodic reports) is our
sole responsibility and not the responsibility of the respective
Portfolios. You agree that the Portfolios will have no liability or
responsibility to you with respect to any such printed or electronic
information. We or the respective Portfolio will bear the expense of
qualifying its shares under the state securities laws.
(c) You may not use any sales literature or advertising material
(including material disseminated through radio, television, or other
electronic media) concerning Portfolio shares, other than the printed
or electronic information referred to in paragraph 6(b) above, in
connection with the offer or sale of Portfolio shares without
obtaining our prior written approval. You may not distribute or make
available to investors any information that we furnish you marked "FOR
DEALER USE ONLY" or that otherwise indicates that it is confidential
or not intended to be distributed to investors.
7. Indemnification: (a) We will indemnify and hold you harmless
from any claim, demand, loss, expense, or cause of action resulting
from the misconduct or negligence, as measured by industry standards,
of us, our agents and employees, in carrying out our obligations under
this Agreement. Such indemnification will survive the termination of
this Agreement.
(b) You will indemnify and hold us harmless from any claim, demand,
loss, expense, or cause of action resulting from the misconduct or
negligence, as measured by industry standards, of you, your agents and
employees, in carrying out your obligations under this Agreement.
Such indemnification will survive the termination of this Agreement.
8. Customer Lists: We hereby agree that we shall not use any list of
your customers which may be obtained in connection with this Agreement
for the purpose of solicitation of any product or service without your
express written consent. However, nothing in this paragraph or
otherwise shall be deemed to prohibit or restrict us or our affiliates
in any way from solicitations of any product or service directed at,
without limitation, the general public, any segment thereof, or any
specific individual, provided such solicitation is not based upon such
list.
9. Duration of Agreement: This Agreement, with respect to any Plan,
will continue in effect for one year from its effective date, and
thereafter will continue automatically for successive annual periods;
provided, however, that such continuance is subject to termination at
any time without penalty if a majority of a Portfolio's Trustees who
are not interested persons of the Portfolio (as defined in the
Investment Company Act of 1940 (the "1940 Act")), or a majority of the
outstanding shares of the Portfolio, vote to terminate or not to
continue the Plan. This Agreement, other than with respect to a Plan,
will continue in effect from year to year after its effective date,
unless terminated as provided herein.
10. Amendment and Termination of Agreement: (a) We may amend any
provision of this Agreement by giving you written notice of the
amendment. Either party to this Agreement may terminate the Agreement
without cause by giving the other party at least thirty (30) days'
written notice of its intention to terminate. This Agreement will
terminate automatically in the event of its assignment (as defined in
the 1940 Act).
(b) In the event that (i) an application for a protective decree
under the provisions of the Securities Investor Protection Act of 1970
is filed against you; (ii) you file a petition in bankruptcy or a
petition seeking similar relief under any bankruptcy, insolvency, or
similar law, or a proceeding is commenced against you seeking such
relief; or (iii) you are found by the SEC, the NASD, or any other
federal or state regulatory agency or authority to have violated any
applicable federal or state law, rule or regulation arising out of
your activities as a broker/dealer or in connection with this
Agreement, this Agreement will terminate effective immediately upon
our giving notice of termination to you. You agree to notify us
promptly and to immediately suspend sales of Portfolio shares in the
event of any such filing or violation, or in the event that you cease
to be a member in good standing of the NASD.
(c) Your or our failure to terminate this Agreement for a
particular cause will not constitute a waiver of the right to
terminate this Agreement at a later date for the same or another
cause. The termination of this Agreement with respect to any one
Portfolio will not cause its termination with respect to any other
Portfolio.
11. Arbitration: In the event of a dispute, such dispute will be
settled by arbitration before arbitrators sitting in Boston,
Massachusetts in accordance with the NASD's Code of Arbitration
Procedure in effect at the time of the dispute. The arbitrators will
act by majority decision and their award may allocate attorneys' fees
and arbitration costs between us. Their award will be final and
binding between us, and such award may be entered as a judgment in any
court of competent jurisdiction.
12. Notices: All notices required or permitted to be given under this
Agreement shall be given in writing and delivered by personal
delivery, by postage prepaid mail, or by facsimile machine or a
similar means of same day delivery (with a confirming copy by mail).
All notices to us shall be given or sent to us at our offices located
at 82 Devonshire Street, Mail Zone L12A, Boston, Massachusetts 02109,
Attn: Bank Wholesale Market. All notices to you shall be given or
sent to you at the address specified by you below. Each of us may
change the address to which notices shall be sent by giving notice to
the other party in accordance with this paragraph 11.
13. Miscellaneous: This Agreement, as it may be amended from time to
time, shall become effective as of the date when it is accepted and
dated below by us. This Agreement is to be construed in accordance
with the laws of the Commonwealth of Massachusetts. This Agreement
supersedes and cancels any prior agreement between us, whether oral or
written, relating to the sale of shares of the Portfolios or any other
subject covered by this Agreement. The captions in this Agreement are
included for convenience of reference only and in no way define or
limit any of the provisions of this Agreement or otherwise affect
their construction or effect.
Very truly yours,
FIDELITY DISTRIBUTORS
CORPORATION
Please return two signed copies of this Agreement to Fidelity
Distributors Corporation. Upon acceptance, one countersigned copy
will be returned to you for your files.
_____________________________________
Name of Firm
Address: _____________________________
_____________________________________
_____________________________________
By __________________________________
Authorized Representative
_____________________________________
Name and Title (please print or type)
CRD # _______________________________
ACCEPTED AND AGREED:
FIDELITY DISTRIBUTORS CORPORATION
By __________________________________
Dated: ________________
** DISCARD THIS PAGE AND ATTACH REVISED SCHEDULES A AND B **
Exhibit 6(h)
FORM OF
GENERAL DISTRIBUTION AGREEMENT
between
Fidelity Advisor Series VIII
and
FIDELITY DISTRIBUTORS CORPORATION
Agreement made this 16th day of October, 1997, between Fidelity
Advisor Series VIII, a Massachusetts business trust having its
principal place of business in Boston, Massachusetts and which may
issue one or more series of beneficial interest ("Issuer"), with
respect to shares of Fidelity Advisor International Capital
Appreciation Fund, a series of the Issuer, and Fidelity Distributors
Corporation, a Massachusetts corporation having its principal place of
business in Boston, Massachusetts ("Distributors").
In consideration of the mutual promises and undertakings herein
contained, the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to
sell shares on behalf of the Issuer during the term of this Agreement
and subject to the registration requirements of the Securities Act of
1933, as amended ("1933 Act"), and of the laws governing the sale of
securities in the various states ("Blue Sky Laws") under the following
terms and conditions: Distributors (i) shall have the right to sell,
as agent on behalf of the Issuer, shares authorized for issue and
registered under the 1933 Act, and (ii) may sell shares under offers
of exchange, if available, between and among the funds advised by
Fidelity Management & Research Company ("FMR") or any of its
affiliates.
2. Sale of Shares by the Issuer - The rights granted to Distributors
shall be nonexclusive in that the Issuer reserves the right to sell
its shares to investors on applications received and accepted by the
Issuer. Further, the Issuer reserves the right to issue shares in
connection with the merger or consolidation, or acquisition by the
Issuer through purchase or otherwise, with any other investment
company, trust, or personal holding company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its
treasury in the event that in the discretion of the Issuer treasury
shares shall be sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all
shares sold to investors by Distributors or the Issuer will be sold at
the public offering price. The public offering price for all accepted
subscriptions will be the net asset value per share, as determined in
the manner described in the Issuer's current Prospectus and/or
Statement of Additional Information, plus a sales charge (if any)
described in the Issuer's current Prospectus and/or Statement of
Additional Information. The Issuer shall in all cases receive the net
asset value per share on all sales. If a sales charge is in effect,
Distributors shall have the right subject to such rules or regulations
of the Securities and Exchange Commission as may then be in effect
pursuant to Section 22 of the Investment Company Act of 1940 to pay a
portion of the sales charge to dealers who have sold shares of the
Issuer. If a fee in connection with shareholder redemptions is in
effect, the Issuer shall collect the fee on behalf of Distributors
and, unless otherwise agreed upon by the Issuer and Distributors,
Distributors shall be entitled to receive all of such fees.
5. Suspension of Sales - If and whenever the determination of net
asset value is suspended and until such suspension is terminated, no
further orders for shares shall be processed by Distributors except
such unconditional orders as may have been placed with Distributors
before it had knowledge of the suspension. In addition, the Issuer
reserves the right to suspend sales and Distributors' authority to
process orders for shares on behalf of the Issuer if, in the judgment
of the Issuer, it is in the best interests of the Issuer to do so.
Suspension will continue for such period as may be determined by the
Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
Distributors, Distributors agrees to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the Issuer. This shall not prevent Distributors from entering into
like arrangements (including arrangements involving the payment of
underwriting commissions) with other issuers. This does not obligate
Distributors to register as a broker or dealer under the Blue Sky Laws
of any jurisdiction in which it is not now registered or to maintain
its registration in any jurisdiction in which it is now registered.
If a sales charge is in effect, Distributors shall have the right to
enter into sales agreements with dealers of its choice for the sale of
shares of the Issuer to the public at the public offering price only
and fix in such agreements the portion of the sales charge which may
be retained by dealers, provided that the Issuer shall approve the
form of the dealer agreement and the dealer discounts set forth
therein and shall evidence such approval by filing said form of dealer
agreement and amendments thereto as an exhibit to its currently
effective Registration Statement under the 1933 Act.
7. Authorized Representations - Distributors is not authorized by the
Issuer to give any information or to make any representations other
than those contained in the appropriate registration statements or
Prospectuses and Statements of Additional Information filed with the
Securities and Exchange Commission under the 1933 Act (as these
registration statements, Prospectuses and Statements of Additional
Information may be amended from time to time), or contained in
shareholder reports or other material that may be prepared by or on
behalf of the Issuer for Distributors' use. This shall not be
construed to prevent Distributors from preparing and distributing
sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be
bought or sold by or through Distributors, and Distributors may
participate directly or indirectly in brokerage commissions or
"spreads" for transactions in portfolio securities of the Issuer.
9. Registration of Shares - The Issuer agrees that it will take all
action necessary to register shares under the 1933 Act (subject to the
necessary approval of its shareholders) so that there will be
available for sale the number of shares Distributors may reasonably be
expected to sell. The Issuer shall make available to Distributors
such number of copies of its currently effective Prospectus and
Statement of Additional Information as Distributors may reasonably
request. The Issuer shall furnish to Distributors copies of all
information, financial statements and other papers which Distributors
may reasonably request for use in connection with the distribution of
shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in
connection with the preparation, setting in type and filing of any
registration statement, Prospectus and Statement of Additional
Information under the 1933 Act and amendments for the issue of its
shares, (b) in connection with the registration and qualification of
shares for sale in the various states in which the Board of Trustees
of the Issuer shall determine it advisable to qualify such shares for
sale (including registering the Issuer as a broker or dealer or any
officer of the Issuer as agent or salesman in any state), (c) of
preparing, setting in type, printing and mailing any report or other
communication to shareholders of the Issuer in their capacity as such,
and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders.
As provided in the Distribution and Service Plan adopted by the
Issuer, it is recognized by the Issuer that FMR may make payment to
Distributors with respect to any expenses incurred in the distribution
of shares of the Issuer, such payments payable from the past profits
or other resources of FMR including management fees paid to it by the
Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
Distributors and each of its directors and officers and each person,
if any, who controls Distributors within the meaning of Section 15 of
the 1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any
alleged loss, liability, claim, damages, or expense and reasonable
counsel fees incurred in connection therewith) arising by reason of
any person acquiring any shares, based upon the ground that the
registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Issuer does not agree to indemnify Distributors or hold
it harmless to the extent that the statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Issuer by or on behalf of Distributors. In no case (i) is the
indemnity of the Issuer in favor of Distributors or any person
indemnified to be deemed to protect Distributors or any person against
any liability to the Issuer or its security holders to which
Distributors or such person would otherwise be subject by reason of
wilful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Issuer to
be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against Distributors or any person
indemnified unless Distributors or person, as the case may be, shall
have notified the Issuer in writing of the claim within a reasonable
time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon
Distributors or any such person (or after Distributors or such person
shall have received notice of service on any designated agent).
However, failure to notify the Issuer of any claim shall not relieve
the Issuer from any liability which it may have to Distributors or any
person against whom such action is brought otherwise than on account
of its indemnity agreement contained in this paragraph. The Issuer
shall be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to
enforce any claims, but if the Issuer elects to assume the defense,
the defense shall be conducted by counsel chosen by it and
satisfactory to Distributors or person or persons, defendant or
defendants in the suit. In the event the Issuer elects to assume the
defense of any suit and retain counsel, Distributors, officers or
directors or controlling person or persons, defendant or defendants in
the suit, shall bear the fees and expenses of any additional counsel
retained by them. If the Issuer does not elect to assume the defense
of any suit, it will reimburse Distributors, officers or directors or
controlling person or persons, defendant or defendants in the suit,
for the reasonable fees and expenses of any counsel retained by them.
The Issuer agrees to notify Distributors promptly of the commencement
of any litigation or proceedings against it or any of its officers or
trustees in connection with the issuance or sale of any of the shares.
Distributors also covenants and agrees that it will indemnify and
hold harmless the Issuer and each of its Board members and officers
and each person, if any, who controls the Issuer within the meaning of
Section 15 of the 1933 Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, damages, claim or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the 1933 Act or
any other statute or common law, alleging any wrongful act of
Distributors or any of its employees or alleging that the registration
statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the
Issuer (as from time to time amended) included an untrue statement of
a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
Distributors. In no case (i) is the indemnity of Distributors in
favor of the Issuer or any person indemnified to be deemed to protect
the Issuer or any person against any liability to which the Issuer or
such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under this Agreement, or (ii) is Distributors to be liable
under its indemnity agreement contained in this paragraph with respect
to any claim made against the Issuer or any person indemnified unless
the Issuer or person, as the case may be, shall have notified
Distributors in writing of the claim within a reasonable time after
the summons or other first written notification giving information of
the nature of the claim shall have been served upon the Issuer or any
such person (or after the Issuer or such person shall have received
notice of service on any designated agent). However, failure to
notify Distributors of any claim shall not relieve Distributors from
any liability which it may have to the Issuer or any person against
whom the action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. In the case of any notice to
Distributors, it shall be entitled to participate, at its own expense,
in the defense or, if it so elects, to assume the defense of any suit
brought to enforce the claim, but if Distributors elects to assume the
defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Issuer, to its officers and Board and to any
controlling person or persons, defendant or defendants in the suit.
In the event that Distributors elects to assume the defense of any
suit and retain counsel, the Issuer or controlling persons, defendant
or defendants in the suit, shall bear the fees and expense of any
additional counsel retained by them. If Distributors does not elect
to assume the defense of any suit, it will reimburse the Issuer,
officers and Board or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. Distributors agrees to notify the Issuer
promptly of the commencement of any litigation or proceedings against
it in connection with the issue and sale of any of the shares.
12. Effective Date - This agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force
until March 31, 1998 and thereafter from year to year, provided
continuance is approved annually by the vote of a majority of the
Board members of the Issuer, and by the vote of those Board members of
the Issuer who are not "interested persons" of the Issuer and, if a
plan under Rule 12b-1 under the Investment Company Act of 1940 is in
effect, by the vote of those Board members of the Issuer who are not
"interested persons" of the Issuer and who are not parties to the
Distribution and Service Plan or this Agreement and have no financial
interest in the operation of the Distribution and Service Plan or in
any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval.
This Agreement shall automatically terminate in the event of its
assignment. As used in this paragraph, the terms "assignment" and
"interested persons" shall have the respective meanings specified in
the Investment Company Act of 1940 as now in effect or as hereafter
amended. In addition to termination by failure to approve continuance
or by assignment, this Agreement may at any time be terminated by
either party upon not less than sixty days' prior written notice to
the other party.
13. Notice - Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Issuer, at 82 Devonshire Street,
Boston, Massachusetts, and if to Distributors, at 82 Devonshire
Street, Boston, Massachusetts.
14. Limitation of Liability - Distributors is expressly put on notice
of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Issuer
and agrees that the obligations assumed by the Issuer under this
contract shall be limited in all cases to the Issuer and its assets.
Distributors shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Issuer. Nor shall
Distributors seek satisfaction of any such obligation from the
Trustees or any individual Trustee of the Issuer. Distributors
understands that the rights and obligations of each series of shares
of the Issuer under the Issuer's Declaration of Trust or other
organizational document are separate and distinct from those of any
and all other series.
15. This agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its
name and behalf, and its seal affixed, by one of its officers duly
authorized, and Distributors has executed this instrument in its name
and behalf by one of its officers duly authorized, as of the day and
year first above written.
Fidelity Advisor Series VIII
By _____________________________
FIDELITY DISTRIBUTORS CORPORATION
By _____________________________
Exhibit 6(i)
FORM OF
GENERAL DISTRIBUTION AGREEMENT
between
Fidelity Advisor Series VIII:
Fidelity Advisor Overseas Fund
and
FIDELITY DISTRIBUTORS CORPORATION
AGREEMENT made this ___________, between Fidelity Advisor Series
VIII, a Massachusetts business trust having its principal place of
business in Boston, Massachusetts and which may issue one or more
series of beneficial interest ("Issuer"), with respect to shares of
Fidelity Advisor Overseas Fund, a series of the Issuer, and Fidelity
Distributors Corporation, a Massachusetts corporation ("Distributor"),
having its principal place of business in Boston, Massachusetts.
In consideration of the mutual promises and undertakings herein
contained, the parties agree as follows:
1. Sale of Shares - The Issuer grants to Distributors the right to
sell shares on behalf of the Issuer during the term of this Agreement
and subject to the registration requirements of the Securities Act of
1933, as amended ("1933 Act"), and of the laws governing the sale of
securities in the various states ("Blue Sky Laws") under the following
terms and conditions: Distributors (i) shall have the right to sell,
as agent on behalf of the Issuer, shares authorized for issue and
registered under the 1933 Act, and (ii) may sell shares under offers
of exchange, if available, between and among the funds advised by
Fidelity Management & Research Company ("FMR") or any of its
affiliates.
2. Sale of Shares by the Issuer - The rights granted to the
Distributor shall be nonexclusive in that the Issuer reserves the
right to sell its shares to investors on applications received and
accepted by the Issuer. Further, the Issuer reserves the right to
issue shares in connection with the merger or consolidation, or
acquisition by the Issuer through purchase or otherwise, with any
other investment company, trust, or personal holding company.
3. Shares Covered by this Agreement - This Agreement shall apply to
unissued shares of the Issuer, shares of the Issuer held in its
treasury in the event that in the discretion of the Issuer treasury
shares shall be sold, and shares of the Issuer repurchased for resale.
4. Public Offering Price - Except as otherwise noted in the Issuer's
current Prospectus and/or Statement of Additional Information, all
shares sold to investors by the Distributor or the issuer will be sold
at the public offering price. The public offering price for all
accepted subscriptions will be the net asset value per share, as
determined in the manner described in the Issuer's current Prospectus
and/or Statement of Additional Information, plus a sales charge (if
any) described in the Issuer's current Prospectus and/or Statement of
Additional Information. The Issuer shall in all cases receive the net
asset value per share on all sales. If a sales charge is in effect,
the Distributor shall have the right subject to such rules or
regulations of the Securities and Exchange Commission as may then be
in effect pursuant to Section 22 of the Investment Company Act of 1940
to pay a portion of the sales charge to dealers who have sold shares
of the Issuer.
5. Suspension of Sales - If and whenever the determination of net
asset value is suspended and until such suspension is terminated, no
further orders for shares shall be processed by the Distributor except
such unconditional orders as may have been placed with the Distributor
before it had knowledge of the suspension. In addition, the Issuer
reserves the right to suspend sales and the Distributor's authority to
process orders for shares on behalf of the Issuer if, in the judgment
of the Issuer, it is in the best interests of the Issuer to do so.
Suspension will continue for such period as may be determined by the
Issuer.
6. Solicitation of Sales - In consideration of these rights granted to
the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the Issuer. This shall not prevent the Distributor from entering into
like arrangements (including arrangements involving the payment of
underwriting commissions) with other issuers. This does not obligate
the Distributor to register as a broker or dealer under the Blue Sky
laws of any jurisdiction in which it is not now registered or to
maintain its registration in any jurisdiction in which it is now
registered. If a sales charge is in effect, the Distributor shall
have the right to enter into sales agreements with dealers of its
choice for the sale of shares of the Issuer to the public at the
public offering price only and fix in such agreements the portion of
the sales charge which may be retained by dealers, provided that the
Issuer shall approve the form of the dealer agreement and the dealer
discounts set forth therein and shall evidence such approval by filing
said form of dealer agreement and amendments thereto as an exhibit to
its currently effective Registration Statement under the 1933 Act.
7. Authorized Representations - The Distributor is not authorized by
the Issuer to give any information or to make any representations
other than those contained in the appropriate registration statements
or Prospectuses and Statements of Additional Information filed with
the Securities and Exchange Commission under the 1933 Act (as these
registration statements, Prospectuses and Statements of Additional
Information may be amended from time to time), or contained in
shareholder reports or other material that may be prepared by or on
behalf of the Issuer for the Distributor's use. This shall not be
construed to prevent the Distributor from preparing and distributing
sales literature or other material as it may deem appropriate.
8. Portfolio Securities - Portfolio securities of the Issuer may be
bought or sold by or through the Distributor, and the Distributor may
participate directly or indirectly in brokerage commissions or
"spreads" for transactions in portfolio securities of the Issuer.
However, all sums of money received by the Distributor as a result of
such purchases and sales or as a result of such participation must,
after reimbursement of actual expenses of the Distributor in
connection with such activity, be paid over by the Distributor for the
benefit of the Issuer.
9. Registration of Shares - The Issuer agrees that it shall take all
action necessary to register shares under the 1933 Act (subject to the
necessary approval of its shareholders) so that there will be
available for sale the number of shares the Distributor may reasonably
be expected to sell. The Issuer shall make available to the
Distributor such number of copies of its currently effective
Prospectus and Statement of Additional Information as the Distributor
may reasonably request. The Issuer shall furnish to the Distributor
copies of all information, financial statements and other papers which
the Distributor may reasonably request for use in connection with the
distribution of shares of the Issuer.
10. Expenses - The Issuer shall pay all fees and expenses (a) in
connection with the preparation, setting in type and filing of any
registration statement, Prospectus and Statement of Additional
Information under the 1933 Act and amendments for the issuer of its
shares, (b) in connection with the registration and qualification of
shares for sale in the various states in which the Board of Trustees
of the Issuer shall determine it advisable to qualify such shares for
sales (including registering the Issuer as a broker or dealer or any
officer of the Issuer as agent or salesman in any state), (c) of
preparing, setting in type, printing and mailing any report or other
communication to shareholders of the Issuer in their capacity as such,
and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements
thereto sent to existing shareholders. As provided in the
Distribution and Service Plan adopted by the Issuer, it is recognized
by the Issuer that FMR may reimburse the Distributor for any direct
expenses incurred in the distribution of shares of the Issuer from any
source available to it, including advisory and service fees paid to it
by the Issuer.
As provided in the Distribution and Service Plan adopted by the
Issuer, it is recognized by the Issuer that FMR may make payment to
Distributors with respect to any expenses incurred in the distribution
of shares of the Issuer, such payments payable from the past profits
or other resources of FMR including management fees paid to it by the
Issuer.
11. Indemnification - The Issuer agrees to indemnify and hold harmless
the Distributor and each of its directors and officers and each
person, if any, who controls the Distributor within the meaning of
Section 15 of the 1933 Act against any loss, liability, claim, damages
or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damages, or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the ground that
the registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Issuer (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law.
However, the Issuer does not agree to indemnify the Distributor or
hold it harmless to the extent that the statement or omission was made
in reliance upon, and in conformity with, information furnished to the
Issuer by or on behalf of the Distributor. In no case (i) is the
indemnity of the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of
wilful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Issuer to
be liable under its indemnity agreement contained in this paragraph
with respect to any claim made against the Distributor or any person
indemnified unless the Distributor or person, as the case may be,
shall have notified the Issuer in writing of the claim with a
reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served
upon the Distributor or any such person (or after the Distributor or
such person shall have received notice of service on any designated
agent). However, failure to notify the Issuer of any claim shall not
relieve the Issuer from any liability which it may have to the
Distributor or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. The Issuer shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any claims, but if the Issuer elects to
assume the defense, the defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Issuer elects
to assume the defense of any suit and retain counsel, the Distributor,
officers or directors or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them. If the Issuer does not elect to
assume the defense of any suit, it will reimburse the Distributors,
officers or directors or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Issuer agrees to notify the Distributor
promptly of the commencement of any litigation or proceedings against
it or any of its officers or trustees in connection with the issuance
or sale of any of the shares.
The Distributor also covenants and agrees that it will indemnify and
hold harmless the Issuer and each of its Board members and officers
and each person, if any, who controls the Issuer within the meaning of
Section 15 of the 1933 Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, damages, claim or expense and
reasonable counsel fees incurred in connection therewith) arising by
reason of any person acquiring any shares, based upon the 1933 Act or
any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the
Issuer (as from time to time amended) included an untrue statement of
a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Issuer by or on behalf of
the Distributor. In no case (i) is the indemnity of the Distributor
in favor of the Issuer or any person indemnified to be deemed to
protect the Issuer or any person against any liability to which the
Issuer or such person would otherwise be subject by reason of wilful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under this Agreement, or (ii) is the Distributor to be liable
under its indemnity agreement contained in this paragraph with respect
to any claim made against the Issuer or any person indemnified unless
the Issuer or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the
nature of the claim shall have been served upon the Issuer or any such
person (or after the Issuer or such person shall have received notice
of service on any designated agent). However, failure to notify the
Distributor of any claim shall not relieve the Distributor from any
liability which it may have to the Issuer or any person against whom
the action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. In the case of nay notice to
the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of
any suit brought toe enforce the claim, but if the Distributor elects
to assume the defense, the defense shall be conducted by counsel
chosen by it and satisfactory to the Issuer, to its officers and Board
and to any controlling person or persons, defendants or defendants in
the suit. In the event that the Distributor elects to assume the
defense of any suit and retain counsel, the Issuer or controlling
persons, defendants or defendants in the suit, shall bear the fees and
expense of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it will
reimburse the Issuer, officers and Board or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees
and expenses of any counsel retained by them. The Distributor agrees
to notify the Issuer promptly of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of
the shares.
12. Effective Date - This agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force
until March 31, 1998 and thereafter from year to year, provided
continuance is approved annually by the vote of a majority of the
Board members of the Issuer, and by the vote of those Board members of
the Issuer who are not "interested persons" of the Issuer and, if a
plan under Rule 12b-1 under the Investment Company Act of 1940 is in
effect, by the vote of those Board members of the Issuer who are not
"interested persons" of the Issuer and who are not parties to the
Distribution and Service Plan or this Agreement and have no financial
interest in the operation of the Distribution and Service Plan or in
any agreements related to the Distribution and Service Plan, cast in
person at a meeting called for the purpose of voting on the approval.
This Agreement shall automatically terminate in the event of its
assignment. As used in this paragraph, the terms "assignment" and
"interested persons" shall have the respective meanings specified in
the Investment Company Act of 1940 as now in effect or as hereafter
amended. In addition to termination by failure to approve continuance
or by assignment, this Agreement may at any time be terminated by
either party upon not less than sixty days' prior written notice to
the other party.
13. Notice - Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Issuer, at 82 Devonshire Street,
Boston, Massachusetts, and if to the Distributor, at 82 Devonshire
Street, Boston, Massachusetts.
14. Limitation of Liability - The Distributor is expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust of the Issuer and agrees that the obligations
assumed by the Issuer under this contract shall be limited in all
cases to the Issuer and its assets. The Distributor shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Issuer. Nor shall the Distributor seek
satisfaction of any such obligation from the Trustees or any
individual Trustee of the Issuer. The Distributor understands that
the rights and obligations of each series of shares of the Issuer
under the Issuer's Declaration of Trust are separate and distinct from
those of any and all other series.
IN WITNESS WHEREOF, the Issuer has executed this instrument in its
name and behalf, and its seal affixed, by one of its officers duly
authorized, and the Distributor has executed this instrument in its
name and behalf, and its corporate seal affixed, by one of its
officers duly authorized, as of the day and year first above written.
FIDELITY ADVISOR SERIES VIII:
Fidelity Advisor Overseas Fund
By: ___________________________
FIDELITY DISTRIBUTORS CORPORATION
By: ____________________________
EXHIBIT 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectuses and Statement of Additional Information in Post-Effective
Amendment No. 46 to the Registration Statement on Form N-1A of
Fidelity Advisor Series VIII: Fidelity Advisor Emerging Markets Income
Fund and Fidelity Advisor Strategic Opportunities Fund, of our reports
dated February 13, 1997 on the financial statements and financial
highlights included in the December 31, 1996 Annual Reports to
Shareholders of Fidelity Advisor Emerging Markets Income Fund and
Fidelity Advisor Strategic Opportunities Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the
Statement of Additional Information.
/s/ COOPERS & LYBRAND L.L.P
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 27, 1997
EXHIBIT 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the
Prospectuses and Statement of Additional Information in Post-Effective
Amendment No. 46 to the Registration Statement on Form N-1A of
Fidelity Advisor Series VII: Fidelity Advisor Overseas Fund (currently
Fidelity Advisor Series VIII: Fidelity Advisor Overseas Fund), of our
report dated December 12, 1996 on the financial statements and
financial highlights included in the October 31, 1996 Annual Report to
Shareholders of Fidelity Advisor Overseas Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the
Statement of Additional Information.
/s/ Price Waterhouse L.L.P.
Price Waterhouse L.L.P.
Boston, Massachusetts
October 27, 1997
Exhibit 15(i)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
Class A Shares
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), for the Class A shares of
Fidelity Advisor International Capital Appreciation Fund ("Class A") a
class of shares of Fidelity Advisor International Capital Appreciation
Fund, (the "Fund"), a portfolio of Fidelity Advisor Series VIII (the
"Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor"), under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares of beneficial interest (the "Shares"). Such efforts
may include, but neither are required to include nor are limited to,
the following: (1) formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (2) preparation,
printing and distribution of sales literature; (3) preparation,
printing and distribution of prospectuses of the Fund and reports to
recipients other than the existing shareholders of the Fund; (4)
obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Distributor may, from time
to time, deem advisable; (5) making payments to securities dealers and
others engaged in the sale of Shares or who engage in shareholder
support services; and (6) providing training, marketing and support to
such dealers with respect to the sale of Shares.
3. In consideration for the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraph 2 hereof, all with respect to Class A Shares,
Class A shall pay to the Distributor a fee at the annual rate of 0.75%
(or such lesser amount as the Trustees may, from time to time,
determine) of the average daily net assets of Class A throughout the
month. The determination of daily net assets shall be made at the
close of business each day throughout the month and computed in the
manner specified in the Fund's then current Prospectus for the
determination of the net asset value of the Fund's Class A Shares.
The Distributor may use all or any portion of the fee received
pursuant to this Plan to compensate securities dealers or other
persons who have engaged in the sale of Class A Shares or in
shareholder support services pursuant to agreements with the
Distributor, or to pay any of the expenses associated with other
activities authorized under paragraph 2 hereof.
4. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
A Shares, including the activities referred to in paragraph 2 hereof.
To the extent that the payment of management fees by the Fund to the
Adviser should be deemed to be indirect financing of any activity
primarily intended to result in the sale of Class A Shares within the
meaning of Rule 12b-1, then such payment shall be deemed to be
authorized by this Plan.
5. This Plan shall become effective upon approval by a vote of a
majority of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" of the Trust (as defined in
the Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreement related to the Plan (the
"Independent Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect until April 30, 1998, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the Trust,
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may
be amended at any time by the Board of Trustees, provided that (a) any
amendment to increase materially the fee provided for in paragraph 3
hereof or any amendment of the Management Contract to increase the
amount to be paid by the Fund thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities
of Class A, in the case of this Plan, or upon approval by a vote of a
majority of the outstanding voting securities of the Fund, in the case
of the Management Contract, and (b) any material amendment of this
Plan shall be effective only upon approval in the manner provided in
the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class A.
8. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of shares of Class A
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class A Shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, obligation assumed by Class
A pursuant to this Plan and any agreement related to this Plan shall
be limited in all cases to Class A and its assets and shall not
constitute an obligation of any shareholder of the Trust or of any
other class of the Fund, series of the Trust or class of such series.
11. If any provision of the Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(j)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
Class T Shares
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), for the Class T shares of
Fidelity Advisor International Capital Appreciation Fund ("Class T") a
class of shares of Fidelity Advisor International Capital Appreciation
Fund, (the "Fund"), a portfolio of Fidelity Advisor Series VIII (the
"Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor"), under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares of beneficial interest (the "Shares"). Such efforts
may include, but neither are required to include nor are limited to,
the following: (1) formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (2) preparation,
printing and distribution of sales literature; (3) preparation,
printing and distribution of prospectuses of the Fund and reports to
recipients other than the existing shareholders of the Fund; (4)
obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Distributor may, from time
to time, deem advisable; (5) making payments to securities dealers and
others engaged in the sale of Shares or who engage in shareholder
support services; and (6) providing training, marketing and support to
such dealers with respect to the sale of Shares.
3. In consideration for the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraph 2 hereof, all with respect to Class T Shares,
Class T shall pay to the Distributor a fee at the annual rate of 0.75%
(or such lesser amount as the Trustees may, from time to time,
determine) of the average daily net assets of Class T throughout the
month. The determination of daily net assets shall be made at the
close of business each day throughout the month and computed in the
manner specified in the Fund's then current Prospectus for the
determination of the net asset value of the Fund's Class T Shares.
The Distributor may use all or any portion of the fee received
pursuant to this Plan to compensate securities dealers or other
persons who have engaged in the sale of Class T Shares or in
shareholder support services pursuant to agreements with the
Distributor, or to pay any of the expenses associated with other
activities authorized under paragraph 2 hereof.
4. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
T Shares, including the activities referred to in paragraph 2 hereof.
To the extent that the payment of management fees by the Fund to the
Adviser should be deemed to be indirect financing of any activity
primarily intended to result in the sale of Class T Shares within the
meaning of Rule 12b-1, then such payment shall be deemed to be
authorized by this Plan.
5. This Plan shall become effective upon approval by a vote of a
majority of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" of the Trust (as defined in
the Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreement related to the Plan (the
"Independent Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect until April 30, 1998, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the Trust,
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may
be amended at any time by the Board of Trustees, provided that (a) any
amendment to increase materially the fee provided for in paragraph 3
hereof or any amendment of the Management Contract to increase the
amount to be paid by the Fund thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities
of Class T, in the case of this Plan, or upon approval by a vote of a
majority of the outstanding voting securities of the Fund, in the case
of the Management Contract, and (b) any material amendment of this
Plan shall be effective only upon approval in the manner provided in
the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class T.
8. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of shares of Class T
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class T Shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, obligation assumed by Class
T pursuant to this Plan and any agreement related to this Plan shall
be limited in all cases to Class T and its assets and shall not
constitute an obligation of any shareholder of the Trust or of any
other class of the Fund, series of the Trust or class of such series.
11. If any provision of the Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(k)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
Class B Shares
1. This Distribution and Service Plan (the "Plan"), when effective
in accordance with its terms, shall be the written plan contemplated
by Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Act"), for Class B Shares of Fidelity Advisor International
Capital Appreciation Fund ("Class B"), a class of shares of Fidelity
Advisor International Capital Appreciation Fund (the "Fund"), a series
of Fidelity Advisor Series VIII (the "Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor") under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares of beneficial interest (the "Shares"). Such efforts
may include, but neither are required to include nor are limited to,
the following: (1) formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (2) preparation,
printing and distribution of sales literature; (3) preparation,
printing and distribution of prospectuses of the Fund and reports to
recipients other than existing shareholders of the Fund; (4) obtaining
such information, analyses and reports with respect to marketing and
promotional activities as the Distributor may, from time to time, deem
advisable; (5) making payments to securities dealers and others
engaged in the sale of Shares or in shareholder support services
("Investment Professionals"); and (6) providing training, marketing
and support to Investment Professionals with respect to the sale of
Shares.
3. In accordance with such terms as the Trustees may, from time to
time establish, and in conjunction with its services under the General
Distribution Agreement with respect to Class B Shares, the Distributor
is hereby expressly authorized to make payments to Investment
Professionals in connection with the sale of Class B Shares. Such
payments may be paid as a percentage of the dollar amount of purchases
of Class B Shares attributable to a particular Investment
Professional, or may take such other form as may be approved by the
Trustees.
4. In consideration of the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraphs 2 and 3 hereof, all with respect to Class B
Shares:
(a) Class B shall pay to the Distributor a monthly distribution fee
at the annual rate of 0.75% (or such lesser amount as the Trustees
may, from time to time, determine) of the average daily net assets of
Class B throughout the month. The determination of daily net assets
shall be made at the close of business each day throughout the month
and computed in the manner specified in the Fund's then current
Prospectus for the determination of the net asset value of Class B
Shares, but shall exclude assets attributable to any other class of
Shares of the Fund. The Distributor may, but shall not be required
to, use all or any portion of the distribution fee received pursuant
to the Plan to compensate Investment Professionals who have engaged in
the sale of Class B Shares or in shareholder support services with
respect to Class B Shares pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities
authorized under paragraphs 2 and 3 hereof; and
(b) In addition, the Plan recognizes that the Distributor may, in
accordance with such terms as the Trustees may from time to time
establish, receive all or a portion of any sales charges, including
contingent deferred sales charges, which may be imposed upon the sale
or redemption of Class B Shares.
5. Separate from any payments made as described in paragraph 4
hereof, Class B shall also pay to the Distributor a service fee at the
annual rate of 0.25% (or such lesser amount as the Trustees may, from
time to time, determine) of the average daily net assets of Class B
throughout the month. The determination of daily net assets shall be
made at the close of business each day throughout the month and
computed in the manner specified in the Fund's then current Prospectus
for the determination of the net asset value of Class B Shares, but
shall exclude assets attributable to any other class of Shares of the
Fund. In accordance with such terms as the Trustees may from time to
time establish, the Distributor may use all or a portion of such
service fees to compensate Investment Professionals for personal
service and/or the maintenance of shareholder accounts, or for other
services for which "service fees" lawfully may be paid in accordance
with applicable rules and regulations.
6. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
B Shares, including the activities referred to in paragraphs 2 and 3
hereof. To the extent that the payment of management fees by the Fund
to the Adviser should be deemed to be indirect financing of any
activity primarily intended to result in the sale of Class B Shares
within the meaning of Rule 12b-1, then such payment shall be deemed to
be authorized by this Plan.
7. This Plan shall become effective upon approval by a vote of a
majority of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" of the Trust (as defined in
the Act) and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the
"Independent Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan.
8. This Plan shall, unless terminated as hereinafter provided,
remain in effect until April 30, 1998, and from year to year
thereafter; provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the
Trust, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to increase materially the fees
provided for in paragraphs 4 and 5 hereof or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of Class B, in the case
of this Plan, or upon approval by a vote of the majority of the
outstanding voting securities of the Fund, in the case of the
Management Contract, and (b) any material amendment of this Plan shall
be effective only upon approval in the manner provided in the first
sentence of this paragraph 8.
9. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class B.
10. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of Class B Shares
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
11. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class B Shares.
12. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class B pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class B and its assets and shall not
constitute an obligation of any shareholder of the Trust or of any
other class of the Fund, series of the Trust or class of such series.
13. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(l)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
Institutional Class Shares
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act"), for Institutional Class Shares of Fidelity Advisor
International Capital Appreciation Fund ("Institutional Class"), a
class of shares of Fidelity Advisor International Capital Appreciation
Fund (the "Fund"), a series of Fidelity Advisor Series VIII (the
"Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor") under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers for
the Fund's shares of beneficial interest ("Shares"). Under the
agreement, the Distributor pays the expenses of printing and
distributing any prospectuses, reports and other literature used by
the Distributor, advertising, and other promotional activities in
connection with the offering of Shares of the Fund for sale to the
public. It is recognized that Fidelity Management & Research Company
(the "Adviser") may use its management fee revenues as well as past
profits or its resources from any other source, to make payment to the
Distributor with respect to any expenses incurred in connection with
the distribution of Institutional Class Shares, including the
activities referred to above.
3. The Adviser directly, or through the Distributor, may, subject to
the approval of the Trustees, make payments to securities dealers and
other third parties who engage in the sale of Institutional Class
Shares or who render shareholder support services, including but not
limited to providing office space, equipment and telephone facilities,
answering routine inquiries regarding the Fund, processing shareholder
transactions and providing such other shareholder services as the
Trust may reasonably request.
4. The Institutional Class will not make separate payments as a
result of this Plan to the Adviser, Distributor or any other party, it
being recognized that the Fund presently pays, and will continue to
pay, a management fee to the Adviser. To the extent that any payments
made by the Fund to the Adviser, including payment of management fees,
should be deemed to be indirect financing of any activity primarily
intended to result in the sale of Institutional Class Shares within
the meaning of Rule 12b-1, then such payments shall be deemed to be
authorized by this Plan.
5. This Plan shall become effective upon the approval by a vote of a
majority of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" of the Trust (as defined in
the Act) and who have no direct or indirect financial interest in the
operation of this Plan or in any agreement related to the Plan (the
"Independent Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect until April 30, 1998, and from year to year thereafter,
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the Trust,
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may
be amended at any time by the Board of Trustees, provided that (a) any
amendment to authorize direct payments by the Institutional Class to
finance any activity primarily intended to result in the sale of
Institutional Class Shares, to increase materially the amount spent by
the Institutional Class for distribution, or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of the Institutional
Class, in the case of this Plan, or upon approval by a vote of a
majority of the outstanding voting securities of the Fund, in the case
of the Management Contract, and (b) any material amendments of this
Plan shall be effective only upon approval in the manner provided in
the first sentence in this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of the
Institutional Class.
8. During the existence of this Plan, the Trust shall require the
Adviser and/or Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of Institutional
Class Shares (making estimates of such costs where necessary or
desirable) and the purposes for which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Institutional Class Shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Institutional Class pursuant to this Plan and any agreement related to
this Plan shall be limited in all cases to Institutional Class and its
assets and shall not constitute an obligation of any shareholder of
the Trust or of any other class of the Fund, series of the Trust or
class of such series.
11. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(m)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
Class C Shares
1. This Distribution and Service Plan (the "Plan"), when effective
in accordance with its terms, shall be the written plan contemplated
by Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Act"), for Class C Shares of Fidelity Advisor International
Capital Appreciation Fund ("Class C"), a class of shares of Fidelity
Advisor International Capital Appreciation Fund (the "Fund"), a series
of Fidelity Advisor Series VIII (the "Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor") under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares of beneficial interest (the "Shares"). Such efforts
may include, but neither are required to include nor are limited to,
the following: (1) formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (2) preparation,
printing and distribution of sales literature; (3) preparation,
printing and distribution of prospectuses of the Fund and reports to
recipients other than existing shareholders of the Fund; (4) obtaining
such information, analyses and reports with respect to marketing and
promotional activities as the Distributor may, from time to time, deem
advisable; (5) making payments to securities dealers and others
engaged in the sale of Shares or in shareholder support services
("Investment Professionals"); and (6) providing training, marketing
and support to Investment Professionals with respect to the sale of
Shares.
3. In accordance with such terms as the Trustees may, from time to
time establish, and in conjunction with its services under the General
Distribution Agreement with respect to Class C Shares, the Distributor
is hereby expressly authorized to make payments to Investment
Professionals in connection with the sale of Class C Shares. Such
payments may be paid as a percentage of the dollar amount of purchases
of Class C Shares attributable to a particular Investment
Professional, or may take such other form as may be approved by the
Trustees.
4. In consideration of the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraphs 2 and 3 hereof, all with respect to Class C
Shares:
(a) Class C shall pay to the Distributor a monthly distribution fee
at the annual rate of 0.75% (or such lesser amount as the Trustees
may, from time to time, determine) of the average daily net assets of
Class C throughout the month. The determination of daily net assets
shall be made at the close of business each day throughout the month
and computed in the manner specified in the Fund's then current
Prospectus for the determination of the net asset value of Class C
Shares, but shall exclude assets attributable to any other class of
Shares of the Fund. The Distributor may, but shall not be required
to, use all or any portion of the distribution fee received pursuant
to the Plan to compensate Investment Professionals who have engaged in
the sale of Class C Shares or in shareholder support services with
respect to Class C Shares pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities
authorized under paragraphs 2 and 3 hereof; and
(b) In addition, the Plan recognizes that the Distributor may, in
accordance with such terms as the Trustees may from time to time
establish, receive all or a portion of any sales charges, including
contingent deferred sales charges, which may be imposed upon the sale
or redemption of Class C Shares.
5. Separate from any payments made as described in paragraph 4
hereof, Class C shall also pay to the Distributor a service fee at the
annual rate of 0.25% (or such lesser amount as the Trustees may, from
time to time, determine) of the average daily net assets of Class C
throughout the month. The determination of daily net assets shall be
made at the close of business each day throughout the month and
computed in the manner specified in the Fund's then current Prospectus
for the determination of the net asset value of Class C Shares, but
shall exclude assets attributable to any other class of Shares of the
Fund. In accordance with such terms as the Trustees may from time to
time establish, the Distributor may use all or a portion of such
service fees to compensate Investment Professionals for personal
service and/or the maintenance of shareholder accounts, or for other
services for which "service fees" lawfully may be paid in accordance
with applicable rules and regulations.
6. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
C Shares, including the activities referred to in paragraphs 2 and 3
hereof. To the extent that the payment of management fees by the Fund
to the Adviser should be deemed to be indirect financing of any
activity primarily intended to result in the sale of Class C Shares
within the meaning of Rule 12b-1, then such payment shall be deemed to
be authorized by this Plan.
7. This Plan shall become effective upon approval by a vote of a
majority of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" of the Trust (as defined in
the Act) and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the
"Independent Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan.
8. This Plan shall, unless terminated as hereinafter provided,
remain in effect until April 30, 1998, and from year to year
thereafter; provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the
Trust, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to increase materially the fees
provided for in paragraphs 4 and 5 hereof or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of Class C, in the case
of this Plan, or upon approval by a vote of the majority of the
outstanding voting securities of the Fund, in the case of the
Management Contract, and (b) any material amendment of this Plan shall
be effective only upon approval in the manner provided in the first
sentence of this paragraph 8.
9. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class C.
10. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of Class C Shares
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
11. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class C Shares.
12. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class C pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class C and its assets and shall not
constitute an obligation of any shareholder of the Trust or of any
other class of the Fund, series of the Trust or class of such series.
13. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(n)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND
Class C Shares
1. This Distribution and Service Plan (the "Plan"), when effective
in accordance with its terms, shall be the written plan contemplated
by Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Act"), for Class C Shares of Fidelity Advisor Emerging Markets
Income Fund ("Class C"), a class of shares of Fidelity Advisor
Emerging Markets Income Fund (the "Fund"), a series of Fidelity
Advisor Series VIII (the "Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor") under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares of beneficial interest (the "Shares"). Such efforts
may include, but neither are required to include nor are limited to,
the following: (1) formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (2) preparation,
printing and distribution of sales literature; (3) preparation,
printing and distribution of prospectuses of the Fund and reports to
recipients other than existing shareholders of the Fund; (4) obtaining
such information, analyses and reports with respect to marketing and
promotional activities as the Distributor may, from time to time, deem
advisable; (5) making payments to securities dealers and others
engaged in the sale of Shares or in shareholder support services
("Investment Professionals"); and (6) providing training, marketing
and support to Investment Professionals with respect to the sale of
Shares.
3. In accordance with such terms as the Trustees may, from time to
time establish, and in conjunction with its services under the General
Distribution Agreement with respect to Class C Shares, the Distributor
is hereby expressly authorized to make payments to Investment
Professionals in connection with the sale of Class C Shares. Such
payments may be paid as a percentage of the dollar amount of purchases
of Class C Shares attributable to a particular Investment
Professional, or may take such other form as may be approved by the
Trustees.
4. In consideration of the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraphs 2 and 3 hereof, all with respect to Class C
Shares:
(a) Class C shall pay to the Distributor a monthly distribution fee
at the annual rate of 0.75% (or such lesser amount as the Trustees
may, from time to time, determine) of the average daily net assets of
Class C throughout the month. The determination of daily net assets
shall be made at the close of business each day throughout the month
and computed in the manner specified in the Fund's then current
Prospectus for the determination of the net asset value of Class C
Shares, but shall exclude assets attributable to any other class of
Shares of the Fund. The Distributor may, but shall not be required
to, use all or any portion of the distribution fee received pursuant
to the Plan to compensate Investment Professionals who have engaged in
the sale of Class C Shares or in shareholder support services with
respect to Class C Shares pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities
authorized under paragraphs 2 and 3 hereof; and
(b) In addition, the Plan recognizes that the Distributor may, in
accordance with such terms as the Trustees may from time to time
establish, receive all or a portion of any sales charges, including
contingent deferred sales charges, which may be imposed upon the sale
or redemption of Class C Shares.
5. Separate from any payments made as described in paragraph 4
hereof, Class C shall also pay to the Distributor a service fee at the
annual rate of 0.25% (or such lesser amount as the Trustees may, from
time to time, determine) of the average daily net assets of Class C
throughout the month. The determination of daily net assets shall be
made at the close of business each day throughout the month and
computed in the manner specified in the Fund's then current Prospectus
for the determination of the net asset value of Class C Shares, but
shall exclude assets attributable to any other class of Shares of the
Fund. In accordance with such terms as the Trustees may from time to
time establish, the Distributor may use all or a portion of such
service fees to compensate Investment Professionals for personal
service and/or the maintenance of shareholder accounts, or for other
services for which "service fees" lawfully may be paid in accordance
with applicable rules and regulations.
6. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
C Shares, including the activities referred to in paragraphs 2 and 3
hereof. To the extent that the payment of management fees by the Fund
to the Adviser should be deemed to be indirect financing of any
activity primarily intended to result in the sale of Class C Shares
within the meaning of Rule 12b-1, then such payment shall be deemed to
be authorized by this Plan.
7. This Plan shall become effective upon approval by a vote of a
majority of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" of the Trust (as defined in
the Act) and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the
"Independent Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan.
8. This Plan shall, unless terminated as hereinafter provided,
remain in effect until April 30, 1998, and from year to year
thereafter; provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the
Trust, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to increase materially the fees
provided for in paragraphs 4 and 5 hereof or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of Class C, in the case
of this Plan, or upon approval by a vote of the majority of the
outstanding voting securities of the Fund, in the case of the
Management Contract, and (b) any material amendment of this Plan shall
be effective only upon approval in the manner provided in the first
sentence of this paragraph 8.
9. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class C.
10. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of Class C Shares
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
11. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class C Shares.
12. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class C pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class C and its assets and shall not
constitute an obligation of any shareholder of the Trust or of any
other class of the Fund, series of the Trust or class of such series.
13. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(o)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR OVERSEAS FUND
Class C Shares
1. This Distribution and Service Plan (the "Plan"), when effective
in accordance with its terms, shall be the written plan contemplated
by Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Act"), for Class C Shares of Fidelity Advisor Overseas Fund
("Class C"), a class of shares of Fidelity Advisor Overseas Fund (the
"Fund"), a series of Fidelity Advisor Series VIII (the "Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor") under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares of beneficial interest (the "Shares"). Such efforts
may include, but neither are required to include nor are limited to,
the following: (1) formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (2) preparation,
printing and distribution of sales literature; (3) preparation,
printing and distribution of prospectuses of the Fund and reports to
recipients other than existing shareholders of the Fund; (4) obtaining
such information, analyses and reports with respect to marketing and
promotional activities as the Distributor may, from time to time, deem
advisable; (5) making payments to securities dealers and others
engaged in the sale of Shares or in shareholder support services
("Investment Professionals"); and (6) providing training, marketing
and support to Investment Professionals with respect to the sale of
Shares.
3. In accordance with such terms as the Trustees may, from time to
time establish, and in conjunction with its services under the General
Distribution Agreement with respect to Class C Shares, the Distributor
is hereby expressly authorized to make payments to Investment
Professionals in connection with the sale of Class C Shares. Such
payments may be paid as a percentage of the dollar amount of purchases
of Class C Shares attributable to a particular Investment
Professional, or may take such other form as may be approved by the
Trustees.
4. In consideration of the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraphs 2 and 3 hereof, all with respect to Class C
Shares:
(a) Class C shall pay to the Distributor a monthly distribution fee
at the annual rate of 0.75% (or such lesser amount as the Trustees
may, from time to time, determine) of the average daily net assets of
Class C throughout the month. The determination of daily net assets
shall be made at the close of business each day throughout the month
and computed in the manner specified in the Fund's then current
Prospectus for the determination of the net asset value of Class C
Shares, but shall exclude assets attributable to any other class of
Shares of the Fund. The Distributor may, but shall not be required
to, use all or any portion of the distribution fee received pursuant
to the Plan to compensate Investment Professionals who have engaged in
the sale of Class C Shares or in shareholder support services with
respect to Class C Shares pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities
authorized under paragraphs 2 and 3 hereof; and
(b) In addition, the Plan recognizes that the Distributor may, in
accordance with such terms as the Trustees may from time to time
establish, receive all or a portion of any sales charges, including
contingent deferred sales charges, which may be imposed upon the sale
or redemption of Class C Shares.
5. Separate from any payments made as described in paragraph 4
hereof, Class C shall also pay to the Distributor a service fee at the
annual rate of 0.25% (or such lesser amount as the Trustees may, from
time to time, determine) of the average daily net assets of Class C
throughout the month. The determination of daily net assets shall be
made at the close of business each day throughout the month and
computed in the manner specified in the Fund's then current Prospectus
for the determination of the net asset value of Class C Shares, but
shall exclude assets attributable to any other class of Shares of the
Fund. In accordance with such terms as the Trustees may from time to
time establish, the Distributor may use all or a portion of such
service fees to compensate Investment Professionals for personal
service and/or the maintenance of shareholder accounts, or for other
services for which "service fees" lawfully may be paid in accordance
with applicable rules and regulations.
6. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
C Shares, including the activities referred to in paragraphs 2 and 3
hereof. To the extent that the payment of management fees by the Fund
to the Adviser should be deemed to be indirect financing of any
activity primarily intended to result in the sale of Class C Shares
within the meaning of Rule 12b-1, then such payment shall be deemed to
be authorized by this Plan.
7. This Plan shall become effective upon approval by a vote of a
majority of the Trustees of the Trust, including a majority of
Trustees who are not "interested persons" of the Trust (as defined in
the Act) and who have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan (the
"Independent Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan.
8. This Plan shall, unless terminated as hereinafter provided,
remain in effect until April 30, 1998, and from year to year
thereafter; provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the
Trust, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to increase materially the fees
provided for in paragraphs 4 and 5 hereof or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of Class C, in the case
of this Plan, or upon approval by a vote of the majority of the
outstanding voting securities of the Fund, in the case of the
Management Contract, and (b) any material amendment of this Plan shall
be effective only upon approval in the manner provided in the first
sentence of this paragraph 8.
9. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class C.
10. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of Class C Shares
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
11. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class C Shares.
12. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class C pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class C and its assets and shall not
constitute an obligation of any shareholder of the Trust or of any
other class of the Fund, series of the Trust or class of such series.
13. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(p)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR OVERSEAS FUND
CLASS T SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act") for Class T shares of
Fidelity Advisor Overseas Fund (the "Portfolio"), a portfolio of
Fidelity Advisor Series VIII (the "Trust").
2. The Fund has entered into a General Distribution Agreement on
behalf of the Portfolio with Fidelity Distributors Corporation (the
"Distributor"), under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Portfolio's shares of beneficial interest (the "Shares"). Such
efforts may include, but neither are required to include nor are
limited to, the following: (1) formulation and implementation of
marketing and promotional activities, such as mail promotions and
television, radio, newspaper, magazine and other mass media
advertising; (2) preparation, printing and distribution of sales
literature; (3) preparation, printing and distribution of prospectuses
of the Portfolio and reports to recipients other than existing
shareholders of the Portfolio; (4) obtaining such information,
analyses and reports with respect to marketing and promotional
activities as the Distributor may, from time to time, deem advisable;
(5) making payments to securities dealers and others engaged in the
sale of Shares or who engage in shareholder support services; and (6)
providing training, marketing and support to such dealers and other
with respect to the sale of Shares.
3. In consideration for the services provide and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement, the Portfolio shall pay to the Distributor a fee at the
annual rate of 0.65% of its average daily net assets throughout the
month. The determination of daily net assets shall be made at the
close of business each day throughout the month and computed in the
manner specified in the Portfolio's then current Prospectus for the
determination of the net asset value of the Portfolio's shares, but
excluding assets attributable to shares purchased more than 144 months
prior to such day. The Distributor may use all or any portion of the
fee received pursuant to the Plan to compensate securities dealers or
other persons who have engaged in the sale of Shares or in shareholder
support services pursuant to agreements with the Distributor, or to
pay any of the expenses associated with other activities authorized
under paragraph 2 hereof.
4. The Portfolio presently pays, and will continue to pay a
management fee to Fidelity Management & Research Company (the
"Adviser") pursuant to a management agreement between the Portfolio
and the Adviser (the "Management Contract"). It is recognized that
the Adviser may use its management fee revenue as well as its past
profits or its resources from any other source, to make payments to
the Distributor with respect to any expenses incurred in connection
with the distribution of Shares, including the activities referred to
in paragraphs 2 and 3 hereof. To the extent that the payment of
management fees by the Portfolio to the Adviser should be deemed to be
indirect financing of any activity primarily intended to result in the
sale of Shares within the meaning of Rule 12b-1, then such payment
shall be deemed to be authorized by this Plan.
5. This Plan shall become effective upon the first business day of
the month following approval by a vote of at least a "majority of the
outstanding voting securities of the Portfolio" (as defined in the
Act), this Plan having been approved by a vote of a majority of the
Trustees of the Fund, including a majority of Trustees who are not
"interested persons" of the Fund (as defined in the Act) and who have
no direct or indirect financial interest in the operation of this Plan
or in any agreement related to the Plan (the "Independent Trustees"),
cast in person at a meeting called for the purpose of voting on this
Plan.
6. This plan shall, unless terminated as hereinafter provided, remain
in effect until April 30, 1998, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the Fund,
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may
be amended at any time by the Board of Trustees, provided that (a) any
amendment to increase materially the fee provided for in paragraph 3
hereof or any amendment of the Management Contract to increase the
amount to be paid by the Portfolio thereunder shall be effective only
upon approval by a vote of a majority of the outstanding voting
securities of the Portfolio, and (b) any material amendment of this
Plan shall be effective only upon approval in the manner provided in
the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of the
Portfolio.
8. During the existence of this Plan, the Fund shall require the
Adviser and/or the Distributor to provide the Fund, for review by the
Fund's Trustees, and the Trustees shall review, at least quarterly, a
written report of the amounts expended in connection with financing
any activity primarily intended to result in the sale of shares of the
Portfolio (making estimates of such costs where necessary or
desirable) and the purposes for which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of shares of the Plymouth Class.
10. Consistent with the limitation of shareholder liability as set
forth in the Fund's Declaration of Trust, any obligation assumed by
the Portfolio pursuant to this Plan and any agreement related to this
Plan shall be limited in all cases to the Portfolio and its assets and
shall not constitute an obligation of any shareholder of the Fund or
of any other class or series of shares of the Fund.
11. If any provision of the Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(q)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR OVERSEAS FUND
CLASS B SHARES
1. This Distribution and Service Plan (the "Plan"), when effective
in accordance with its terms, shall be the written plan contemplated
by Rule 12b-1 under the Investment Company Act of 1940, as amended
(the "Act") for Class B Shares of Fidelity Advisor Overseas Fund
("Class B"), a class of shares of Fidelity Advisor Overseas Fund (the
"Fund"), a series of Advisor Series VIII (the "Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor") under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares of beneficial interest (the "Shares"). Such efforts
may include, but neither are required to include nor are limited to,
the following: (1) formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (2) preparation,
printing and distribution of sales literature; (3) preparation,
printing and distribution of prospectuses of the Fund and reports to
recipients other than existing shareholders of the Fund; (4) obtaining
such information, analyses and reports with respect to marketing and
promotional activities as the Distributor may, from time to time, deem
advisable; (5) making payments to securities dealers and others
engaged in the sale of Shares or in shareholder support services
("Investment Professionals"); and (6) providing training, marketing
and support to Investment Professionals with respect to the sale of
Shares.
3. In accordance with such terms as the Trustees may, from time to
time establish, and in conjunction with its services under the General
Distribution Agreement with respect to Class B Shares, the Distributor
is hereby expressly authorized to make payments to Investment
Professionals in connection with the sale of Class B Shares. Such
payments may be paid as a percentage of the dollar amount of purchases
of Class B Shares attributable to a particular Investment
Professional, or may take such other form as may be approved by the
Trustees.
4. In consideration of the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraphs 2 and 3 hereof, all with respect to Class B
Shares:
(a) Class B shall pay to the Distributor a monthly distribution fee
at the annual rate of 0.75% (or such lesser amount as the Trustees
may, from time to time, determine) of the average daily net assets of
Class B throughout the month. The determination of daily net assets
shall be made at the close of business each day throughout the month
and computed in the manner specified in the Fund's then current
Prospectus for the determination of the net asset value of Class B
Shares, but shall exclude assets attributable to any other class of
Shares of the Fund. The Distributor may, but shall not be required
to, use all or any portion of the distribution fee received pursuant
to the Plan to compensate Investment Professionals who have engaged in
the sale of Class B Shares or in shareholder support services with
respect to Class B Shares pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities
authorized under paragraphs 2 and 3 hereof; and
(b) In addition, the Plan recognizes that the Distributor may, in
accordance with such terms as the Trustees may from time to time
establish, receive all or a portion of any sales charges, including
contingent deferred sales charges, which may be imposed upon the sale
or redemption of Class B Shares.
5. Separate from any payments made as described in paragraph 4
hereof, Class B shall also pay to the Distributor a service fee at the
annual rate of 0.25% (or such lesser amount as the Trustees may, from
time to time, determine) of the average daily net assets of Class B
throughout the month. The determination of daily net assets shall be
made at the close of business each day throughout the month and
computed in the manner specified in the Fund's then current Prospectus
for the determination of the net asset value of Class B Shares, but
shall exclude assets attributable to any other class of Shares of the
Fund. In accordance with such terms as the Trustees may from time to
time establish, the Distributor may use all or a portion of such
service fees to compensate Investment Professionals for personal
service and/or the maintenance of shareholder accounts, or for other
services for which "service fees" lawfully may be paid in accordance
with applicable rules and regulations.
6. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payments to the Distributor with
respect to any expenses incurred in connection with the distribution
of Class B Shares, including the activities referred to in paragraphs
2 and 3 hereof. To the extent that the payment of management fees by
the Fund to the Adviser should be deemed to be indirect financing of
any activity primarily intended to result in the sale of Class B
Shares within the meaning of Rule 12b-1, then such payment shall be
deemed to be authorized by this Plan.
7. This Plan shall become effective upon the first business day of
the month following approval by a vote of at least a "majority of the
outstanding voting securities" (as defined in the Act) of Class B,
this Plan having been approved by a vote of a majority of the Trustees
of the Trust, including a majority of Trustees who are not "interested
persons" of the Trust (as defined in the Act) and who have no direct
or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan (the "Independent Trustees"), cast in
person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall, unless terminated as hereinafter provided,
remain in effect until April 30, 1998, and from year to year
thereafter; provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the
Trust, including a majority of the Independent Trustees, cast in
person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to increase materially the fees
provided for in paragraphs 4 and 5 hereof or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a
majority of the outstanding voting securities of Class B, in the case
of this Plan, or upon approval by a vote of the majority of the
outstanding voting securities of the Fund, in the case of the
Management Contract, and (b) any material amendment of this Plan shall
be effective only upon approval in the manner provided in the first
sentence of this paragraph 8.
9. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class B.
10. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of Class B Shares
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
11. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class B Shares.
12. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class B pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class B and its assets and shall not
constitute an obligation of any shareholder of the Trust or of any
other class of the Fund, series of the Trust or class of such series.
13. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(r)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR OVERSEAS FUND
INSTITUTIONAL CLASS SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act") for Institutional Class Shares of Fidelity Advisor Overseas
Fund ("Institutional Class"), a class of shares of Fidelity Advisor
Overseas Fund (the "Fund"), a series of Advisor Series VIII (the
"Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor") under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers for
the Fund's shares of beneficial interest ("Shares"). Under the
agreement, the Distributor pays the expenses of printing and
distributing any prospectuses, reports and other literature used by
the Distributor, advertising, and other promotional activities in
connection with the offering of Shares of the Fund for sale to the
public. It is recognized that Fidelity Management & Research Company
(the "Adviser") may use its management fee revenues, as well as past
profits or its resources from any other source, to make payments to
the Distributor with respect to any expenses incurred in connection
with the distribution of Institutional Class Shares, including the
activities referred to above.
3. The Adviser directly, or through the Distributor, may, subject to
the approval of the Trustees, make payments to securities dealers and
other third parties who engage in the sale of Shares or who render
shareholder support services, including but not limited to providing
office space, equipment and telephone facilities, answering routine
inquiries regarding the Fund, processing shareholder transactions and
providing such other shareholder services as the Trust may reasonably
request.
4. The Fund will not make separate payments as a result of this Plan
to the Adviser, Distributor or any other party, it being recognized
that the Fund presently pays, and will continue to pay, a management
fee to the Adviser. To the extent that any payments made by the Fund
to the Adviser, including payment of management fees, should be deemed
to be indirect financing of any activity primarily intended to result
in the sale of Shares of the Fund within the context of Rule 12b-1
under the Act, then such payments shall be deemed to be authorized by
this Plan.
5. This Plan shall become effective upon the first business day of
the month following approval by a vote of at least a "majority of the
outstanding voting securities of the Fund" (as defined in the Act),
the plan having been approved by a vote of a majority of the Trustees
of the Trust, including a majority of Trustees who are not "interested
persons" of the Trust (as defined in the Act) and who have no direct
or indirect financial interest in the operation of this Plan or in any
agreements related to this Plan (the "Independent Trustees"), cast in
person at a meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect from the date specified above until April 30, 1998, and from
year to year thereafter, provided, however, that such continuance is
subject to approval annually by a vote of a majority of the Trustees
of the Trust, including a majority of the Independent Trustees, cast
in person at a meeting called for the purpose of voting on this Plan.
This Plan may be amended at any time by the Board of Trustees,
provided that (a) any amendment to authorize direct payments by the
Fund to finance any activity primarily intended to result in the sale
of Shares of the Fund, to increase materially the amount spent by the
Fund for distribution, or any amendment of the Management Contract to
increase the amount to be paid by the Fund thereunder shall be
effective only upon approval by a vote of a majority of the
outstanding voting securities of the Fund, and (b) any material
amendments of this Plan shall be effective only upon approval in the
manner provided in the first sentence in this paragraph.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of the Fund.
8. During the existence of this Plan, the Trust shall require the
Adviser and/or Distributor to provide the Trust, for review by the
Trust's Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended in connection with
financing any activity primarily intended to result in the sale of
Shares of the Fund (making estimates of such costs where necessary or
desirable) and the purposes for which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Shares of the Fund.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Institutional Class pursuant to this Plan and any agreement related to
this Plan shall be limited in all cases to Institutional Class and its
assets and shall not constitute an obligation of any shareholder of
the Trust or of any other class of the Fund, series of the Trust or
class of such series.
11. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
Exhibit 15(s)
DISTRIBUTION AND SERVICE PLAN
FIDELITY ADVISOR OVERSEAS FUND
CLASS A SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act") for the Class A shares of
Fidelity Advisor Overseas Fund ("Class A") a class of shares of
Fidelity Advisor Overseas Fund, (the "Fund"), a portfolio of Fidelity
Advisor Series VIII (the "Trust").
2. The Trust has entered into a General Distribution Agreement on
behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor"), under which the Distributor uses all reasonable
efforts, consistent with its other business, to secure purchasers of
the Fund's shares of beneficial interest (the "Shares"). Such efforts
may include, but neither are required to include nor are limited to,
the following: (1) formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (2) preparation,
printing and distribution of sales literature; (3) preparation,
printing and distribution of prospectuses of the Fund and reports to
recipients other than existing shareholders of the Fund; (4) obtaining
such information, analyses and reports with respect to marketing and
promotional activities as the Distributor may, from time to time, deem
advisable; (5) making payments to securities dealers and others
engaged in the sale of Shares or who engage in shareholder support
services; and (6) providing training, marketing and support to such
dealers and others with respect to the sale of Shares.
3. In consideration for the services provided and the expenses
incurred by the Distributor pursuant to the General Distribution
Agreement and paragraph 2 hereof, all with respect to Class A Shares,
Class A shall pay to the Distributor a fee at the annual rate of 0.75%
(or such lesser amount as the Trustees may, from time to time,
determine) of the average daily net assets of Class A throughout the
month. The determination of daily net assets shall be made at the
close of business each day throughout the month and computed in the
manner specified in the Fund's then current Prospectus for the
determination of the net asset value of the Fund's Class A Shares.
The Distributor may use all or any portion of the fee received
pursuant to this Plan to compensate securities dealers or other
persons who have engaged in the sale of Class A Shares or in
shareholder support services pursuant to agreements with the
Distributor, or to pay any of the expenses associated with other
activities authorized under paragraph 2 hereof.
4. The Fund presently pays, and will continue to pay, a management
fee to Fidelity Management & Research Company (the "Adviser") pursuant
to a management agreement between the Fund and the Adviser (the
"Management Contract"). It is recognized that the Adviser may use its
management fee revenue, as well as its past profits or its resources
from any other source, to make payment to the Distributor with respect
to any expenses incurred in connection with the distribution of Class
A Shares, including the activities referred to in paragraph 2 hereof.
To the extent that the payment of management fees by the Fund to the
Adviser should be deemed to be indirect financing of any activity
primarily intended to result in the sale of Class A Shares within the
meaning of Rule 12b-1, then such payment shall be deemed to be
authorized by this Plan.
5. This Plan shall become effective upon the first business day of
the month following approval by a vote of at least a "majority of the
outstanding voting securities" (as defined in the Act) of Class A,
this Plan having been approved by a vote of a majority of the Trustees
of the Trust, including a majority of Trustees who are not "interested
persons" of the Trust (as defined in the Act) and who have no direct
or indirect financial interest in the operation of this Plan or in any
agreement related to the Plan (the "Independent Trustees"), cast in
person at a meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect until April 30, 1998, and from year to year thereafter;
provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of the Trust,
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may
be amended at any time by the Board of Trustees, provided that (a) any
amendment to increase materially the fee provided for in paragraph 3
hereof or any amendment of the Management Contract to increase the
amount to be paid by the Fund thereunder shall be effective only upon
approval by a vote of a majority of the outstanding voting securities
of Class A, in the case of this Plan, or upon approval by a vote of a
majority of the outstanding voting securities of the Fund, in the case
of the Management Contract, and (b) any material amendment of this
Plan shall be effective only upon approval in the manner provided in
the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities of Class A.
8. During the existence of this Plan, the Trust shall require the
Adviser and/or the Distributor to provide the Trust, for review by the
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any
activity primarily intended to result in the sale of shares of Class A
(making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform
any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result
in the sale of Class A Shares.
10. Consistent with the limitation of shareholder liability as set
forth in the Trust's Declaration of Trust, any obligation assumed by
Class A pursuant to this Plan and any agreement related to this Plan
shall be limited in all cases to Class A and its assets and shall not
constitute an obligation of any shareholder of the Trust or of any
other class of the Fund, series of the Trust or class of such series.
11. If any provision of the Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan
shall not be affected thereby.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000729218
<NAME> Fidelity Advisor Series VII
<SERIES>
<NUMBER> 34
<NAME> Advisor Overseas Portfolio- Class A
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Oct-31-1997
<PERIOD-END> apr-30-1997
<INVESTMENTS-AT-COST> 1,023,944
<INVESTMENTS-AT-VALUE> 1,149,740
<RECEIVABLES> 22,185
<ASSETS-OTHER> 1,329
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,173,254
<PAYABLE-FOR-SECURITIES> 29,445
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,743
<TOTAL-LIABILITIES> 33,188
<SENIOR-EQUITY> 0
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<OTHER-ITEMS-LIABILITIES> 4,045
<TOTAL-LIABILITIES> 7,705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 490,061
<SHARES-COMMON-STOCK> 38
<SHARES-COMMON-PRIOR> 28
<ACCUMULATED-NII-CURRENT> (723)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47,393
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 55,679
<NET-ASSETS> 592,410
<DIVIDEND-INCOME> 2,103
<INTEREST-INCOME> 1,025
<OTHER-INCOME> 0
<EXPENSES-NET> 3,850
<NET-INVESTMENT-INCOME> (722)
<REALIZED-GAINS-CURRENT> 47,769
<APPREC-INCREASE-CURRENT> 23,260
<NET-CHANGE-FROM-OPS> 70,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 24
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17
<NUMBER-OF-SHARES-REDEEMED> 9
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (129,646)
<ACCUMULATED-NII-PRIOR> 1,667
<ACCUMULATED-GAINS-PRIOR> 40,770
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,180
<INTEREST-EXPENSE> 16
<GROSS-EXPENSE> 3,890
<AVERAGE-NET-ASSETS> 711
<PER-SHARE-NAV-BEGIN> 22.510
<PER-SHARE-NII> (.040)
<PER-SHARE-GAIN-APPREC> 2.860
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .870
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.460
<EXPENSE-RATIO> 149
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000729218
<NAME> Fidelity Advisor Series VII
<SERIES>
<NUMBER> 13
<NAME> Fidelity Advisor Strategic Opportunities Fund-Class B
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Oct-31-1997
<PERIOD-END> apr-30-1997
<INVESTMENTS-AT-COST> 540,390
<INVESTMENTS-AT-VALUE> 596,058
<RECEIVABLES> 3,166
<ASSETS-OTHER> 891
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 600,115
<PAYABLE-FOR-SECURITIES> 3,660
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,045
<TOTAL-LIABILITIES> 7,705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 490,061
<SHARES-COMMON-STOCK> 4,018
<SHARES-COMMON-PRIOR> 4,407
<ACCUMULATED-NII-CURRENT> (723)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47,393
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 55,679
<NET-ASSETS> 592,410
<DIVIDEND-INCOME> 2,103
<INTEREST-INCOME> 1,025
<OTHER-INCOME> 0
<EXPENSES-NET> 3,850
<NET-INVESTMENT-INCOME> (722)
<REALIZED-GAINS-CURRENT> 47,769
<APPREC-INCREASE-CURRENT> 23,260
<NET-CHANGE-FROM-OPS> 70,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3,719
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 320
<NUMBER-OF-SHARES-REDEEMED> 864
<SHARES-REINVESTED> 155
<NET-CHANGE-IN-ASSETS> (129,646)
<ACCUMULATED-NII-PRIOR> 1,667
<ACCUMULATED-GAINS-PRIOR> 40,770
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 3,890
<AVERAGE-NET-ASSETS> 93,645
<PER-SHARE-NAV-BEGIN> 22.360
<PER-SHARE-NII> (.080)
<PER-SHARE-GAIN-APPREC> 2.830
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .870
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.240
<EXPENSE-RATIO> 182
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000729218
<NAME> Fidelity Advisor Series VII
<SERIES>
<NUMBER> 12
<NAME> Fidelity Advisor Strategic Opportunities Fund-Class T
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Oct-31-1997
<PERIOD-END> apr-30-1997
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<INVESTMENTS-AT-VALUE> 596,058
<RECEIVABLES> 3,166
<ASSETS-OTHER> 891
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 600,115
<PAYABLE-FOR-SECURITIES> 3,660
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,045
<TOTAL-LIABILITIES> 7,705
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 490,061
<SHARES-COMMON-STOCK> 19,020
<SHARES-COMMON-PRIOR> 24,711
<ACCUMULATED-NII-CURRENT> (723)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 47,393
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 55,679
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<DIVIDEND-INCOME> 2,103
<INTEREST-INCOME> 1,025
<OTHER-INCOME> 0
<EXPENSES-NET> 3,850
<NET-INVESTMENT-INCOME> (722)
<REALIZED-GAINS-CURRENT> 47,769
<APPREC-INCREASE-CURRENT> 23,260
<NET-CHANGE-FROM-OPS> 70,307
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 18,661
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,605
<NUMBER-OF-SHARES-REDEEMED> 8,000
<SHARES-REINVESTED> 703
<NET-CHANGE-IN-ASSETS> (129,646)
<ACCUMULATED-NII-PRIOR> 1,667
<ACCUMULATED-GAINS-PRIOR> 40,770
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,180
<INTEREST-EXPENSE> 16
<GROSS-EXPENSE> 3,890
<AVERAGE-NET-ASSETS> 470,781
<PER-SHARE-NAV-BEGIN> 22.690
<PER-SHARE-NII> (.020)
<PER-SHARE-GAIN-APPREC> 2.880
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .870
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 24.680
<EXPENSE-RATIO> 126
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000729218
<NAME> Fidelity Advisor Series VII
<SERIES>
<NUMBER> 11
<NAME> Fidelity Advisor Strategic Opportunities Fund-Initial Class
<MULTIPLIER> 1,000
<S>
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<PERIOD-TYPE> 6-mos
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<PERIOD-END> apr-30-1997
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<TOTAL-LIABILITIES> 7,705
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<SHARES-COMMON-PRIOR> 891
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<ACCUMULATED-NET-GAINS> 47,393
<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OF-GAINS> 743
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Exhibit 18
MULTIPLE CLASS OF SHARES PLAN
FOR
FIDELITY ADVISOR FUNDS
DATED OCTOBER 16, 1997
This Amended and Restated Multiple Class of Shares Plan (the
"Plan"), when effective in accordance with its provisions, shall be
the written plan contemplated by Rule 18f-3 under the Investment
Company Act of 1940 (the "1940 Act") for the portfolios (each, a
"Fund") of the respective Fidelity Trusts (each, a "Trust") as listed
on Schedule I to this Plan.
1. Classes Offered. Each Fund may offer up to six classes of its
shares: Class A, Class T, Class B, Class C, Institutional Class, and
Initial Class (each, a "Class").
2. Distribution and Shareholder Service Fees. Distribution fees
and/or shareholder service fees shall be calculated and paid in
accordance with the terms of the then-effective plan pursuant to Rule
12b-l under the 1940 Act for the applicable class. Distribution and
shareholder service fees currently authorized are as set forth in
Schedule I to this Plan.
3. Conversion Privilege. After a maximum holding period of seven
years from the initial date of purchase, Class B shares convert
automatically to Class A shares of the same Fund. Simultaneously, a
portion of the Class B shares purchased through the reinvestment of
Class B dividends or capital gains distributions ("Dividend Shares")
will also convert to Class A shares. The portion of Dividend Shares
that will convert at that time is determined by the ratio of
converting Class B non-Dividend Shares held by a shareholder to that
shareholder's total Class B non-Dividend Shares. All conversions
pursuant to this paragraph 3 shall be made on the basis of the
relative net asset values of the two classes, without the imposition
of any sales load, fee, or other charge.
4. Exchange Privileges.
Class A: Shares of Class A may be exchanged for shares of (i) any
other Fidelity Advisor Fund: Class A; (ii) Treasury Fund - Daily Money
Class; (iii) Prime Fund - Daily Money Class; and (iv) Tax-Exempt Fund
- - Daily Money Class.
Class T: Shares of Class T may be exchanged for shares of (i) any
other Fidelity Advisor Fund: Class T; (ii) Treasury Fund - Daily Money
Class; (iii) Prime Fund - Daily Money Class ; and (iv) Tax-Exempt Fund
- - Daily Money Class .
Class B: Shares of Class B may be exchanged for shares of (i) any
other Fidelity Advisor Fund: Class B; and (ii) Treasury Fund - Advisor
B Class.
Class C: Shares of Class C may be exchanged for shares of (i) any
other Fidelity Advisor Fund: Class C; and (ii) Treasury Fund - Advisor
C Class.
Institutional Class: Shares of Institutional Class may be exchanged
for shares of (i) any other Fidelity Advisor Fund: Institutional
Class; and (ii) any Fidelity Retail Fund offering an exchange
privilege to other Fidelity Retail Funds.
Initial Class: Shares of Initial Class may be exchanged for shares of
any Fidelity Retail Fund offering an exchange privilege to other
Fidelity Retail Funds.
5. Expense Allocations. Expenses shall be allocated under this Plan
as follows:
A. Class expenses: The following expenses shall be allocated
exclusively to the applicable specific class of shares: (i)
distribution and shareholder service fees; (ii) transfer agent fees;
and (iii) Blue Sky fees.
B. Fund expenses: Expenses not allocated to specific classes as
specified above shall be charged to the Fund and allocated daily to
each class on the basis of the net asset value of that class in
relation to the net asset value of the Fund.
6. Voting Rights. Each class of shares governed by this Plan (i)
shall have exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement; and (ii) shall
have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any
other class.
7. Effective Date of Plan. This Plan shall become effective upon
approval by a vote of at least a majority of the Trustees of the
Trust, and a majority of the Trustees of the Trust who are not
"interested persons" of the Trust, which vote shall have found that
this Plan as proposed to be adopted, including expense allocations, is
in the best interests of each class individually and of the Fund as a
whole; or upon such other date as the Trustees shall determine.
8. Amendment of Plan. Any material amendment to this Plan shall
become effective upon approval by a vote of at least a majority of the
Trustees of the Trust, and a majority of the Trustees of the Trust who
are not "interested persons" of the Trust, which vote shall have found
that this Plan as proposed to be amended, including expense
allocations, is in the best interests of each class individually and
of the Fund as a whole; or upon such other date as the Trustees shall
determine.
9. Severability. If any provision of this Plan shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of the Plan shall not be affected thereby.
10. Limitation of Liability. Consistent with the limitation of
shareholder liability as set forth in each Trust's Declaration of
Trust or other organizational document, any obligations assumed by any
Fund or class thereof, and any agreements related to this Plan shall
be limited in all cases to the relevant Fund and its assets, or class
and its assets, as the case may be, and shall not constitute
obligations of any other Fund or class of shares. All persons having
any claim against a Fund, or any class thereof, arising in connection
with this Plan, are expressly put on notice of such limitation of
shareholder liability, and agree that any such claim shall be limited
in all cases to the relevant Fund and its assets, or class and its
assets, as the case may be, and such person shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Trust, class or Fund; nor shall such person seek
satisfaction of any such obligation from the Trustees or any
individual Trustee of the Trust.
SCHEDULE I DATED OCTOBER 16, 1997 TO MULTIPLE CLASS OF SHARES PLAN FOR
FIDELITY ADVISOR FUNDS DATED OCTOBER 16, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRUST/FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisor Series VII
Overseas Fund1:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series I
Equity Growth Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series V
Natural Resources Fund2:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series II
Growth Opportunities Fund3:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series III
Equity Income Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series II
Balanced Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRUST/FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisor Series I
Large Cap Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series I
Mid Cap Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series VIII
Strategic Opportunities Fund4:
Initial Class front-end none none
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series VII
Consumer Industries Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series VII
Cyclical Industries Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series VII
Financial Services Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRUST/FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisor Series VII
Health Care Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series VII
Technology Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series VII
Utilities Growth Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series I
TechnoQuant Growth Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series I
Growth & Income Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series IV
Intermediate Bond Fund:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRUST/FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisor Series VI
Intermediate Municipal Income Fund:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series II
Short Fixed-Income Fund:
Class A* front-end 0.15 none
Class T* front-end 0.15 none
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series VI
Short-Intermediate Municipal Income
Fund:
Class A* front-end 0.15 none
Class T* front-end 0.15 none
Institutional Class none none none
Advisor Series VIII
Emerging Markets Income Fund:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series II
High Yield Fund:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series VIII
Strategic Income Fund5:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series II
Government Investment Fund:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRUST/FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Advisor Series V
High Income Municipal Fund:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
Advisor Series V
California Municipal Income Fund:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Institutional Class none none none
Advisor Series V
New York Municipal Income Fund:
Class A* front-end 0.15 none
Class T* front-end 0.25 none
Class B contingent deferred 0.65 0.25
Institutional Class none none none
Advisor Series VIII
International Capital Appreciation Fund:
Class A* front-end 0.25 none
Class T* front-end 0.50 none
Class B contingent deferred 0.75 0.25
Class C contingent deferred 0.75 0.25
Institutional Class none none none
</TABLE>
______________________________________________________________
* A contingent deferred sales charge of 0.25% is assessed on certain
redemptions of Class A and Class T shares on which a finder's fee
was paid.
1 Effective on or about October 31, 1997, Fidelity Advisor Overseas
Fund will reorganize from Advisor Series VII to Advisor Series VIII.
2 Effective on or about October 31, 1997, Fidelity Advisor Natural
Resources Fund will reorganize from Advisor Series V to Advisor Series
VII.
3 Effective on or about February 28, 1998, Fidelity Growth
Opportunities Fund will reorganize from Advisor Series II to Advisor
Series I.
4 Effective on or about February 28, 1998, Fidelity Advisor Strategic
Opportunities Fund will reorganize from Advisor Series VIII to Advisor
Series I.
5 Effective on or about October 31, 1997, Fidelity Strategic Income
Fund will reorganize from Advisor Series VIII to Advisor Series II.
