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. 52 [X]
and
REGISTRATION STATEMENT (No. 811-3855)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 52 [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: 617-563-7000
Eric D. Roiter, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
( ) on ( ) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
(X) on February 26, 1999 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.
LIKE SECURITIES OF ALL MUTUAL
FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION, AND THE
SECURITIES AND EXCHANGE
COMMISSION HAS NOT
DETERMINED IF THIS PROSPECTUS
IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
FIDELITY ADVISOR
INTERNATIONAL FUNDS
CLASS A, CLASS T, CLASS B, AND CLASS C
FIDELITY ADVISOR LATIN AMERICA FUND
FIDELITY ADVISOR JAPAN FUND
FIDELITY ADVISOR EUROPE CAPITAL APPRECIATION FUND
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
FIDELITY ADVISOR OVERSEAS FUND
FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND
FIDELITY ADVISOR GLOBAL EQUITY FUND
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND
PROSPECTUS
FEBRUARY 26, 1999
(fidelity_logo_graphic)
82 Devonshire Street, Boston, MA 02109
CONTENTS
FUND SUMMARY 3 INVESTMENT SUMMARY
6 PERFORMANCE
8 FEE TABLE
FUND BASICS 13 INVESTMENT DETAILS
16 VALUING SHARES
SHAREHOLDER INFORMATION 16 BUYING AND SELLING SHARES
23 EXCHANGING SHARES
23 ACCOUNT FEATURES AND POLICIES
26 DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
26 TAX CONSEQUENCES
FUND SERVICES 27 FUND MANAGEMENT
28 FUND DISTRIBUTION
APPENDIX 32 FINANCIAL HIGHLIGHTS
32 PRIOR PERFORMANCE OF SIMILAR FUNDS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
ADVISOR LATIN AMERICA FUND seeks high total investment return.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Latin American issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in Latin America as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN LATIN AMERICA. The
Latin American economies are generally considered emerging markets and
are significantly affected by currency devaluations. The markets in
Latin America can be extremely volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR JAPAN FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Japanese issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN JAPAN. The Japanese
economy is currently in a recession. International trade and
government policy significantly affect economic growth.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR EUROPE CAPITAL APPRECIATION FUND seeks long-term capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of issuers that have their principal activities in Europe.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in Europe as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN EUROPE. Both
developed and emerging market countries in Europe will be
significantly affected by the tight fiscal and monetary controls
required to join the European Economic and Monetary Union (EMU).
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities, including securities of issuers located in emerging
markets.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR OVERSEAS FUND seeks growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR DIVERSIFIED INTERNATIONAL FUND seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using computer-aided, quantitative analysis of
historical earnings, dividend yield, earnings per share and other
factors supported by fundamental analysis to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
(small solid bullet) QUANTITATIVE INVESTING. Securities selected using
quantitative analysis can perform differently than the market as a
whole as a result of the factors used in the analysis, the weight
placed on each factor, and changes in the factors' historical trends.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR GLOBAL EQUITY FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing in securities issued anywhere in the
world.
(small solid bullet) Investing at least 65% of total assets in common
stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the world market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR EMERGING MARKETS INCOME FUND seeks a high level of current
income. As a secondary objective, the fund seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in debt
securities of issuers in emerging markets (countries that have an
emerging stock market as defined by the International Finance
Corporation, countries with low- to middle-income economies according
to the World Bank, and countries that are listed in World Bank
publications as "developing").
(small solid bullet) Potentially investing in other types of
securities, including equity securities of emerging market issuers,
debt securities of non-emerging market foreign issuers, and
lower-quality debt securities of U.S. issuers.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in countries considered emerging markets as a
whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. Lower-quality debt securities
(those of less than investment-grade quality) can be more volatile due
to increased sensitivity to adverse issuer, political, regulatory,
market or economic developments.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in share price than would
occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates Advisor International Capital
Appreciation's performance over the past year and the changes in
Advisor Overseas's and Advisor Emerging Markets Income's performance
from year to year and compares the funds' performance to the
performance of a market index and an average of the performance of
similar funds over various periods of time. Prior to December 1, 1992,
Advisor Overseas operated under a different investment objective.
Accordingly, the fund's historical performance may not represent its
current investment policies. Returns are based on past results and are
not an indication of future performance.
Because Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor Diversified International and Advisor Global
Equity were new when this prospectus was printed, their performance
history is not included. Performance history will be available for
Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor Diversified International and Advisor Global
Equity after each fund has been in operation for one calendar year.
YEAR-BY-YEAR RETURNS
The returns in the charts do not include the effect of Class T's
front-end sales charge. If the effect of the sales charge was
reflected, returns would be lower than those shown.
ADVISOR
INTERNATIONAL
CAPITAL
APPRECIATION
- - CLASS T
CALENDAR YEARS 1998
%
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: NIL
ROW: 10, COL: 1, VALUE: NIL
DURING THE PERIOD SHOWN IN THE CHART FOR CLASS T OF ADVISOR
INTERNATIONAL CAPITAL APPRECIATION, THE HIGHEST RETURN FOR A QUARTER
WAS __% (QUARTER ENDING ___, 1998) AND THE LOWEST RETURN FOR A QUARTER
WAS __% (QUARTER ENDING ___, 1998).
ADVISOR OVERSEAS -
CLASS T
CALENDAR YEARS 1991 1992 1993 1994 1995 1996 1997 1998
% % % % % % % %
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: NIL
ROW: 10, COL: 1, VALUE: NIL
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS T OF ADVISOR OVERSEAS,
THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING ____, 199_)
AND THE LOWEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING ____,
199_).
ADVISOR
EMERGING
MARKETS
INCOME -
CLASS T
CALENDAR YEARS 1995 1996 1997 1998
% % % %
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: NIL
ROW: 10, COL: 1, VALUE: NIL
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS T OF ADVISOR EMERGING
MARKETS INCOME, THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER
ENDING ___, 199_) AND THE LOWEST RETURN FOR A QUARTER WAS __% (QUARTER
ENDING ___, 199_).
AVERAGE ANNUAL RETURNS
The returns in the following table include the effect of Class A's and
Class T's maximum applicable front-end sales charge and Class B's and
Class C's maximum applicable contingent deferred sales charge (CDSC).
FOR THE PERIODS ENDED PAST 1 PAST 5 LIFE OF CLASS*
DECEMBER 31, 1998 YEAR YEARS
ADVISOR % N/A %A
INTERNATIONAL
CAPITAL
APPRECIATION -
CLASS A
ADVISOR % N/A %A
INTERNATIONAL
CAPITAL
APPRECIATION -
CLASS T
ADVISOR % N/A %A
INTERNATIONAL
CAPITAL
APPRECIATION -
CLASS B
ADVISOR % N/A %A
INTERNATIONAL
CAPITAL
APPRECIATION -
CLASS C
MORGAN STANLEY % N/A %A
CAPITAL
INTERNATIONAL AC
WORLD INDEX FREE
EX USA
LIPPER % N/A %A
INTERNATIONAL
FUNDS AVERAGE
ADVISOR % N/A %B
OVERSEAS - CLASS
A
ADVISOR % % %C
OVERSEAS - CLASS
T
ADVISOR % N/A %D
OVERSEAS - CLASS
B
ADVISOR % N/A %A
OVERSEAS - CLASS
C
MORGAN STANLEY % % %C
CAPITAL
INTERNATIONAL
EUROPE,
AUSTRALASIA, FAR
EAST INDEX
LIPPER % % %C
INTERNATIONAL
FUNDS AVERAGE
ADVISOR % N/A %B
EMERGING
MARKETS INCOME
- - CLASS A
ADVISOR % N/A %E
EMERGING
MARKETS INCOME
- - CLASS T
ADVISOR % N/A %E
EMERGING
MARKETS INCOME
- - CLASS B
ADVISOR % N/A %A
EMERGING
MARKETS INCOME
- - CLASS C
J.P. MORGAN % N/A %E
EMERGING
MARKETS BOND
INDEX PLUS
LIPPER EMERGING % N/A %E
MARKETS DEBT
FUNDS AVERAGE
* BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE CLASS'S
COMMENCEMENT OF OPERATIONS.
A FROM JANUARY 1, 1998.
B FROM JANUARY 1, 1997.
C FROM JANUARY 1, 1991.
D FROM JANUARY 1, 1996.
E FROM JANUARY 1, 1995.
[If FMR had not reimbursed certain class expenses during these
periods, [Advisor ___ - Class _, Advisor ___ - Class _, Advisor ___ -
Class _ and Advisor ___ - Class _]'s total returns would have been
lower.]
Morgan Stanley Capital International AC World Index Free ex USA is a
market capitalization-weighted index that is designed to represent the
performance of developed stock markets, excluding the United States,
throughout the world.
Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE(registered trademark)) Index is a market capitalization-weighted
index that is designed to represent the performance of developed stock
markets outside the United States and Canada. As of December 31, 1998,
the index included over ____ equity securities of companies domiciled
in ___ countries.
J.P. Morgan Emerging Markets Bond Index Plus is a market
capitalization-weighted 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 Emerging Markets Free - Latin
America Index is a market capitalization-weighted index of
approximately 170 stocks traded in seven Latin American markets.
Tokyo Stock Price Index (TOPIX) is a market capitalization-weighted
index of over 1100 stocks traded in the Japanese market.
Morgan Stanley Capital International Europe Index is a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets in Europe. As of December 31,
1998, the index included over __ equity securities of companies
domiciled in __ European countries.
Morgan Stanley Capital International World Index is a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. As of
December 31, 1998, the index included over __ equity securities of
companies domiciled in __ countries.
Each Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold or sell Class A, Class T, Class B, and Class C
shares of a fund. [The annual class operating expenses provided below
for [each class] are based on historical expenses, adjusted to reflect
current fees.] [The annual class operating expenses provided below for
___, ___, and ___, are higher than the expenses actually paid by each
class as the result of [expense reimbursements] [[and] the payment or
reduction of certain expenses] during the period.] [The annual class
operating expenses provided below for [each class] are based on
historical expenses.] The annual class operating expenses provided
below for Class A, Class T, Class B, and Class C of Advisor Latin
America, Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity are based on
estimated expenses.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
CLASS A CLASS T CLASS B CLASS C
MAXIMUM SALES CHARGE 5.75%A 3.50%B NONE NONE
(LOAD) (AS A % OF OFFERING
PRICE) ON PURCHASES OF:
ADVISOR LATIN AMERICA,
ADVISOR JAPAN, ADVISOR
EUROPE CAPITAL
APPRECIATION, ADVISOR
INTERNATIONAL CAPITAL
APPRECIATION, ADVISOR
OVERSEAS, ADVISOR
DIVERSIFIED INTERNATIONAL,
AND ADVISOR GLOBAL EQUITY
(THE EQUITY FUNDS)
MAXIMUM SALES CHARGE 4.75%A 3.50%B NONE NONE
(LOAD) (AS A % OF OFFERING
PRICE) ON PURCHASES OF:
ADVISOR EMERGING MARKETS
INCOME (THE BOND FUND)
MAXIMUM CDSC FOR ALL NONEC NONEC 5.00%D 1.00%E
EQUITY AND BOND FUNDS (AS
A % OF THE LESSER OF
ORIGINAL PURCHASE PRICE OR
REDEMPTION PROCEEDS)
SALES CHARGE (LOAD) ON NONE NONE NONE NONE
REINVESTED DISTRIBUTIONS
A LOWER FRONT-END SALES CHARGES FOR CLASS A MAY BE AVAILABLE WITH
PURCHASE OF $50,000 OR MORE.
B LOWER FRONT-END SALES CHARGES FOR CLASS T MAY BE AVAILABLE WITH
PURCHASE OF $50,000 OR MORE.
C 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.
D DECLINES OVER 6 YEARS FROM 5.00% TO 0%.
E ON CLASS C SHARES REDEEMED WITHIN ONE YEAR OF PURCHASE.
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
CLASS A CLASS T CLASS B CLASS C
ADVISOR LATIN MANAGEMENT FEE % % % %
AMERICA
DISTRIBUTION AND % % % %
SERVICE (12B-1) FEE
(INCLUDING 0.25%
SERVICE FEE ONLY FOR
CLASS B AND CLASS C)
OTHER EXPENSES % % % %
TOTAL ANNUAL CLASS % % % %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE % % % %
JAPAN
DISTRIBUTION AND % % % %
SERVICE (12B-1) FEE
(INCLUDING 0.25%
SERVICE FEE ONLY FOR
CLASS B AND CLASS C)
OTHER EXPENSES % % % %
TOTAL ANNUAL CLASS % % % %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE % % % %
EUROPE
CAPITAL
APPRECIATION
DISTRIBUTION AND % % % %
SERVICE (12B-1) FEE
(INCLUDING 0.25%
SERVICE FEE ONLY FOR
CLASS B AND CLASS C)
OTHER EXPENSES % % % %
TOTAL ANNUAL CLASS % % % %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE % % % %
INTERNATIONAL
CAPITAL
APPRECIATION
DISTRIBUTION AND % % % %
SERVICE (12B-1) FEE
(INCLUDING 0.25%
SERVICE FEE ONLY FOR
CLASS B AND CLASS C)
OTHER EXPENSES % % % %
TOTAL ANNUAL CLASS % % % %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE % % % %
OVERSEAS
DISTRIBUTION AND % % % %
SERVICE (12B-1) FEE
(INCLUDING 0.25%
SERVICE FEE ONLY FOR
CLASS B AND CLASS C)
OTHER EXPENSES % % % %
TOTAL ANNUAL CLASS % % % %
OPERATING EXPENSES
ADVISOR MANAGEMENT FEE % % % %
DIVERSIFIED
INTERNATIONAL
DISTRIBUTION AND % % % %
SERVICE (12B-1) FEE
(INCLUDING 0.25%
SERVICE FEE ONLY FOR
CLASS B AND CLASS C)
OTHER EXPENSES % % % %
TOTAL ANNUAL CLASS % % % %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE % % % %
GLOBAL EQUITY
DISTRIBUTION AND % % % %
SERVICE (12B-1) FEE
(INCLUDING 0.25%
SERVICE FEE ONLY FOR
CLASS B AND CLASS C)
OTHER EXPENSES % % % %
TOTAL ANNUAL CLASS % % % %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE % % % %
EMERGING
MARKETS
INCOME
DISTRIBUTION AND % % % %
SERVICE (12B-1) FEE
(INCLUDING 0.25%
SERVICE FEE ONLY FOR
CLASS B AND CLASS C)
OTHER EXPENSES % % % %
TOTAL ANNUAL CLASS % % % %
OPERATING EXPENSESA
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.
A FMR has voluntarily agreed to reimburse Class A, Class T, Class B,
and Class C of certain funds to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions and
extraordinary 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
ADVISOR LATIN 2.00% 12/18/98 2.25% 12/18/98 2.75% 12/18/98 2.75% 12/18/98
AMERICA
ADVISOR 2.00% 12/18/98 2.25% 12/18/98 2.75% 12/18/98 2.75% 12/18/98
JAPAN
ADVISOR 2.00% 12/18/98 2.25% 12/18/98 2.75% 12/18/98 2.75% 12/18/98
EUROPE
CAPITAL
APPRECIATION
ADVISOR 1.70% 12/1/98 1.95% 12/1/98 2.45% 12/1/98 2.45% 12/1/98
INTERNATIONAL
CAPITAL
APPRECIATION
ADVISOR 2.00% 12/18/98 2.25% 12/18/98 2.75% 12/18/98 2.75% 12/18/98
DIVERSIFIED
INTERNATIONAL
ADVISOR 2.00% 12/18/98 2.25% 12/18/98 2.75% 12/18/98 2.75% 12/18/98
GLOBAL EQUITY
ADVISOR 1.40% 8/30/96 1.50% 3/10/94 2.15% 1/1/96 2.25% 11/1/97
EMERGING
MARKETS
INCOME
</TABLE>
These arrangements can be terminated by FMR at any time.
[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 class operating expenses [ , after reimbursement for ___,] would
have been:]
[CLASS A] [CLASS T] [CLASS B] [CLASS C]
[ADVISOR ____] % % % %
[ADVISOR ____] % % % %
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each class's annual return is 5% and
that your shareholder fees and each class's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years indicated
and if you leave your account open:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS CLASS CLASS CLASS
A T B C
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
OPEN CLOSED OPEN CLOSED OPEN CLOSED OPEN CLOSED
ADVISOR LATIN 1 YEAR $ $ $ $ $ $ $ $
AMERICA
3 YEARS $ $ $ $ $ $ $ $
ADVISOR 1 YEAR $ $ $ $ $ $ $ $
JAPAN
3 YEARS $ $ $ $ $ $ $ $
ADVISOR 1 YEAR $ $ $ $ $ $ $ $
EUROPE
CAPITAL
APPRECIATION
3 YEARS $ $ $ $ $ $ $ $
ADVISOR 1 YEAR $ $ $ $ $ $ $ $
INTERNATIONAL
CAPITAL
APPRECIATION
3 YEARS $ $ $ $ $ $ $ $
5 YEARS $ $ $ $ $ $ $ $
10 YEARS $ $ $ $ $ A $ A $ $
ADVISOR 1 YEAR $ $ $ $ $ $ $ $
OVERSEAS
3 YEARS $ $ $ $ $ $ $ $
5 YEARS $ $ $ $ $ $ $ $
10 YEARS $ $ $ $ $ A $ A $ $
ADVISOR 1 YEAR $ $ $ $ $ $ $ $
DIVERSIFIED
INTERNATIONAL
3 YEARS $ $ $ $ $ $ $ $
ADVISOR 1 YEAR $ $ $ $ $ $ $ $
GLOBAL EQUITY
3 YEARS $ $ $ $ $ $ $ $
ADVISOR 1 YEAR $ $ $ $ $ $ $ $
EMERGING
MARKETS
INCOME
3 YEARS $ $ $ $ $ $ $ $
5 YEARS $ $ $ $ $ $ $ $
10 YEARS $ $ $ $ $ A $ A $ $
</TABLE>
A REFLECTS CONVERSION TO CLASS A SHARES AFTER SEVEN YEARS.
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
ADVISOR LATIN AMERICA FUND seeks high total investment return.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
securities of Latin American issuers. Latin America includes
Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Panama and
Venezuela. FMR normally invests the fund's assets primarily in common
stocks.
FMR normally diversifies the fund's investments across different Latin
American countries. In allocating the fund's investments across
countries, FMR will consider the size of the market in each country
relative to the size of the markets in Latin America as a whole.
Although FMR may invest up to 35% of the fund's total assets in any
industry that accounts for more than 20% of the Latin American market
as a whole, it does not currently intend to invest more than 25% of
the fund's total assets in any one industry.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR JAPAN FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
securities of Japanese issuers. FMR normally invests the fund's assets
primarily in common stocks.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR EUROPE CAPITAL APPRECIATION FUND seeks long-term capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
securities of issuers that have their principal activities in Europe.
Europe includes Austria, Belgium, Belarus, Bulgaria, the Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands,
Norway, Poland, Portugal, Russia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Turkey, and the United Kingdom. FMR normally invests the
fund's assets primarily in common stocks.
FMR normally diversifies the fund's investments across different
European countries. In allocating the fund's investments across
countries, FMR will consider the size of the market in each country
relative to the size of the markets in Europe as a whole.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities, including securities of issuers located in
emerging markets. FMR normally invests the fund's assets primarily in
common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments 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.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR OVERSEAS FUND seeks growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments 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.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR DIVERSIFIED INTERNATIONAL FUND seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments 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.
In buying and selling securities, FMR uses a disciplined approach that
involves computer-aided, quantitative analysis supported by
fundamental analysis. FMR's computer model systematically reviews
thousands of stocks, using data such as historical earnings, dividend
yield, earnings per share, and other quantitative factors. Then, the
issuers of potential investments are analyzed further using
fundamental factors such as growth potential, earnings estimates and
financial condition.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR GLOBAL EQUITY FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR invests the fund's assets in securities issued anywhere in the
world, including the United States. FMR normally invests at least 65%
of the fund's total assets in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the world market as a
whole.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve it's
objective.
INVESTMENT OBJECTIVE
ADVISOR EMERGING MARKETS INCOME FUND seeks a high level of current
income. As a secondary objective, the fund seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in debt
securities of issuers in emerging markets. Countries with emerging
markets include those that have an emerging stock market as defined by
the International Finance Corporation, those with low- to
middle-income economies according to the World Bank, and those that
are listed in World Bank publications as "developing." FMR expects to
emphasize countries with relatively low gross national product per
capita compared to the world's major economies and countries with the
potential for rapid economic growth.
FMR may also invest in equity securities of emerging market issuers,
debt securities of non-emerging market foreign issuers, and
lower-quality debt securities of U.S. issuers. Although FMR may invest
up to 35% of the fund's total assets in these securities, FMR does not
currently anticipate that these investments will exceed approximately
20% of the fund's total assets.
FMR normally diversifies the fund's investments across different
emerging market countries. In allocating the fund's investments across
countries, FMR will consider the size of the market in each country
relative to the size of the markets in countries considered emerging
markets as a whole.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates, or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority
in the event of the bankruptcy of the issuer. Equity securities
include common stocks, preferred stocks, convertible securities and
warrants.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. 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 include
corporate bonds, government securities, mortgage and other
asset-backed securities, and loans and loan participations.
PRINCIPAL INVESTMENT RISKS
Many factors affect each fund's performance. Each fund's share price
and the yield for Advisor Emerging Markets Income Fund change daily
based on changes in market conditions and interest rates and in
response to other economic, political or financial developments. A
fund's reaction to these developments will be affected by the
financial condition, industry and economic sector, and geographic
location of an issuer, and the fund's level of investment in the
securities of that issuer. Because FMR concentrates the investments of
Advisor Europe Capital Appreciation Fund, Advisor Japan Fund and
Advisor Latin America Fund in a particular country or group of
countries, each fund's performance is expected to be closely tied to
economic and political conditions within that country or group of
countries and to be more volatile than the performance of more
geographically diversified funds. When you sell your shares of a fund,
they could be worth more or less than what you paid for them.
The following factors may significantly affect a fund's performance:
STOCK MARKET VOLATILITY. The value of equity securities fluctuates in
response to issuer, political, market and economic developments. In
the short term, equity prices can fluctuate dramatically in response
to these developments. Different parts of the market can react
differently to these developments. For example, large cap stocks can
react differently than small cap stocks, and "growth" stocks can react
differently than "value" stocks. Issuer, political or economic
developments can affect a single issuer, issuers within an industry or
economic sector or geographic region, or the market as a whole.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities and mortgage
securities can be more sensitive to interest rate changes. In other
words, the longer the maturity of a security, the greater the impact a
change in interest rates could have on the security's price. In
addition, short-term and long-term interest rates do not necessarily
move in the same amount or the same direction. Short-term securities
tend to react to changes in short-term interest rates, and long-term
securities tend to react to changes in long-term interest rates.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
can involve additional risks relating to political, economic or
regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial and other operational risks; and the
less stringent investor protection and disclosure standards of some
foreign markets. All of these factors can make foreign investments,
especially those in emerging markets, more volatile and potentially
less liquid than U.S. investments. In addition, foreign markets can
perform differently than the U.S. market.
Investing in emerging markets involves risks in addition to and
greater than those generally associated with investing in more
developed foreign markets. The extent of foreign development;
political stability; market depth, infrastructure and capitalization
and regulatory oversight is generally less than in more developed
markets. Emerging market economies can be subject to greater social,
economic, regulatory and political uncertainties. All of these factors
can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.
GEOGRAPHIC CONCENTRATION. Political and economic conditions and
changes in regulatory, tax or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries.
LATIN AMERICA. The economies of countries in Latin America are all
considered emerging market economies. High interest, inflation and
unemployment rates generally characterize each economy. Currency
devaluations in any country can have a significant affect on the
entire region. Recently, the markets in many Latin American countries
have experienced significant downturns as well as significant
volatility. A small number of companies and industries, including the
telecommunications sector, represent a large portion of the market in
many Latin American countries.
JAPAN. The Japanese economy is currently in a recession. The economy
is characterized by government intervention and protectionism, an
unstable financial services sector, and relatively high unemployment.
Economic growth is dependent on international trade, government
support of the financial services sector and other troubled sectors,
and consistent government policy. The Japanese market has decreased
significantly recently.
EUROPE. Europe includes both developed and emerging markets. Most
developed countries in Western Europe are members of the European
Union and many are also members of the EMU, which requires compliance
with restrictions on inflation rates, deficits and debt levels. Many
Eastern European countries continue to move toward market economies.
However, their markets remain relatively undeveloped and are
particularly sensitive to political and economic developments. The
tight fiscal and monetary controls necessary to join the EMU will
significantly affect every country in Europe.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can affect the credit quality or value of an
issuer's securities. The value of securities of smaller, less
well-known issuers can be more volatile than that of larger issuers.
Lower-quality debt securities (those of less than investment-grade
quality) tend to be more sensitive to these changes than
higher-quality debt securities.
Lower-quality debt securities involve greater risk of default or price
changes due to changes in the credit quality of the issuer. The value
of lower-quality debt securities often fluctuates in response to
company, political or economic developments and can decline
significantly over short periods of time or during periods of general
or regional economic difficulty. Lower-quality debt securities can be
thinly traded or have restrictions on resale, making them difficult to
sell at an acceptable price. The default rate for lower-quality debt
securities is likely to be higher during economic recessions or
periods of high interest rates.
"QUANTITATIVE" INVESTING. The value of securities selected using
quantitative analysis can react differently to issuer, political,
market and economic developments than the market as a whole or
securities selected using only fundamental analysis. The factors used
in quantitative analysis and the weight placed on those factors may
not be predictive of a security's value. In addition, factors that
affect a security's value can change over time and these changes may
not be reflected in the quantitative model.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.
ADVISOR LATIN AMERICA FUND seeks high total investment return.
ADVISOR JAPAN FUND seeks long-term growth of capital.
ADVISOR EUROPE CAPITAL APPRECIATION FUND seeks long-term capital
appreciation.
ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation.
ADVISOR OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities.
ADVISOR DIVERSIFIED INTERNATIONAL FUND seeks capital growth by
investing primarily in equity securities of companies located anywhere
outside the U.S.
ADVISOR GLOBAL EQUITY FUND seeks long-term growth of capital.
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.
VALUING SHARES
Each fund is open for business each day the New York Stock Exchange
(NYSE) is open.
A class's net asset value per share (NAV) is the value of a single
share. Fidelity(registered trademark) normally calculates each class's
NAV as of the close of business 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 Securities and Exchange
Commission (SEC). Each fund's assets are valued as of this time for
the purpose of computing each class's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
Each fund's assets are valued primarily on the basis of market
quotations or on the basis of information furnished by a pricing
service. Certain short-term securities are valued on the basis of
amortized cost. If market quotations or information furnished by a
pricing service is not readily available for a security or if a
security's value has been materially affected by events occurring
after the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market), that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. In these circumstances, the
security's valuation may differ from the generally expected valuation.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
For account, product and service information, please use the following
phone numbers:
(small solid bullet) If you are investing through a broker-dealer or
insurance representative, 1-800-522-7297 (8:30 a.m. - 7:00 p.m.
Eastern time, Monday through Friday).
(small solid bullet) If you are investing through a bank
representative, 1-800-843-3001 (8:30 a.m. - 7:00 p.m. Eastern time,
Monday through Friday).
Please use the following addresses:
BUYING OR SELLING SHARES
Fidelity Investments(registered trademark)
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may buy or sell Class A, Class T, Class B, and Class C shares of
the funds through a retirement account or an investment professional.
When you invest through a retirement account or an investment
professional, the procedures for buying, selling and exchanging shares
of each class of a fund and the account features and policies may
differ. Additional fees may also apply to your investment in Class A,
Class T, Class B, and Class C shares of a fund, including a
transaction fee if you buy or sell shares of the fund through a broker
or other investment professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
RETIREMENT
FOR TAX-ADVANTAGED RETIREMENT SAVINGS
(solid bullet) TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
(solid bullet) ROTH IRAS
(solid bullet) ROTH CONVERSION IRAS
(solid bullet) ROLLOVER IRAS
(solid bullet) 401(K) PLANS, and certain other 401(A)-QUALIFIED PLANS
(solid bullet) KEOGH PLANS
(solid bullet) SIMPLE IRAS
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS)
(solid bullet) SALARY REDUCTION SEP-IRAS (SARSEPS)
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS
BUYING SHARES
The price to buy one share of Class A or Class T is the class's
offering price or the class's NAV, depending on whether you pay a
front-end sales charge.
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.
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.
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 and 4.75% of the offering
price for the Bond Fund. Class T has a maximum front-end sales charge
of 3.50% of the offering price for the Equity Funds and the Bond Fund.
Your shares will be bought at the next offering price or NAV, as
applicable, calculated after your order is received in proper form.
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.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity funds, and accounts under
common ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, 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) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) 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 liable for any losses
or fees a fund or Fidelity has incurred.
(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.
Shares can be bought or sold through investment professionals using an
automated order placement and settlement system that guarantees
payment for orders on a specified date.
Certain financial institutions that meet creditworthiness criteria
established by Fidelity Distributors Corporation (FDC) 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 that time, the order will be
canceled and the financial institution will be liable for any losses.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
For certain Fidelity Advisor retirement accountsA $500
Through regular investment plansB $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
For certain Fidelity Advisor retirement accountsA None
A FIDELITY ADVISOR TRADITIONAL IRA, ROTH IRA, ROTH CONVERSION IRA,
ROLLOVER IRA, SEP-IRA, AND KEOGH ACCOUNTS.
B AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $100, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED.
There is no minimum account balance or initial or subsequent purchase
minimum for certain Fidelity retirement accounts funded through salary
deduction, or accounts opened with the proceeds of distributions from
such retirement accounts. In addition, each fund may waive or lower
purchase minimums in other circumstances.
Purchase and account minimums are waived for purchases of Class T
shares with distributions from a Fidelity Defined Trust account.
PURCHASE AMOUNTS OF MORE THAN $250,000 WILL NOT BE ACCEPTED FOR CLASS
B SHARES.
PURCHASE AMOUNTS OF MORE THAN $1 MILLION WILL NOT BE ACCEPTED FOR
CLASS C SHARES. THIS LIMIT DOES NOT APPLY TO PURCHASES OF CLASS C
SHARES MADE BY AN EMPLOYEE BENEFIT PLAN.
KEY
INFORMATI
ON
PHONE TO OPEN AN ACCOUNT
(bullet)
Exchange from the same
class of another Fidelity
Advisor fund or from
certain other Fidelity
funds. Call your
investment professional
or call Fidelity at the
appropriate number
found in "General
Information."
TO ADD TO AN
ACCOUNT
(bullet)
Exchange from the same
class of another Fidelity
Advisor fund or from
certain other Fidelity
funds. Call your
investment professional
or call Fidelity at the
appropriate number
found in "General
Information."
MAIL TO OPEN AN
FIDELITY ACCOUNT
INVESTMENTS (bullet)
P.O. BOX 770002 Complete and sign the
CINCINNATI, OH application. Make your
45277-0081 check payable to the
complete name of the
fund and note the
applicable class. Mail to
your investment
professional or to the
address at left.
TO ADD TO AN
ACCOUNT
(bullet)
Make your check
payable to the complete
name of the fund and
note the applicable
class. Indicate your fund
account number on your
check and mail to your
investment professional
or to the address at left.
(bullet)
Exchange from the same
class of other Fidelity
Advisor funds or from
certain other Fidelity
funds. Send a letter of
instruction to your
investment professional or
to the address at left,
including your name, the
funds' names, the
applicable class names,
the fund account
numbers, and the dollar
amount or number of
shares to be exchanged.
IN PERSON TO OPEN AN
ACCOUNT
(bullet)
Bring your application
and check to your
investment professional.
TO ADD TO AN
ACCOUNT
(bullet)
Bring your check to your
investment professional.
WIRE TO OPEN AN
ACCOUNT
(bullet)
Call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" to set up
your account and to
arrange a wire
transaction.
(bullet)
Wire to: Banker's Trust
Company, Bank Routing
# 021001033, Account
# 00159759.
(bullet)
Specify the complete
name of the fund, note
the applicable class, and
include your new fund
account number and
your name.
TO ADD TO AN
ACCOUNT
(bullet)
Wire to: Banker's Trust
Company, Bank Routing
# 021001033, Account
# 00159759.
(bullet)
Specify the complete
name of the fund, note
the applicable class, and
include your fund
account number and
your name.
AUTOMATICAL TO OPEN AN ACCOUNT
LY (bullet)
Not available.
TO ADD TO AN
ACCOUNT
(bullet)
Use Fidelity Advisor
Systematic Investment
Program.
(bullet)
Use Fidelity Advisor
Systematic Exchange
Program to exchange
from certain Fidelity
money market funds or a
Fidelity Advisor fund.
SELLING SHARES
The price to sell one share of each class is the class's NAV, minus
any applicable CDSC.
Each fund may impose a trading fee on redemptions from the fund.
Any applicable CDSC is calculated based on your original redemption
amount.
Your shares will be sold at the next NAV calculated after your order
is received in proper form, minus any applicable CDSC.
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.
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 sell 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; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
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.
When you place an order to sell shares, note the following:
(small solid bullet) 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, except accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(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) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
KEY INFORMATION
PHONE (bullet)
Call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" to initiate a
wire transaction or to
request a check for your
redemption.
(bullet)
Exchange to the same
class of other Fidelity
Advisor funds or to certain
other Fidelity funds. Call
your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information."
MAIL: INDIVIDUAL, JOINT
FIDELITY TENANT,
INVESTMENTS SOLE PROPRIETORSHIP,
P.O. BOX 770002 UGMA, UTMA
CINCINNATI, OH (bullet)
45277-0081 Send a letter of
instruction to your
investment professional
or to the address at left,
including your name, the
fund's name, the
applicable class name,
your fund account
number, and the dollar
amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on
the account.
RETIREMENT ACCOUNT
(bullet)
The account owner
should complete a
retirement distribution
form. Call your
investment professional
or call Fidelity at the
appropriate number
found in "General
Information" to request
one.
TRUST
(bullet)
Send a letter of
instruction to your
investment professional
or to the address at left,
including the trust's
name, the fund's name,
the applicable class
name, the trust's fund
account number, and the
dollar amount or number
of shares to be sold. The
trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR
ORGANIZATION
(bullet)
Send a letter of
instruction to your
investment professional
or to the address at left,
including the firm's
name, the fund's name,
the applicable class
name, the firm's fund
account number, and the
dollar amount or number
of shares to be sold. At
least one person
authorized by corporate
resolution to act on the
account must sign the
letter of instruction.
(bullet)
Include a corporate
resolution with corporate
seal or a signature
guarantee.
EXECUTOR,
ADMINISTRATOR,
CONSERVATOR,
GUARDIAN
(bullet)
Call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT
TENANT,
SOLE PROPRIETORSHIP,
UGMA, UTMA
(bullet)
Bring a letter of
instruction to your
investment professional.
The letter of instruction
must be signed by all
persons required to sign
for transactions, exactly
as their names appear on
the account.
RETIREMENT ACCOUNT
(bullet)
The account owner
should complete a
retirement distribution
form. Visit your
investment professional
to request one.
TRUST
(bullet)
Bring a letter of
instruction to your
investment professional.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR
ORGANIZATION
(bullet)
Bring a letter of
instruction to your
investment professional.
At least one person
authorized by corporate
resolution to act on the
account must sign the
letter of instruction.
(bullet)
Include a corporate
resolution with corporate
seal or a signature
guarantee.
EXECUTOR,
ADMINISTRATOR,
CONSERVATOR,
GUARDIAN
(bullet)
Visit your investment
professional for
instructions.
AUTOMATICAL (bullet)
LY Use Fidelity Advisor
Systematic Exchange
Program to exchange to
the same class of
another Fidelity Advisor
fund or to certain Fidelity
funds.
(bullet)
Use Fidelity Advisor
Systematic Withdrawal
Program to set up
periodic redemptions
from your Class A, Class
T, Class B, or Class C
account.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As a Class A shareholder, you have the privilege of exchanging Class A
shares of a fund for the same class of shares of other Fidelity
Advisor funds at NAV or for Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt Fund.
As a Class T shareholder, you have the privilege of exchanging Class T
shares of a fund for the same class of shares of other Fidelity
Advisor funds at NAV or for Daily Money Class shares of Treasury Fund,
Prime Fund or Tax-Exempt 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.
As a Class B shareholder, you have the privilege of exchanging Class B
shares of a fund for the same class of shares of other Fidelity
Advisor funds or for Advisor B Class shares of Treasury Fund.
As a Class C shareholder, you have the privilege of exchanging Class C
shares of a fund for the same class of shares of other Fidelity
Advisor funds or for Advisor C Class shares of Treasury Fund.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only 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) Each fund may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year.
(small solid bullet) The exchange limit may be modified for accounts
held by 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 may 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) Any exchanges of Class A, Class T, Class B and
Class C shares are not subject to a CDSC.
The funds may terminate or modify the exchange privileges in the
future.
Other funds may have different exchange restrictions, and may impose
trading fees of up to 1.00% of the amount exchanged. Check each fund's
prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
funds.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs 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. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY ADVISOR
SYSTEMATIC
INVESTMENT
PROGRAM
TO MOVE MONEY FROM
YOUR BANK ACCOUNT TO
A FIDELITY ADVISOR
FUND
MINIMUM MINIMUM FREQUENCY PROCEDURES
INITIAL ADDITIONAL Monthly, bimonthly, quarterly, (bullet) To set up for a new account, complete the
appropriate section on the application.
$100 $100 or semi-annually (bullet) To set up for existing accounts, call your
investment professional or call Fidelity at
the appropriate number found in "General Information" for an
application.
(bullet) To make changes, call your investment professional
or call Fidelity at the appropriate
number found in "General Information." Call at least 10
business days prior to your next
scheduled investment date.
TO DIRECT DISTRIBUTIONS
FROM A FIDELITY
DEFINED TRUST TO CLASS
T OF A FIDELITY ADVISOR
FUND
MINIMUM MINIMUM PROCEDURES
INITIAL ADDITIONAL (bullet) To set up for a new or existing account, call your
investment professional or call
Not Not Fidelity at the appropriate number found in "General
Information" for the appropriate enrollment
Applicable Applicable form.
(bullet) To make changes, call your investment professional
or call Fidelity at the appropriate
number found in "General Information."
FIDELITY
ADVISOR
SYSTEMATIC
EXCHANGE
PROGRAM
TO MOVE MONEY
FROM CERTAIN
FIDELITY MONEY
MARKET FUNDS TO
CLASS A, CLASS T,
CLASS B OR CLASS
C OF A FIDELITY
ADVISOR FUND OR
FROM CLASS A,
CLASS T, CLASS B
OR CLASS C OF A
FIDELITY ADVISOR
FUND TO THE SAME
CLASS OF ANOTHER
FIDELITY ADVISOR
FUND
MINIMUM FREQUENCY PROCEDURES
$100 Monthly, quarterly, (bullet) To set up,
semi-annually, or annually call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" after
both accounts are
opened.
(bullet) To make
changes, call your
investment
professional or call
Fidelity at the
appropriate number
found in "General
Information." Call at
least 2 business days
prior to your next
scheduled exchange
date.
(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
balance of $1,000.
FIDELITY
ADVISOR
SYSTEMATIC
WITHDRAWAL
PROGRAM
TO SET UP PERIODIC
REDEMPTIONS FROM
YOUR CLASS A,
CLASS T, CLASS B
OR CLASS C
ACCOUNT TO YOU OR
TO YOUR BANK
CHECKING ACCOUNT.
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Class A and Class T: Monthly, (bullet) Accounts
quarterly, or semi-annually with a value of
$10,000 or more in
Class B and Class C: Monthly or Class A, Class T, Class
quarterly B or Class C shares
are eligible for this
program.
(bullet) To set up,
call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" for
instructions.
(bullet) To make
changes, call your
investment
professional or call
Fidelity at the
appropriate number
found in "General
Information." Call at
least 10 business
days prior to your
next scheduled
withdrawal date.
(bullet) Aggregat
e 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;
and you may set your
withdrawal amount as
a percentage of the
value of your account
or a fixed dollar
amount.
(bullet) 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.
</TABLE>
OTHER FEATURES. The following other features are also available to buy
and sell shares of the funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(bullet) You must sign up for the Wire feature before using it.
Complete the appropriate section on the application when opening your
account.
(bullet) Call your investment professional or call Fidelity at the
appropriate number found in "General Information" before your first
use to verify that this feature is set up on your account.
(bullet) To sell shares by wire, you must designate the U.S.
commercial bank account(s) into which you wish the redemption proceeds
deposited.
(bullet) To add the wire feature or to change the bank account
designated to receive redemption proceeds at any time prior to making
a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information."
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(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, prospectuses or historical account
information.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
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.
If your ACCOUNT BALANCE falls below $1,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Each fund earns dividends, interest and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gains distributions.
Each Equity Fund normally pays dividends and capital gains
distributions in December.
The Bond Fund normally declares dividends daily and pays them monthly.
The fund normally pays capital gains distributions in December and
February.
EARNING DIVIDENDS
Shares of the Bond Fund purchased by an automated purchase order begin
to earn dividends on the day your payment is received.
Shares of the Bond Fund purchased by all other purchase orders begin
to earn dividends on the first business day following the day your
payment is received.
Shares of the Bond Fund earn dividends until, but not including, the
next business day following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each class's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gains 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 gains distributions will be
automatically reinvested in additional shares of the same class of the
fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gains distributions will be
paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in the same class of shares of another
identically registered Fidelity Advisor fund or shares of certain
identically registered Fidelity funds. Your capital gains
distributions will be automatically reinvested in the same class of
shares of another identically registered Fidelity Advisor fund or
shares of certain identically registered Fidelity funds, automatically
reinvested in additional shares of the same class of the fund, or paid
in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you. If you are not investing through a
tax-advantaged retirement account, you should consider these tax
consequences.
TAXES ON DISTRIBUTIONS. Distributions you receive from each fund are
subject to federal income tax, and may also be subject to state or
local taxes.
For federal tax purposes, each fund's dividends and distributions of
short-term capital gains are taxable to you as ordinary income. Each
fund's distributions of long-term capital gains are taxable to you
generally as capital gains.
If a fund's distributions exceed its income and capital gains realized
in any year, which is sometimes the result of currency-related losses,
all or a portion of those distributions may be treated as a return of
capital to shareholders for tax purposes. A return of capital will
generally not be taxable to you, but will reduce the cost basis of
your shares and result in a higher reported capital gain or a lower
reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in the same class of shares of another
Fidelity Advisor fund or shares of certain Fidelity funds, you will
receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in a fund is the difference between
the cost of your shares and the price you receive when you sell them.
FUND SERVICES
FUND MANAGEMENT
Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.
FMR is each fund's manager.
As of ___ __, 199_, FMR had approximately $__ billion in discretionary
assets under management.
As the manager, FMR is responsible for choosing the funds' investments
and handling their business affairs.
Affiliates assist FMR with foreign investments:
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for each fund. FMR
U.K. was organized in 1986 to provide investment research and advice
to FMR. Currently, FMR U.K. provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services 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. FMR
Far East was organized in 1986 to provide investment research and
advice to FMR. Currently, FMR Far East provides investment research
and advice on issuers based outside the United States and may also
provide investment advisory services for each fund.
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda, serves as a sub-adviser for each fund.
As of ___ __, 199_, FIIA had approximately $___ in discretionary
assets under management. Currently, FIIA provides investment research
and advice on issuers based outside the United States and may also
provide investment advisory services 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. As of___ __, 199_, FIIA(U.K.)L had approximately $___ in
discretionary assets under management. Currently, FIIA(U.K.)L provides
investment research and advice on issuers based outside the United
States and may also provide investment advisory services for each
fund.
(small solid bullet) Fidelity Investment Japan Ltd. (FIJ), in Tokyo,
Japan, serves as a sub-adviser for Advisor Japan, Advisor
International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, Advisor Global Equity, and Advisor Emerging
Markets Income. As of ___ __, 199_, FIJ had approximately $___ in
discretionary assets under management. Currently, FIJ is primarily
responsible for choosing investments for Advisor Japan. Currently, FIJ
provides investment research and advice on issuers based outside the
United States and may also provide investment advisory services for
Advisor International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, Advisor Global Equity, and Advisor Emerging
Markets Income.
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
John Carlson is Vice President and manager of Advisor Emerging Markets
Income which he has managed since June 1995. He also manages 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.
Greg Fraser is Vice President and manager of Advisor Diversified
International, which he has managed since December 1998. He also
manages other Fidelity funds. Since joining Fidelity in 1986, Mr.
Fraser has worked as an analyst and manager.
Dick Habermann is Vice President and manager of Advisor Global Equity,
which he has managed since December 1998. He also manages other
Fidelity funds. Mr. Habermann is a Senior Vice President of FMR Co.
Previously, he was Division Head for International Equities and
Director of International Research from 1993 to 1996, and Joint Chief
Strategist for Portfolio Advisory ServicesSM from 1996 to 1997. Mr.
Habermann joined Fidelity in 1968.
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 and Advisor Europe Capital Appreciation, which he
has managed since November 1997 and December 1998, respectively. He
also manages other Fidelity funds. Since joining Fidelity 1986, Mr.
McCarey has worked as analyst and manager.
Brenda Reed is Vice President and manager of Advisor Japan Fund, which
she has managed since December 1998. She also manages other Fidelity
funds. Since joining Fidelity in 1992, Ms. Reed has worked as an
analyst and manager.
Margaret Reynolds is associate manager of Advisor Latin America, which
she has managed since December 1998. Since joining Fidelity in 1995,
Ms. Reynolds has worked as an analyst and associate manager. Prior to
joining Fidelity in 1995, Ms. Reynolds was an international equity and
fixed-income analyst with Putnam Investments covering Latin America
and other emerging markets from 1986 to 1995.
Patricia Satterthwaite is Vice President and lead manager of Advisor
Latin America, which she has managed since December 1998. She also
manages other Fidelity funds. Since joining Fidelity in 1986, Ms.
Satterthwaite has worked as an analyst and manager.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a management fee to FMR.
The management fee is calculated and paid to FMR every month.
For Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Diversified International, Advisor Global Equity, and Advisor Emerging
Markets Income, the fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by the fund's average net assets throughout the month.
For Advisor Overseas, the fee is determined by calculating a basic fee
and then applying a performance adjustment. The performance adjustment
either increases or decreases the management fee, depending on how
well the fund has performed relative to the EAFE Index.
MANAGEMENT = BASIC +/- PERFORMANCE
FEE FEE ADJUSTMENT
The basic fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by the fund's average net assets throughout the month.
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 the
Equity Funds or 0.37% for the Bond Fund, and it drops as total assets
under management increase.
For October 1998, the group fee rate was __% for the Equity Funds and
for December 1998, the group fee rate was ___% for the Bond Fund. The
individual fund fee rate is __% for the Equity Funds and__% for the
Bond Fund.
The basic fee for Advisor Overseas for the fiscal year ended October
31, 1998 was __% of the fund's average net assets.
The performance adjustment rate is calculated monthly by comparing
Advisor Overseas's performance to that of the EAFE Index over the
performance period.
For Advisor Overseas, the performance period is the most recent
36-month period.
The performance adjustment rate is divided by twelve and multiplied by
the fund's average net assets throughout the month, and the resulting
dollar amount is then 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 Advisor
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 total management fee for the fiscal year ended October 31, 1998
was __%[, after reimbursement,] of the fund's average net assets for
Advisor International Capital Appreciation and __%[, after
reimbursement,] of the fund's average net assets for Advisor Overseas.
The total management fee for the fiscal year ended December 31, 1998
was __%[, after reimbursement,] of the fund's average net assets for
Advisor Emerging Markets Income.
FMR pays FMR U.K., FMR Far East, FIJ and FIIA for providing assistance
with investment advisory services, and FIIA in turn pays FIIA(U.K.)L.
FMR may, from time to time, agree to reimburse each class for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a class if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated by FMR at any time, can decrease
a class's expenses and boost its performance.
[As of December 31, 1998, approximately __%, __%, __%, __% and __% of
_____'s, ______'s, _____'s, ______'s, and ______'s total outstanding
shares, respectively, were held by FMR [and [an] FMR affiliate[s]].
FUND DISTRIBUTION
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
FDC distributes each class's shares.
You may pay a sales charge when you buy or sell your shares.
FDC collects the sales charge.
The front-end sales charge will be reduced for purchases of Class A
and Class T shares according to the sales charge schedules below.
SALES CHARGES AND CONCESSIONS - CLASS A
EQUITY FUNDS: SALES CHARGE INVESTMENT
PROFESSIONAL
CONCESSION AS %
OF OFFERING PRICE
AS A % OF AS AN
OFFERING APPROXIMATE %
PRICE 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 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 MORE NONE* NONE* *
* SEE "FINDER'S FEE" SECTION BELOW.
BOND FUND: SALES CHARGE INVESTMENT
PROFESSIONAL
CONCESSION AS %
OF OFFERING PRICE
AS A % OF AS AN
OFFERING APPROXIMATE %
PRICE 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 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 MORE NONE* NONE* *
* SEE "FINDER'S FEE" SECTION BELOW.
SALES CHARGES AND CONCESSIONS - CLASS T
EQUITY FUNDS: SALES CHARGE INVESTMENT
PROFESSIONAL
CONCESSION AS %
OF OFFERING PRICE
AS A % OF AS AN
OFFERING APPROXIMATE %
PRICE 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 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 MORE NONE* NONE* *
* SEE "FINDER'S FEE" SECTION BELOW.
BOND FUND: SALES CHARGE INVESTMENT
PROFESSIONAL
CONCESSION AS %
OF OFFERING PRICE
AS A % OF AS AN
OFFERING APPROXIMATE %
PRICE 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 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 MORE NONE* NONE* *
* SEE "FINDER'S FEE" SECTION BELOW.
Class A or Class T shares purchased by an individual or company
through the Combined Purchase, Rights of Accumulation or Letter of
Intent program may receive a reduced front-end sales charge according
to the sales charge schedules above. To qualify for a Class A or Class
T front-end sales charge reduction under one of these programs, you
must notify Fidelity in advance of your purchase. More detailed
information about these programs is contained in the Statement of
Additional Information (SAI).
COMBINED PURCHASE. To receive a Class A or Class T front-end sales
charge reduction, if you are a new shareholder, you may combine your
purchase of Class A or Class T shares with purchases of: (i) Class A ,
Class T, Class B and Class C shares of any Fidelity Advisor fund and
(ii) Advisor B Class shares and Advisor C Class shares of Treasury
Fund.
RIGHTS OF ACCUMULATION. To receive a Class A or Class T front-end
sales charge reduction, if you are an existing shareholder, you may
add to your purchase of Class A or Class T shares the current value of
your holdings in: (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 or Tax-Exempt Fund acquired by exchange from
any Fidelity Advisor fund.
LETTER OF INTENT. You may receive a Class A or Class T front-end sales
charge reduction on your purchases of Class A and Class T shares made
during a 13-month period by signing a Letter of Intent (Letter). Each
Class A or Class T purchase you make after you sign the Letter will be
entitled to the reduced front-end sales charge applicable to the total
investment indicated in the Letter. Purchases of the following may be
aggregated for the purpose of completing your Letter: (i) Class A and
Class T shares of any Fidelity Advisor fund (except those acquired by
exchange from Daily Money Class shares of Treasury Fund, Prime Fund or
Tax-Exempt Fund that had been previously exchanged from a Fidelity
Advisor fund), (ii) Class B and Class C shares of any Fidelity Advisor
fund and (iii) Advisor B Class shares and Advisor C Class shares of
Treasury Fund. Reinvested income and capital gain distributions will
not be considered purchases for the purpose of completing your Letter.
Class B shares may, upon redemption, be assessed a CDSC based on the
following schedule:
EQUITY FUNDS
AND BOND FUND
- - CLASS B:
FROM DATE OF PURCHASE CONTINGENT DEFERRED
SALES CHARGE
LESS THAN 1 YEAR 5%
1 YEAR TO LESS THAN 2 4%
YEARS
2 YEARS TO LESS THAN 3 3%
YEARS
3 YEARS TO LESS THAN 4 3%
YEARS
4 YEARS TO LESS THAN 5 2%
YEARS
5 YEARS TO LESS THAN 6 1%
YEARS
6 YEARS TO LESS THAN 7 0%
YEARS A
A AFTER SEVEN YEARS, CLASS B SHARES WILL CONVERT AUTOMATICALLY TO
CLASS A SHARES OF THE SAME FIDELITY ADVISOR FUND.
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 bought.
Except as provided below, investment professionals receive as
compensation from FDC, at the time of sale, a concession equal to
4.00% of your purchase of Class B shares. For purchases of Class B
shares through reinvested dividends or capital gains distributions,
investment professionals do not receive a concession at the time of
sale.
Class C shares may, upon redemption within one year of purchase, be
assessed a CDSC of 1.00%.
Except as provided below, investment professionals will receive as
compensation from FDC, at the time of the sale, a concession equal to
1.00% of your purchase of Class C shares. For purchases of Class C
shares made for an employee benefit plan or through reinvested
dividends or capital gains distributions, investment professionals do
not receive a concession at the time of sale.
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 reinvestment of dividends or capital gains
distributions 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 will be
redeemed first, followed by those Class B or Class C shares that have
been held for the longest period of time.
A front-end sales charge will not apply to the following Class A
shares:
1. Purchased for an employee benefit plan with at least $25 million or
more in plan assets;
2. Purchased for an employee benefit plan investing through an
insurance company separate account used to fund annuity contracts;
3. Purchased for an employee benefit plan investing through a trust
institution, bank trust department or insurance company, or any such
institution's broker-dealer affiliate that is not part of an
organization primarily engaged in the brokerage business. Employee
benefit plans that participate in the Advisor Retirement Connection do
not qualify for this waiver;
4. Purchased for an employee benefit plan investing through an
investment professional sponsored program that requires the
participating employee benefit plan to initially invest in Class C or
Class B shares and, upon meeting certain criteria, subsequently
requires the plan to invest in Class A shares;
5. Purchased by a trust institution or bank trust department for a
managed account that is charged an asset-based fee. Employee benefit
plans and accounts managed by third parties do not qualify for this
waiver;
6. Purchased by a broker-dealer for a managed account that is charged
an asset-based fee. Employee benefit plans do not qualify for this
waiver;
7. Purchased by a registered investment advisor that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee. Employee benefit plans do not qualify for this
waiver; or
8. 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.
A front-end sales charge will not apply to the following Class T
shares:
1. Purchased for an insurance company separate account used to fund
annuity contracts for employee benefit plans;
2. Purchased by a trust institution or bank trust department for a
managed account that is charged an asset-based fee. Accounts managed
by third parties do not qualify for this waiver;
3. Purchased by a broker-dealer for a managed account that is charged
an asset-based fee;
4. Purchased by a registered investment advisor that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee;
5. Purchased for an employee benefit plan, except certain small
employer retirement plans;
6. Purchased for a Fidelity or Fidelity Advisor account with the
proceeds of a distribution from (i) an insurance company separate
account used to fund annuity contracts for employee benefit plans that
are invested in Fidelity Advisor or Fidelity funds, or (ii) an
employee benefit plan that is invested in Fidelity Advisor or Fidelity
funds. (Distributions other than those transferred to an IRA account
must be transferred directly into a Fidelity account.);
7. Purchased for any state, county, or city, or any governmental
instrumentality, department, authority or agency;
8. Purchased with redemption proceeds from other mutual fund complexes
on which you have previously paid a front-end sales charge or CDSC;
9. Purchased by a current or former trustee or officer of a Fidelity
fund or a current or retired officer, director or regular employee of
FMR Corp. or Fidelity International Limited or their direct or
indirect subsidiaries (a Fidelity trustee or employee), the spouse of
a Fidelity trustee or employee, a Fidelity trustee or employee acting
as custodian for a minor child, or a person acting as trustee of a
trust for the sole benefit of the minor child of a Fidelity trustee or
employee;
10. Purchased by a charitable organization (as defined for purposes of
Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or
more;
11. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC;
12. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined
for purposes of Section 501(c)(3) of the Internal Revenue Code); or
13. Purchased with distributions of income, principal, and capital
gains from Fidelity Defined Trusts.
Employee benefit plan investors must meet additional requirements
specified in the funds' SAI.
The CDSC on Class B and Class C shares may be waived:
1. In cases of disability or death, provided that the shares are sold
within one year following the death or the initial determination of
disability;
2. In connection with a total or partial redemption related to certain
distributions from retirement plans or accounts at age 701/2 which are
permitted without penalty pursuant to the Internal Revenue Code;
3. In connection with redemptions through the Fidelity Advisor
Systematic Withdrawal Program; or
4. (Applicable to Class C only) In connection with any redemptions
from an employee benefit plan. Employee benefit plan investors must
meet additional requirements specified in the funds' SAI.
To qualify for a Class A or Class T front-end sales charge reduction
or waiver or a finder's fee, you must notify Fidelity in advance of
your purchase.
To qualify for a Class B or Class C CDSC waiver, you must notify
Fidelity in advance of your redemption.
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, and (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.
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 Fidelity access to
records detailing purchases at the client level.
Except as provided below, 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 those 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 reinvestment of dividends or capital gains distributions 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 will be redeemed first, followed by those Class A or
Class T CDSC shares that have been held for the longest period of
time.
With respect to shares held by an insurance company separate account,
the Class A or Class T CDSC does not apply.
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.
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 another Fidelity Advisor fund, at the NAV
next determined after receipt in proper form of your investment order,
provided that such reinvestment is made within 90 days of redemption.
Under these circumstances, the dollar amount of the CDSC you paid, if
any, on 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 Class A, Class T, Class B or Class C 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 schedule, the holding
period will continue as if the Class A, Class T, Class B or Class C
shares had not been redeemed.
CONVERSION FEATURE. After 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 bought
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.
Class A of each fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class A of each fund is authorized to pay FDC a monthly
12b-1 fee as compensation for providing services intended to result in
the sale of Class A shares and/or shareholder support services. Class
A of the Equity Funds may pay FDC a 12b-1 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 Fund may pay FDC
a 12b-1 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 Equity Funds currently pays FDC a monthly 12b-1 fee at an
annual rate of 0.25% of its average net assets throughout the month.
Class A of the Bond Fund currently pays FDC a monthly 12b-1 fee at an
annual rate of 0.15% of its average net assets throughout the month.
Class A's 12b-1 fee rate may be increased only when the Trustees
believe that it is in the best interests of Class A shareholders to do
so.
Class T of each fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class T of each fund is authorized to pay FDC a monthly
12b-1 fee as compensation for providing services intended to result in
the sale of Class T shares and/or shareholder support services. Class
T of Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Diversified International, and Advisor Global Equity may pay FDC a
12b-1 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 Advisor Overseas may pay FDC a 12b-1 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 Advisor Emerging
Markets Income may pay FDC a 12b-1 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 the Equity Funds currently
pays FDC a monthly 12b-1 fee at an annual rate of 0.50% of its average
net assets throughout the month. Class T of the Bond Fund currently
pays FDC a monthly 12b-1 fee at an annual rate of 0.25% of its average
net assets throughout the month. Class T's 12b-1 fee rate may be
increased only when the Trustees believe that it is in the best
interests of Class T shareholders to do so.
FDC may reallow to intermediaries (such as banks, broker-dealers and
other service-providers), including its affiliates, up to the full
amount of the Class A and Class T 12b-1 fee, for providing services
intended to result in the sale of Class A or Class T shares and/or
shareholder support services.
Class B of each fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class B of each fund is authorized to pay FDC a monthly
12b-1 (distribution) fee as compensation for providing services
intended to result in the sale of Class B shares. Class B of each fund
may pay FDC a 12b-1 (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 12b-1 (distribution) fee at an annual rate of 0.75%
of its average net assets throughout the month. Class B of the Bond
Fund currently pays FDC a monthly 12b-1 (distribution) fee at an
annual rate of 0.65% of its average net assets throughout the month.
Class B's 12b-1 (distribution) fee rate for the Bond Fund 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 12b-1 (service) fee at an annual rate of 0.25% of Class
B's average net assets throughout the month for providing shareholder
support services.
FDC may reallow up to the full amount of the Class B 12b-1 (service)
fee to intermediaries (such as banks, broker-dealers and other
service-providers) for providing shareholder support services.
Class C of each fund has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, Class C of each fund is authorized to pay FDC a monthly
12b-1 (distribution) fee as compensation for providing services
intended to result in the sale of Class C shares. Class C of each fund
currently pays FDC a monthly 12b-1 (distribution) fee at an annual
rate of 0.75% of its average net assets throughout the month.
In addition, pursuant to each Class C plan, Class C of each fund pays
FDC a monthly 12b-1 (service) fee at an annual rate of 0.25% of Class
C's average net assets throughout the month for providing shareholder
support services.
Normally, after the first year of investment, FDC may reallow up to
the full amount of the Class C 12b-1 (distribution) fees to
intermediaries (such as banks, broker-dealers and other
service-providers) for providing services intended to result in the
sale of Class C shares and may reallow up to the full amount of the
Class C 12b-1 (service) fee to intermediaries for providing
shareholder support services.
For purchases of Class C shares made for an employee benefit plan or
through reinvestment of dividends or capital gains distributions,
during the first year of investment and thereafter, FDC may reallow up
to the full amount of the Class C 12b-1 (distribution) fee paid by
such shares to intermediaries, including its affiliates, for providing
services intended to result in the sale of Class C shares and may
reallow up to the full amount of the Class C 12b-1 (service) fee paid
by such shares to intermediaries, including its affiliates, for
providing shareholder support services.
Because 12b-1 fees are paid out of each class's assets on an ongoing
basis, they will increase the cost of your investment and may cost you
more than paying other types of sales charges.
In addition, each plan specifically recognizes that FMR may make
payments from its management fee revenue, past profits, or other
resources to FDC for expenses incurred in connection with providing
services intended to result in the sale of the applicable class's
shares and/or shareholder support services, including payments made to
intermediaries that provide those services. Currently, the Board of
Trustees of each fund has authorized such payments.
To receive sales concessions, finder's fees and payments made pursuant
to a Distribution and Service Plan, intermediaries must sign the
appropriate agreement with FDC in advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Fidelity Advisor funds, provided
that a fund receives brokerage services and commission rates
comparable to those of other broker-dealers.
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
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
class's financial history. Class T of Advisor Overseas has financial
history for the past 5 years. The remaining classes and funds have
under 5 years of financial history, beginning with their respective
commencement of operations dates. Certain information reflects
financial results for a single class share. Total returns for each
period include the reinvestment of all dividends and distributions.
This information has been audited by ________, independent
accountants, whose report, along with each fund's financial highlights
and financial statements, are included in each fund's Annual Report. A
free copy of each Annual Report is available upon request. Advisor
Latin America, Advisor Japan, Advisor Europe Capital Appreciation,
Advisor Diversified International, and Advisor Global Equity commenced
operations on ___ __, 199_.
[Financial Highlights to be filed by subsequent amendment.]
PRIOR PERFORMANCE OF SIMILAR FUNDS
Because Advisor Diversified International, Advisor Europe Capital
Appreciation, Advisor Japan, Advisor Latin America, and Advisor Global
Equity (Corresponding Funds) were new when this prospectus was
printed, their performance history is not included. However, Advisor
Diversified International, Advisor Europe Capital Appreciation,
Advisor Japan, and Advisor Latin America are modeled after the
following existing funds, respectively: Fidelity Diversified
International Fund, Fidelity Europe Capital Appreciation Fund,
Fidelity Japan Fund, and Fidelity Latin America Fund (Related Funds).
Advisor Global Equity has investment objectives and policies that are
substantially similar to those of other accounts managed by FMR or an
affiliate (Related Accounts). The comparable existing funds and
similar accounts are collectively referred to as the "Related Funds
and Accounts."
The Related Funds and Accounts are managed by FMR or an affiliate and
have investment objectives, policies, and strategies that are
substantially similar to those of the Corresponding Funds offered
through this prospectus. The Related Funds and Accounts, however,
have different expenses and are sold through different distribution
channels.
Below you will find information about the prior performance of the
Related Funds and Accounts, not the performance of the Corresponding
Funds offered through this prospectus. The performance data of the
Related Funds and Accounts is net of advisory fees and other expenses.
Although the Corresponding Funds have substantially similar investment
objectives, policies, and strategies as the Related Funds and
Accounts, you should not assume that the Corresponding Funds will have
the same performance as the Related Funds and Accounts. For example,
a Corresponding Fund's future performance may be better or worse than
the performance of its Related Fund or Account due to, among other
things, differences in sales charges, expenses, asset sizes and cash
flows between the Corresponding Fund and its Related Fund or Account.
Class A, Class T, Class B, and Class C shares of the Corresponding
Funds may have higher sales charges and may have higher total expenses
than the Related Funds and Accounts, which would have resulted in
lower performance if each Corresponding Fund's current sales charges
and expenses had been applied to the performance of the Related Funds
and Accounts. Certain investors may be eligible for sales charge
waivers.
The Related Accounts with policies similar to those of Advisor Global
Equity include funds organized in foreign jurisdictions that are not
offered to U.S. investors. These funds have different expense
structures and are subject to different regulatory requirements than
U.S. mutual funds, which may affect their performance.
Advisor Global Equity is subject to restrictions imposed by the 1940
Act and the Internal Revenue Code of 1986 (E.G., limits on the
percentage of assets invested in securities of issuers in a single
industry and requirements on distributing income to shareholders) that
do not apply to its Related Accounts. These differences may affect
the performance of Advisor Global Equity and cause it to differ from
that of its Related Accounts, but do not change the substantial
similarity between Advisor Global Equity and its Related Accounts.
The total returns that follow are based on past results of the Related
Funds and Accounts and do not reflect the effect of taxes. In the
case of Advisor Global Equity, the prior performance shown is for a
composite of non-mutual fund accounts with substantially similar
investment objectives and policies (Composite). The methodology for
calculating the performance of the non-mutual fund accounts differs
from that required to be employed by mutual funds that are offered in
the United States.
The first table below shows the corresponding Related Funds or the
Composite of Advisor Diversified International, Advisor Europe Capital
Appreciation, Advisor Japan, Advisor Latin America, and Advisor Global
Equity; the date FMR began managing each Related Fund and the date of
the commencement of the Composite; and the asset size of each Related
Fund or the Composite as of December 31, 1998.
The next group of tables below shows changes in the performance of
each Related Fund or the Composite, as applicable, from year to year.
The last group of tables below compares the performance of each
Related Fund or the Composite, as applicable, to the performance of a
market index and similar funds over various periods of time.
The performance of each Related Fund or the Composite, as applicable,
does not represent the past performance of the Corresponding Funds and
should not be interpreted as indicative of the future performance of
the Corresponding Funds or the Related Funds and Accounts.
CORRESPONDING RELATED FUNDS OR
FUNDS OFFERED COMPOSITE
THROUGH THIS (INCEPTION DATE)
PROSPECTUS AND ASSET SIZE
FIDELITY ADVISOR FIDELITY DIVERSIFIED
DIVERSIFIED INTERNATIONAL FUND
INTERNATIONAL FUND (DECEMBER 27, 1991)
$ ____________
FIDELITY ADVISOR FIDELITY EUROPE
EUROPE CAPITAL CAPITAL APPRECIATION
APPRECIATION FUND FUND
(DECEMBER 21, 1993)
$ ____________
FIDELITY ADVISOR FIDELITY JAPAN FUND
JAPAN FUND (SEPTEMBER 15, 1992)
$ ____________
FIDELITY ADVISOR LATIN FIDELITY LATIN
AMERICA FUND AMERICA FUND
(APRIL 19, 1993) $
____________
FIDELITY ADVISOR COMPOSITE OF
GLOBAL EQUITY FUND NON-MUTUAL FUND
ACCOUNTS
MANAGED BY FMR OR
AN AFFILIATE
(MARCH 31, 1993)
$____________
YEAR-BY-YEAR RETURNS FOR THE RELATED FUNDS AND THE COMPOSITE
The returns in the following tables do not include the effect of
Fidelity Europe Capital Appreciation Fund's, Fidelity Japan Fund's, or
Fidelity Latin America Fund's applicable front-end sales charge. If
the effect of the sales charge was reflected, returns would be lower
than those shown.
FIDELITY DIVERSIFIED
INTERNATIONAL FUND
CALENDAR YEARS 1992 1993 1994 1995 1996 1997 1998
% % % % % % %
PERCENTAGE
(%)
40
30
20
10
0
- -10
1992 1993 1994 1995 1996 1997 1998
During the periods shown in the chart for Fidelity Diversified
International Fund, the highest return for a quarter was __% (quarter
ending [calendar quarter], [19__]) and the lowest return for a quarter
was __% (quarter ending [calendar quarter], [19__]).
FIDELITY EUROPE
CAPITAL
APPRECIATION FUND
CALENDAR YEARS 1994 1995 1996 1997 1998
% % % % %
PERCENTAGE
(%)
40
30
20
10
0
- -10
1994 1995 1996 1997 1998
During the periods shown in the chart for Fidelity Europe Capital
Appreciation Fund, the highest return for a quarter was __% (quarter
ending [calendar quarter], [19__]) and the lowest return for a quarter
was __% (quarter ending [calendar quarter], [19__]).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FIDELITY
JAPAN FUND
CALENDAR YEARS 1993 1994 1995 1996 1997 1998
% % % % % %
</TABLE>
PERCENTAGE
(%)
40
30
20
10
0
- -10
- -20
1993 1994 1995 1996 1997 1998
During the periods shown in the chart for Fidelity Japan Fund, the
highest return for a quarter was __% (quarter ending [calendar
quarter], [19__]) and the lowest return for a quarter was __% (quarter
ending [calendar quarter], [19__]).
FIDELITY LATIN
AMERICA FUND
CALENDAR YEARS 1994 1995 1996 1997 1998
% % % % %
PERCENTAGE
(%)
40
30
20
10
0
- -10
- -20
- -30
1994 1995 1996 1997 1998
During the periods shown in the chart for Fidelity Latin America Fund,
the highest return for a quarter was __% (quarter ending [calendar
quarter], [19__]) and the lowest return for a quarter was __% (quarter
ending [calendar quarter], [19__]).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMPOSITE(DAGGER)
CALENDAR YEARS 1994 1995 1996 1997 1998
% % % % %
PERCENTAGE
(%)
40
30
20
10
0
- -10
- -20
1994 1995 1996 1997 1998
</TABLE>
(dagger) The methodology for calculating the performance of the
non-mutual fund accounts in the Composite differs from that required
to be employed by mutual funds that are offered in the United States.
[During the periods shown in the chart for the Composite, the highest
return for a quarter was __% (quarter ending [calendar quarter],
[19__]) and the lowest return for a quarter was __% (quarter ending
[calendar quarter], [19__]).
AVERAGE ANNUAL RETURNS FOR THE RELATED FUNDS AND THE COMPOSITE
The returns in the following table include the effect of Fidelity
Europe Capital Appreciation Fund's, Fidelity Japan Fund's, and
Fidelity Latin America Fund's maximum applicable front-end sales
charge.
RELATED
FUNDS [A]
PAST 10 YEARS/
FOR THE PERIODS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND+
ENDED DECEMBER
31, 1998
FIDELITY % % %
DIVERSIFIED
INTERNATIONAL
FUND [B]
MORGAN STANLEY % % %
CAPITAL
INTERNATIONAL
GDP-WEIGHTED
EAFE INDEX
MORGAN STANLEY % % %
CAPITAL
INTERNATIONAL
CAP-WEIGHTED
EAFE INDEX
LIPPER % % %
INTERNATIONAL
FUNDS AVERAGE
FIDELITY EUROPE % N/A %
CAPITAL
APPRECIATION
FUND [B]
MORGAN STANLEY % % %
CAPITAL
INTERNATIONAL
EUROPE INDEX
LIPPER EUROPEAN % % %
REGION FUNDS
AVERAGE
FIDELITY JAPAN % % %
FUND [B]
TOKYO STOCK % % %
PRICE INDEX
(TOPIX)
LIPPER JAPANESE % % %
FUNDS AVERAGE
FIDELITY LATIN % % %
AMERICA FUND
[B]
MORGAN STANLEY % % %
CAPITAL
INTERNATIONAL
EMERGING
MARKETS
FREE-LATIN
AMERICA INDEX
% % %
LIPPER LATIN
AMERICA REGION
FUNDS AVERAGE
+ FROM
JANUARY
1, 1992
(FIDELIT
Y
DIVERSI
FIED
INTERNAT
IONAL
FUND),
JANUARY
1, 1993
(FIDELIT
Y JAPAN
FUND),
AND
JANUARY
1, 1994
(FIDELIT
Y
EUROPE
CAPITAL
APPREC
IATION
FUND
AND
FIDELITY
LATIN
AMERIC
A
FUND).
[A] THE
FUNDS
OFFERED
THROUGH
THIS
PROSPEC
TUS
CHARGE
A
12B-1
FEE,
WHILE
THE
RELATED
FUNDS
DO NOT.
THE
FUNDS
OFFERED
THROUGH
THIS
PROSPEC
TUS
MAY
SELL
THEIR
SHARES
WITH A
FRONT-E
ND
SALES
CHARGE
OR
CONTING
ENT
DEFERRE
D SALES
CHARGE.
CERTAIN
INVESTO
RS MAY
BE
ELIGIBLE
FOR
SALES
CHARGE
WAIVERS
.
FIDELITY
EUROPE
CAPITAL
APPREC
IATION
FUND,
FIDELITY
JAPAN
FUND,
AND
FIDELITY
LATIN
AMERIC
A FUND
SELL
THEIR
SHARES
WITH A
MAXIM
UM
FRONT-E
ND
SALES
CHARGE
OF
3.0%,
WHILE
FIDELITY
DIVERSI
FIED
INTERNAT
IONAL
FUND
DOES
NOT
CHARGE
A SALES
CHARGE.
INCLUDI
NG ANY
APPLICA
BLE
SALES
CHARGE
AND/OR
12B-1
FEE IN A
PERFOR
MANCE
CALCULAT
ION
PRODUC
ES A
LOWER
RETURN.
[B] FOR THE
FISCAL
YEAR
ENDED
OCTOBE
R 31,
1998,
THE
TOTAL
OPERATI
NG
EXPENS
ES WERE
___%
FOR
FIDELITY
DIVERSI
FIED
INTERNAT
IONAL
FUND,
___%
FOR
FIDELITY
EUROPE
CAPITAL
APPREC
IATION
FUND,
___%
FOR
FIDELITY
JAPAN
FUND,
AND
___%
FOR
FIDELITY
LATIN
AMERIC
A FUND
(INCLUDI
NG ANY
APPLICA
BLE
EXPENS
E
REDUCTI
ONS). IF
FMR
HAD NOT
REIMBU
RSED
CERTAIN
EXPENS
ES
DURING
THESE
PERIODS
,
FIDELITY
DIVERSI
FIED
INTERNAT
IONAL
FUND'S
AND
FIDELITY
JAPAN
FUND'S
TOTAL
RETURNS
WOULD
HAVE
BEEN
LOWER.
COMPOSITE(DAGGER)
FOR THE PERIODS ENDED LIFE OF
DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS COMPOSITE+
COMPOSITE % % %
MORGAN STANLEY CAPITAL % % %
INTERNATIONAL WORLD INDEX
LIPPER GLOBAL FUNDS % % %
AVERAGE
(dagger) The Composite is the asset-weighted composite performance of
three Related Accounts, which are all the non-mutual fund accounts
that have substantially similar investment objectives, policies, and
strategies as Advisor Global Equity. The Composite reflects the
deduction of fees and expenses of 2.75%, which may be higher or lower
than any particular Related Account. Composite performance results are
valued monthly and are asset-weighted by using beginning of month
market values.
+ Life of Composite figures are from March 31, 1993, when the oldest
account in the Composite began reporting its performance in U.S.
dollars.
You can obtain additional information about the funds. The funds' SAI
includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). For Advisor Latin America, Advisor
Japan, Advisor Europe Capital Appreciation, Advisor Diversified
International, and Advisor Global Equity, financial reports will be
available once the funds have completed their first annual or
semi-annual period. Each fund's annual and semi-annual reports include
a discussion of recent market conditions and the fund's investment
strategies, performance and holdings.
For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-800-___-____.
The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-3855
Fidelity Investments & (Pyramid) Design, Fidelity, Fidelity
Investments, and Directed Dividends are registered trademarks of FMR
Corp.
Portfolio Advisor Services is a service mark of FMR Corp.
The third party marks appearing above are the marks of their
respective owners.
1.702979.101 AINT-pro-0299
LIKE SECURITIES OF ALL MUTUAL
FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION, AND THE
SECURITIES AND EXCHANGE
COMMISSION HAS NOT
DETERMINED IF THIS PROSPECTUS
IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
FIDELITY ADVISOR
INTERNATIONAL FUNDS
INSTITUTIONAL CLASS
FIDELITY ADVISOR LATIN AMERICA FUND
FIDELITY ADVISOR JAPAN FUND
FIDELITY ADVISOR EUROPE CAPITAL APPRECIATION FUND
FIDELITY ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND
FIDELITY ADVISOR OVERSEAS FUND
FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND
FIDELITY ADVISOR GLOBAL EQUITY FUND
FIDELITY ADVISOR EMERGING MARKETS INCOME FUND
PROSPECTUS
FEBRUARY 26, 1999
(fidelity_logo_graphic)
82 Devonshire Street, Boston, MA 02109
CONTENTS
FUND SUMMARY 3 INVESTMENT SUMMARY
6 PERFORMANCE
7 FEE TABLE
FUND BASICS 11 INVESTMENT DETAILS
14 VALUING SHARES
SHAREHOLDER INFORMATION 14 BUYING AND SELLING SHARES
21 EXCHANGING SHARES
21 ACCOUNT FEATURES AND POLICIES
23 DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
23 TAX CONSEQUENCES
FUND SERVICES 24 FUND MANAGEMENT
25 FUND DISTRIBUTION
APPENDIX 25 FINANCIAL HIGHLIGHTS
27 PRIOR PERFORMANCE OF SIMILAR FUNDS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
ADVISOR LATIN AMERICA FUND seeks high total investment return.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Latin American issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in Latin America as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN LATIN AMERICA. The
Latin American economies are generally considered emerging markets and
are significantly affected by currency devaluations. The markets in
Latin America can be extremely volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR JAPAN FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of Japanese issuers.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets can be more
volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments and can
perform differently than the U.S. market.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN JAPAN. The Japanese
economy is currently in a recession. International trade and
government policy significantly affect economic growth.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR EUROPE CAPITAL APPRECIATION FUND seeks long-term capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in
securities of issuers that have their principal activities in Europe.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in Europe as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) GEOGRAPHIC CONCENTRATION IN EUROPE. Both
developed and emerging market countries in Europe will be
significantly affected by the tight fiscal and monetary controls
required to join the European Economic and Monetary Union (EMU).
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities, including securities of issuers located in emerging
markets.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR OVERSEAS FUND seeks growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR DIVERSIFIED INTERNATIONAL FUND seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using computer-aided, quantitative analysis of
historical earnings, dividend yield, earnings per share and other
factors supported by fundamental analysis to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
(small solid bullet) QUANTITATIVE INVESTING. Securities selected using
quantitative analysis can perform differently than the market as a
whole as a result of the factors used in the analysis, the weight
placed on each factor, and changes in the factors' historical trends.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR GLOBAL EQUITY FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing in securities issued anywhere in the
world.
(small solid bullet) Investing at least 65% of total assets in common
stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the world market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
INVESTMENT OBJECTIVE
ADVISOR EMERGING MARKETS INCOME FUND seeks a high level of current
income. As a secondary objective, the fund seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Investing at least 65% of total assets in debt
securities of issuers in emerging markets (countries that have an
emerging stock market as defined by the International Finance
Corporation, countries with low- to middle-income economies according
to the World Bank, and countries that are listed in World Bank
publications as "developing").
(small solid bullet) Potentially investing in other types of
securities, including equity securities of emerging market issuers,
debt securities of non-emerging market foreign issuers, and
lower-quality debt securities of U.S. issuers.
(small solid bullet) Allocating investments across countries
considering the size of the market in each country relative to the
size of the markets in countries considered emerging markets as a
whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) STOCK MARKET VOLATILITY. Stock markets are
volatile and can decline significantly in response to adverse issuer,
political, regulatory, market or economic developments. Different
parts of the market can react differently to these developments.
(small solid bullet) FOREIGN EXPOSURE. Foreign markets, particularly
emerging markets, can be more volatile than the U.S. market due to
increased risks of adverse issuer, political, regulatory, market or
economic developments and can perform differently than the U.S.
market. Emerging markets can be subject to greater social, economic,
regulatory and political uncertainties and can be extremely volatile.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole. Lower-quality debt securities
(those of less than investment-grade quality) can be more volatile due
to increased sensitivity to adverse issuer, political, regulatory,
market or economic developments.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in share price than would
occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates Advisor International Capital
Appreciation's performance over the past year and the changes in
Advisor Overseas's and Advisor Emerging Markets Income's performance
from year to year and compares the funds' performance to the
performance of a market index and an average of the performance of
similar funds over various periods of time. Returns are based on past
results and are not an indication of future performance.
Because Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor Diversified International, and Advisor Global
Equity were new when this prospectus was printed, their performance
history is not included. Performance history will be available for
Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor Diversified International, and Advisor Global
Equity after each fund has been in operation for one calendar year.
YEAR-BY-YEAR RETURNS
ADVISOR
INTERNATIONAL
CAPITAL
APPRECIATION
CALENDAR YEARS 1998
%
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: NIL
ROW: 10, COL: 1, VALUE: NIL
DURING THE PERIOD SHOWN IN THE CHART FOR INSTITUTIONAL CLASS OF
ADVISOR INTERNATIONAL CAPITAL APPRECIATION, THE HIGHEST RETURN FOR A
QUARTER WAS __% (QUARTER ENDING ____, 1998) AND THE LOWEST RETURN FOR
A QUARTER WAS __% (QUARTER ENDING ____, 1998).
ADVISOR
OVERSEAS
CALENDAR YEARS 1996 1997 1998
% % %
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: NIL
ROW: 10, COL: 1, VALUE: NIL
DURING THE PERIODS SHOWN IN THE CHART FOR INSTITUTIONAL CLASS OF
ADVISOR OVERSESAS, THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER
ENDING ____, 199_) AND THE LOWEST RETURN FOR A QUARTER WAS __%
(QUARTER ENDING ____, 199_).
ADVISOR
EMERGING
MARKETS
INCOME
CALENDAR YEARS 1996 1997 1998
% % %
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: NIL
ROW: 10, COL: 1, VALUE: NIL
DURING THE PERIODS SHOWN IN THE CHART FOR INSTITUTIONAL CLASS OF
ADVISOR EMERGING MARKETS INCOME, THE HIGHEST RETURN FOR A QUARTER WAS
__% (QUARTER ENDING ____, 199_) AND THE LOWEST RETURN FOR A QUARTER
WAS __% (QUARTER ENDING ____, 199_).
AVERAGE ANNUAL RETURNS
FOR THE PERIODS ENDED PAST 1 LIFE OF CLASS*
DECEMBER 31, 1998 YEAR
ADVISOR % %A
INTERNATIONAL
CAPITAL
APPRECIATION
MORGAN STANLEY % %A
CAPITAL
INTERNATIONAL AC
WORLD INDEX FREE
EX USA
LIPPER % %A
INTERNATIONAL
FUNDS AVERAGE
ADVISOR % %B
OVERSEAS
MORGAN STANLEY % %B
CAPITAL
INTERNATIONAL
EUROPE,
AUSTRALASIA, FAR
EAST INDEX
LIPPER % %B
INTERNATIONAL
FUNDS AVERAGE
ADVISOR % %B
EMERGING
MARKETS INCOME
J.P. MORGAN % %B
EMERGING
MARKETS BOND
INDEX PLUS
LIPPER EMERGING % %B
MARKETS DEBT
FUNDS AVERAGE
* BEGINNING JANUARY 1 OF THE FIRST CALENDAR YEAR FOLLOWING THE CLASS'S
COMMENCEMENT OF OPERATIONS.
A FROM JANUARY 1, 1998.
B FROM JANUARY 1, 1996.
[If FMR had not reimbursed certain class expenses during these
periods, ___, ___, and ___'s total returns would have been lower.]
Morgan Stanley Capital International AC World Index Free ex USA is a
market capitalization-weighted index that is designed to represent the
performance of developed stock markets, excluding the United States,
throughout the world.
Morgan Stanley Capital International Europe, Australasia, Far East
(EAFE(registered trademark)) Index is a market capitalization-weighted
index that is designed to represent the performance of developed stock
markets outside the United States and Canada. As of December 31, 1998,
the index included over ____ equity securities of companies domiciled
in ___ countries.
J.P. Morgan Emerging Markets Bond Index Plus is a market
capitalization-weighted 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 Emerging Markets Free - Latin
America Index is a market capitalization-weighted index of
approximately 170 stocks traded in seven Latin American markets.
Tokyo Stock Price Index (TOPIX) is a market capitalization-weighted
index of over 1100 stocks traded in the Japanese market.
Morgan Stanley Capital International Europe Index is a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets in Europe. As of December 31,
1998, the index included over ___ equity securities of companies
domiciled in ___ European countries.
Morgan Stanley Capital International World Index is a market
capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. As of
December 31, 1998, the index included over ___ equity securities of
companies domiciled in ___ countries.
Each Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold or sell Institutional Class shares of a fund. [The
annual class operating expenses provided below for ____ are based on
historical expenses, adjusted to reflect current fees.] [The annual
class operating expenses provided below for ____ are higher than the
expenses actually paid by the class[es] as the result of [expense
reimbursements] [and] [the payment or reduction of certain expenses]
during the period.] [The annual class operating expenses provided
below for ____ are based on historical expenses.] The annual class
operating expenses provided below for Institutional Class of Advisor
Latin America, Advisor Japan, Advisor Europe Capital Appreciation,
Advisor Diversified International, and Advisor Global Equity are based
on estimated expenses.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
SALES CHARGE (LOAD) ON NONE
PURCHASES AND
REINVESTED DISTRIBUTIONS
DEFERRED SALES CHARGE NONE
(LOAD) ON REDEMPTIONS
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
ADVISOR LATIN MANAGEMENT FEE %
AMERICA
DISTRIBUTION AND NONE
SERVICE (12B-1) FEE
OTHER EXPENSES %
TOTAL ANNUAL CLASS %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE %
JAPAN
DISTRIBUTION AND NONE
SERVICE (12B-1) FEE
OTHER EXPENSES %
TOTAL ANNUAL CLASS %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE %
EUROPE
CAPITAL
APPRECIATION
DISTRIBUTION AND NONE
SERVICE (12B-1) FEE
OTHER EXPENSES %
TOTAL ANNUAL CLASS %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE %
INTERNATIONAL
CAPITAL
APPRECIATION
DISTRIBUTION AND NONE
SERVICE (12B-1) FEE
OTHER EXPENSES %
TOTAL ANNUAL CLASS %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE %
OVERSEAS
DISTRIBUTION AND NONE
SERVICE (12B-1) FEE
OTHER EXPENSES %
TOTAL ANNUAL CLASS %
OPERATING EXPENSES
ADVISOR MANAGEMENT FEE %
DIVERSIFIED
INTERNATIONAL
DISTRIBUTION AND NONE
SERVICE (12B-1) FEE
OTHER EXPENSES %
TOTAL ANNUAL CLASS %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE %
GLOBAL EQUITY
DISTRIBUTION AND NONE
SERVICE (12B-1) FEE
OTHER EXPENSES %
TOTAL ANNUAL CLASS %
OPERATING EXPENSESA
ADVISOR MANAGEMENT FEE %
EMERGING
MARKETS
INCOME
DISTRIBUTION AND NONE
SERVICE (12B-1) FEE
OTHER EXPENSES %
TOTAL ANNUAL CLASS %
OPERATING EXPENSESA
A FMR has voluntarily agreed to reimburse Institutional Class of
certain funds to the extent that total operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses), as
a percentage of their respective average net assets, exceed the
following rates:
EFFECTIVE
DATE
ADVISOR LATIN AMERICA 1.75% 12/18/98
ADVISOR JAPAN 1.75% 12/18/98
ADVISOR EUROPE CAPITAL 1.75% 12/18/98
APPRECIATION
ADVISOR INTERNATIONAL 1.45% 12/1/98
CAPITAL APPRECIATION
ADVISOR DIVERSIFIED 1.75% 12/18/98
INTERNATIONAL
ADVISOR GLOBAL EQUITY 1.75% 12/18/98
ADVISOR EMERGING MARKETS 1.25% 7/1/95
INCOME
These arrangements can be terminated by FMR at any time.
[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[, after reimbursement
[for ____],] would have been __% for ____ and __% for ____.]
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that Institutional Class's annual return is
5% and that your shareholder fees and Institutional Class's annual
operating expenses are exactly as described in the fee table. This
example illustrates the effect of fees and expenses, but is not meant
to suggest actual or expected fees and expenses or returns, all of
which may vary. For every $10,000 you invested, here's how much you
would pay in total expenses if you close your account after the number
of years indicated:
ADVISOR LATIN 1 YEAR $
AMERICA
3 YEARS $
ADVISOR 1 YEAR $
JAPAN
3 YEARS $
ADVISOR 1 YEAR $
EUROPE
CAPITAL
APPRECIATION
3 YEARS $
ADVISOR 1 YEAR $
INTERNATIONAL
CAPITAL
APPRECIATION
3 YEARS $
5 YEARS $
10 YEARS $
ADVISOR 1 YEAR $
OVERSEAS
3 YEARS $
5 YEARS $
10 YEARS $
ADVISOR 1 YEAR $
DIVERSIFIED
INTERNATIONAL
3 YEARS $
ADVISOR 1 YEAR $
GLOBAL EQUITY
3 YEARS $
ADVISOR 1 YEAR $
EMERGING
MARKETS
INCOME
3 YEARS $
5 YEARS $
10 YEARS $
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
ADVISOR LATIN AMERICA FUND seeks high total investment return.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
securities of Latin American issuers. Latin America includes
Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Panama and
Venezuela. FMR normally invests the fund's assets primarily in common
stocks.
FMR normally diversifies the fund's investments across different Latin
American countries. In allocating the fund's investments across
countries, FMR will consider the size of the market in each country
relative to the size of the markets in Latin America as a whole.
Although FMR may invest up to 35% of the fund's total assets in any
industry that accounts for more than 20% of the Latin American markets
as a whole, it does not currently intend to invest more than 25% of
the fund's total assets in any one industry.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR JAPAN FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
securities of Japanese issuers. FMR normally invests the fund's assets
primarily in common stocks.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR EUROPE CAPITAL APPRECIATION FUND seeks long-term capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
securities of issuers that have their principal activities in Europe.
Europe includes Austria, Belgium, Belarus, Bulgaria, the Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands,
Norway, Poland, Portugal, Russia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Turkey, and the United Kingdom. FMR normally invests the
fund's assets primarily in common stocks.
FMR normally diversifies the fund's investments across different
European countries. In allocating the fund's investments across
countries, FMR will consider the size of the market in each country
relative to the size of the markets in Europe as a whole.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities, including securities of issuers located in
emerging markets. FMR normally invests the fund's assets primarily in
common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments 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.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR OVERSEAS FUND seeks growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments 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.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR DIVERSIFIED INTERNATIONAL FUND seeks capital growth.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in
foreign securities. FMR normally invests the fund's assets primarily
in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments 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.
In buying and selling securities, FMR uses a disciplined approach that
involves computer-aided, quantitative analysis supported by
fundamental analysis. FMR's computer model systematically reviews
thousands of stocks, using data such as historical earnings, dividend
yield, earnings per share, and other quantitative factors. Then, the
issuers of potential investments are analyzed further using
fundamental factors such as growth potential, earnings estimates and
financial condition.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve its
objective.
INVESTMENT OBJECTIVE
ADVISOR GLOBAL EQUITY FUND seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR invests the fund's assets in securities issued anywhere in the
world, including the United States. FMR normally invests at least 65%
of the fund's total assets in common stocks.
FMR normally diversifies the fund's investments across different
countries and regions. In allocating the fund's investments across
countries and regions, FMR will consider the size of the market in
each country and region relative to the size of the world market as a
whole.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may lend the fund's securities to broker-dealers or other
institutions to earn income for the fund.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices or other factors that affect security values. If FMR's
strategies do not work as intended, the fund may not achieve it's
objective.
INVESTMENT OBJECTIVE
ADVISOR EMERGING MARKETS INCOME FUND seeks a high level of current
income. As a secondary objective, the fund seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests at least 65% of the fund's total assets in debt
securities of issuers in emerging markets. Countries with emerging
markets include those that have an emerging stock market as defined by
the International Finance Corporation, those with low- to
middle-income economies according to the World Bank, and those that
are listed in World Bank publications as "developing." FMR expects to
emphasize countries with relatively low gross national product per
capita compared to the world's major economies and countries with the
potential for rapid economic growth.
FMR may also invest in equity securities of emerging market issuers,
debt securities of non-emerging market foreign issuers, and
lower-quality debt securities of U.S. issuers. Although FMR may invest
up to 35% of the fund's total assets in these securities, FMR does not
currently anticipate that these investments will exceed approximately
20% of the fund's total assets.
FMR normally diversifies the fund's investments across different
emerging market countries. In allocating the fund's investments across
countries, FMR will consider the size of the market in each country
relative to the size of the markets in countries considered emerging
markets as a whole.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR relies on
fundamental analysis of each issuer and its potential for success in
light of its current financial condition, its industry position, and
economic and market conditions. Factors considered include growth
potential, earnings estimates and management.
FMR may use various techniques, such as buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates, or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority
in the event of the bankruptcy of the issuer. Equity securities
include common stocks, preferred stocks, convertible securities and
warrants.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. 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 include
corporate bonds, government securities, mortgage and other
asset-backed securities, and loans and loan participations.
PRINCIPAL INVESTMENT RISKS
Many factors affect each fund's performance. Each fund's share price
and the yield for Advisor Emerging Markets Income Fund change daily
based on changes in market conditions and interest rates and in
response to other economic, political or financial developments. A
fund's reaction to these developments will be affected by the
financial condition, industry and economic sector, and geographic
location of an issuer, and the fund's level of investment in the
securities of that issuer. Because FMR concentrates the investments of
Advisor Europe Capital Appreciation Fund, Advisor Japan Fund and
Advisor Latin America Fund in a particular country or group of
countries, each fund's performance is expected to be closely tied to
economic and political conditions within that country or group of
countries and to be more volatile than the performance of more
geographically diversified funds. When you sell your shares of a fund,
they could be worth more or less than what you paid for them.
The following factors may significantly affect a fund's performance:
STOCK MARKET VOLATILITY. The value of equity securities fluctuates in
response to issuer, political, market and economic developments. In
the short term, equity prices can fluctuate dramatically in response
to these developments. Different parts of the market can react
differently to these developments. For example, large cap stocks can
react differently than small cap stocks, and "growth" stocks can react
differently than "value" stocks. Issuer, political or economic
developments can affect a single issuer, issuers within an industry or
economic sector or geographic region, or the market as a whole.
INTEREST RATE CHANGES. Debt securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise and can rise when
interest rates fall. Securities with longer maturities and mortgage
securities can be more sensitive to interest rate changes. In other
words, the longer the maturity of a security, the greater the impact a
change in interest rates could have on the security's price. In
addition, short-term and long-term interest rates do not necessarily
move in the same amount or the same direction. Short-term securities
tend to react to changes in short-term interest rates, and long-term
securities tend to react to changes in long-term interest rates.
FOREIGN EXPOSURE. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations
can involve additional risks relating to political, economic or
regulatory conditions in foreign countries. These risks include
fluctuations in foreign currencies; withholding or other taxes;
trading, settlement, custodial and other operational risks; and the
less stringent investor protection and disclosure standards of some
foreign markets. All of these factors can make foreign investments,
especially those in emerging markets, more volatile and potentially
less liquid than U.S. investments. In addition, foreign markets can
perform differently than the U.S. market.
Investing in emerging markets involves risks in addition to and
greater than those generally associated with investing in more
developed foreign markets. The extent of foreign development;
political stability; market depth, infrastructure and capitalization
and regulatory oversight is generally less than in more developed
markets. Emerging market economies can be subject to greater social,
economic, regulatory and political uncertainties. All of these factors
can make emerging market securities more volatile and potentially less
liquid than securities issued in more developed markets.
GEOGRAPHIC CONCENTRATION. Political and economic conditions and
changes in regulatory, tax or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries.
LATIN AMERICA. The economies of countries in Latin America are all
considered emerging market economies. High interest, inflation and
unemployment rates generally characterize each economy. Currency
devaluations in any country can have a significant affect on the
entire region. Recently, the markets in many Latin American countries
have experienced significant downturns as well as significant
volatility. A small number of companies and industries, including the
telecommunications sector, represent a large portion of the market in
many Latin American countries.
JAPAN. The Japanese economy is currently in a recession. The economy
is characterized by government intervention and protectionism, an
unstable financial services sector, and relatively high unemployment.
Economic growth is dependent on international trade, government
support of the financial services sector and other troubled sectors,
and consistent government policy. The Japanese market has decreased
significantly recently.
EUROPE. Europe includes both developed and emerging markets. Most
developed countries in Western Europe are members of the European
Union and many are also members of the EMU, which requires compliance
with restrictions on inflation rates, deficits and debt levels. Many
Eastern European countries continue to move toward market economies.
However, their markets remain relatively undeveloped and are
particularly sensitive to political and economic developments. The
tight fiscal and monetary controls necessary to join the EMU will
significantly affect every country in Europe.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can affect the credit quality or value of an
issuer's securities. The value of securities of smaller, less
well-known issuers can be more volatile than that of larger issuers.
Lower-quality debt securities (those of less than investment-grade
quality) tend to be more sensitive to these changes than
higher-quality debt securities.
Lower-quality debt securities involve greater risk of default or price
changes due to changes in the credit quality of the issuer. The value
of lower-quality debt securities often fluctuates in response to
company, political or economic developments and can decline
significantly over short periods of time or during periods of general
or regional economic difficulty. Lower-quality debt securities can be
thinly traded or have restrictions on resale, making them difficult to
sell at an acceptable price. The default rate for lower-quality debt
securities is likely to be higher during economic recessions or
periods of high interest rates.
"QUANTITATIVE" INVESTING. The value of securities selected using
quantitative analysis can react differently to issuer, political,
market and economic developments than the market as a whole or
securities selected using only fundamental analysis. The factors used
in quantitative analysis and the weight placed on those factors may
not be predictive of a security's value. In addition, factors that
affect a security's value can change over time and these changes may
not be reflected in the quantitative model.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.
ADVISOR LATIN AMERICA FUND seeks high total investment return.
ADVISOR JAPAN FUND seeks long-term growth of capital.
ADVISOR EUROPE CAPITAL APPRECIATION FUND seeks long-term capital
appreciation.
ADVISOR INTERNATIONAL CAPITAL APPRECIATION FUND seeks capital
appreciation.
ADVISOR OVERSEAS FUND seeks growth of capital primarily through
investments in foreign securities.
ADVISOR DIVERSIFIED INTERNATIONAL FUND seeks capital growth by
investing primarily in equity securities of companies located anywhere
outside the U.S.
ADVISOR GLOBAL EQUITY FUND seeks long-term growth of capital.
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.
VALUING SHARES
Each fund is open for business each day the New York Stock Exchange
(NYSE) is open.
A class's net asset value per share (NAV) is the value of a single
share. Fidelity(registered trademark) normally calculates
Institutional Class's NAV as of the close of business 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
Securities and Exchange Commission (SEC). Each fund's assets are
valued as of this time for the purpose of computing Institutional
Class's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
Each fund's assets are valued primarily on the basis of market
quotations or on the basis of information furnished by a pricing
service. Certain short-term securities are valued on the basis of
amortized cost. If market quotations or information furnished by a
pricing service is not readily available for a security or if a
security's value has been materially affected by events occurring
after the close of the exchange or market on which the security is
principally traded (for example, a foreign exchange or market), that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. In these circumstances, the
security's valuation may differ from the generally expected valuation.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
For account, product and service information, please use the following
phone numbers:
(small solid bullet) If you are investing through a broker-dealer or
insurance representative, 1-800-522-7297 (8:30 a.m. - 7:00 p.m.
Eastern time, Monday through Friday).
(small solid bullet) If you are investing through a bank
representative, 1-800-843-3001 (8:30 a.m. - 7:00 p.m. Eastern time,
Monday through Friday).
Please use the following addresses:
BUYING OR SELLING SHARES
Fidelity Investments(registered trademark)
P.O. Box 770002
Cincinnati, OH 45277-0081
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH2A
Hebron, KY 41048
You may buy or sell Institutional Class shares of the funds through a
retirement account or an investment professional. When you invest
through a retirement account or an investment professional, the
procedures for buying, selling and exchanging Institutional Class
shares of a fund and the account features and policies may differ.
Additional fees may also apply to your investment in Institutional
Class shares of a fund, including a transaction fee if you buy or sell
Institutional Class shares of the fund through a broker or other
investment professional.
Certain methods of contacting Fidelity, such as by telephone, may be
unavailable or delayed (for example, during periods of unusual market
activity).
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
RETIREMENT
FOR TAX-ADVANTAGED RETIREMENT SAVINGS
TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
ROTH IRAS
ROTH CONVERSION IRAS
ROLLOVER IRAS
401(K) PLANS, and certain other 401(A)-QUALIFIED PLANS
KEOGH PLANS
SIMPLE IRAS
SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS)
SALARY REDUCTION SEP-IRAS (SARSEPS)
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS OR
OTHER GROUPS
BUYING SHARES
Institutional Class shares are offered to:
1. Broker-dealer managed account programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans must have at least $50 million in plan assets;
2. Registered investment advisor managed account programs, provided
the registered investment advisor is not part of an organization
primarily engaged in the brokerage business, and the program (i)
charges an asset-based fee and (ii) will have at least $1 million
invested in the Institutional Class of the Advisor funds. In addition,
non-employee benefit plan accounts in the program must be managed on a
discretionary basis;
3. Trust institution and bank trust department managed account
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds; and
5. Fidelity Trustees and employees.
6. Insurance company employee benefit plan programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. Insurance company employee
benefit plan programs include such programs offered by a broker-dealer
affiliate of an insurance company, provided that the affiliate is not
part of an organization primarily engaged in the brokerage business.
For purchases made by managed account programs, insurance company
separate accounts or insurance company employee benefit plan programs,
FDC reserves the right to waive the requirement that $1 million be
invested in the Institutional Class of the Advisor funds. Employee
benefit plan investors must meet additional requirements specified in
the funds' Statement of Additional Information (SAI).
The price to buy one share of Institutional Class is the class's NAV.
Institutional Class shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your order
is received in proper form.
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.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity funds, and accounts under
common ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, 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) Fidelity reserves the right to limit the number
of checks processed at one time.
(small solid bullet) 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 liable for any losses
or fees a fund or Fidelity has incurred.
(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.
Institutional Class shares can be bought or sold through investment
professionals using an automated order placement and settlement system
that guarantees payment for orders on a specified date.
Certain financial institutions that meet creditworthiness criteria
established by Fidelity Distributors Corporation (FDC) 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 that time, the order will be
canceled and the financial institution will be liable for any losses.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
For certain Fidelity Advisor retirement accountsA $500
Through regular investment plansB $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
For certain Fidelity Advisor retirement accountsA None
A FIDELITY ADVISOR TRADITIONAL IRA, ROTH IRA, ROTH CONVERSION IRA,
ROLLOVER IRA, SEP-IRA, AND KEOGH ACCOUNTS.
BAN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $100, PROVIDED THAT A
REGULAR INVESTMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS
OPENED.
There is no minimum account balance or initial or subsequent purchase
minimum for certain Fidelity retirement accounts funded through salary
deduction, or accounts opened with the proceeds of distributions from
such retirement accounts. In addition, each fund may waive or lower
purchase minimums in other circumstances.
KEY
INFORMATI
ON
PHONE TO OPEN AN ACCOUNT
(bullet)
Exchange from the same
class of another Fidelity
Advisor fund or from
another Fidelity fund.
Call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information."
TO ADD TO AN
ACCOUNT
(bullet)
Exchange from the same
class of another Fidelity
Advisor fund or from
another Fidelity fund.
Call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information."
MAIL TO OPEN AN
FIDELITY ACCOUNT
INVESTMENTS (bullet)
P.O. BOX 770002 Complete and sign the
CINCINNATI, OH application. Make your
45277-0081 check payable to the
complete name of the
fund and note the
applicable class. Mail to
your investment
professional or to the
address at left.
TO ADD TO AN
ACCOUNT
(bullet)
Make your check
payable to the complete
name of the fund and
note the applicable
class. Indicate your fund
account number on your
check and mail to your
investment professional
or to the address at left.
(bullet)
Exchange from the same
class of other Fidelity
Advisor funds or from
another Fidelity fund.
Send a letter of instruction
to your investment
professional or to the
address at left, including
your name, the funds'
names, the applicable
class names, the fund
account numbers, and the
dollar amount or number
of shares to be
exchanged.
IN PERSON TO OPEN AN
ACCOUNT
(bullet)
Bring your application
and check to your
investment professional.
TO ADD TO AN
ACCOUNT
(bullet)
Bring your check to your
investment professional.
WIRE TO OPEN AN
ACCOUNT
(bullet)
Call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" to set up
your account and to
arrange a wire
transaction.
(bullet)
Wire to: Banker's Trust
Company, Bank Routing
# 021001033, Account
# 00159759.
(bullet)
Specify the complete
name of the fund, note
the applicable class, and
include your new fund
account number and
your name.
TO ADD TO AN
ACCOUNT
(bullet)
Wire to: Banker's Trust
Company, Bank Routing
# 021001033, Account
# 00159759.
(bullet)
Specify the complete
name of the fund, note
the applicable class, and
include your fund
account number and
your name.
AUTOMATICAL TO OPEN AN ACCOUNT
LY (bullet)
Not available.
TO ADD TO AN
ACCOUNT
(bullet)
Use Fidelity Advisor
Systematic Investment
Program.
SELLING SHARES
The price to sell one share of Institutional Class is the class's NAV.
Each fund may impose a trading fee on redemptions from the fund.
Your shares will be sold at the next NAV calculated after your order
is received in proper form.
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.
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 sell 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; or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
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.
When you place an order to sell shares, note the following:
(small solid bullet) 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, except accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(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) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.
KEY
INFORMATI
ON
PHONE (bullet)
Call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" to initiate a
wire transaction or to
request a check for your
redemption.
(bullet)
Exchange to the same
class of other Fidelity
Advisor funds or to
another Fidelity fund. Call
your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information."
MAIL INDIVIDUAL, JOINT
FIDELITY TENANT,
INVESTMENTS SOLE PROPRIETORSHIP,
P.O. BOX 770002 UGMA, UTMA
CINCINNATI, OH (bullet)
45277-0081 Send a letter of
instruction to your
investment professional
or to the address at left,
including your name, the
fund's name, the
applicable class name,
your fund account
number, and the dollar
amount or number of
shares to be sold. The
letter of instruction must
be signed by all persons
required to sign for
transactions, exactly as
their names appear on
the account.
RETIREMENT ACCOUNT
(bullet)
The account owner
should complete a
retirement distribution
form. Call your
investment professional
or call Fidelity at the
appropriate number
found in "General
Information" to request
one.
TRUST
(bullet)
Send a letter of
instruction to your
investment professional
or to the address at left,
including the trust's
name, the fund's name,
the applicable class
name, the trust's fund
account number, and the
dollar amount or number
of shares to be sold. The
trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR
ORGANIZATION
(bullet)
Send a letter of
instruction to your
investment professional
or to the address at left,
including the firm's
name, the fund's name,
the applicable class
name, the firm's fund
account number, and the
dollar amount or number
of shares to be sold. At
least one person
authorized by corporate
resolution to act on the
account must sign the
letter of instruction.
(bullet)
Include a corporate
resolution with corporate
seal or a signature
guarantee.
EXECUTOR,
ADMINISTRATOR,
CONSERVATOR,
GUARDIAN
(bullet)
Call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" for
instructions.
IN PERSON INDIVIDUAL, JOINT
TENANT,
SOLE PROPRIETORSHIP,
UGMA, UTMA
(bullet)
Bring a letter of
instruction to your
investment professional.
The letter of instruction
must be signed by all
persons required to sign
for transactions, exactly
as their names appear on
the account.
RETIREMENT ACCOUNT
(bullet)
The account owner
should complete a
retirement distribution
form. Visit your
investment professional
to request one.
TRUST
(bullet)
Bring a letter of
instruction to your
investment professional.
The trustee must sign the
letter of instruction
indicating capacity as
trustee. If the trustee's
name is not in the
account registration,
provide a copy of the trust
document certified within
the last 60 days.
BUSINESS OR
ORGANIZATION
(bullet)
Bring a letter of
instruction to your
investment professional.
At least one person
authorized by corporate
resolution to act on the
account must sign the
letter of instruction.
(bullet)
Include a corporate
resolution with corporate
seal or a signature
guarantee.
EXECUTOR,
ADMINISTRATOR,
CONSERVATOR,
GUARDIAN
(bullet)
Visit your investment
professional for
instructions.
AUTOMATICAL (bullet)
LY Use Fidelity Advisor
Systematic Withdrawal
Program to set up
periodic redemptions
from your Institutional
Class account.
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As an Institutional Class shareholder, you have the privilege of
exchanging your Institutional Class shares for Institutional Class
shares of other Fidelity Advisor funds or for shares of Fidelity
funds.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only 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) Each fund may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year.
(small solid bullet) The exchange limit may be modified for accounts
held by 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 may 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.
The funds may terminate or modify the exchange privileges in the
future.
Other funds may have different exchange restrictions, and may impose
administrative fees of up to 1.00% and trading fees of up to 3.00% of
the amount exchanged. Check each fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
funds.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs 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. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY ADVISOR
SYSTEMATIC
INVESTMENT
PROGRAM
TO MOVE MONEY FROM
YOUR BANK ACCOUNT TO
A FIDELITY ADVISOR
FUND
MINIMUM MINIMUM FREQUENCY PROCEDURES
INITIAL ADDITIONAL Monthly, bimonthly, quarterly, (bullet) To set up
$100 $100 or semi-annually for a new account,
complete the
appropriate section on
the application.
(bullet) To set up
for existing accounts,
call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" for an
application.
(bullet) To make
changes, call your
investment
professional or call
Fidelity at the
appropriate number
found in "General
Information." Call at
least 10 business
days prior to your
next scheduled
investment date.
FIDELITY ADVISOR
SYSTEMATIC
WITHDRAWAL
PROGRAM
TO SET UP PERIODIC
REDEMPTIONS FROM
YOUR INSTITUTIONAL
CLASS ACCOUNT TO YOU
OR TO YOUR BANK
CHECKING ACCOUNT.
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Monthly, quarterly, or (bullet) Accounts
semi-annually with a value of
$10,000 or more in
Institutional Class
shares are eligible for
this program.
(bullet) To set up,
call your investment
professional or call
Fidelity at the
appropriate number
found in "General
Information" for
instructions.
(bullet) To make
changes, call your
investment
professional or call
Fidelity at the
appropriate number
found in "General
Information." Call at
least 10 business
days prior to your
next scheduled
withdrawal date.
</TABLE>
OTHER FEATURES. The following other features are also available to buy
and sell shares of the funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(bullet) You must sign up for the Wire feature before using it.
Complete the appropriate section on the application when opening your
account.
(bullet) Call your investment professional or call Fidelity at the
appropriate number found in "General Information" before your first
use to verify that this feature is set up on your account.
(bullet) To sell shares by wire, you must designate the U.S.
commercial bank account(s) into which you wish the redemption proceeds
deposited.
(bullet) To add the wire feature or to change the bank account
designated to receive redemption proceeds at any time prior to making
a redemption request, you should send a letter of instruction,
including a signature guarantee, to your investment professional or to
Fidelity at the address found in "General Information."
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(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, prospectuses or historical account
information.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable security procedures
designed to verify the identity of the investor. Fidelity will request
personalized security codes or other information, and may also record
calls. For transactions conducted through the Internet, Fidelity
recommends the use of an Internet browser with 128-bit encryption. You
should verify the accuracy of your confirmation statements immediately
after you receive them. If you do not want the ability to sell and
exchange by telephone, call Fidelity for instructions. Additional
documentation may be required from corporations, associations, and
certain fiduciaries.
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.
If your ACCOUNT BALANCE falls below $1,000 (except accounts not
subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold 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.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Each fund earns dividends, interest and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gains distributions.
Each of Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Overseas, Advisor Diversified International, and Advisor Global Equity
normally pays dividends and capital gains distributions in December.
Advisor Emerging Markets Income normally declares dividends daily and
pays them monthly. The fund normally pays capital gains distributions
in December and February.
EARNING DIVIDENDS
Shares of Advisor Emerging Markets Income purchased by an automated
purchase order begin to earn dividends on the day your payment is
received.
Shares of Advisor Emerging Markets Income purchased by all other
purchase orders begin to earn dividends on the first business day
following the day your payment is received.
Shares of Advisor Emerging Markets Income earn dividends until, but
not including, the next business day following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
Institutional Class's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gains distributions
will be automatically reinvested in additional Institutional Class
shares 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 gains distributions will be
automatically reinvested in additional Institutional Class shares of
the fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gains distributions will be
paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in the same class of shares of another
identically registered Fidelity Advisor fund or shares of identically
registered Fidelity funds. Your capital gains distributions will be
automatically invested in Institutional Class shares of another
identically registered Fidelity Advisor fund or shares of identically
registered Fidelity funds, automatically reinvested in additional
Institutional Class shares of the fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, contact your investment
professional directly or call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you. If you are not investing through a
tax-advantaged retirement account, you should consider these tax
consequences.
TAXES ON DISTRIBUTIONS. Distributions you receive from each fund are
subject to federal income tax, and may also be subject to state or
local taxes.
For federal tax purposes, each fund's dividends and distributions of
short-term capital gains are taxable to you as ordinary income. Each
fund's distributions of long-term capital gains are taxable to you
generally as capital gains.
If a fund's distributions exceed its income and capital gains realized
in any year, which is sometimes the result of currency-related losses,
all or a portion of those distributions may be treated as a return of
capital to shareholders for tax purposes. A return of capital will
generally not be taxable to you, but will reduce the cost basis of
your shares and result in a higher reported capital gain or a lower
reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in Institutional Class shares of another
Fidelity Advisor fund or shares of Fidelity funds, you will receive
certain December distributions in January, but those distributions
will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your redemptions, including exchanges, may
result in a capital gain or loss for federal tax purposes. A capital
gain or loss on your investment in a fund is the difference between
the cost of your shares and the price you receive when you sell them.
FUND SERVICES
FUND MANAGEMENT
Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.
FMR is each fund's manager.
As of ___, FMR had approximately $___ billion in discretionary assets
under management.
As the manager, FMR is responsible for choosing the funds' investments
and handling their business affairs.
Affiliates assist FMR with foreign investments:
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR
U.K.), in London, England, serves as a sub-adviser for each fund. FMR
U.K. was organized in 1986 to provide investment research and advice
to FMR. Currently, FMR U.K. provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services 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. FMR
Far East was organized in 1986 to provide investment research and
advice to FMR. Currently, FMR Far East provides investment research
and advice on issuers based outside the United States and may also
provide investment advisory services for each fund.
(small solid bullet) Fidelity International Investment Advisors
(FIIA), in Pembroke, Bermuda, serves as a sub-adviser for each fund.
As of ___, FIIA had approximately $___ in discretionary assets under
management. Currently, FIIA provides investment research and advice on
issuers based outside the United States and may also provide
investment advisory services 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. As of ___, FIIA(U.K.)L had approximately $___ in
discretionary assets under management. Currently, FIIA(U.K.)L provides
investment research and advice on issuers based outside the United
States and may also provide investment advisory services for each
fund.
(small solid bullet) Fidelity Investment Japan Ltd. (FIJ), in Tokyo,
Japan, serves as a sub-adviser for Advisor Japan, Advisor
International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, Advisor Global Equity, and Advisor Emerging
Markets Income. As of ___, FIJ had approximately $___ in discretionary
assets under management. Currently, FIJ is primarily responsible for
choosing investments for Advisor Japan. Currently, FIJ provides
investment research and advice on issuers based outside the United
States and may also provide investment advisory services for Advisor
International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, Advisor Global Equity, and Advisor Emerging
Markets Income.
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
John Carlson is Vice President and manager of Advisor Emerging Markets
Income, which he has managed since June 1995. He also manages 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.
Greg Fraser is Vice President and manager of Advisor Diversified
International, which he has managed since December 1998. He also
manages other Fidelity funds. Since joining Fidelity in 1986, Mr.
Fraser has worked as an analyst and manager.
Dick Habermann is Vice President and manager of Advisor Global Equity,
which he has managed since December 1998. He also manages other
Fidelity funds. Mr. Habermann is a Senior Vice President of FMR Co.
Previously, he was Division Head for International Equities and
Director of International Research from 1993 to 1996, and Joint Chief
Strategist for Portfolio Advisory ServicesSM from 1996 to 1997. Mr.
Habermann joined Fidelity in 1968.
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 and Advisor Europe Capital Appreciation, which he
has managed since November 1997 and December 1998, respectively. He
also manages other Fidelity funds. Since joining Fidelity in 1986, Mr.
McCarey has worked as an analyst and manager.
Brenda Reed is Vice President and manager of Advisor Japan, which she
has managed since December 1998. She also manages other Fidelity
funds. Since joining Fidelity in 1992, Ms. Reed has worked as an
analyst and manager.
Margaret Reynolds is associate manager of Advisor Latin America, which
she has managed since December 1998. Since joining Fidelity in 1995,
Ms. Reynolds has worked as an analyst and associate manager. Prior to
joining Fidelity in 1995, Ms. Reynolds was an international equity and
fixed-income analyst with Putnam Investments covering Latin America
and other emerging markets from 1986 to 1995.
Patricia Satterthwaite is Vice President and lead manager of Advisor
Latin America, which she has managed since December 1998. She also
manages other Fidelity funds. Since joining Fidelity in 1986, Ms.
Satterthwaite has worked as an analyst and manager.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a management fee to FMR.
The management fee is calculated and paid to FMR every month.
For Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Diversified International, Advisor Global Equity, and Advisor Emerging
Markets Income, the fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by the fund's average net assets throughout the month.
For Advisor Overseas, the fee is determined by calculating a basic fee
and then applying a performance adjustment. The performance adjustment
either increases or decreases the management fee, depending on how
well the fund has performed relative to the EAFE Index.
MANAGEMENT = BASIC +/- PERFORMANCE
FEE FEE ADJUSTMENT
The basic fee is calculated by adding a group fee rate to an
individual fund fee rate, dividing by twelve, and multiplying the
result by the fund's average net assets throughout the month.
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
Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Overseas, Advisor Diversified International, and Advisor Global Equity
or 0.37% for Advisor Emerging Markets Income, and it drops as total
assets under management increase.
For October 1998, the group fee rate was __% for Advisor Latin
America, Advisor Japan, Advisor Europe Capital Appreciation, Advisor
International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, and Advisor Global Equity and for December
1998, the group fee rate was ___% for Advisor Emerging Markets Income.
The individual fund fee rate is 0.45% for Advisor Latin America,
Advisor Japan, Advisor Europe Capital Appreciation, Advisor
International Capital Appreciation, Advisor Overseas Fund, Advisor
Diversified International, and Advisor Global Equity and 0.55% for
Advisor Emerging Markets Income.
The basic fee for Advisor Overseas for the fiscal year ended October
31, 1998 was __% of the fund's average net assets.
The performance adjustment rate is calculated monthly by comparing
Advisor Overseas's performance to that of the EAFE Index over the
performance period.
For Advisor Overseas, the performance period is the most recent
36-month period.
The performance adjustment rate is divided by twelve and multiplied by
the fund's average net assets throughout the month, and the resulting
dollar amount is then 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 Advisor
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 total management fee for the fiscal year ended October 31, 1998
was __%[, after reimbursement,] of the fund's average net assets for
Advisor International Capital Appreciation and __%[, after
reimbursement,] of the fund's average net assets for Advisor Overseas.
The total management fee for the fiscal year ended December 31, 1998
was __%[, after reimbursement,] of the fund's average net assets for
Advisor Emerging Markets Income.
FMR pays FMR U.K., FMR Far East, FIJ and FIIA for providing assistance
with investment advisory services, and FIIA in turn pays FIIA(U.K.)L.
FMR may, from time to time, agree to reimburse each class for
management fees and other expenses above a specified limit. FMR
retains the ability to be repaid by a class if expenses fall below the
specified limit prior to the end of the fiscal year. Reimbursement
arrangements, which may be terminated by FMR at any time, can decrease
a class's expenses and boost its performance.
As of December 31, 1998, approximately __% and __% of ___'s and ___'s
total outstanding shares, respectively, were held by [FMR/FMR and [an]
FMR affiliate[s]/[an] FMR affiliate[s]].
FUND DISTRIBUTION
Each fund is composed of multiple classes of shares. All classes of a
fund have a common investment objective and investment portfolio.
FDC distributes Institutional Class's shares.
Institutional Class has adopted a Distribution and Service Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 that
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 providing services intended
to result in the sale of Institutional Class shares and/or shareholder
support services. FMR, directly or through FDC, may pay
intermediaries, such as banks, broker-dealers and other
service-providers, that provide those services. Currently, the Board
of Trustees of each fund has authorized such payments for
Institutional Class.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of the Fidelity Advisor funds, provided
that a fund receives brokerage services and commission rates
comparable to those of other broker-dealers.
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
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
class's financial history for the past 1 year for Advisor
International Capital Appreciation and the past 4 years for Advisor
Overseas and Advisor Emerging Markets Income. Certain information
reflects financial results for a single class share. Total returns for
each period include the reinvestment of all dividends and
distributions. This information has been audited by ___________,
independent accountants, whose report, along with each fund's
financial highlights and financial statements, are included in each
fund's Annual Report. A free copy of each Annual Report is available
upon request. Advisor Latin America, Advisor Japan, Advisor Europe
Capital Appreciation, Advisor Diversified International, and Advisor
Global Equity commenced operations on December __, 1998.
[FINANCIAL HIGHLIGHTS TO BE FILED BY SUBSEQUENT AMENDMENT.]
PRIOR PERFORMANCE OF SIMILAR FUNDS
Because Advisor Diversified International, Advisor Europe Capital
Appreciation, Advisor Japan, Advisor Latin America, and Advisor Global
Equity (Corresponding Funds) were new when this prospectus was
printed, their performance history is not included. However, Advisor
Diversified International, Advisor Europe Capital Appreciation,
Advisor Japan, and Advisor Latin America are modeled after the
following existing funds, respectively: Fidelity Diversified
International Fund, Fidelity Europe Capital Appreciation Fund,
Fidelity Japan Fund, and Fidelity Latin America Fund (Related Funds).
Advisor Global Equity has investment objectives and policies that are
substantially similar to those of other accounts managed by FMR or an
affiliate (Related Accounts). The comparable existing funds and
similar accounts are collectively referred to as the "Related Funds
and Accounts."
The Related Funds and Accounts are managed by FMR or an affiliate and
have investment objectives, policies, and strategies that are
substantially similar to those of the Corresponding Funds offered
through this prospectus. The Related Funds and Accounts, however,
have different expenses and are sold through different distribution
channels.
Below you will find information about the prior performance of the
Related Funds and Accounts, not the performance of the Corresponding
Funds offered through this prospectus. The performance data of the
Related Funds and Accounts is net of advisory fees and other expenses.
Although the Corresponding Funds have substantially similar investment
objectives, policies, and strategies as the Related Funds and
Accounts, you should not assume that the Corresponding Funds will have
the same performance as the Related Funds and Accounts. For example,
a Corresponding Fund's future performance may be better or worse than
the performance of its Related Fund or Account due to, among other
things, differences in sales charges, expenses, asset sizes and cash
flows between the Corresponding Fund and its Related Fund or Account.
The Related Accounts with policies similar to those of Advisor Global
Equity include funds organized in foreign jurisdictions that are not
offered to U.S. investors. These funds have different expense
structures and are subject to different regulatory requirements than
U.S. mutual funds, which may affect their performance.
Advisor Global Equity is subject to restrictions imposed by the 1940
Act and the Internal Revenue Code of 1986 (E.G., limits on the
percentage of assets invested in securities of issuers in a single
industry and requirements on distributing income to shareholders) that
do not apply to its Related Accounts. These differences may affect
the performance of Advisor Global Equity and cause it to differ from
that of its Related Accounts, but do not change the substantial
similarity between Advisor Global Equity and its Related Accounts.
The total returns that follow are based on past results of the Related
Funds and Accounts and do not reflect the effect of taxes. In the
case of Advisor Global Equity, the prior performance shown is for a
composite of non-mutual fund accounts with substantially similar
investment objectives and policies (Composite). The methodology for
calculating the performance of the non-mutual fund accounts differs
from that required to be employed by mutual funds that are offered in
the United States.
The first table below shows the corresponding Related Funds or the
Composite of Advisor Diversified International, Advisor Europe Capital
Appreciation, Advisor Japan, Advisor Latin America, and Advisor Global
Equity; the date FMR began managing each Related Fund and the date of
the commencement of the Composite; and the asset size of each Related
Fund or the Composite as of December 31, 1998.
The next group of tables below shows changes in the performance of
each Related Fund or the Composite, as applicable, from year to year.
The last group of tables below compares the performance of each
Related Fund or the Composite, as applicable, to the performance of a
market index and similar funds over various periods of time.
The performance of each Related Fund or the Composite, as applicable,
does not represent the past performance of the Corresponding Funds and
should not be interpreted as indicative of the future performance of
the Corresponding Funds or the Related Funds and Accounts.
<TABLE>
<CAPTION>
<S> <C> <C>
CORRESPONDING FUNDS OFFERED THROUGH THIS RELATED FUNDS OR COMPOSITE (INCEPTION DATE)
PROSPECTUS AND ASSET SIZE
FIDELITY ADVISOR DIVERSIFIED INTERNATIONAL FUND FIDELITY DIVERSIFIED INTERNATIONAL FUND
(DECEMBER 27, 1991) $ ____________
FIDELITY ADVISOR EUROPE CAPITAL APPRECIATION FUND FIDELITY EUROPE CAPITAL APPRECIATION FUND
(DECEMBER 21, 1993) $ ____________
FIDELITY ADVISOR JAPAN FUND FIDELITY JAPAN FUND
(SEPTEMBER 15, 1992) $ ____________
FIDELITY ADVISOR LATIN AMERICA FUND FIDELITY LATIN AMERICA FUND
(APRIL 19, 1993) $ ____________
FIDELITY ADVISOR GLOBAL EQUITY FUND COMPOSITE OF NON-MUTUAL FUND ACCOUNTS
MANAGED BY FMR OR AN AFFILIATE
(MARCH 31, 1993) $____________
</TABLE>
YEAR-BY-YEAR RETURNS FOR THE RELATED FUNDS AND THE COMPOSITE
The returns in the following tables do not include the effect of
Fidelity Europe Capital Appreciation Fund's, Fidelity Japan Fund's, or
Fidelity Latin America Fund's applicable front-end sales charge. If
the effect of the sales charge was reflected, returns would be lower
than those shown.
FIDELITY DIVERSIFIED INTERNATIONAL FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CALENDAR YEARS 1992 1993 1994 1995 1996 1997 1998
% % % % % % %
PERCENTAGE
(%)
40
30
20
10
0
- -10
1992 1993 1994 1995 1996 1997 1998
</TABLE>
During the periods shown in the chart for Fidelity Diversified
International Fund, the highest return for a quarter was __% (quarter
ending [calendar quarter], [19__]) and the lowest return for a quarter
was __% (quarter ending [calendar quarter], [19__]).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIDELITY EUROPE CAPITAL APPRECIATION FUND
CALENDAR YEARS 1994 1995 1996 1997 1998
PERCENTAGE
(%)
40
30
20
10
0
- -10
1994 1995 1996 1997 1998
</TABLE>
During the periods shown in the chart for Fidelity Europe Capital
Appreciation Fund, the highest return for a quarter was __% (quarter
ending [calendar quarter], [19__]) and the lowest return for a quarter
was __% (quarter ending [calendar quarter], [19__]).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FIDELITY JAPAN FUND
CALENDAR YEARS 1993 1994 1995 1996 1997 1998
% % % % % %
PERCENTAGE
(%)
40
30
20
10
0
- -10
- -20
1993 1994 1995 1996 1997 1998
</TABLE>
During the periods shown in the chart for Fidelity Japan Fund, the
highest return for a quarter was __% (quarter ending [calendar
quarter], [19__]) and the lowest return for a quarter was __% (quarter
ending [calendar quarter], [19__]).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FIDELITY LATIN AMERICA FUND
CALENDAR YEARS 1994 1995 1996 1997 1998
% % % % %
PERCENTAGE
(%)
40
30
20
10
0
- -10
- -20
- -30
1994 1995 1996 1997 1998
</TABLE>
During the periods shown in the chart for Fidelity Latin America Fund,
the highest return for a quarter was __% (quarter ending [calendar
quarter], [19__]) and the lowest return for a quarter was __% (quarter
ending [calendar quarter], [19__]).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
COMPOSITE(DAGGER)
CALENDAR YEARS 1994 1995 1996 1997 1998
% % % % %
PERCENTAGE
(%)
40
30
20
10
0
- -10
- -20
1994 1995 1996 1997 1998
</TABLE>
(dagger) The methodology for calculating the performance of the
non-mutual fund accounts in the Composite differs from that required
to be employed by mutual funds that are offered in the United States.
[During the periods shown in the chart for the Composite, the highest
return for a quarter was __% (quarter ending [calendar quarter],
[19__]) and the lowest return for a quarter was __% (quarter ending
[calendar quarter], [19__]).
AVERAGE ANNUAL RETURNS FOR THE RELATED FUNDS AND THE COMPOSITE
The returns in the following table include the effect of Fidelity
Europe Capital Appreciation Fund's, Fidelity Japan Fund's, and
Fidelity Latin America Fund's maximum applicable front-end sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
RELATED FUNDS
PAST 10 YEARS/
FOR THE PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND+
FIDELITY DIVERSIFIED INTERNATIONAL FUND [A] % % %
MORGAN STANLEY CAPITAL INTERNATIONAL % % %
GDP-WEIGHTED EAFE INDEX
MORGAN STANLEY CAPITAL INTERNATIONAL % % %
CAP-WEIGHTED EAFE INDEX
LIPPER INTERNATIONAL FUNDS AVERAGE % % %
FIDELITY EUROPE CAPITAL APPRECIATION FUND % N/A %
[A]
MORGAN STANLEY CAPITAL INTERNATIONAL % % %
EUROPE INDEX
LIPPER EUROPEAN REGION FUNDS AVERAGE % % %
FIDELITY JAPAN FUND [A] % % %
TOKYO STOCK PRICE INDEX (TOPIX) % % %
LIPPER JAPANESE FUNDS AVERAGE % % %
FIDELITY LATIN AMERICA FUND [A] % % %
MORGAN STANLEY CAPITAL INTERNATIONAL % % %
EMERGING MARKETS FREE-LATIN AMERICA INDEX
LIPPER LATIN AMERICA REGION FUNDS AVERAGE % % %
+ FROM JANUARY 1, 1992 (FIDELITY DIVERSIFIED INTERNATIONAL FUND),
JANUARY 1, 1993 (FIDELITY JAPAN FUND), AND JANUARY 1, 1994 (FIDELITY
EUROPE CAPITAL APPRECIATION FUND AND FIDELITY LATIN AMERICA FUND).
[A] FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998, THE TOTAL OPERATING
EXPENSES WERE ___% FOR FIDELITY DIVERSIFIED INTERNATIONAL FUND, ___% FOR
FIDELITY EUROPE CAPITAL APPRECIATION FUND, ___% FOR FIDELITY JAPAN FUND,
AND ___% FOR FIDELITY LATIN AMERICA FUND (INCLUDING ANY
APPLICABLE EXPENSE REDUCTIONS). IF FMR HAD NOT REIMBURSED
CERTAIN EXPENSES DURING THESE PERIODS, FIDELITY DIVERSIFIED INTERNATIONAL
FUND'S AND FIDELITY JAPAN FUND'S TOTAL RETURNS WOULD HAVE BEEN LOWER.
</TABLE>
COMPOSITE(DAGGER)
FOR THE PERIODS ENDED LIFE OF
DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS COMPOSITE+
COMPOSITE % % %
MORGAN STANLEY CAPITAL % % %
INTERNATIONAL WORLD INDEX
LIPPER GLOBAL FUNDS % % %
AVERAGE
(dagger) The Composite is the asset-weighted composite performance of
three Related Accounts, which are all the non-mutual fund accounts
that have substantially similar investment objectives, policies, and
strategies as Advisor Global Equity. The Composite reflects the
deduction of fees and expenses of 1.75%, which may be higher or lower
than any particular Related Account. Composite performance results
are valued monthly and are asset-weighted by using beginning of month
market values.
+ Life of Composite figures are from March 31, 1993, when the oldest
account in the Composite began reporting its performance in U.S.
dollars.
You can obtain additional information about the funds. The funds' SAI
includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). For Advisor Latin America, Advisor
Japan, Advisor Europe Capital Appreciation, Advisor Diversified
International, and Advisor Global Equity, financial reports will be
available once the funds have completed their first annual or
semi-annual period. Each fund's annual and semi-annual reports include
a discussion of recent market conditions and the fund's investment
strategies, performance and holdings.
For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-800-___-____.
The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-3855
Fidelity Investments & (Pyramid) Design, Fidelity, Fidelity
Investments, and Directed Dividends are registered trademarks of FMR
Corp.
Portfolio Advisory Services is a service mark of FMR Corp.
The third party marks appearing above are the marks of their
respective owners.
1.540185.101 AINTI-pro-0299
FIDELITY ADVISOR FUNDSSM
CLASS A, CLASS T, CLASS B, CLASS C, INSTITUTIONAL CLASS, AND INITIAL
CLASS
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 26, 1999
This Statement of Additional Information (SAI) is not a prospectus.
Portions of the funds' Annual Reports are incorporated herein. The
Annual Reports are supplied with this SAI.
For the Initial Class of Fidelity Advisor Strategic Opportunities
Fund and Fidelity Advisor Mortgage Securities Fund, to obtain a free
additional copy of a Prospectus, dated February 26, 1999, or Annual
Report, please call Fidelity(registered trademark) at
1-800-544-8544. For Class A, Class T, Class B, Class C and
Institutional Class of all funds, to obtain a free additional copy of
a Prospectus, dated February 26, 1999, or Annual Report, please call
Fidelity at 1-800-___-___.
TABLE OF CONTENTS PAGE
Investment Policies and 3
Limitations
Special Considerations Regarding 30
Africa
Special Considerations Regarding 30
Canada
Special Considerations Regarding 31
Europe
Special Considerations Regarding 33
Asia
Special Considerations Regarding 39
Latin America
Special Considerations Regarding 41
the Russian Federation
Portfolio Transactions 42
Valuation 53
Performance 54
Prior Performance of Similar 54
Funds
Additional Purchase, Exchange
and Redemption Information
Distributions and Taxes
Trustees and Officers
Control of Investment Advisers
Management Contracts
Distribution Services
Transfer and Service Agent
Agreements
Description of the Trusts
Financial Statements
Appendix
For more information on any Fidelity fund, including charges and
expenses, call Fidelity at the number indicated above for a free
prospectus. Read it carefully before you invest or send money.
ACOM-ptb- 0299
1.469556.101
(fidelity_logo_graphic)
82 Devonshire Street, Boston, MA 02109
INTERNATIONAL FUNDS
Fidelity Advisor Latin America Fund
Fidelity Advisor Japan Fund
Fidelity Advisor Europe Capital Appreciation Fund
Fidelity Advisor International Capital Appreciation Fund
Fidelity Advisor Overseas Fund
Fidelity Advisor Diversified International Fund
Fidelity Advisor Global Equity Fund
GROWTH FUNDS
Fidelity Advisor TechnoQuantSM Growth Fund
Fidelity Advisor Small Cap Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Retirement Growth Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Large Cap Fund
Fidelity Advisor Dividend Growth Fund
Fidelity Advisor Growth Opportunities Fund
GROWTH AND INCOME FUNDS
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Asset Allocation 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 Government Investment Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS
Fidelity Advisor Municipal Income Fund
Fidelity Advisor Intermediate Municipal Income Fund
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 the fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the
1940 Act)) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF ADVISOR LATIN AMERICA 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
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, except that
the fund may purchase the securities of any issuer if, as a result, no
more than 35% of the fund's total assets would be invested in any
industry that accounts for more than 20% of the Latin American market
as a whole, as measured by an index determined by FMR to be an
appropriate measure of the Latin American market;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
(vii) The fund does not currently intend to 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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page ____.
INVESTMENT LIMITATIONS OF ADVISOR JAPAN 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent
that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page ____.
INVESTMENT LIMITATIONS OF ADVISOR EUROPE 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent
that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page ____.
INVESTMENT LIMITATIONS OF ADVISOR 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page ___.
INVESTMENT LIMITATIONS OF ADVISOR 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) issu e senior securities, except in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as
otherwise permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements).
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page _______.
INVESTMENT LIMITATIONS OF ADVISOR DIVERSIFIED INTERNATIONAL
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent
that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page ____.
INVESTMENT LIMITATIONS OF ADVISOR GLOBAL EQUITY 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent
that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page _____.
INVESTMENT LIMITATIONS OF ADVISOR TECHNOQUANTSM GROWTH FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issu e senior securities, except in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Sec urities and Exchange Commission or as
otherwise permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page _____.
INVESTMENT LIMITATIONS OF ADVISOR SMALL CAP FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (a) more
than 5% of the fund's total assets would be invested in the securities
of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent
that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page _____.
INVESTMENT LIMITATIONS OF ADVISOR 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) iss ue senior securities, except in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by t he Securities and Exchange Commission or as
otherwise permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page ____.
INVESTMENT LIMITATIONS OF ADVISOR 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 se nior secu rities, except in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Se curitie s and Exchange Commission or as
otherwise permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page _____.
INVESTMENT LIMITATIONS OF ADVISOR RETIREMENT 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent
that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page ____.
INVESTMENT LIMITATIONS OF ADVISOR 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 securitie s, except in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as
otherwise permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite any issue of securities (to the extent that the fund
may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than obligations
issued or guaranteed by the Government of the United States, its
agencies or instrumentalities) if, as a result, more than 25% of the
fund's total assets (taken at current value) would be invested in the
securities of issuers having their principal business activities in
the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page _____.
INVESTMENT LIMITATIONS OF ADVISOR 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 in co nne ction with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exch ang e Commission or as
otherwise permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page _____.
INVESTMENT LIMITATIONS OF ADVISOR DIVIDEND 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within
three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent
that the fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR 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 ,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
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.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser, or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR ASSET ALLOCATION 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
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 and selling precious metals, or
from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security
if, as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser, or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest more than 5% of
its total assets in precious metals.
(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.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR 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 ,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of
the fund's net assets) to a registered investment company or portfolio
for which FMR or an affiliate serves as investment adviser, or (b)
acquiring loans, loan participations, or other forms of direct debt
instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except (a) by lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser,
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more that 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR 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 ,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more that 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 15% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR GOVERNMENT INVESTMENT FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
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 investments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies in the real estate
business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
The fund has been advised that the Staff of the Securities and
Exchange Commission (SEC) does not consider proprietary strips of
securities issued by the U.S. Government or its agencies or
instrumentalities, and privately sponsored collateralized mortgage
obligations (CMOs) backed by the U.S. Government or its agencies or
instrumentalities to be U.S. Government securities for purposes of
investment limitation (5). Accordingly, the fund may establish the
following four industry groups: (1) custodian banks for proprietary
strips of obligations of the U.S. Government and its agencies and
instrumentalities that are backed by the full faith and credit of the
U.S. Government; (2) custodian banks for proprietary strips of
obligations of the U.S. Government and its agencies and
instrumentalities that are not backed by the full faith and credit of
the U.S. Government; (3) custodian banks for CMOs that are backed by
the full faith and credit of the U.S. Government; (4) custodian banks
for CMOs that are backed by U.S. Government agencies and
instrumentalities but not by the full faith and credit of the U.S.
Government. If the fund concludes that, under applicable legal
principles, any of these securities is a Government security, it will
exclude the security from investment limitation (5).
INVESTMENT LIMITATIONS OF ADVISOR MORTGAGE SECURITIES FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase any security if, as a result thereof, more than 25% of
the value of its total assets would be invested in the securities of
companies having their principal business activities in the same
industry (this limitation does not apply to securities issued or
guaranteed by the United States government, its agencies or
instrumentalities);
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a ) lending money (up to
7.5% of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or ( b ) acquiring loans, loan participations, or other forms of
direct debt instruments and, in connection therewith, assuming any
associated unfunded commitments of the sellers. (This limitation does
not apply to purchases of debt securities or to repurchase
agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
The fund has been advised that the Staff of the Securities and
Exchange Commission (SEC) does not consider proprietary strips of
securities issued by the U.S. Government or its agencies or
instrumentalities, and privately sponsored collateralized mortgage
obligations (CMOs) backed by the U.S. Government or its agencies or
instrumentalities to be U.S. Government securities for purposes of
investment limitation (5). Accordingly, the fund may establish the
following four industry groups: (1) custodian banks for proprietary
strips of obligations of the U.S. Government and its agencies and
instrumentalities that are backed by the full faith and credit of the
U.S. Government; (2) custodian banks for proprietary strips of
obligations of the U.S. Government and its agencies and
instrumentalities that are not backed by the full faith and credit of
the U.S. Government; (3) custodian banks for CMOs that are backed by
the full faith and credit of the U.S. Government; (4) custodian banks
for CMOs that are backed by U.S. Government agencies and
instrumentalities but not by the full faith and credit of the U.S.
Government. If the fund concludes that, under applicable legal
principles, any of these securities is a Government security, it will
exclude the security from investment limitation (5).
INVESTMENT LIMITATIONS OF ADVISOR INTERMEDIATE BOND FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities ,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment), in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of the fund's total assets would be lent to other parties
(but this limitation does not apply to purchases of debt securities or
to repurchase agreements).
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 7.5%
of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or (b) acquiring loans, loan participations, or other forms of direct
debt instruments and, in connection therewith, assuming any associated
unfunded commitments of the sellers. (This limitation does not apply
to purchases of debt securities or to repurchase agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR SHORT FIXED-INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities ,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to lend assets other than
securities to other parties, except by ( a ) lending money (up to
7.5% of the fund's net assets) to a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser
or ( b ) acquiring loans, loan participations, or other forms of
direct debt instruments and, in connection therewith, assuming any
associated unfunded commitments of the sellers. (This limitation does
not apply to purchases of debt securities or to repurchase
agreements.)
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities ,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others (except to the extent that
the fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(9) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of investment limitations (1) and (5), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
INVESTMENT LIMITATIONS OF ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. government or any of its agencies or instrumentalities ,
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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities);
(8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company managed by Fidelity
Management & Research Company or an affiliate or successor with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (3)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(v) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vi) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of investment limitations (1) and (5), FMR identifies the
issuer of a security depending on its terms and conditions. In
identifying the issuer, FMR will consider the entity or entities
responsible for payment of interest and repayment of principal and the
source of such payments; the way in which assets and revenues of an
issuing political subdivision are separated from those of other
political entities; and whether a governmental body is guaranteeing
the security.
With respect to limitation (iv), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page .
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help a fund achieve
its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act. These
transactions may involve 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 purchase
contracts, financing leases, or sales agreements entered into by
municipalities , mortgages, loans, receivables or other assets.
Payment of interest and repayment of principal may be largely
dependent upon the cash flows generated by the assets backing the
securities and, in certain cases, supported by letters of credit,
surety bonds, or other credit enhancements. Asset-backed security
values may also be affected by other factors including changes in
interest rates, the availability of information concerning the pool
and its structure , the creditworthiness of the servicing agent for
the pool, the originator of the loans or receivables, or the entities
providing the credit enhancement. In addition, these securities may be
subject to prepayment risk.
BORROWING. Each fund may borrow from banks or from other
funds advised by FMR or its affiliates, 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.
CASH MANAGEMENT. A fund can hold uninvested cash or can invest it
in cash equivalents such as money market securities, repurchase
agreements or shares of money market funds. Generally, these
securities offer less potential for gains than other types of
securities.
CENTRAL CASH FUNDS are money market funds managed by FMR or its
affiliates that seek to earn a high level of current income (free from
federal income tax in the case of a municipal money market fund) while
maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of their investments.
COMMON STOCK represents an equity or ownership interest in an
issuer. In the event an issuer is liquidated or declares bankruptcy,
the claims of owners of bonds and preferred stock take
precedence over the claims of those who own common stock.
CONVERTIBLE SECURITIES are bonds, debentures, notes, preferred stocks
or other securities that may be converted or exchanged (by the holder
or by the issuer) into shares of the underlying common stock (or cash
or securities of equivalent value) at a stated exchange ratio. A
convertible security may also be called for redemption or conversion
by the issuer after a particular date and under certain circumstances
(including a specified price) established upon issue. If a convertible
security held by a fund is called for redemption or conversion, the
fund could be required to tender it for redemption, convert it into
the underlying common stock, or sell it to a third party.
Convertible securities generally have less potential for gain or loss
than common stocks. Convertible securities generally provide yields
higher than the underlying common stocks, but generally lower than
comparable non-convertible securities. Because of this higher yield,
convertible securities generally sell at prices above their
"conversion value," which is the current market value of the stock to
be received upon conversion. The difference between this conversion
value and the price of convertible securities will vary over time
depending on changes in the value of the underlying common stocks and
interest rates. When the underlying common stocks decline in value,
convertible securities will tend not to decline to the same extent
because of the interest or dividend payments and the repayment of
principal at maturity for certain types of convertible securities.
However, securities that are convertible other than at the option of
the holder generally do not limit the potential for loss to the same
extent as securities convertible at the option of the holder. When the
underlying common stocks rise in value, the value of convertible
securities may also be expected to increase. At the same time,
however, the difference between the market value of convertible
securities and their conversion value will narrow, which means that
the value of convertible securities will generally not increase to the
same extent as the value of the underlying common stocks. Because
convertible securities may also be interest-rate sensitive, their
value may increase as interest rates fall and decrease as interest
rates rise. Convertible securities are also subject to credit risk,
and are often lower-quality securities.
COUNTRIES NOT CONSIDERED TO HAVE EMERGING MARKETS. As of
_____________ , the following countries are not considered to
have emerging markets: Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New
Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United
Kingdom, and the United States.
DEBT SECURITIES are used by issuers to borrow money. The
issuer usually pays a fixed, variable or floating rate of interest,
and must repay the amount borrowed at the maturity of the security.
Some debt securities, such as zero coupon bonds, do not pay interest
but are sold at a deep discount from their face values. Debt
securities include corporate bonds, government securities, and
mortgage and other asset-backed securities.
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 pre-refunded bond is considered to
be the number of days to the announced call date of the bonds. The
maturities of mortgage 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.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign
operations may involve significant risks in addition to the risks
inherent in U.S. investments.
Foreign investments involve risks relating to local political,
economic, regulatory, or social instability, military action or
unrest, or adverse diplomatic developments, and may be affected by
actions of foreign governments adverse to the interests of U.S.
investors. Such actions may include expropriation or nationalization
of assets, confiscatory taxation, restrictions on U.S. investment or
on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. 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 . There is no assurance that
FMR will be able to anticipate these potential events or counter their
effects. In addition, the value of securities denominated in foreign
currencies and of dividends and interest paid with respect to such
securities will fluctuate based on the relative strength of the U.S.
dollar.
It is anticipated that in most cases the best available market for
foreign securities will be on an exchange or in over-the-counter (OTC)
markets located outside of the United States. Foreign stock markets,
while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some
foreign issuers may be less liquid and more volatile than securities
of comparable U.S. issuers. Foreign security trading, settlement and
custodial practices (including those involving securities settlement
where fund assets may be released prior to receipt of payment) are
often less developed than those in U.S. markets, and may result in
increased risk or substantial delays in the event of a failed trade or
the insolvency of, or breach of duty by, a foreign broker-dealer,
securities depository or foreign subcustodian. In addition, the costs
associated with foreign investments, including withholding taxes,
brokerage commissions and custodial costs, are generally higher than
with U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and
standards of practice comparable to those applicable to U.S. issuers.
Adequate public information on foreign issuers may not be available,
and it may be difficult to secure dividends and information regarding
corporate actions on a timely basis. In general, there is less overall
governmental supervision and regulation of securities exchanges,
brokers, and listed companies than in the United States. OTC markets
tend to be less regulated than stock exchange markets and, in certain
countries, may be totally unregulated. Regulatory enforcement may be
influenced by economic or political concerns, and investors may have
difficulty enforcing their legal rights in foreign countries.
Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such
transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depositary Receipts (ADRs) as well as other "hybrid" forms of
ADRs, including European Depositary Receipts (EDRs) and Global
Depositary Receipts (GDRs), are certificates evidencing ownership of
shares of a foreign issuer. These certificates are issued by
depository banks and generally trade on an established market in the
United States or elsewhere. The underlying shares are held in trust by
a custodian bank or similar financial institution in the issuer's home
country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various
services, including forwarding dividends and interest and corporate
actions. ADRs are alternatives to directly purchasing the underlying
foreign securities in their national markets and currencies. However,
ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the
underlying issuer's country.
The risks of foreign investing may be magnified for investments in
emerging markets. Security prices in emerging markets can be
significantly more volatile than those in more developed markets,
reflecting the greater uncertainties of investing in less established
markets and economies. In particular, countries with emerging markets
may have relatively unstable governments, may present the risks of
nationalization of businesses, restrictions on foreign ownership and
prohibitions on the repatriation of assets, and may have less
protection of property rights than more developed countries. The
economies of countries with emerging markets may be based on only a
few industries, may be highly vulnerable to changes in local or global
trade conditions, and may suffer from extreme and volatile debt
burdens or inflation rates. Local securities markets may trade a small
number of securities and may be unable to respond effectively to
increases in trading volume, potentially making prompt liquidation of
holdings difficult or impossible at times.
FOREIGN CURRENCY TRANSACTIONS. A fund may conduct foreign currency
transactions on a spot (i.e., cash) or forward basis (i.e., by
entering into forward contracts to purchase or sell foreign
currencies). Although foreign exchange dealers generally do not charge
a fee for such conversions, they do realize a profit based on the
difference between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency at one rate, while offering a lesser rate of exchange should
the counterparty desire to resell that currency to the dealer. Forward
contracts are customized transactions that require a specific amount
of a currency to be delivered at a specific exchange rate on a
specific date or range of dates in the future. Forward contracts are
generally traded in an interbank market directly between currency
traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the
contract before its maturity, or may hold the contract to maturity and
complete the contemplated currency exchange.
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.
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
involve an agreement to purchase a foreign security and to sell that
security back to original seller at an agreed-upon price in either
U.S. dollars or foreign currency. Unlike typical U.S. repurchase
agreements, foreign repurchase agreements may not be fully
collateralized at all times. The value of a security purchased by a
fund may be more or less than the price at which the counterparty has
agreed to repurchase the security. In the event of default by the
counterparty, the fund may suffer a loss if the value of the security
purchased is less than the agreed-upon repurchase price, or if the
fund is unable to successfully assert a claim to the collateral under
foreign laws. As a result, foreign repurchase agreements may involve
higher credit risks than repurchase agreements in U.S. markets, as
well as risks associated with currency fluctuations. In addition, as
with other emerging market investments, repurchase agreements with
counterparties located in emerging markets or relating to emerging
markets may involve issuers or counterparties with lower credit
ratings than typical U.S. repurchase agreements.
FUNDS' RIGHTS AS SHAREHOLDERS. The funds do not intend to direct or
administer the day-to-day operations of any company. A fund, however,
may exercise its rights as a shareholder and may communicate its views
on important matters of policy to management, the Board of Directors,
and shareholders of a company when FMR determines that such matters
could have a significant effect on the value of the fund's investment
in the company. The activities in which a fund may engage, either
individually or in conjunction with others, may include, among others,
supporting or opposing proposed changes in a company's corporate
structure or business activities; seeking changes in a company's
directors or management; seeking changes in a company's direction or
policies; seeking the sale or reorganization of the company or a
portion of its assets; or supporting or opposing third-party takeover
efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that a fund could be involved in
lawsuits related to such activities. FMR will monitor such activities
with a view to mitigating, to the extent possible, the risk of
litigation against a fund and the risk of actual liability if a fund
is involved in litigation. No guarantee can be made, however, that
litigation against a fund will not be undertaken or liabilities
incurred.
FUTURES AND OPTIONS. The following paragraphs pertain to futures and
options: 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.
COMBINED POSITIONS involve purchasing and writing options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, purchasing a put option and writing a
call option on the same underlying instrument would construct a
combined position whose risk and return characteristics are similar to
selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call
option at a lower price, to reduce the risk of the written call option
in the event of a substantial price increase. Because combined options
positions involve multiple trades, they result in higher transaction
costs and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. A fund may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests, which involves a risk that the
options or futures position will not track the performance of the
fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. In purchasing a futures contract, the buyer agrees
to purchase a specified underlying instrument at a specified future
date. In selling a futures contract, the seller agrees to sell a
specified underlying instrument at a specified future date. The price
at which the purchase and sale will take place is fixed when the buyer
and seller enter into the contract. Some currently available futures
contracts are based on specific securities, such as U.S. Treasury
bonds or notes, and some are based on indices of securities prices,
such as the Standard & Poor's 500 Index (S&P 500) or the Bond Buyer
Municipal Bond Index. Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is
available.
Futures may be based on foreign indexes such as the CAC 40
(France), DAX 30 (Germany), EuroTop 100 (Europe), IBEX (Spain), FTSE
100 (United Kingdom), All Ordinary (Australia), Hang Seng (Hong Kong),
and Nikkei 225, Nikkei 300 and TOPIX (Japan).
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
Although futures exchanges generally operate similarly in the United
States and abroad, foreign futures exchanges may follow trading,
settlement and margin procedures that are different from those for
U.S. exchanges. Futures contracts traded outside the United States may
involve greater risk of loss than U.S.-traded contracts, including
potentially greater risk of losses due to insolvency of a futures
broker, exchange member or other party that may owe initial or
variation margin to a fund. Because initial and variation margin
payments may be measured in foreign currency, a futures contract
traded outside the United States may also involve the risk of foreign
currency fluctuation.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The funds intend to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the funds can commit assets to initial margin deposits and option
premiums.
In addition, each equity 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 under
normal conditions ; 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.
In addition, each bond fund will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than
25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the fund's total obligations upon
settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets; or (c) purchase call
options if, as a result, the current value of option premiums for call
options purchased by the fund would exceed 5% of the fund's total
assets. These limitations do not apply to options attached to or
acquired or traded together with their underlying securities, and do
not apply to securities that incorporate features similar to
options.
Each bond fund further limits its options and futures investments to
options and futures contracts relating to U.S. Government securities.
The above limitations on the funds' investments in futures contracts
and options, and the funds' policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible to enter into new positions or close out
existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could
prevent prompt liquidation of unfavorable positions, and potentially
could require a fund to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, a fund's
access to other assets held to cover its options or futures positions
could also be impaired.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except
that they are traded on exchanges (and have margin requirements) and
are standardized as to contract size and delivery date. Most currency
futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency,
which generally is purchased or delivered in exchange for U.S.
dollars, or may be a futures contract. The purchaser of a currency
call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed
above. A fund may purchase and sell currency futures and may purchase
and write currency options to increase or decrease its exposure to
different foreign currencies. Currency options may also be purchased
or written in conjunction with each other or with currency futures or
forward contracts. Currency futures and options values can be expected
to correlate with exchange rates, but may not reflect other factors
that affect the value of a fund's investments. A currency hedge, for
example, should protect a Yen-denominated security from a decline in
the Yen, but will not protect a fund against a price decline resulting
from deterioration in the issuer's creditworthiness. Because the value
of a fund's foreign-denominated investments changes in response to
many factors other than exchange rates, it may not be possible to
match the amount of currency options and futures to the value of the
fund's investments exactly over time.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the purchaser or writer greater flexibility
to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed
by the clearing organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the
purchaser obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for
this right, the purchaser pays the current market price for the option
(known as the option premium). Options have various types of
underlying instruments, including specific securities, indices of
securities prices, and futures contracts. The purchaser may terminate
its position in a put option by allowing it to expire or by exercising
the option. If the option is allowed to expire, the purchaser will
lose the entire premium. If the option is exercised, the purchaser
completes the sale of the underlying instrument at the strike price. A
purchaser may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. The writer of a put or call option takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the writer assumes the obligation
to pay the strike price for the option's underlying instrument if the
other party to the option chooses to exercise it. The writer may seek
to terminate a position in a put option before exercise by closing out
the option in the secondary market at its current price. If the
secondary market is not liquid for a put option, however, the writer
must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes. When writing an option on
a futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the writer to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options
are similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the
effects of a price decline. At the same time, because a call writer
must be prepared to deliver the underlying instrument in return for
the strike price, even if its current value is greater, a call writer
gives up some ability to participate in security price increases.
ILLIQUID SECURITIES cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they
are valued. Difficulty in selling securities may result in a loss or
may be costly to a fund. 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
securities. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency and volume
of trades and quotations, (2) the number of dealers and prospective
purchasers in the marketplace, (3) dealer undertakings to make a
market and (4) the nature of the security and the market in which it
trades (including any demand, put or tender features, the mechanics
and other requirements for transfer, any letters of credit or other
credit enhancement features, any ratings, the number of holders, the
method of soliciting offers, the time required to dispose of the
security, and the ability to assign or offset the rights and
obligations of the security).
INDEXED SECURITIES are instruments whose prices are indexed to the
prices of other securities, securities indices, currencies, or other
financial indicators. Indexed securities typically, but not always,
are debt securities or deposits whose value at maturity or coupon rate
is determined by reference to a specific instrument or statistic.
Indexed securities may have principal payments as well as coupon
payments that depend on the performance of one or more interest rates.
Their coupon rates or principal payments may change by several
percentage points for every 1% interest rate change.
Mortgage-indexed securities, for example, could be structured to
replicate the performance of mortgage securities and the
characteristics of direct ownership.
Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest
rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities. Currency-indexed securities may be
positively or negatively indexed; that is, their maturity value may
increase when the specified currency value increases, resulting in a
security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a
put on the underlying currency. Currency-indexed securities may also
have prices that depend on the values of a number of different foreign
currencies relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which
they are indexed, and may also be influenced by interest rate changes
in the United States and abroad. Indexed securities may be more
volatile than the underlying instruments. Indexed securities are also
subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities
have included banks, corporations, and certain U.S. Government
agencies.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and borrow money
from, other funds advised by FMR or its affiliates. Advisor Municipal
Income and Advisor Intermediate Municipal Income currently intend to
participate in this program as borrowers. A fund will borrow through
the program only when the costs are equal to or lower than the costs
of bank loans, and will lend through the program only when the returns
are higher than those available from an investment in repurchase
agreements. Interfund loans and borrowings normally extend overnight,
but can have a maximum duration of seven days. Loans may be called on
one day's notice. A fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay
in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from movements in prevailing short-term
interest rate levels - rising when prevailing short-term interest
rates fall, and vice versa. The prices of inverse floaters can be
considerably more volatile than the prices of bonds with comparable
maturities.
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities
are medium and high-quality securities. Some may possess speculative
characteristics and may be more sensitive to economic changes and to
changes in the financial conditions of issuers. A debt security is
considered to be investment-grade if it is rated investment-grade by
Moody's Investors Service, Standard & Poor's, Duff & Phelps Credit
Rating Co., or Fitch IBCA Inc., or is unrated but considered to be of
equivalent quality by FMR.
ISSUER LOCATION . FMR determines where an issuer [or its
principal activities] [are] located by looking at such factors as the
issuer's country of organization, the primary trading market for the
issuer's securities, and the location of the issuer's 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 that 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
involve a risk of loss in case of default or insolvency of the
borrower and may offer less legal protection to the purchaser in the
event of fraud or misrepresentation, or there may be a requirement
that a fund supply additional cash to a borrower on demand.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
interest and repayment of principal. If scheduled interest or
principal payments are not made, the value of the instrument may be
adversely affected. Loans that are fully secured provide more
protections than an unsecured loan in the event of failure to make
scheduled interest or principal payments. However, there is no
assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral could be
liquidated. Indebtedness of borrowers whose creditworthiness is poor
involves substantially greater risks and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off
their indebtedness, or may pay only a small fraction of the amount
owed. Direct indebtedness of developing countries also involves a risk
that the governmental entities responsible for the repayment of the
debt may be unable, or unwilling, to pay interest and repay principal
when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks. For example, if a loan is foreclosed, the purchaser could
become part owner of any collateral, and would bear the costs and
liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of
lender liability, a purchaser could be held liable as a co-lender.
Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary.
A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of
the loan, as specified in the loan agreement. Unless, under the terms
of the loan or other indebtedness, the purchaser has direct recourse
against the borrower, the purchaser may have to rely on the agent to
apply appropriate credit remedies against a borrower. If assets held
by the agent for the benefit of a purchaser were determined to be
subject to the claims of the agent's general creditors, the purchaser
might incur certain costs and delays in realizing payment on the loan
or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness may include letters of credit, revolving credit
facilities, or other standby financing commitments that obligate
purchasers to make additional cash payments on demand. These
commitments may have the effect of requiring a purchaser to increase
its investment in a borrower at a time when it would not otherwise
have done so, even if the borrower's condition makes it unlikely that
the amount will ever be repaid.
Each fund limits the amount of total assets that it will invest in any
one issuer or in issuers within the same industry (see each fund's
investment limitations). For purposes of these limitations, a fund
generally will treat the borrower as the "issuer" of indebtedness held
by the fund. In the case of loan participations where a bank or other
lending institution serves as financial intermediary between a fund
and the borrower, if the participation does not shift to the fund the
direct debtor-creditor relationship with the borrower, SEC
interpretations require a fund, in appropriate circumstances, to treat
both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an
issuer of indebtedness may restrict a fund's ability to invest in
indebtedness related to a single financial intermediary, or a group of
intermediaries engaged in the same industry, even if the underlying
borrowers represent many different companies and industries.
LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities have poor
protection with respect to the payment of interest and repayment of
principal, or may be in default. These securities are often considered
to be speculative and involve greater risk of loss or price changes
due to changes in the issuer's capacity to pay. The market prices of
lower-quality debt securities may fluctuate more than those of
higher-quality debt securities and may decline significantly in
periods of general economic difficulty, which may follow periods of
rising interest rates.
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. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-quality debt securities and the ability of outside pricing
services to value lower-quality debt securities.
Because the risk of default is higher for lower-quality debt
securities, FMR's research and credit analysis are an especially
important part of managing securities of this type. FMR will attempt
to identify those issuers of high-yielding securities whose financial
condition is adequate to meet future obligations, has improved, or is
expected to improve in the future. FMR's analysis focuses on relative
values based on such factors as interest or dividend coverage, asset
coverage, earnings prospects, and the experience and managerial
strength of the issuer.
A fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
MORTGAGE SECURITIES are issued by government and non-government
entities such as banks, mortgage lenders, or other institutions. A
mortgage 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 securities, such as collateralized mortgage
obligations (or "CMOs"), make payments of both principal and interest
at a range of specified intervals; others make semiannual interest
payments at a predetermined rate and repay principal at maturity (like
a typical bond). Mortgage securities are based on different types of
mortgages, including those on commercial real estate or residential
properties. Stripped mortgage securities are created when the interest
and principal components of a mortgage security are separated and sold
as individual securities. In the case of a stripped mortgage security,
the holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage, while the holder
of the "interest-only" security (IO) receives interest payments from
the same underlying mortgage.
Fannie Maes and Freddie Macs are pass-through securities
issued by Fannie Mae and Freddie Mac, respectively. Fannie Mae and
Freddie Mac, which guarantee payment of interest and repayment of
principal on Fannie Maes and Freddie Macs, respectively, are federally
chartered corporations supervised by the U.S. Government that act as
governmental instrumentalities under authority granted by Congress.
Fannie Mae is authorized to borrow from the U.S. Treasury to meet its
obligations. Fannie Maes and Freddie Macs are not backed by the full
faith and credit of the U.S. Government.
The value of mortgage securities may change due to shifts in the
market's perception of issuers and changes in interest rates. In
addition, regulatory or tax changes may adversely affect the mortgage
securities market as a whole. Non-government mortgage securities may
offer higher yields than those issued by government entities, but also
may be subject to greater price changes than government issues.
Mortgage securities are subject to prepayment risk, which is the risk
that early principal payments made on the underlying mortgages,
usually in response to a reduction in interest rates, will result in
the return of principal to the investor, causing it to be invested
subsequently at a lower current interest rate. Alternatively, in a
rising interest rate environment , mortgage security values may be
adversely affected when prepayments on underlying mortgages do not
occur as anticipated, resulting in the extension of the security's
effective maturity and the related increase in interest rate
sensitivity of a longer-term instrument. The prices of stripped
mortgage securities tend to be more volatile in response to changes in
interest rates than those of non-stripped mortgage securities.
In order to earn additional income for a fund, FMR may use a
trading strategy that involves selling mortgage securities and
simultaneously agreeing to purchase similar securities on a later date
at a set price. This trading strategy may result in an increased
portfolio turnover rate which increases costs and may increase taxable
gains.
MUNICIPAL INSURANCE. A municipal bond may be covered by
insurance that guarantees the bond's scheduled payment of interest and
repayment of principal. This type of insurance may be obtained by
either (i) the issuer at the time the bond is issued (primary market
insurance), or (ii) another party after the bond has been issued
(secondary market insurance).
Both primary and secondary market insurance guarantee timely and
scheduled repayment of all principal and payment of all interest on a
municipal bond in the event of default by the issuer, and cover a
municipal bond to its maturity, enhancing its credit quality and
value.
Municipal bond insurance does not insure against market
fluctuations or fluctuations in a fund's share price. In addition, a
municipal bond insurance policy will not cover: (i) repayment of a
municipal bond before maturity (redemption), (ii) prepayment or
payment of an acceleration premium (except for a mandatory sinking
fund redemption) or any other provision of a bond indenture that
advances the maturity of the bond, or (iii) nonpayment of principal or
interest caused by negligence or bankruptcy of the paying agent. A
mandatory sinking fund redemption may be a provision of a municipal
bond issue whereby part of the municipal bond issue may be retired
before maturity.
Because a significant portion of the municipal securities issued
and outstanding is insured by a small number of insurance companies,
an event involving one or more of these insurance companies could have
a significant adverse effect on the value of the securities insured by
that insurance company and on the municipal markets as a whole.
FMR may decide to retain an insured municipal bond that is in
default, or, in FMR's view, in significant risk of default. While a
fund holds a defaulted, insured municipal bond, the fund collects
interest payments from the insurer and retains the right to collect
principal from the insurer when the municipal bond matures, or in
connection with a mandatory sinking fund redemption.
PRINCIPAL MUNICIPAL BOND INSURERS. The various insurance companies
providing primary and secondary market insurance policies for
municipal bonds are described below. Ratings reflect each respective
rating agency's assessment of the creditworthiness of an insurer and
the insurer's ability to pay claims on its insurance policies at the
time of the assessment.
Ambac Assurance Corp., a wholly-owned subsidiary of Ambac Financial
Group Inc., is authorized to provide bond insurance in the 50 U.S.
states, the District of Columbia, and the Commonwealth of Puerto Rico.
Bonds insured by Ambac Assurance Corp. are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.
Connie Lee Insurance Co. is a wholly-owned subsidiary of Connie Lee
Holdings Inc., which is a wholly-owned subsidiary of Ambac Assurance
Corp. All losses incurred by Connie Lee Insurance Co. that would cause
its statutory capital to drop below $75 million would be covered by
Ambac Assurance Corp. Connie Lee Insurance Co. is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and the Commonwealth of Puerto Rico. Bonds insured by Connie Lee
Insurance Co. are rated "AAA" by Standard & Poor's.
Financial Guaranty Insurance Co. (FGIC), a wholly-owned subsidiary
of GE Capital Services, is authorized to provide bond insurance in the
50 U.S. states and the District of Columbia. Bonds insured by FGIC are
rated "Aaa" by Moody's Investor Service and "AAA" by Standard &
Poor's.
Financial Security Assurance Inc. (FSA), a wholly-owned subsidiary
of Financial Security Assurance Holdings Ltd., is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and three U.S. territories. Bonds insured by FSA are rated "Aaa" by
Moody's Investor Service and "AAA" by Standard & Poor's.
Municipal Bond Investors Assurance Corp. (MBIA Insurance Corp.), a
wholly-owned subsidiary of MBIA Inc., a publicly-owned company, is
authorized to provide bond insurance in the 50 U.S. states, the
District of Columbia, and the Commonwealth of Puerto Rico. Bonds
insured by MBIA Insurance Corp. are rated "Aaa" by Moody's Investor
Service and "AAA" by Standard & Poor's.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities. Generally,
a fund will not hold these obligations directly as a lessor of the
property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest
gives the purchaser a specified, undivided interest in the obligation
in proportion to its purchased interest in the total amount of the
issue.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations. If a municipality stops making payments or transfers its
obligations to a private entity, the obligation could lose value or
become taxable.
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. Proposals to restrict or eliminate the federal income
tax exemption for interest on municipal securities are introduced
before Congress from time to time. Proposals also may be introduced
before state legislatures that would affect the state tax treatment of
a municipal fund's distributions. If such proposals were enacted, the
availability of municipal securities and the value of a municipal
fund's holdings would be affected and the Trustees would reevaluate
the fund's investment objectives and policies. 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.
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 periods of forbearance. Other risks
associated with student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and
other program subsidies currently in effect.
ELECTRIC UTILITIES. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open
transmission access to any electricity supplier, although it is not
presently known to what extent competition will evolve. Other risks
include: (a) the availability and cost of fuel, (b) the availability
and cost of capital, (c) the effects of conservation on energy demand,
(d) the effects of rapidly changing environmental, safety, and
licensing requirements, and other federal, state, and local
regulations, (e) timely and sufficient rate increases, and (f)
opposition to nuclear power.
HEALTH CARE. The health care industry is subject to regulatory action
by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for
the health care industry is payments from the Medicare and Medicaid
programs. As a result, the industry is sensitive to legislative
changes and reductions in governmental spending for such programs.
Numerous other factors may affect the industry, such as general and
local economic conditions; demand for services; expenses (including
malpractice insurance premiums); and competition among health care
providers. In the future, the following elements may adversely affect
health care facility operations: adoption of legislation proposing a
national health insurance program; other state or local health care
reform measures; medical and technological advances which dramatically
alter the need for health services or the way in which such services
are delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; and efforts by employers, insurers,
and governmental agencies to reduce the costs of health insurance and
health care services.
HOUSING. Housing revenue bonds are generally issued by a state,
county, city, local housing authority, or other public agency. They
generally are secured by the revenues derived from mortgages purchased
with the proceeds of the bond issue. It is extremely difficult to
predict the supply of available mortgages to be purchased with the
proceeds of an issue or the future cash flow from the underlying
mortgages. Consequently, there are risks that proceeds will exceed
supply, resulting in early retirement of bonds, or that homeowner
repayments will create an irregular cash flow. Many factors may affect
the financing of multi-family housing projects, including acceptable
completion of construction, proper management, occupancy and rent
levels, economic conditions, and changes to current laws and
regulations.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways, or other transit
facilities. Airport bonds are dependent on the general stability of
the airline industry and on the stability of a specific carrier who
uses the airport as a hub. Air traffic generally follows broader
economic trends and is also affected by the price and availability of
fuel. Toll road bonds are also affected by the cost and availability
of fuel as well as toll levels, the presence of competing roads and
the general economic health of an area. Fuel costs and availability
also affect other transportation-related securities, as do 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.
PREFERRED STOCK is a class of equity or ownership in an
issuer that pays dividends at a specified rate and that has precedence
over common stock in the payment of dividends. In the event an issuer
is liquidated or declares bankruptcy, the claims of owners of bonds
take precedence over the claims of those who own preferred and common
stock.
PUT FEATURES entitle the holder to sell a security back to
the issuer at any time or at specified intervals. In exchange for this
benefit, a fund may accept a lower interest rate. Securities with put
features are subject to the risk that the put provider is unable to
honor the put feature (purchase the security). Demand features and
standby commitments are types of put features.
REAL ESTATE INVESTMENT TRUSTS. Equity real estate investment trusts
own real estate properties, while mortgage real estate investment
trusts make construction, development, and long-term mortgage loans.
Their value may be affected by changes in the value of the underlying
property of the trusts, the creditworthiness of the issuer, property
taxes, interest rates, and tax and regulatory requirements, such as
those relating to the environment. Both types of trusts are dependent
upon management skill, are not diversified, and are subject to heavy
cash flow dependency, defaults by borrowers, self-liquidation, and the
possibility of failing to qualify for tax-free status of income under
the Internal Revenue Code and failing to maintain exemption from the
1940 Act.
REFUNDING CONTRACTS. Securities may be purchased on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and a
purchaser to buy refunded municipal obligations at a stated price and
yield on a settlement date that may be several months or several years
in the future. A purchaser generally will not be obligated to pay the
full purchase price if the issuer fails to perform under a refunding
contract. Instead, refunding contracts generally provide for payment
of liquidated damages to the issuer. A purchaser may secure its
obligations under a refunding contract by depositing collateral or a
letter of credit equal to the liquidated damages provisions of the
refunding contract.
REPURCHASE AGREEMENTS involve an agreement to purchase a security
and to sell that security back to the original seller at an
agreed-upon price. The resale price reflects the purchase price
plus an agreed-upon incremental amount which is unrelated to the
coupon rate or maturity of the purchased security. As protection
against the risk that the original seller will not fulfill its
obligation, the securities are held in a separate account at a bank,
marked-to-market daily, and maintained at a value at least equal to
the sale price plus the accrued incremental amount. The value of
the security purchased may be more or less than the price at which the
counterparty has agreed to purchase the security . In addition,
delays or losses could result if the other party to the agreement
defaults or becomes insolvent. The funds will engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES are subject to legal restrictions on their
sale. Difficulty in selling securities may result in a loss or be
costly to a fund. Restricted securities generally can be sold in
privately negotiated transactions, pursuant to an exemption from
registration under the Securities Act of 1933, or in a registered
public offering. Where registration is required, the holder of a
registered security 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, the
holder might obtain a less favorable price than prevailed when it
decided to seek registration of the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The funds will enter into
reverse repurchase agreements with parties whose creditworthiness has
been reviewed and found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of fund assets and a fund's
yield and may be viewed as a form of leverage.
SECURITIES OF OTHER INVESTMENT COMPANIES, including shares of
closed-end investment companies, unit investment trusts, and open-end
investment companies, represent interests in professionally managed
portfolios that may invest in any type of instrument. Investing in
other investment companies involves substantially the same risks as
investing directly in the underlying instruments, but may involve
additional expenses at the investment company-level, such as portfolio
management fees and operating expenses. Certain types of investment
companies, such as closed-end investment companies, issue a fixed
number of shares that trade on a stock exchange or over-the-counter at
a premium or a discount to their net asset value. Others are
continuously offered at net asset value, but may also be traded in the
secondary market.
The extent to which a fund can invest in securities of other
investment companies is limited by federal securities laws.
SECURITIES LENDING. A fund may lend securities to parties such as
broker-dealers or other institutions, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
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.
Because there may be delays in the recovery of loaned
securities, or even a loss of rights in collateral supplied should the
borrower fail financially, loans will be made only to parties deemed
by FMR to be of good standing. Furthermore, they will only be made if,
in FMR's judgment, the consideration to be earned from such loans
would justify the risk.
FMR understands that it is the current view of the SEC Staff that a
fund may engage in loan transactions only under the following
conditions: (1) the fund must receive 100% collateral in the form of
cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the
borrower; (2) the borrower must increase the collateral whenever the
market value of the securities loaned (determined on a daily basis)
rises above the value of the collateral; (3) after giving notice, the
fund must be able to terminate the loan at any time; (4) the fund must
receive reasonable interest on the loan or a flat fee from the
borrower, as well as amounts equivalent to any dividends, interest, or
other distributions on the securities loaned and to any increase in
market value; (5) the fund may pay only reasonable custodian fees in
connection with the loan; and (6) the Board of Trustees must be able
to vote proxies on the securities loaned, either by terminating the
loan or by entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in other
eligible securities. Investing this cash subjects that investment, as
well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
SHORT SALES "AGAINST THE BOX" are short sales of securities that a
fund owns or has the right to obtain (equivalent in kind or amount to
the securities sold short) . If a fund enters into a short sale
against the box, it will be required to set aside securities
equivalent in kind and amount to the securities sold short (or
securities convertible or exchangeable into such securities) and will
be required to hold such securities while the short sale is
outstanding. The fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short
sales against the box.
SHORT SALES. S tocks underlying a fund's convertible security
holdings can be sold shor t. For example, if FMR anticipates a
decline in the price of the stock underlying a convertible security
held by a fund, it may sell the stock short. If the stock price
subsequently declines, the proceeds of the short sale could be
expected to offset all or a portion of the effect of the stock's
decline on the value of the convertible security. Each fund currently
intends to hedge no more than 15% of its total assets with short sales
on equity securities underlying its convertible security holdings
under normal circumstances.
A fund will be required to set aside securities equivalent in
kind and amount to those sold short (or securities convertible or
exchangeable into such securities) and will be required to hold them
aside while the short sale is outstanding. A fund will incur
transaction costs, including interest expenses, in connection with
opening, maintaining, and closing short sales.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. Issuers may employ
various forms of credit and liquidity enhancements, including letters
of credit, guarantees, puts, and demand features, and insurance
provided by domestic or foreign entities such as banks and other
financial institutions. FMR may rely on its evaluation of the credit
of the credit or liquidity enhancement provider in determining whether
to purchase a security supported by such enhancement. In evaluating
the credit of a foreign bank or other foreign entities, FMR will
consider whether adequate public information about the entity is
available and whether the entity may be subject to unfavorable
political or economic developments, currency controls, or other
government restrictions that might affect its ability to honor its
commitment. Changes in the credit quality of the entity providing the
enhancement could affect the value of the security or a fund's share
price.
SOVEREIGN DEBT OBLIGATIONS are issued or guaranteed by foreign
governments or their agencies, including debt of Latin American
nations or other developing countries. Sovereign debt may be in the
form of conventional securities or other types of debt instruments
such as loans or loan participations. Sovereign debt of developing
countries may involve a high degree of risk, and may be in default or
present the risk of default. Governmental entities responsible for
repayment of the debt may be unable or unwilling to repay principal
and pay interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of
principal and payment of interest may depend on political as well as
economic factors. Although some sovereign debt, such as Brady Bonds,
is collateralized by U.S. Government securities, repayment of
principal and payment of interest is not guaranteed by the U.S.
Government.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. A fund may acquire standby commitments to enhance the
liquidity of portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a
third party at any time. A fund may purchase standby commitments
separate from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, the fund would
pay a higher price for the securities acquired, thus reducing their
yield to maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to purchase an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments
are not generally marketable; and the possibility that the maturities
of the underlying securities may be different from those of the
commitments.
STRIPPED 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.
Privately stripped government securities are created when a dealer
deposits a U.S. Treasury security or other U.S. Government security
with a custodian for safekeeping. The custodian issues separate
receipts for the coupon payments and the principal payment, which the
dealer then sells.
SWAP AGREEMENTS can be individually negotiated and structured to
include exposure to a variety of different types of investments or
market factors. Depending on their structure, swap agreements may
increase or decrease a fund's exposure to long- or short-term interest
rates (in the United States or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such
as security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names.
In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap
obtains the right to receive payments to the extent that a
specified interest rate exceeds an agreed-upon level, while the seller
of an interest rate floor is obligated to make payments to the extent
that a specified interest rate falls below an agreed-upon level. An
interest rate collar combines elements of buying a cap and selling a
floor.
Swap agreements will tend to shift a fund's investment exposure from
one type of investment to another. For example, if th e fund
agreed to exchange payments in dollars for payments in foreign
currency, the swap agreement would tend to decrease the fund's
exposure to U.S. interest rates and increase its exposure to foreign
currency and interest rates. Caps and floors have an effect similar to
buying or writing options. Depending on how they are used, swap
agreements may increase or decrease the overall volatility of a fund's
investments and its share price and yield.
The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from a fund. If a
swap agreement calls for payments by the fund, the fund must be
prepared to make such payments when due. In addition, if the
counterparty's creditworthiness declined, the value of a swap
agreement would be likely to decline, potentially resulting in losses.
A fund may be able to eliminate its exposure under a swap agreement
either by assignment or other disposition, or by entering into an
offsetting swap agreement with the same party or a similarly
creditworthy party.
TEMPORARY DEFENSIVE POLICIES.
Each of Advisor Latin America, Advisor Japan, Advisor Europe
Capital Appreciation, Advisor International Capital Appreciation,
Advisor Overseas, Advisor Diversified International, Advisor Global
Equity, Advisor TechnoQuant Growth, Advisor Small Cap, Advisor
Strategic Opportunities, Advisor Mid Cap, Advisor Retirement Growth,
Advisor Equity Growth, Advisor Large Cap, Advisor Dividend Growth,
Advisor Growth Opportunities, Advisor Growth & Income, Advisor Equity
Income, Advisor Asset Allocation, and Advisor Balanced reserves the
right to invest without limitation in preferred stocks and
investment-grade debt instruments for temporary, defensive
purposes.
Each of Advisor Government Investment, Advisor Mortgage Securities,
Advisor Intermediate Bond, and Advisor 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 Advisor Municipal Income and Advisor Intermediate Municipal
Income reserves the right to invest without limitation in short-term
instruments, to hold a substantial amount of uninvested cash, or to
invest more than normally permitted in federally taxable obligations
for temporary, defensive purposes.
Advisor Emerging Markets Income reserves the right to invest
without limitation in U.S. securities for temporary, defensive
purposes.
Each of Advisor High Yield and Advisor Strategic Income reserves
the right to invest without limitation in investment-grade securities
for temporary, defensive purposes.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, municipal bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, a fund
effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds, FMR will consider the creditworthiness of the issuer of the
underlying bond, the custodian, and the third party provider of the
tender option. In certain instances, a sponsor may terminate a tender
option if, for example, the issuer of the underlying bond defaults on
interest payments.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments
in the interest rate paid on the security. Variable rate securities
provide for a specified periodic adjustment in the interest rate,
while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some
variable or floating rate securities are structured with put features
that permit holders to demand payment of the unpaid principal balance
plus accrued interest from the issuers or certain financial
intermediaries.
In many instances bonds and participation interests have tender
options or demand features that permit the holder to tender (or put)
the bonds to an institution at periodic intervals and to receive the
principal amount thereof. Variable rate instruments structured in this
fashion are considered to be essentially equivalent to other variable
rate securities. The IRS has not ruled whether the interest on these
instruments is tax-exempt. Fixed-rate bonds that are subject to third
party puts and participation interests in such bonds held by a bank in
trust or otherwise may have similar features.
WARRANTS. Warrants are instruments which entitle the holder to buy an
equity security at a specific price for a specific period of time.
Changes in the value of a warrant do not necessarily correspond to
changes in the value of its underlying security. The price of a
warrant may be more volatile than the price of its underlying
security, and a warrant may offer greater potential for capital
appreciation as well as capital loss.
Warrants do not entitle a holder to dividends or voting rights with
respect to the underlying security and do not represent any rights in
the assets of the issuing company. A warrant ceases to have value if
it is not exercised prior to its expiration date. These factors can
make warrants more speculative than other types of investments.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS
involve a commitment to purchase or sell specific securities at a
predetermined price or yield in which payment and delivery take place
after the customary settlement period for that type of security.
Typically, no interest accrues to the purchaser until the security is
delivered.
When purchasing securities pursuant to one of these transactions,
the purchaser assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, the fund does not
participate in further gains or losses with respect to the security.
If the other party to a delayed-delivery transaction fails to deliver
or pay for the securities, a fund could miss a favorable price or
yield opportunity or suffer a loss.
A fund may renegotiate a when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or losses for the fund.
ZERO COUPON BONDS do not make interest payments; instead, they are
sold at a discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be more volatile than other types of
fixed-income securities when interest rates change. In calculating a
fund's dividend, a portion of the difference between a zero coupon
bond's purchase price and its face value is considered income.
SPECIAL CONSIDERATIONS REGARDING AFRICA
Africa is a highly dive rse and p olitically unstable continent
of over 50 countries and 720 million people. Civil wars, coups and
even genocidal warfare have beset much of this region in recent years.
Nevertheless, it is home to an abundance of natural resources,
including natural gas, aluminum, crude oil, copper, iron, bauxite,
cotton, diamonds and timber. Wealthier countries generally have strong
connections to European partners, and evidence of these relationships
is seen in the growing market capitalization and foreign investment of
these count ries . Economic performance is closely tied to world
commodity markets, particularly oil, and also to weather conditions,
such as drought.
Five African countries are among the 20 fastest growing in the world
(Uganda, Ivory Coast, Botswana, Angola and Zimbabwe, confirm EIU
1995 ), with G DP growth rates ranging from 5.5% to 6.0%. Two
countries, Yemen and Bahrain, are experiencing growth at o r
belo w 2.0%, and one country, Libya, is experiencing (-4.0%)
negative growth.
African eco nomic growth is projected to remain higher than in any
recent year other than 1996. The relatively small effects of the Asian
crisis are attributable to the comparatively low levels of private
capital flows to most countries in the regions. Africa can be
negatively impac ted from the slowdown in global growth, and its
effects on commodity prices.
Several African countries in the north have substantial oil reserves
and accordingly their economies react strongly to world oil prices.
They share a regional and sometimes religious identification with the
oil producing nations of the Middle East and can be strongly affected
by political and economic developments in those countries. As in the
south, weather conditions also have a strong impact on many of their
natural resources, and, as was the case in 1995, severe drought can
adversely effect economic growth.
Twelve African countries have activ e equity markets (Bahrain,
Botswana, Egypt, Ghana, Kenya, Morocco, Nigeria, Oman, South Africa,
Tunisia, Zambia, and Zimbabwe). The oldest market, in Egypt, was
established in 1883, while the youngest, in Zambia, was established in
1994. Four additional markets have been established since 1989, and
the mean age for all equity markets is 40 years old. A total of 1,830
firms are listed on the respective exchanges. Total market
capitalization for these countries in 1996 was $290 billion, an
average increase of 54% over 1995 levels.
The South African ma rket is the largest in Africa and has a
capitalization of more than ten times that of all the other African
markets combined. In 1997, the country's Johannesburg Stock Exchange
fell by 6.8%, due largely to weakening commodity prices and a slowdown
in the South African economy. The market decline extended into 1998 as
the South African rand declined versus the world's major currencies.
SPECIAL CONSIDERATIONS REGARDING CANADA
Canada is a confederation of ten provinces with a parliamentary system
of government. Canada is the world's second largest nation by landmass
and is inhabited by 30.2 million people, most of whom are descendants
of France, the United Kingdom and ind igenous peoples. The country
has a workforce of over 15 million people in various industries such
as trade, manufacturing, mining, fina nce, construction and
government. While the country has many institutions which closely
parallel the United States, such as a transparent stock market and
similar accounting practices, it differs from the United States in
that it has an extensive social welfare system, much more akin to
European welfare states.
The confederated structures combined with recent financial pressure on
the federal government have pushed provinces, Quebec in particular, to
call for a revaluation of the legal and financial relationships
between the federal government in Ottawa and the provinces. Recent
referendums on Quebec sovereignty have been narrowly defeated and
the issue appears far from resolved. However, in August of 1998, the
country's Supreme Court decided that Quebec does not have the right to
secede unilaterally, removing any immediate threat that Canada will
break up. Nevertheless, the Canadian markets could continue to react
to any periodic escalations of separatist calls.
Canada is one of the richest nations in the world in terms of
natural resources. The country is a major producer of such commodities
as forest products, mining, metals, an d agricultural products.
Additionally, energy related products such as oil, gas, and
hydroelectricity are important components of their economy.
Accordingly, the Canadian stock market is strongly represented by
basic material stocks, and movements in the supply and demand of
industrial materials, agriculture, and energy, both domestically and
internationally, can have a strong effect on market performance.
The United States is Canada's larg est trading partner and
approximately 80% of Canadian merchandise traded in 1997 was with the
United States. Automobiles and auto parts accounted for the largest
export items followed by energy, mining and forest products. Canada is
the largest energy supplier to the United States, while the United
States is Canada's largest foreign investor. United States investment
has been largely focused on financial, energy, metals and mining
businesses. The expanding economic and financial integration of the
United States and Canada will likely make the Canadian economy and
securities markets increasingly sensitive to U.S. economic and market
events.
For United States investors in Can adian markets, currency has
become an important determinant of investment return. Since Canada let
its dollar float in 1970, its value has been in a steady decline
against its United States counterpart. While the decline has enabled
Canada to stay competitive with its more efficient southern neighbor,
which buys four-fifths of its exports, United States investors have
seen their investment retu rns eroded by the impact of currency
conversion.
SPECIAL CONSIDERATIONS REGARDING EUROPE
Europe can be divided into two distinct categories of market
development: the developed economies of Western Europe and the
transition economies of Eastern Europe.
Any discussion of European national economies and securities
markets must be made with an eye to the impact that the European Union
(EU) and European and Economic Monetary Union (EMU) - will have upon
the future of these countries as well as the rest of the world. The
scope and magnitude of these economic and political initiatives dwarfs
anything attempted to date. If successful, the EU will change or erase
many political, economic, cultural and market distinctions that define
and differentiate each of the Continent's countries today.
The third and final stage of the European Economic and Monetary
Union is scheduled to be implemented on January 1, 1999. The European
Union (EU) consists of 15 countries of western Europe: Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United
Kingdom. The six founding countries first formed an economic community
in the 1950s to bring down trade barriers such as taxes and quotas, to
eliminate technical restrictions such as special standards and
regulations for foreigners, and to coordinate various industrial
policies, such as those pertaining to agriculture. Since that time the
group has admitted new members and, in time, may expand its membership
to other nations such as those of Eastern Europe. The EU has as its
goal, the creation of a single, unified market that would be, at over
370 million people, the largest in the developed world and through
which goods, people and capital could move freely.
A second component of the EU is the establishment of a single
currency - the Euro, to replace each member country's domestic
currencies. In preparation for the creation of the Euro, the Exchange
Rate Mechanism (ERM) was established to keep the various national
currencies at a pre-specified value relative to each other. The year
1997 is significant for membership in the EU as it is the initial
reference year for evaluating debt levels and deficits within the
criteria set forth by the Maastricht treaty. Specifically, the
Maastricht criteria include, among other indicators, an inflation rate
below 3.3%, a public debt below 60% of GDP, and a deficit of 3% or
less of GDP. Failure to meet the Maastricht levels would disqualify
any country from membership.
On May 3, 1998 the European Council of Ministers formally announced
the "first wave" of EMU participants. They are: Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands,
Portugal and Spain. On January 1, 1999, the Euro becomes a currency,
while the bank notes used by EMU's eleven members remain legal tender.
After a three year transition period, the Euro will begin
circul ating on January 1, 2002. Six months later, today's
currencies will cease to exist.
Many foreign and d omestic businesses are establishing or
increasing their presence in Europe in anticipation of the new unified
single market. Clear, confident visions of a diverse,
multi-industrial, unified market under a single currency have been the
impetus for much of the recent corporate restructuring initiatives as
well as for the increased mergers and acquisitions activity in the
region. A successful EM U could prove to be an engine for sustained
growth throughout Europe.
While the se curities markets view the introduction of the euro as
inevitable, the success of the union is not wholly assured. Europe
must grapple with a number of challenges, any one of which could
threaten the survival of this monumental undertaking. For example,
eleven disparate economies must adjust to a unified monetary system,
the absence of exchange rate flexibility and the loss of economic
sovereignty. The Continent's economies are diverse, its governments
decentralized and its cultures differ widely. Unemployment is
historically high and could pose a political risk that one or more
countries might exit the union placing the currency and banking system
in jeopardy.
For those coun tries in Western and Eastern Europe that will not be
included in the first round of the EU implementation, the prospects
for eventual membership serves as a strong political impetus for many
governments to employ tight fiscal and monetary policies. Particularly
for the Eastern European countries, aspirations to join the EU are
likely to push governments to act decisively. At the same time, there
could become an increasingly widening gap between rich and poor both
within the aspiring countries and also those countries who are close
to meeting membership criteria and those who are not. Realigning
traditional alliances could result in altering trading
r elationships and potentially provoking divisive socio-economic
splits.
The economies of Ea stern Europe are embarking on the transition
from communism at different paces with appropriately different
characteristics. The transition countries also display sharp contrasts
in performance. Those that are most advanced in the transformation
process are now reaping the rewards of comprehensive reform and
stabilization policies pursued with determination over recent years.
These include Poland, the Baltic countries, Croatia, the Czech
Republic, Hungary, the Slovak Republic and Slovenia. Conversely, those
that are less advanced in the transition are struggling with a number
of policy challenges to strengthen their economies. Several countries
have made good progress, and in Armenia, Azerbaijan, Georgia,
Kazakhstan, and the Kyrgyz Republic, inflation has fallen considerably
in recent years. Nevertheless, the East European markets are
particularly vulnerable to weakness in the world's other emerging
countries and are particularly sensitive to events in Russia. For
example, in mid-1998 when economic and political turmoil forced the
Russian government to devalue its currency and restructure its debt
payments, the other markets in Eastern Europe suffered sign ificant
destabilization of which the extent and duration is still unknown.
FRANCE. France is a re public of over 58 million people in the
historic if not the geographic center of Western Europe. The Fifth
French Republic, established in the early postwar period under
Charles de Gaulle, provides for a strong Presidency which can appoint
its own cabinet but m ust win approval of a parliamentary majority.
The government was founded upon the French cultural values of liberty,
brotherhood and egalitarianism. In France, this latter value often
translates into a government burden of providing job security. The
result is a large, vast bureaucracy in the public sector and strict
employment and labor laws in the private sector. In addition, a
significant portion of government economic policy revolves around
regulating and protecting domestic industries, particularly farming
and manufacturing. Finally, the French government frequently owns high
majority or minority interests in large companies, particularly
utility, transport and communications concerns. While privatization
has been a popular movement in many other European countries, it has
encountered a stalled stop-and-go cycle in France.
The French economy is the world's fourth-largest Western
industrialized economy, with a GDP of $1538 billion in 1996. The
nation has substantial agricultural resources, a diversified modern
industrial system, and a highly skilled labor force. France's economy
boasts a sophisticated industrial manufacturing base, which includes
not only high technology (information technology and
telecommunications, vehicles, aircraft, computer equipment, etc.) but
also a number of very large companies producing consumer goods. The
country's industrial structure is unusual for an industrialized
economy because the state still controls a large proportion of the
heavy strategic goods industries as well as institutions such as banks
and communications companies. The agricultural sector continues to be
important; however, most farms are small by European standards and
require massive government support. Exports are an economic strong
point and the nation has enjoyed trade surpluses in recent years.
Leading exports include chemicals, electronics and automotive and
aircraft machinery, while imports are dominated by petroleum,
industrial machinery and electronics. Their main trading partners are
the United States, Japan, and other EU countries.
The country is one of the largest consumers of nuclear energy,
obtaining nearly 75% of its total electricity needs from reactors.
While it has some small deposits of oil and gas, it remains heavily
dependent on imports for most of its needs.
In recent years, the country's economic growth has been hindered by
a series of general strikes. The government's efforts to reduce
spending to meet the Maastricht criteria have prompted strikes and
unrest from France's powerful trade unions. In addition, striking
workers have pushed their demands for a lower retirement age and a
reduction in the workweek. With an unemployment rate above 12%, the
country's labor markets are not functioning efficiently. France's
pay-as-you-go pension program is an additional deterrent to economic
growth as spending on pensions account for a tenth of GDP. While all
parties agree that the system must be replaced, no agreement has been
reached on an alternative.
France went to the polls in May 1997 after a surprise decision to
hold early elections by conservative President Jacques Chirac.
Chirac's calculation was to capitalize on popular support before he
was forced to undertake austere fiscal measures to meet the Maastricht
criteria. Voters responded that they were more concerned about the
country's high level of unemployment and Chirac's party lost enough
seats in the parliament that the president must now share power for
the remaining five years in office with a socialist-led government.
This change could set back the previous government's pledges to
continue its privatization initiatives, restrain spending, support the
franc, and endure fiscal austerity. It also calls into question
whether the French people have the will to adhere to the EMU
convergence criteria over the next few years.
The stock market in France has undergone both gradual and dramatic
changes in recent years, keeping pace with global trends toward
deregulation, privatization, and cross border activities, allowing
Paris to maintain its position as the world's fourth-largest financial
center. Until 1996, the Paris Bourse was the country's sole stock
exchange, providing access to all listed French securities. Since
then, foreign interest has been stimulated by the creation of new
markets, such as the Nouveau Marche, for riskier, growth oriented,
small corporations. While the listings of these combined markets are
fairly diverse financial companies that account for approximately
one-third of the total. The system underwent many regulatory changes
in the late 1980s, taking steps toward combating insider trading and
ensuring market transpare ncy.
GERMANY. Germany is the larg est economy in all of Europe and is the
third largest economy in the world behind the United States and Japan.
The country occupies a central position in Western Europe with strong
cultural and economic ties with the countries of Eastern Europe and
borders on no less than six other Western European countries. The
country's size, location and proven industrial ability have
historically thrust it to the center of European economic life, a
position it was able to re-attain in the wake of the post-war period.
More recently, Germany has used this position as a platform to
champion the cause of the European Union, and also to absorb and
transform the devastated economy of its former communist eastern half.
The German economy is heavily industrialized, with a strong
emphasis on manufacturing. The manufacturing sector is driven by small
and medium-sized companies, most of which are very efficient and
dynamic. Germany, nevertheless, has many large industries and
manufacturing is dominated by the production of motor vehicles,
precision engineering, brewing, chemicals, pharmaceuticals and heavy
metal products.
The economy has benefited from a strong export performance
throughout the decade. Exports, weighted heavily in the industrial
machinery, autos and chemicals sectors, have provided the economy with
positive trade balances. Exports are the main engine of GDP growth,
highlighting Germany's dependence on the prosperity of its trading
partners. Five out of its top six trading partners are fellow EU
members (the sixth is the United States), while very low levels of
trade are conducted with Asian and Latin American countries. Germany
stands very well poised to supply the emerging markets of central
Europe. It is already the largest European foreign investor in the
Czech Republic and the largest trading partner for Poland and Hungary.
Accordingly, any weakness in the emerging market economies might
likely dampen demand for German goods, to the detriment of the German
economy. As most of these emerging markets aspire to join the EU, it
is possible that a larger EU could alter Germany's trading
relationships due to new quotas, tax rates, exchange rates and other
factors which will come with EU membership.
The recent performance of the German economy must be evaluated
within the context of the 1990 reunification of the eastern and
western states. GDP growth dropped markedly during the early years of
reunification. Industry in Eastern Germany is still catching up.
Workers in Eastern Germany earn two-thirds of western wages but
produce only half as much. In addition, one of the byproducts of
assimilating East Germany into the state has been the need to
restructure many of the government services to accommodate the new and
substantially less affluent citizens. Significant tax and welfare
reforms have yet to be undertaken, and pressure is mounting on the
government to address these issues. Unemployment rates have begun to
cause some discontent among German citizens whose culture generally
places strong emphasis on a social compact. Any dissatisfaction could
be expressed at the polls during the 1998 elections.
Germany is faced with other significant economic challenges.
Unemployment is currently above 12% as the country experiences its
longest period of slow growth since the Second World War. The
government's ability to deal with the problem is limited by its
efforts to meet the stringent Maastricht criteria for convergence.
There are also growing concerns about the exodus of German companies
relocating abroad in order to avoid the country's high labor costs. In
the longer run, Germany's government must alter the peculiar mix of
capitalism, welfarism and consensus that sets the country apart. Those
decisions will be politically sensitive - especially if they
antagonize the powerful trade unions or the country's many family-run
firms.
Germany's stock market has enjoyed dramatic growth in volume as the
main DAX index has soared over the past two years. Much of the
market's strength has been attributed to the dollar's recovery and
rising corporate earnings. In addition, a number of changes have
occurred recently to support the share-buying explosion and to
establish a German equity culture. A number of initial public
offerings were launched as the government sought to divest itself of
ownership in such businesses as the nation's telephone utility and
post office businesses to ease budgetary pressures. The government
also created a supervisory authority which has outlawed insider
trading and established stiffer company reporting standards intended
to further increase the appeal of Germany's stock market.
Nevertheless, while there has been progress in broadening the investor
base, shares remain overwhelmingly in the hands of institutions and
companies.
The German central bank is one of the world's strongest and most
independent. Their high interest rates have contributed to a
controlled growth of the stock market and a steadily decreasing
inflation rate. Keeping the Deutsche Mark strong in leading up to EMU
has been a priority for the bank. Nevertheless, exports have thrived
despite the currency's strong position.
A founding member of the EU and the most ardent proponent of EMU,
Germany is seen as the primary player in Union economics and politics.
Seeking to consolidate this position, recent government policy has put
a strong emphasis on the maintenance of a strong currency and the
achiev ement of the Maastricht criteria.
NORDIC COUNTRIES. Increasi ng economic globalization and the
expansion of the EU have forced the Nordic Countries to scale back
their historically liberal welfare spending policies. While public
spending has dropped from average levels, the cutbacks in social
programs have sparked drops in domestic demand and increases in
unemployment. Nevertheless, the Nordic economies are experiencing
positive growth fueled largely by strong exports and low interest
rates. The approaching EMU deadline is putting pressure on each nation
to maintain their economies in line with requirements of the
Maastricht treaty criteria and the fiscal and political issues remain
central in political debates.
Of the Nordic countries, Finland, Denmark and Sweden are all
members of the EU. Only Norway has elected not to join. However, the
decision likely will not isolate the Norwegian economy from those of
its Nordic neighbors. The country maintains a "shadow membership" in
the EU, by which it seeks to stay as closely informed as possible and
to make its voice heard on the issues. This may ensure that it will
become more closely aligned with the rest of Europe as time passes.
One significant aspect of opting out of the EU is that the central
bank is free to pursue its own agenda, such as setting inflation
targets as opposed to exchange rate targets. Inflation patterns and
currency stability could prove to be issues that may separate the
policy decisions of Norway from the other Nordic countries.
Politically, the countries of this region are historically known
for their approach to policy making that emphasizes consensus. The
most common type of government among the Nordic countries is dominated
by long-standing, left-of-center parties which often align themselves
with smaller centrist parties for majority support. The landscape,
however, is so fractured that governing from a minority position is
common. The absence of a clear majority party slows and sometimes
arrests policy making. The strongest opposition comes from traditional
European conservative parties, which have gained support in recent
years with the decline of the welfare state and the need for the
libertarian policies necessary to compete and integrate with free
markets. None of the Nordic countries face any serious risk of any
anti-democratic political change. However, in Sweden, the prospects of
the present government will depend on its ability to create more jobs
and to prepare the economy for EMU. A large minority of voters are
also disappointed about the benefits which membership in the EU was
expected to bring and have been increasingly voicing anti-EU
sentiments. However, in May 1998, Sweden and its fellow applicants,
Finland and Denmark, were formally admitted in the "first wave" of the
EMU.
Industry in the region is heavily resource-oriented. Denmark's
agricultural sector remains the backbone of the economy although other
industries have been developing rapidly in recent years, with
engineering, food processing, pharmaceuticals, brewing and
shipbuilding gaining in importance. Finland's major industry is
forestry which supplies a large paper and timber products sector. It
also produces household goods and telecommunications equipment and has
an extremely important heavy goods sector producing ships, cement,
steel and machine tools. In Sweden, the manufacturing sector dominates
the economy and includes major industries which range from motor
vehicles to aerospace, chemicals, pharmaceuticals, timber, pulp and
paper. Several of the country's export-oriented industries (in
particular forestry, mining and steel) are suffering as the country's
high wages squeeze them out of foreign markets. Norway's oil-driven
economy has provided its citizens with one of the highest standards of
living in the world. However, they must prepare for the time, due to
arrive early in the next century, when their vast reserves run out.
Reliance on exports concentrated in a few sectors tie these countries
closely to one another.
Economically, the Nordic countries are strong export economies that
take advantage of their abundant natural resources. They are also very
closely tied both to each other and to the rest of Europe. Most
countries have witnessed low levels of positive growth in the last six
years. Finland is the exception. As a significant portion of its trade
is with Russia, Finland suffered in the early years of the collapse of
the Soviet Union. However, in the past two years its economy has
recorded some of the highest growth rates in Western Europe while
having the lowest rate of inflation. Similarly, after five years of
recession, the overall outlook for the Swedish economy is also vastly
improved. A stringent package of spending cuts and tax increases has
brought down the budget deficit to a level that is well within the EMU
target. Exports are recovering as other parts of Europe are coming out
of recession and its inflation is among the lowest in Western Europe.
However, the one weak spot in both country's economies is a
persistently high unemployment rate. Finland's unemployment, at 17%,
is the second highest in Europe after Spain, and Finland's rate
represents only a marginal improvement over the previous year.
Norway's oil driven economy is the envy of many and unemployment is
just a little over five percent.
A portion of the region's unemployment woes can be attributed to
the cultural ethic which was advanced during the years of the welfare
state. Subsequent cuts in public spending, particularly in those
sectors that traditionally rely on large government spending,
exacerbated the problem. Labor market reform will be a critical issue
in these countries as public spending is cut back. Pensions and
structural issues such as union regulations all need to be reformed, a
task, which brings both challenges and unpopularity to the government
that accepts it. Not only will labor market reforms give governments a
daunting challenge; they could also cause the public to regret their
participation in the EMU. One positive point is that the countries
boast very high standards of living, which create healthy and highly
educated workforces.
The stock markets in Scandinavia are of medium size, and frequently
are strongly influenced by a small number of large multinational
firms. For example, in Sweden thirty firms constituted 75% of the
market's total capitalization and market turnover in 1997. Weighing
heavily in the equity markets are the electronics, forest products,
mining and manufacturing sectors. Market capitalization is highest in
Sweden at $273 billion, while the others are between $74 and $94
billion. Sweden also leads in numbers of firms (261) listed. Other
country's listings range from 126 (Finland) to 249 (Denmark).
Performance of Nordic country indexes tend to be skewed owing to the
dominant weightings that a few large companies have in the index. For
example, the market capitalization of Finnish telecommunications
equipment manufacturer Nokia comprises about one-third of the total
market capitalization of the Finnish exchange and has a substantial
impact upon the performance of the co mpanies in the HEX Index.
UNITED KINGDOM. The Unite d Kingdom is the world's sixth largest
economy and is home to one of the oldest, most established, and most
active stock markets. An island nation, it built an empire of
strategically located trading posts such as Hong Kong and India. While
today the empire is largely dissolved, trade remains a very key
component of the U.K. economy. Strong domestic sectors are services,
natural energy resources, and heavy industry, including steel, autos,
and machinery. Imports generally emphasize food and manufacturing
components. The United Kingdom's trading partners are predominately
established market economies, such as the United States, Japan, and
other member countries of the European Union. The United Kingdom, via
the North Sea, also has substantial petroleum resources.
The London Stock Exchange is comprised of six offices scattered
throughout Great Britain and Northern Ireland. It lists over 2900
firms, and trades both foreign and domestic securities as well as
securities issued by the British Government. A vast majority of the
firms listed (80%) are from the United Kingdom. Total market
capitalization in 1997 was over $5,440 billion. Such size prevents the
stock market from being overly sensitive to the performance of
individual firms.
In 1997 the U.K. posted its sixth year of recovery with GDP growth
of 3.5%, the third highest in the EU. The labor market also appears to
have improved as pay settlements and wages remain under control
despite the employment rate falling from 6.5% to 5% over the year. The
strengthening economy prompted a sharp acceleration in consumer
spending and, in response, the nation's Monetary Policy Committee was
forced to raise base rates. The interest rate rise added fuel to an
already robust sterling which rose 8.6% in 1997 after appreciating by
15.6% in 1996. This proved particularly damaging to the manufacturing
sector and, although exports held up well during the year, there were
early indications that a decline was underway. Inflation is low,
making the country attractive for foreign investment. Investment is
especially attractive to the United States, with which the United
Kingdom shares many market similarities. Each country is the other's
largest foreign investment partner.
Under Conservative Party leadership in the early 1980s, the United
Kingdom privatized many state-run utilities, such as British Gas and
British Telecom. The success of these efforts is evidence both of the
strong entrepreneurial spirit of British society and also a
fundamental rejection of the welfare state policies that dominated the
scene in the early post-war period. Even today, the Labour Party has
shed much of its socialist economic platform, reflecting a strong
break away from policies that continue to be popular in other European
countries. Eager to attract foreign investment the new administration
is not expected to undo any of the major reforms put in place by the
Conservatives during their last 18 years in power. Some changes could
include an increase in spending on social programs, a slowing of
privatization, and an increase in corporate taxes. Tight monetary
policy and interest rate hikes could be used to keep inflation below
the government's self-imposed 2.5% ceiling. In addition, the
government will probably wish to rebuild ties with the rest of the EU
and has already taken steps to get the pound back into the European
system by increasing the independence of the country's central bank.
Nevertheless, there appears to be some nervousness among many
investors who see the U.K. market lagging behind the continental
European stock markets where they see more compelling prospects for
economic growth. In addition, the manufacturing industry is suffering
from the pound's lofty valuation and many fear that an economic
slowdown could spread to the services sector.
The political scene in London is largely shaped by positions
regarding EMU. Pro Europe MPs in the Tory opposition leadership were
marginalized after the 1997 election, further polarizing the positions
of the two parties. Despite this expression of support, the United
Kingdom continues to be overtly less enthusiastic about EMU than other
countries in Europe and has not committed itself to immediately
joining the new currency once it is established. While the new
government has stated that it hopes to meet the Maastricht criteria,
it is less a self-imposed pressure on the U.K. government than it is
for other countries in the Union. Signing on to the EU Social Charter
would neutralize the policies which have set the United Kingdom above
other countries in attracting investment, such as wages and employment
conditions.
SPECIAL CONSIDERATIONS REGARDING ASIA
Asia has undergone an i mpressive economic transformation in the
past decade. Many developing economies, utilizing substantial foreign
investments, established themselves as inexpensive producers of
manufactured and re-manufactured consumer goods for export. As
ho usehold incomes rose, middle classes increased, stimulating
domestic consumption. In recent years, large projects in
infrastr uctur e and energy resource development have been
undertaken, and have benefited from cheap labor, foreign investment,
and a business friend ly regulatory environment. During the
course of development, democratic governments fought to maintain the
stability and control necessary to attract investment and provide
labor. Subsequently, Asian countries today are coming under
increasing, if inconsistent, pressure from western governments
regarding human rights practices.
Manufacturing expo rts declined s ignificantly in 1997, due to
drops in demand, increased competition, and strong performance of the
U .S. dollar. This significant decline is particularly true of
electronics, a critical industry for several Asian economies. Declines
in exports reveal how much of the recent growth in these countries is
dependent on their trading partners. Many Asian exports are priced in
U.S. dollars, while the majority of its imports are paid for i n
loca l currencies. A stable exchange rate between the U.S. dollar
and Asian currencies is important to Asian trade balances.
Despite the impressive economic growth experienced by Asia's emerging
economies, currency and economic concerns have recently roiled these
markets. Over the summer of 1997, a plunge in Thailand's currency set
off a wave of currency depreciations throughout South and Southeast
Asia. The Thai crisis was brought on by the country's failure to take
steps to curb its current-account deficit, reduce short-term foreign
borrowing and strengthen its troubled banking industry, which was
burdened by speculative property loans. Most of Sout heast
Asi a's stock markets tumbled in reaction to these events.
Investors were heavy sellers as they became increasingly concerned
that other countries in the region, faced with similar problems, would
have to allow their currencies to weaken further or take steps that
would choke off economic growth and erode company profits. For U.S.
investors, the impact of the market declines were further exacerbated
by the effect of the decline in the value of local currencies versus
the U.S. dollar.
The same kind of concerns that effected Thailand and other Southeast
Asian countries subsequently spread to North Asia. To widely varying
degrees, Taiwan, South Kore a and Hong Kong all faced related
currency and/or equity market declines. Due to continued weakness in
the Japanese economy combined with the reliance of Asian economies on
intra-Asian trade and capital flows, most of the region was mired in
their worst rece ssions since World War II.
Investors continue to face co nsiderable risk in Asian markets as
political, economic and currency turmoil has continued to undermine
market valuations throughout the first half of 1998. Rising
unemployment, food shortages and declining purchasing power could lead
to social unrest and threaten the orderly functioning of government.
Currency devaluations also increase pressure on both the consumers who
must pay more for imported goods and on many businesses that must deal
with the rising costs of raw materials. For U.S. investors, weakening
local currencies erode their returns in these markets upon currency
translation. Certainly, the resolve of the region's governments to
adhere to International Monetary Fund-mandated benchmarks will be
sorely tested, as their implementation could further exacerbate these
pressures on the nation's populace and businesses. In addition,
Japan's paralysis is fast becoming a problem for Asia. Worsening
Japanese banking problems could lead to a contraction of credit for
all of Asia and slow rehabilitation in the region. Similarly, a
significant portion of both domestic and foreign investors have fled
these markets in favor of safer havens outside of the region and will
not likely return until they see more evidence that these problems are
being effectively addressed. The scope and magnitude of the tasks that
these countries face in resolving their problems could mean that
investors will see a continuation of high mark et volatility over
an extended period.
JAPAN. A country of 126 million with a labor force of 64 million
people, Japan is renowned as the preeminent economic miracle of the
post-war era. Fueled by public investment, protectionist trade
policies, and innovative management styles, the Japanese economy has
transformed itself since the World War II into the world's second
largest economy. An island nation with limited natural resources,
Japan has developed a strong heavy industrial sector and is highly
dependent on international trade. Strong domestic industries are
automotive, electronics, and metals. Needed imports revolve around raw
materials such as oil, forest products, and iron ore. Subsequently,
Japan is sensitive to fluctuations in commodity prices. With only 19%
of its land suitable for cultivation, the agricultural industry is
small and largely protected. While the United States is Japan's
largest single trading partner, close to half of Japan's trade is
conducted with developing nations, almost all of which are in
southeast Asia. Investment patterns generally mirror these trade
relationships. Japan has over $100 billion of direct investment in the
United States.
The Tokyo Stock Exchange (TSE) is the largest of eight exchanges in
Japan. The exchanges divide the market for domestic stocks into two
sections, with larger companies assig ned t o the first section
and newly listed or smaller companies assigned to the second. In 1997,
1,805 firms wer e l isted on the TSE, 96% of which were domestic.
Some believe that the TSE has a tendency to be strongly influenced by
the performance of a small circle of large cap firms that dominate the
market. The two key indexes are the Tokyo Stock Price Index (TOPIX)
an d the Ni kkei. In 1997, TSE performance was disappointing,
with the TOPIX down 28% for the year.
Since Japan's bubble econom y collapsed seven years ago, the nation
has drifted between modest growth and recession. By mid-year 1998 the
world's second largest economic power had slipped into its deepest
recession since World War II. Much of the blame can be placed on
government inaction in implementing long-neglected structural reforms
despite strong and persistent proddings from the International
Monetary Fund and the G-7 nations. Steps have been taken to institute
deregulation and liberalization of protected areas of the economy, but
the pace of change has been disappointedly slow.
Unemployment levels, already at record rates when measured by the
broader criteria used in many other countries, have been an area of
increasing concern and a major cause of recent voter dissatisfaction
with recent governments. However, the most pressing need for action is
the daunting task of overhauling the nation's financial institutions
and securing public support for taxpayer-funded bailouts. Banks, in
particular, must dispose of their huge overhang of bad loans and trim
their balance sheets in preparation for greater competition from
foreign financial institutions as more areas of the financial sector
are opened. Successful financial sector reform would allow Japan's
financial institutions to act as a catalyst for economic recovery at
home and across the troubled Asian region. Further steps toward
complete financial liberalization are in the initial stages of
implementation. Proposals under consideration could lower many
barriers allowing foreign firms greater and cheaper access to funds,
and the recent relaxation of restrictions on the insurance market also
promise greater access to foreign companies. A large factor in
determining the pace and scope of recovery is the government's
handling of deregulation programs, a delicate task given the recent
changes in Japanese politics.
Recent political initiatives in Japan have fundamentally
transformed Japanese political life, ushering in a new attitude which
is strongly reverberating in the economy. The Japanese Parliament (the
Diet) had been consistently dominated by the Liberal Democratic Party
(LDP) since 1955. The LDP dynasty, recently fraught with scandal,
corruption, accusations of maintaining a virtual monopoly, effectively
ended in 1994 as a result of electoral reform measures that brought
Diet seats to previously underrepresented areas. The first election
under this new system was held in October 1996. While the LDP remained
as the ruling party, it did so from a minority position. A key result
of the electoral reforms has been a strengthening of ideas of
opposition parties. Indeed, many of the LDP's recent reforms
originated with the leaders of the opposition New Frontier Party. The
LDP's ability to consistently produce bold innovations in a
politically competitive environment is untested. The opposition
parties suffer from structural and organizational weaknesses.
Infighting and defections are common. This inexperience with a true
multi-party system has caused the rise and fall of four coalition
governments in recent years. Between the adjusting of the monolithic
LDP to a more demanding and competitive system and the settling of the
opposition parties, Japan's political environment remains unstable.
The desire for electoral reform arose out of what many see as a basic
change in Japanese public opinion in recent years. Faced with
recurring scandal and corruption, Japanese society has come to demand
more accountability from their leaders, more transparency in their
institutions, and less interference from their intensely bureaucratic
government. This attitude was reflected in the results of the recent
election where candidates of the LDP party were heavily defeated in an
election for the upper house of parliament and prime minister
Hashimoto was forced to resign. The election results were considered
to be a repudiation of the government's failure to come to grips with
the countries economic decline, widening corruption scandals and a
lack of any discernable progress in addressing the nation's banking
problems.
Nevertheless, sustaining reforms and recovery are not guaranteed.
Drops in consumption, increased budget deficits, or halting
deregulation could exacerbate the nation's economic woes. Furthermore,
as a trade-dependent nation long used to high levels of government
protection, it is unclear how the Japanese economy will react to the
potential adoption of the trade liberalization measures which are
constantly promoted by their trading partners. In addition, as the
largest economy in a rapidly changing and often volatile region of the
world, external events such as the Korean conflict could effect Japan.
As many of the governments of Southeast Asia frequently face domestic
discontent, and as many of these countries are Japanese trading
partners and investment recipients, their internal stability and its
impact on regional security are of tremendous importance to Japan.
Also of concern are Japan's trade and current-account surpluses. If
they continue to grow, they could lead to an increase in trade
friction between Japan and the United States. Additionally, with
inflationary pressures largely absent and wholesale prices falling,
Japan may be entering a period of deflation. A deflationary
environment would both hit corporate profits and increase the debt
burden of Japan's most highly leveraged companies.
CHINA AND HONG KONG. China is one of the world's last remaining
communist systems, and the only one that appears poised to endure due
to its measured embrace of ca pitalist institutions. It is the
world's most populous nation, with 1.22 billion people creating a
workforce of 699 mill ion people. Today's Chinese economy,
roughly separated between the largely agricultural interior provinces
and the more industrialized coastal and southern provinces, has its
roots in the reforms of the recently deceased communist leader Deng
Xiaoping. Originally an orthodox communist system, China undertook
economic reforms in 1978 by providing broad autonomy to certain
industries and establishing special economic zones (SEZs) to attract
foreign investment (FDI). Attracted to low labor costs and favorable
government policies, investment flowed from many sources, with Hong
Kong, Taiwan, and the United States leading the way. Most of this
investment, has been conc entrat ed in the southern provinces,
establishing manufacturing facilities to process goods for re-export.
The result has been a steadily high level of real GDP growth,
averaging 11.35% per year so far this decade. With this growth has
come a doubling of total consumption, a tripling of real incomes for
many workers, and a reduction in the number of people living in
absolute poverty from 270 to 100 million people. Today there is a
market of more than 80 million people who are now able to afford
middle class western goods.
Such success has not come without negatives. As a communist system
in transition, there still exist high levels of subsidies to
state-owned enterprises (SOE) which are not productive. At the end of
1997, it was reported that close to half of the SOEs ran losses. In
addition, the inefficiencies endemic to communist systems, with their
parallel (thus redundant) political, economic and governmental policy
bodies, contribute to high levels of inflation. Fighting inflation and
attempting to cool runaway growth has forced the government to
repeatedly implement periods of fiscal and monetary austerity.
Periodic intervention seems to be their chosen method of guarding
against overheating.
Performance in 1997 r eflects this dynamic between growth,
inflation, and the government's attempts to control them. Growth
slowed to 9.1%, largely as a result of a tightening of credits to
SOEs. Policy was a mix between a loose monetary stance and some
relatively austere fiscal position s. While growth was a priority,
it came at the cost of double-digit inflation.
China has two stock exchanges that are set up to accommodate foreign
investment, in Shenzhen and in Shanghai. In both cases, foreign
trading is limited to a special class of shares (Class B) which was
created for that purpose. Only foreign investors may own Class B
shares, but the government must appro ve sales o f Class B shares
among foreign investors. As of December 1997, there were 51
c ompanies with Class B shares on the two exchanges, for a total
Class B market capitalization of $2.1 billion U.S. dollars. In 1997,
all of China's stock market indices finished the year below the level
at which they began it. These markets were buoyed by strong
speculative buying in the year's second quarter. Market valuations
peaked in September and were subsequently hit by a heavy sell off from
Octo ber onwards.
In Shan ghai, all "B" shares are denominated in Chinese renminbi but
all transactions in "B" shares must be settled in U.S. dollars. All
distributions made on "B" shares are also payable in U.S. dollars, the
exchange rate being the weighted average exchange rate for the U.S.
dollar as published by the Shanghai Foreign Exchange Adjustment
Center. In Shenzhen, the purchase and sale prices for "B" shares are
quoted in Hong Kong dollars. Dividends and other lawful revenue
derived from "B" shares are calculated in renminbi but payable in Hong
Kong dollars, the rate of exchange being the average rate published by
the Shenzhen Foreign Exchange Adjustment Center. There are no foreign
exchange restrictions on the repatriation of gains made on or income
derived from "B" shares, subject to the repayment of taxes imposed by
China thereon.
China's proven ability to nurture domestic consumption and expand
export markets leads many to believe that the bulk of its growth has
yet to be seen. Most sources, notably the World Bank, predict future
growth levels through the year 2000 of over 7%. This auspicious
indicator notwithstanding, there are a few special considerations
regarding China's future. While this list is not all-inclusive, it
does highlight some internal and external forces that have a strong
influence on the country's future.
To begin with the internal issues, one matter is that
infrastructure bottlenecks could prove to be a problem, as most FDI
has been concentrated in manufacturing and industry at the expense of
badly needed transportation and power improvements. Secondly, as with
all transition economies, the ability to develop and sustain a
credible legal, regulatory, and tax system could influence the course
of investments. Third, environmentalists warn of the current and
looming problems regarding pollution and resource destruction, a
common result of such industrial growth in developing economies which
can't afford effective environmental protection. This is a
particularly noteworthy issue, given the size of the country's
agricultural sector. Lastly, given China's unique method of transition
there exists the possibility that further economic liberalization
could give rise to new social issues which have heretofore been
effectively mitigated. One such issue is the possible dismantling of
inefficient state-owned enterprises, something which is potentially
socially explosive given the communist policy of providing social
welfare through the firm. Exposing what many economists feel is a high
level of open unemployment and widening the gap between the newly
empowered business class and the disenfranchised could pressure the
government to retreat on the road to reform and continue with massive
state spending.
Regarding external issues, China's position in the world economy
and its relationship with the United States also have a strong
influence on it's economic performance. The country has recently
enjoyed an almost uninterrupted positive trade balance. As the largest
country amidst the fastest growing region in the world, China and its
multi-million person ethnic diaspora have a significant role to play
in Asian growth. Should China ascend to become a member of the World
Trade Organization (WTO), as it desires, such movements of capital and
goods will become easier.
Export growth in China has recently been subject to fluctuations
caused by external political events, such as the U.S. elections and
debates over human rights issues. U.S. policy (specifically most
favored nation status) is frequently reconsidered by various elements
of the U.S. government in reaction to a variety of issues, from
nuclear proliferation to Tibetan rights. Significant changes in U.S.
policy could impact China's growth, as close to 9% of their GDP is
trade with the U.S. and the U.S. represents the third biggest investor
in China.
Perhaps the strongest influence on the Chinese economy is the
policy that is set by the political leaders in Beijing and this is
somewhat of an open question as the death of Deng has created a slight
vacuum in Chinese political society. A large part of Deng's strength
derived from a newly empowered business class endeared to him and it
is unclear if any of his successors can harness this loyalty as
effectively as he did. Sustained growth is one possible way to win
over this constituency, leading many to believe that the future
Chinese leadership will respect market forces at least as much as Deng
did. Choosing between double digit growth and reduced inflation could
continue to be a central economic question, with 1997 (Deng
influenced) decisions pointing to an acceptance of lower, albeit still
high, GDP growth.
Another key political player is the Chinese army. With provocative
situations occurring in Taiwan and the Korean peninsula, and with ever
present pressure from internal democrats, the military is in a
position of leverage regarding the shaping of the future political
scene. Finally, there is the communist party, long seen as a loser
amongst the beneficiaries of Deng's reforms. Many view the battle
between the party and the middle class as a zero sum game and as the
leadership settles, respective alliances and constituencies could
determine how much the government pursues its growth strategy.
As with almost all foreign investments, U.S. investors face the
significant risk of currency devaluation by the Chinese government.
Despite assurances from officials reemphasizing China's policy
commitment to maintain the current exchange rate of the renminbi
against the U.S. dollar, many observers believe that this policy will
be soon tested as China monitors the effect of regional devaluations
on exports. Government authorities feel that China has boosted its
international reputation by refraining from devaluing the renminbi at
a time when such a move could further destabilize the currencies of
its neighbors. Nevertheless, Chinese authorities have recently hinted
that a continued slide in the Japanese yen would make it very
difficult for them to maintain their promise not to devalue. If
efforts to prevent the slide in the yen fail, then China may be pushed
into devaluing their currency. For U.S. investors, a devaluation would
erode the investment returns on their investments.
The last significant force in the Chinese economy is the
acquisition on July 1, 1997 of Hong Kong as a Special Autonomous
Region (SAR). For the past 99 years as a British Colony, Hong Kong has
established itself as the world's freest market and more recently as
an economic gateway between China and the west.
A tiny, 814 square mile area adjacent to the coast of southern
China with a population of 6.3 million, Hong Kong has a long
established history as a global trading center. Originally a
manufacturing-based economy; most of these businesses have migrated to
southern China. In their place has emerged a developed, mature service
economy which currently accounts for approximately 80% of ITS GROSS
DOMESTIC PRODUCT. Hong Kong trades over $400 billion in goods and
services each year with countries throughout the world, notably China,
Japan, and the U.S. Its leading exports are textiles and electronics
while imports tend to revolve around foodstuffs and raw materials.
Hong Kong's currency, the HK dollar, was pegged to the US dollar at
HK7.7=$1 in 1983 and investors consider it to be a stable mechanism in
enduring confidence lapses and speculator attacks. The operation of a
currency board and accumulation of U.S. dollars in its monetary fund
is partly responsible for this stability.
The stock market (SEHK) listed 658 publicly traded companies by the
end of 1997, with total capitalization at $413 billion U.S. dollars. A
significant portion of SEHK firms are in real estate, and are
sensitive to fluctuations in the property markets. 1997 was a
tumultuous year for the Hong Kong stock market as a speculative attack
on the Hong Kong dollar in October provoked a global sell-off in
equities. Investors were shocked as the Hong Kong market, long
regarded as a safe-haven, plunged 40% in October. The stock market's
decline and the attack on the local currency sent interest rates
soaring, precipitating an erosion in local property values. This in
turn put additional pressure on the banking sector which is heavily
geared to real estate. The Hong Kong market's dramatic downturn
illustrates how vulnerable it is to the Asian region's economic
problems. The structural problems besetting Hong Kong's neighbors in
Southeast and Northeast Asia may not be quickly resolved. Exports to
the Asian region may remain depressed as the process of economic
reform in countries such as Thailand, Malaysia, Indonesia, Japan and
South Korea will likely hold back economic growth in the area.
Accordingly, Hong Kong and China will likely be more dependent upon
demand from the U.S. and Europe for some time to come.
As a trade center, Hong Kong's economy is very closely tied to that
of its trading partners, particularly China and the United States. In
the wake of Deng's reforms, Hong Kong and China have become
increasingly interdependent economically. Currently, China is Hong
Kong's largest trading partner. After Taiwan, Hong Kong is the largest
foreign investor in China, accounting for about 60 percent of overall
foreign direct investment. Hong Kong plays a particularly significant
role as an intermediary in U.S.-China trade. In 1996, it handled 56%
of China's exports to the U.S. and 49% of Chinese imports from the
U.S.
The critical question regarding the future of Hong Kong is how the
Chinese leadership will exert its influence now that it has become a
Special Autonomous Region (SAR). This new status is in accordance with
pledges made at the Joint Declaration on the Question of Hong Kong
made by the Chinese and British governments in 1984. Leading up to the
hand over of the colony, the Chinese government has pledged to uphold
the Basic Law of 1990 which states that Hong Kong's status as an
unfettered financial center will remain intact for at least 50 years
after 1997. Part of this status includes retaining the legal,
financial and monetary systems (specifically the HK$/US$ peg) which
guarantee economic freedom and foster market expansion.
Many investors and citizens are closely monitoring Chinese actions
in order to assess their actual commitment to these principles.
Already there is evidence of a clear, if slow, current of political
change coming from Beijing. Certain actions, such as the curbing of
media freedoms, indicate that there is the possibility of significant
interference from communist authorities. More significant was the
clash between the U.K. and Chinese governments over China's abolition
of the elected legislature and subsequent installation of governmental
leaders in both the executive and the legislature who are directly
appointed by Beijing. Mr. Tung Chee-hwa, appointed as the first Chief
Executive of the SAR, has surrounded himself with like-minded
Machiavellian figures who have strong ties to both market successes
and Beijing leaders. They are portrayed as believing in the powers of
capitalism and central authority, if not democracy, leading some to
speculate that the SAR could develop into a South Korean style of
corporatism which preserves the economic status quo without
incorporating further political freedoms.
In assessing the prospects for Hong Kong's future, it must be noted
that China has a very strong interest in a prosperous SAR.
Particularly if Beijing pursues a growth strategy as it has in the
past, Hong Kong can be a key agent in China's economic policy. Desire
for investment and new technologies necessary for modernization is a
strong incentive to send positive signals through the treatment of
Hong Kong. This is reinforced by the respect Hong Kong is due given
its role in China's recent dynamic performance.
To be sure, there are more adamant concerns over the effect of the
acquisition. Many are skeptical of Beijing's ability to leave the
currency alone. Some note the continuous drop in GDP as evidence that
Hong Kong has yet to mature as a service economy and that the
workforce hasn't fully adjusted to the switch out of manufacturing.
Additionally, by tying Hong Kong so closely with China, it now must
weather the ups and downs of Beijing's relationship with the U.S. Most
Favored Nation Status now means just as much, if not more, to the SAR
than it does to Beijing, with some asserting that revoking MFN could
result in substantial losses in trade, income, and jobs.
Hong Kong's competitive advantage has traditionally been a mix of
geography, market freedoms and entrepreneurial spirit. The
preservation of these advantages is now a function of the island's
independence from Beijing. Today's investors will be vigilant in
measuring how muc h of that independence is retained after July 1,
1997.
AUSTRALIA. Australia is a 3 million square mile continent (about the
size of the 48 continental United States) with a predominantly
European ethnic population of 18.2 million people. A member of the
British Commonwealth, its government is a democratic, federal-state
system.
The country has a western style capitalist economy with a workforce of
9.2 million people that is concentrated in services, mining, and
agriculture. Australia's l arge agric ultural sector specializes
in wheat and sheep rearing and together, these two activities account
for more than half of t he cou ntry's export revenues. Australia
also possesses abundant natural resources such as bauxite, coal, iron
ore, copper, tin, silver, uranium, nickel, tungsten, mineral sands,
lead, zinc, diamonds, natural gas, and oil. The health of the
country's domestic economy is particularly sensitive to movements in
the world prices of these commodities. Primary trading partners are
the United States, Japan, South Korea, New Zealand, the United Kingdom
and Germany. Imports revolve around machinery and high technology
equi pment.
Historically, Australia's strong points were its agricultural and
mining sectors. While this is still true to a large extent, the
government managed to boost its manufacturing sector by undertaking
protective measures in the 1970's and early 1980's. These have
subseque ntly be en liberalized in an effort to spur growth in
the industrial sector. Today's economy is more diverse, as
manufactures' share of total exports is increasing. Part of the
government's effort to make manufacturing more competitive was a
floating of the Australian dollar in 1984, precipitating an initial
depreciation, and a campaign to reduce taxes. Such reforms have
attracted foreign investment, particularly in the transport and
manufacturing sectors. Restrictions do exist on investment in certain
areas as media, mining and some real estate .
With inflation well under control but unemployment stubbornly high
and signs of cyclical slack in the economy, Australia's monetary
policy is focused on preserving the low inflation environment while
keeping monetary conditions conducive to stronger economic growth. The
government has set a goal of achieving a government budget surplus
in fiscal year 1998/1999.
Australia is fully integrated into the world economy, participating in
GATT and also more regional trade associations such as the Asia and
the Pacific Economic Cooperation (APEC) forum. Future growth could
result from their movement towards regional economic liberalization,
but a countervailing force is the reality that some export markets in
Europe could be lost to continued European economic integration.
After suffering a significant recession in 1990-91, the Australian
economy has enjoyed six years of expansion. The medium-term outlook
appears favorable, with domestic spending supported by low interest
rates, improving consumer confidence and a strengthening labor market.
GDP growth has increased steadily throughout 1997. However, weakness
in commodity prices, particularly metal prices, coupled with an
increase in the nation's current account deficit have placed
significant pressure on the Australian dollar.
Investors should be aware that, while Australia's prospects for
strong economic growth appear favorable over the long-term, many
sectors currently face significant risks arising from the recent
turbulence in Asian countries, which account altogether for almost 60
percent of Australia's exports. While projections already embody a
more subdued outlook for growth in these countries, there is a risk of
this outlook deteriorating further, especially in Japan and Korea.
Due to the large position that the agriculture and natural resource
sectors have in the nation's export driven economy, any weakness in
commodity prices may negatively impact both the economy and stock
prices. In addition, United States investors face the risk that their
investment returns from investments in Australia could be eroded if
the Australian currency declines relative to the United States
dollar.
INDONESIA. Indonesia is a country that encompasses over 17,000 islands
on which live 195 million people. It is a mixed economy that balances
free enterprise with significant government intervention. Deregulation
policies, diversification of strong domestic sectors, and investment
in infrastructure projects have all contributed to high levels of
growth since the late 1980's. Indonesia's economy grew at 7.1% in
1996, the exact average of its performance for the current decade.
Growth in the 1990's had been fairly steady, hovering between 6.5-7.5%
for the most part, peaking at 8.1% in 1995. Moderate growth in
investment, including public investment, and also in import growth,
helped to slowdown GDP growth. Growth has been accompanied by
moderately high levels of inflation.
In recent years, Indonesia had been undergoing a
diversification of the core of its economy. No longer strictly
revolving around oil and textiles, it is now gaining strength in high
technology manufactures, such as electronics. Indonesia consistently
runs a positive trade balance. Strong export performers are oil, gas,
and textiles and apparel. Oil, once responsible for 80% of export
revenues, now accounts for only 25%, an indication of how far other
(mostly manufacturing and apparel) sectors have developed. Main
imports are raw materials and capital goods.
However , as with many of its Asian neighbors, Indonesia's bright
prospects came to a sudden halt in August of 1997 when the plunging
Thai baht began to destabilize the rupiah. By mid-year 1998 the local
currency had fallen more than 80% against the dollar, and hugely
increased the cost of servicing foreign debts; a collapse of the real
economy, and a growing number of bad loans. Various central bank
initiatives, including a doubling of interest rates, failed to halt
the currency's depreciation. The nation's banks, unable to service
their extensive short term borrowings, were suddenly in danger of
collapse. Of more than 200 local banks, a mere handful were estimated
to be solvent at mid-year 1998.
The social effects of t his decline have been devastating. By the
end of 1998 the government expects 47% of the population to be living
below the poverty line and unemployment is expected to surpass 20% of
the workforce. This has led to an increase in social tensions and food
riots and large-scale strikes have broken out sporadically. Rioting
and attacks upon the countries business oriented ethnic Chinese
population have prompted as many as 80,000 to flee the country. Rising
popular opposition forced President Suharto to resign less than three
months after being appointed to his seventh consecutive five-year term
and was replaced by his vice-president, B. J. Habibie. The political
upheaval and resulting uncertainty has resulted in the further erosion
in public confidence at home and abroad.
The breakdown in public con fidence in the Indonesian economy will
likely be difficult to reverse, and will prolong the period of
recovery. Resumption of lending by multilateral institutions under a
rescue package drawn up by the International Monetary Fund (IMF) may
speed up the process of restoring the faith in the government's
efforts to shore up the banking system. Nevertheless, even if the two
critical outstanding issues of restructuring the corporate sector's
external debt and shoring up the banking sector can be resolved this
year, the economy will remai n weak in 1999 and recover only slowly
in the following years.
The Indone sian stock market plunged to record lows in 1997 under
the combined impact of the country's economic implosion, political
uncertainty and social unrest. The market's retreat continued into
mid-1998 as domestic and foreign investors fled the market for safer
havens overseas. While many investors believe that the market's steep
decline has brought valuations of a number of Indonesian companies to
very attractive levels, there remains considerable risk particularly
for foreign investors. As with most foreign investments, United States
investors could see their investment returns eroded if the Indonesian
currency declines in value relative to the U.S. dollar. Secondly, any
escalation of rioting and other forms of social unrest could be a
major obstacle in the path of economic recovery. Thirdly, many
question the will of the Indonesian government and its people to
accept the conditions of economic reform as mandated by the IMF.
Fourth, the Indonesian economy, currency and securities markets are
extremely sensitive to events that take place within the Asian region
and their fortunes are somewhat dependent upon how well other Asian
nations resolve their own economic and currency problems.
MALAYSIA. 1997 saw Malaysia's GDP growth slow to 7 .4%, down
from over 8.2% in 1996 and 9.5% in 1995. Inflation has been kept
relatively low at 3.8%. Performance in 1996 avoided the economy's
potential overheating as export growth, investment, and consumption
all slowed. A large part of Malaysia's recent growth is due to its
manufacturing industries, particularly electronics and semiconductors.
This has led to an increased reliance on imports; thus the economy is
sensitive to shifts in foreign production and demand. This is
particularly true regarding its main trading partners: the United
States, Japan, and Singapore. Such shifts were partly responsible for
the slowdown in 1 997. In a ddition, monetary policies to stem
the threat of overheating were evident, but the country still needs
massive public and private investment to finance several large
infrastructure projects. Government industrial policy seeks investment
to create more value added high technology manufacturing and service
sectors in order to decrease the emphasis on low skilled
manufacturing. Already U.S. investors have invested over $9 billion,
and most of this is in electronics and energy projects.
However, like its Asian nei ghbors, Malaysia has stumbled in its
dash to become a developed nation by 2020. The grandiose ambitions of
Malaysian Prime Minister Mahathir Mohamad have been set back by its
worst-ever currency crisis, which also brought a sharp fall in the
country's stock market. An overheated property market, a growing
current-account deficit and a highly leveraged economy, precipitated
much of the country's problems. Following the sharp decline of
Thailand's currency, the Malaysian ringgit came under severe pressure.
The Malaysian central bank attempted to defend the currency and the
resulting spikes in interbank rates marked the start of a period of
escalating interest rates. Once the central bank ceased using foreign
exchange reserves to slow the ringgit's depreciation in the
region-wide currency slide, the Malaysian currency quickly weakened
versus the United States dollar and by year end had declined by 35%.
By mid-year 1998, the outlook for the Malaysian economy remained
bleak as economists predicted that the economy would shrink by at
least 5 percent this year, the first contraction in 13 years. The
likelihood that Malaysia will be forced to seek IMF assistance is
increasing. Although Malaysia does not have the high level of foreign
debt that has overwhelmed its Asian neighbors, domestic lending, at
170 percent of GDP, was the highest in Southeast Asia when the
currency crisis struck. The nation's banks are now faced with a
growing number of unpaid loans as more businesses are struggling to
stay afloat in the sagging economic environment.
Adding to the bleak outlook is the government's seemingly confused
and erratic response to the nation's serious economic and currency
crisis. The Prime Minister is increasingly at odds with the finance
minister on what policies the country has to institute to remedy the
country's serious problems. Prime Minister Mahathir has abandoned the
tight money, financially conservative recovery policy endorsed by the
IMF and has placed the blame for the nation's troubles on foreign
currency and stock market speculators. The move risks triggering
another round of currency devaluations, inflation and, in the long
run, economic collapse.
Investors should be aware that investing in Malaysia currently
entails a number of potential risks, not the least of which is the
increasingly erratic economic policies of the Malaysian government
that are counter to the advice of the IMF and many of the developed
nations. In addition, the government appears to be escalating its
hostile attitude toward foreign investors. In September of 1998
Malaysian authorities imposed new restrictions on the foreign exchange
and securities markets. Included were limitations in repatriating the
investment proceeds of foreign investors.
While the Malaysian population has been relatively passive during
the first year of the economic meltdown, there could be mounting
social unrest if the crisis is prolonged. Should the country finally
adopt IMF remedies the Malaysian people may be reluctant to accept the
additional sacrifices that they will be called upon to endure. This
could seriously undermine the recovery of Malaysia's economy as well
as its currency and stock market. An increasingly hostile government
towards foreign investors could also lead to additional curbs on the
free ac cess to their funds. As with other Asian markets, currency
risk remains substantial.
SINGAPORE. Since achieving independence from the British in 1965,
Singapore has repeatedly elected the People's Action Party (PAP) as
their government. It is a party that is so consistent it has only
offered up two prime ministers in this 32-year period. Elections in
January 1997 returned the PAP to power, signaling satisfaction with
their policy of close coordination with the private sector to
stimulate investment. Typical policies include selective tax
incentives, subsidies for R&D, and joint ventures with private firms.
While the combination of consistent leadership and interventionist
policies is sometimes seen as impeding civil liberties and
laissez-faire economics, it has produced an attractive investment
environment.
The Singapore economy is almost devoid of agriculture and natural
resources, not surprising given the island nation's geographic size.
Its strongest sector is manufacturing, particularly of electronics,
machinery and petroleum and chemical products. They produce 45% of the
world's computer disk drives. Major trading partners are Japan,
Malaysia and the United States.
The economic situation in Singapore regis tered a p assable year
in 1996 but weakened in early 1997, dragged down by the downturn in
the gl oba l electronics industry. However, it ended the year on
a firmer footing as real GDP growth rose from 4.1% in the first
quarter to 7% b y the fourth quarter. Inflation remained low and the
current account balance maintained its large surplus. Property values
have declined recently, impacted by continuing oversupply.
Although Singapore boasts one of the strongest economies in Asia,
investors in that market face a number of possible risks. Chief among
these is that the country is not immune to the region's economic
troubles, as Singapore's neighbors account for nearly one-quarter of
its trade. Any prolonged regional economic downturn could slow its
growth. In addition, Analysts believe that there is considerable
downside risk in the current Singapore dollar exchange rate and any
decline in the Singapore currency versus the U.S. dollar could erode
the investment return of United States investors in that market.
Lastly, manufacturing, a major pillar of Singapore's economy, is
unlikely to sustain growth into 1998 as recent indications point to
continued excess capacity in the computer electronics industry.
SOUTH KOREA. South Korea has been one of the more s pectacul ar
economic stories of the post-war period. Coming out of a civil war in
the mid-1950's, the country found itself with a destroyed economy and
boundaries that excluded most of the peninsula's mineral and
industrial resources. It proceeded over the next 40 years to create a
society that includes a highly skilled and educated labor force and an
economy that exploited the large amounts of foreign aid given to it by
the United States and other countries. Exports of labor intensive
products such as textiles initially drove th e econ omy and were
eventually replaced by heavy industries such as automobiles.
Hostile relations with North Korea dictate large expenditures on the
military and political uncertainty and potential famine in the north
has put the south on high alert. Any kind of significant military
effort could have multiple effects, both positive and negative, on the
economy. South Korea's lack of natural resources put a premium on
imported energy products, making the economy very sensitive to oil
prices.
Since 1991, GDP growth has fluctuated widel y betwee n 5% and 9%,
settling down at 5.6% last year. Currently the labor market is in need
of restructuring, and its rigidity has hurt performance. Relations
between labor and the large conglomerates, or Chaebols, could prove to
be a significant influence on future growth. Inflation in the same
period has been consistently dropping, save a brief rise in 1994 and
finished the year at 4.5%. The country consistently runs trade
deficits, and the current account deficit widened sharply in 1996,
more than doubling to $19.3 billion. South Korea's strong domestic
sectors are electronics, textiles and industrial machinery. Exports
revolve around electronics, textiles, automobiles, steel and footwear,
while imports focus on oil, food, chemicals and metals.
The stock market (Korea Stock Exchange) is currently undergoing
liberalization to include more foreign participation, which was only
first allowed in 1992, but the bond market remains off limits until
1999. F oreign ownership has since been increased to 55% for all
listed stocks except three. The foreign ownership liberalization is in
response to the KSE 1996 performance, which was down 18%. The number
of listed companies totaled 726 in 1997, a decline of 34 from the
previous year, while the market's capitalization plummeted 70 percent
from its 1996 level.
Over the calendar year 1997, the Ko rean stock market extended its
two-year decline plunging by 42% to its lowest year-end level since
1986. The collapse came as a direct result of the Asian region's
currency crisis and the failure of several Korean conglomerates. In
the summer of 1997 the South Korean won hit record lows against the
U.S. dollar as a series of nationwide labor strikes aggravated the
already escalating trade deficit. Despite aggressive official
intervention to support the local currency, the won had fallen from
860 to 914 to the U.S. dollar by year-end.
The Korean market poses risks for current and prospective
investors. The Korean government will need to maintain public support
to implement the radical and difficult restructuring of the economy
demanded by the IMF under a $58 million loan package. This opposition
could come from the country's major conglomerates that have yet to
institute necessary restructuring initiatives, and from workers
protesting against rising unemployment.
In addition, relations with its long-standing enemy, North Korea
have been worsening as widespread famine could prompt another attack
on its southern neighbor to divert the attention of its people from
their suffering. More importantly, South Korea's heavy reliance on
exporting to the Asian region holds its economy hostage to the
economic fortunes of its neighbors.
THAILAND. The Thai economy has witnessed a fundamental transition in
recent years. Traditionally it was a strong producer of textiles,
minerals and agricultural products, but more recently it has tried to
build high technology export industries. This proved particularly
fortuitous in the mid 1990s when flooding wiped out much of their
traditional exports, but the newer industries remained strong, keeping
the growth rate above 8%. (This level had been achieved through the
1990s, giving the economy a name as one of the fastest growing in the
region.) Successive governments have also taken steps toward reducing
the influence of central planning, opening its market to foreigners
and abandoning five-year plans. This restructuring is still underway,
and the change can cause difficulty at times.
The political situation in Thailand is tenuous. Democracy has a short
history in the country, and power is alternatively obtained by the
military, a non-elected bureaucratic elite, and democratically elected
officials. The frequent transfers of power have generally gone without
divisive, bloody conflicts, but there are bitter differences between
the military and the political parties. Free elections in 1992 and
again in 1995 have produced non-military democratic leaders from
different parties, a healthy sign of party competition. More
rec ently, the dramatic downturn in the economy generated demands
from all sectors of society for the resignation of Prime Minister
Chavalit. The worsening economic situation threatened social stability
of the nation and the Prime Minister resigned after barely one
y ear in power.
In 1997 GDP contr acted by approximately 0.3%, compared with 7.2%
growth in 1996 and 8.6% in 1995. The 1997 current account deficit was
1.9% of GDP as against 7.9% in 1996. Inflation was 5.6%, however, the
government has projected a 16.2% rate for 1998. One cause for
Thailand's economic downturn was a decline in export growth as its
manufacturing industry faces stiff competition from low priced
competitors and its agriculture has suffered a severe drop in
production. In 1996, Thailand's currency, the baht, was linked to a
U.S. dollar dominated basket, and monetary policy had remained tight
to keep that link strong and avoid inflationary pressures.
The situation changed in early 1997, however, with the revelation of
many bad bank loans and a bubbling of property prices due to
over-investment. Many companies, faced with slowing exports, stopped
servicing their debts. Many other firms have stayed alive only with
infusions of public cash, and the government has been slow to let many
property laden financial firms fail. The stock market has reacted
strongly, dropping to new lows for the decade. Reluctant to float the
baht, indeed promising that it wouldn't, the government relented in
early July hoping to revive export and stock market growth. The
subsequent devaluation (approximately 20% against the dollar in the
first month) led to the need for a $16 billion loan coordinated by the
IMF to shore up foreign reserves. Most of the loan came from
neighboring countries led by Japan, indicating their desire to both
protect their own investments in Thailand, and also mitigate the
effect of the devaluation on their home currencies.
The total impact of the entire situation is negative, particularly on
inflation, unemployment and foreign debt. Significant turnover and a
major gamble on the currency has put the government in a precarious
position, especially given the fact that it is a six party coalition.
Dissatisfaction amongst the military, always a political factor, is
high.
The new Thai government has prod uced mixed results in their efforts
to remedy the country's serious economic woes. Crucial to Thailand's
recovery are both the outcome of newly instituted economic and banking
reforms and the outlook for both China's and Malaysia's economies.
Looking forward, currenc y risk remains high and the baht will
likely be highly vulnerable to regional contagion.
INDIA. India is the second most populous and seventh largest
country in the world. Although the country occupies only 2.4% of the
world's land area, it supports over 15% of the world's population.
Only China has a larger population. The Indian government is
classified as a federation, or union, and is, under its constitution a
"sovereign, socialist, secular, democratic republic" composed of 25
states and 7 union territories. Like the united States, it has a
federal form of government. However, the central government in India
has greater power in relation to its states, and is patterned after
the British parliamentary system.
India's population was estimated at 952 million in 1997 and has
been projected to double by the year 2028. Religion, caste, and
language are major determinants of social and political organization.
Although 83% of the people are Hindu, India also is the home of more
than 120 million Muslims - one of the world's largest Muslim
populations. Despite economic modernization and laws countering
discrimination against the lower end of the class structure, the caste
system remains an important factor in Indian society.
India has the world's fifth largest economy in terms of purchasing
power parity. About 62% of the population depends directly on
agriculture. Industry and services sectors are are growing in
importance and account for 29% and 42% of GDP, respectively, while
agriculture contributes about 29%. More than 35% of the population
lives below the poverty line, but a large and growing middle class of
150 - 200 million has disposable income for consumer goods. In the
industrial sector, India now manufactures a variety of finished
products for domestic use and export.
India gained independence in 1947 after two centuries of British
colonial rule. Economic policies in the first four decades of
independence were driven by its leaders' deep distrust of foreign
economic interests and admiration for the the Soviet model of
centrally planned industrialization. Accordingly, the country has
followed a policy regime that has been characterized by extreme
protectionism and public sector dominance in strategic sectors.
Nevertheless, India has developed a large and diversified private
sector, and agriculture has remained almost entirely in private
hands.
India's treatment of foreign investment has been alternatively
encouraging, ambivalent or difficult, depending on the industry sector
involved. Most industries are open to limited investment by
multinational companies while others are closed to foreign investors.
Sectors closed to foreign investment currently number five: mineral
oils; railway transport; warships and the military-related areas of
aircraft; atomic energy; and associated minerals. Although recent
measure have liberalized the investment limits on a number of major
industries, several political parties, deeply hostile to foreign
investment, have made these issues the subject of pre-election
rhetoric.
India has a large and active stock market which ranks twentieth
globally in market value. There are 23 recognized stock exchanges in
India. The BSE is the premier exchange; accounting for more than
one-third of trading volume, over 70% of listed capital and over 90%
of market capitalization. As of the end of 1997 there were 5,842
listed companies on the BSE with a total market value of US$128.27
billion.
Relations between India and its neighbors have been fraught with
difficulties. India disputes Pakistan's claims to part of Kashmir, and
repeated attempts at mediation have not resolved this conflict. The
dispute has triggered wars between the two countries in 1947, 1965 and
1971. More recently, India's nuclear tests prompted Pakistan to reply
in kind, despite Western efforts to dissuade it. Economic sanctions
imposed by the U.S. and other industrialized countries following the
nuclear tests in May of 1998 have not been without consequences. While
their short-term direct effect on the economy has been relatively
modest, the indirect and medium-term consequences of sanctions could
become more serious. Relations with Nepal, whit Bhutan and with China
are marred by China's two territorial claims in the nation's east and
north. Historical suspicions remain following the 1962 border war
between India and China and the two countries have continued to work
towards expanding their political and economic influence in the South
Asian region.
While India presents many attractions for U.S. investors, there are
a number of factors that could pose considerable risk to those
investing in this market: Contemporary politics have become
increasingly unpredictable since the resounding defeat of Congress in
1996 after decades at the help. Th alignment of political forces has
become increasingly erratic among factions, parties and interest
groups. Some factions within the current administration have been
hostile to foreign investment and could impose measures that would be
detrimental to the interests and rights of these investors.
India's foreign relations in the region remain fragile and the
possibility of increased tensions or open warfare is an ever-present
danger to th stability of the market. In addition, the monetary cost
of economic sanctions resulting from recent nuclear tests could
substantially impact economic growth and corporate profits. Sanctions
affect India in several ways. Crucially, there will be a deferment or
loss of direct aid and concessional loans, from multilateral agencies
(notably the World Bank) and bilateral donors (th U.S., Japan and
Canada, among others). The loss of export credit and guarantees,
notable from the US Export-Import Bank could delay and increase the
cost of large infrastructure and foreign investment projects. This, in
turn, could have a negative impact upon creditor and investor
confidence in the Indian market.
Relative to the more mature markets of the world, the level of
corporate disclosure in India is very low and companies are generally
less disposed to act in the best interests of their shareholders.
Accordingly, investors face a much more difficult task in ascertaining
the true investment worth of a particular stock.
As with most other emerging markets, the Indian market has been
negatively impacted by recent economic and currency turmoil in the
world's less developed regions and its likely to be similarly impacted
in any future weakness. Currency fluctuation is an additional risk to
U.S. investors as any weakening in the value of the Indian rupee
versus the U.S. dollar could erode the value of their investments upon
currency translation.
TAIWAN. Taiwan is one of the most densely populated
countries in the world, with a population of over 20 million, or 1,504
persons per square mile. Most Taiwanese are descendants of immigrants
who came from China's Fukien and Kwantung provinces over 100 years
ago. Mandarin is the official language while English is taught to all
students as their first foreign language, beginning in the seventh
grade.
Although settled by Chinese in the seventeenth century, Taiwan
(also called Formosa) was ruled by Japan from 1895-1945 and
subsequently reverted to Chinese administration at the end of World
War II. In 1949, nationalist leader Chiang Kai-shek took control of
the island after fleeing mainland China with two million supporters,
following his defeat at the hands of the communists. Since that time,
Taiwan has been governed by the right-wing Kuomintang (KMT) which was
founded by Chiang Kai-shek. In 1996 the island held its first popular
presidential elections in which the KMT retained its control.
Both the Taipei and Beijing governments consider Taiwan an integral
part of China. The KMT has vowed to reconquer the mainland while the
People's Republic of China has urged Taiwan to accept a peaceful
reunification with the mainland. China has proposed that they regain
sovereignty over Taiwan on the basis of a "one country-two systems"
arrangement similar to that of the recent reunification of Hong Kong.
Nevertheless, China has periodically threatened to annex Taiwan
through military action.
Under the KMT government, Taiwan achieved a remarkable record of
economic growth with the assistance of massive U.S. aid in the early
years of the post war period. Today, Taiwan has one of the world's
strongest economies and is among the ten leading capital exporters.
Between 1980 and 1990 real GDP expanded at an average annual rate of
7.9%. During 1990-95 an annual GDP growth rate of 6.6% was recorded.
In 1996, compared with the previous year, GDP increased by 5.7% in
real terms, while it was anticipated that growth would exceed 6.0% in
1997 and 1998. Between 1960 and 1973 the island's exports rose 20 fold
and real GDP increased 3.3 times. Even more remarkable, as the shift
of millions of people from villages to cities took place, was the high
level of employment. Between 1964 and 1995 the unemployment rate
rarely exceeded 2% of the work force in any year.
Prior to 1967 foreign sources played a large role in financing
capital formation expansion, but thereafter domestic savings financed
the entire growth of net capital formation. By 1986 the ratio of
national gross savings to GDP had reached 38.5%. Thereafter the ratio
declined, standing at 26.0% in 1996. The expansion of foreign trade
was the major reason for Taiwan's rapid capital growth. Much of the
growth in exports could be attributed to the competitiveness of its
exports in price and quality in world markets.
Since the mid-1990s the island's traditional reliance upon light
industry has gradually given way to high technology activities, as
emphasis shifted from labor-intensive to capital-intensive production.
The electrical and electronic machinery sector continued to show
particularly strong growth in the 1990s as did the chemical sector.
Taiwan also has eleven vehicle manufacturers, all of which have
contracted joint ventures with foreign companies. By the mid-1990s
Taiwan had become one of the world's largest producers of personal
computers and semiconductors.
Taiwan has a large and active stock market ranking twelfth by
market value among the world's markets. The TSE in Taipei is the only
official stock exchange in Taiwan, although there is also a small OTC
market. At the end of 1997 there were 404 companies listed on the TSE
with a market capitalization of US$288.1 billion. The market is
dominated by individual investors, who account for 90.7% of total
turnover in listed shares. Many local institutions, such as banks,
insurance companies or pension funds, are prohibited or restricted
from investing in listed shares. Foreign individuals and institutional
investors meeting certain criteria have been able to invest in the
market directly since 1990 but are subject to certain limits. Foreign
involvement in the market through qualified foreign institutional
investors and mutual funds is small but growing.
Investing in Taiwan entails special risks as well as those risks
that are common to other emerging markets. Taiwan's relations with The
People's Republic of China remain fragile. The conflict between the
entrenched nationalization of China and the nascent nationalism of
Taiwan persists and armed conflict between the two nations remains a
possibility. Beijing continues its policy of attempting to isolate
Taiwan and could use its growing economic power and political
influence to interfere with the nation's trade with the rest of the
world's economies.
In addition, the Taiwan market has been one of the most volatile in
Asia over the past decade. The country did not escape the effects of
the Asian economic and currency crises in 1997 and 1998 and could
continue to be negatively impacted by an extension of the current
regional turmoil. The nation's heavy dependence upon trade and
manufacturing partnerships with foreign companies also leaves it
particularly vulnerable to downturns in the global economies. Currency
fluctuation is an additional risk to U.S. investors as any weakening
in the value of the local currency versus the U.S. dollar could erode
the value of their investments upon currency conversion.
THE PHILIPPINES. The Philippines is a developing democratic
republic. After 300 years of Spanish rule, the United States acquired
the Philippins from Spain in 1898 and ruled for 48 years. The country
subsequently gained its independence from the United States in 1946.
The nation, as provided by the 1987 Constitut8ion, is a democratic
republican state with a prsidential form of government. However, since
its independence, the government has been periodically roined by
militar coups, martial law and political assassinations.
The Filipino population consists of approximately 70 million
people, primarily of Indo-Malay, Chinese and Spanish descent. Thirteen
percent of the population lives within the Metro Manila area. Most
Filipinos are bilingual, with English as the basic language in
business, government, schools, and everyday communications. While
there are 87 languages spoken throughout the Philippines, the official
language is Pilipino, which is spoken mainly in the Metro Manila area
and widely used in the mass media.
The Philippine economy is basically agricultural if food-processing
manufacture is included. Agriculture (including forestry and fishing)
contributed 21.5% of GDP in 1996, and engaged 39.8% of the employed
labor force, while industry (including mining, manufacturing,
construction and power) contributed 31.9% of GDP and engaged 16.5% of
the employed labor force.
Manufacturing accounted for 22.6% of GDP in 1996 and engaged 9.8%
of the labor force. The pirncipal branches of manufacturing are food
products, petroleum refineries, electrical machinery, chemical
products, beverages, metals and textiles.
The services sector contributed 46.6% of GDP in 1996, and engaged
43.7% of the employed labor force. Remittances from Filipino workers
abroad constituted the Government's principal source of foreign
exchange, while tourism remains a significant sector of the
economy.
In 1995 the Philippines recorded a trade deficit and a deficit on
the current account of the balance of payments. The principal souce of
imorts was Japan, which accounted for 22.1% of the total. Other
significant suppliers were the United States, Saudi Arabia, Singapore,
the Republic of Korea and Taiwan. The United States was the principal
market for exports (35.8%), while other purchasers were Japan,
Singapore and the United Kingdom.
Under the regime of General Fidel Ramos, installed in 1992, the
economic performance of the Philippines improved dramatically, owing
to extensive structural reforms, including the dismantling of
protectionist legislation and the liberalization of trade, foreign
investment an foreign exchange controls. However, economic growth was
adversely affected by the regional financial crisis in 1997. The
effective devaluation of the peso in July caused a collapse of the
stock market and led to rising inflation and the depletion of foreign
exchange reserves. The absence of large foreign invstment inflows,
which had previously contributed to an overall surplus on the balance
of payments despite a recurrent account deficit, resulted in an
overall deficit in 1997.
The Philippine stock exchange (PSE) is the country's only exchange
and ranks thirty-sixth in total market capitalization among the
world's markets. The total number of companies listed on the exchange
was 221 in 1997. Individual domestic investors are the majority
participants while foreign investment is dominated by the Taiwanese,
who are closely followed by the Japanese and Hong Kong Chinese.
Foreign investors are generally allowed to acquire 100% of the equity
of a Philippine listed company, although there are businesses where
foreign ownership is restricted by law.
Foreign investors face special risks when investing in the
Philippines. The country's economy and stock markets have hostorically
been highly sensitive to changes in the Asian region's economies and
this has been amply demonstrated in recent years. After posting
dramatic gains in the fouryears preceding Asia's financial crisis in
mid-1997, the Philippine stock market plummted in response to the
spreading economic, political turmoil in Southeast Asia and Japan. The
market's weakness was further exacerbated as foreign investors pulled
out of the market in large numbers.
Weakening conditions in neighboring countries has also negatively
impacted the Philippine peso. Plummeting currencies in Thailand,
Indonesia, Singapore and Malaysia sent the Philippine peso into a
stready decline. Over the 1997 calendar year, the value of the peso
fell by 52 percent versus the U.S. dollar.
For U.S. investors, currency fluctuation presents an additional
risk to nvesting in the Philippines as a weakening peso can erode the
investment returns on their investments in that country.
Because the Philippines is highly dependent uon the United States,
Japan and the Southeast Asian countries as the primary purchasers of
their exports, their economy is particularly sensitive to changes in
the economic fortunes of these nations.
Although the Philippine political climate appears to have imporved
over the past few years, investors should be aware that the country
has periodically been subjected to military coups, martial law, and
wide spread political corruption since it gained independence. Several
past administrations have instituted policies that have also been
detrimental to the domestic econom and the rights of tis citizens.
Cronyism and corruption have also been rampant in both government and
the business community to the detriment of the interests of corporate
shareholders.
PAKISTAN. The Islamic Republic of Pakistan was founded in
1947, when the British partitioned the South Asian subcontinent into
two states: India and Pakistan. (East Pakistan broke away to become
Bangladesh in 1971). The Pakistan constitution of 1973, amended
substantially in 1985, provides for a President (Chief of State) who
is elected by an electoral college consisting of both houses of the
federal parliament and members of the four provincial legislatures.
The National Assembly in a special session elects a Prime Minister.
Following the election, the President invites the Prime Minister to
create a government. The constitution permits a vote of "no
confidence" against the Prime Minister by a majority of the National
Assembly. In practice, the army has a strong voice in the
decision-making process and few Presidents have been able to oppose
its interests for long.
Relations between Pakistan and India have been fraught with
difficulties. India disputes Pakistan's claims to part of Kashmir, and
repeated attempts at mediation have not resolved this conflict. The
dispute has triggered wars between the two countries in 1947, 1965 and
1971. India has accused Pakistan of fomenting religious and political
unrest and in 1994 there were frequent disturbances in the region.
The two sides frequently exchange fire. More recently, India's
nuclear tests prompted Pakistan to reply in kind, despite Western
efforts to dissuade it. Economic sanctions imposed by the U.S. and
other industrialized countries following the nuclear tests have not
been without consequences. While their short-term, direct effect on
the economy has been relatively modest, the indirect and medium-term
consequences of sanctions could become more serious as the resumption
of IMF funding is currently in jeopardy.
With a per capita GDP of about $470, Pakistan is considered a
low-income country by the World Bank. No more than 39% of adults are
literate and life expectancy at birth is about 62 years. Relatively
few resources have been devoted to socio-economic development or
infrastructure projects. Inadequate provision of social services and
high population growth have contributed to a persistence of poverty
and unequal income distribution.
The country's principal natural resource is arable land ( 25% of
the total land area is under cultivation). Agriculture accounts for
24% of GDP and employs about 50% of the labor force. Wheat, cotton,
and rice together account for almost 70% of the value of total crop
output and are among the countries major exports. Pakistan's
manufacturing sector accounts for about 20% of GDP. Cotton textile
production and apparel manufacturing are Pakistan's largest
industries, accounting for about 50% of total exports. Other major
industries include cement, fertilizer, sugar, steel, tobacco,
chemicals, machinery and food processing.
Weak world demand for its exports and domestic political
uncertainty have contributed to the nation's widening trade deficit.
The nation continues to rely heavily on imports of such materials as
petroleum products, capital goods, industrial raw materials and
consumer products and the resulting external imbalance has left
Pakistan with a growing foreign debt burden. Annual debt service now
exceeds 27% of export earnings.
Pakistan has three stock exchanges located in Karachi, Lahore and
Islamabad. The Karachi Stock Exchange (KSE) is dominant, accounting
for approximately 80% of equity transactions in Pakistan. The KSE
ranks forty-eighth among the world's markets and had a market
capitalization of US$11billion in 1997. At the end of that year there
were 781 companies listed on the KSE. The combined market
capitalization of the 20 largest companies represented 71.7% of the
market total.
U.S. investors should be aware that there are a number of factors
that could pose special risks to investing in Pakistan securities.
Among these is the country's long history of government instability
marked by military coups, political assassinations and frequent
outbreaks of violent rioting, strikes and ethnic unrest. While recent
governments have made some progress on addressing some of the
country's social and economic ills, the current administration is
faced with a number of serious crises. The country appears to be
close to defaulting on its international commitments. With no debt
repayments made since August of 1998, Pakistan faces the possibility
of outright default unless it can secure a bailout package and debt
rescheduling. Recent talks with the IMF on a debt rescue package broke
down and a default could precipitate declines in the nation's trade
and currency. By November of 1998, foreign investment has slowed
dramatically in response to a rise in investment risk and new
restrictions imposed by the central bank designed to limit the outflow
of foreign exchange.
Corruption within the government and business community remains a
problem and corporate managements are generally not focused on
improving shareholder interests.
The threat of war with India over the disputed province of Kashmir
remains a threat to peace in the region and any outbreak of
hostilities would likely plunge the nation's economy into deep
depression and further erode the relative value of its currency versus
the world's major currencies.
SPECIAL CONSIDERATIONS REGARDING LATIN AMERICA
Latin America represents one of the world's more advanced emerging
markets. With a total population of 427 million people and its
abundant natural resources, the area is a prime trading partner for
the United States and Canada. Latin American exports represent, on
average, 16.6% of GDP. Strong export sectors are petroleum,
manufactured goods, agricultural commodities such as coffee and beef,
and metals and mining products. GDP growth in Latin America as a
region was 3.4% in 1996, up from 0.1% in 1995. Recognizing the
important role of international trade as a component of GDP, the
countries of Latin America have formed strong region al trade
organizations, notably Mercado Comun del Sur (MERCOSUR). Talk of
extending the North American Free Trade Agreement (NAFTA) down through
Latin America indicates some desire to tie the economies even closer
to those of the north.
Politically, Latin American countries generally have strong
presidential systems closely modeled after the United States. The
transition to democracy is largely complete in most countries. All
countries enjoy good relations with the United States, with whom they
cooperate on a range of non-economic matters, such as preservation of
the environment and drug control. Monetarist minded governments were
responsible for the successful staving off of contagion from the
recent currency crisis in Mexico, increasing their stature in the eyes
of most capital market participants.
ARGENTINA. Prior to 1989, Argentine politics were characterized by
populist leaders, sometimes democratically elected and sometimes not,
who ruled with the overt support of the military. Coups and outright
military rule were not uncommon. Economic polices were highly
protectionist, with significant barriers and restrictions on foreign
trade and investment. Markets were highly regulated and the state was
heavily involved in many industries. Inflation was routinely high and
growth stagnant.
President Carlos Menem was first elected to office in 1989 and
undertook a program of deregulation, liberalization and macroeconomic
reform. The results have been positive. GD P grow th in 1997 was
8.0%, up from 4.4% in 1996 and -4.4% in 1995. Argentina's growth,
averaging over 6% fro m 1991 to 1997, had been driven primarily
by domestic consumption. Immediately after the Mexican crisis, bank
liquidity was restrained. However, deposits have since returned to the
system surpassing the levels that existed prior to the crisis and
liquidity is very much improved. Lending also increased and consumer
spending rebounded although it has slowed somewhat due to the most
recent Brazilian crisis. The positive effect is that inflation, well
over 150% at the beginning of the decade, was 0.4% in 1996. Still
troublesome for Argentina is unemployment, quite high at 15%. Menem's
economic liberalization policies have succeeded in attracting foreign
investment. From the U.S. alone, approximately $10 billion was
invested by 1996. Investors have been most attracted to the
telecommunications, finance, and energy sectors.
Argentina enjoys a positive trade balance. The export economy is
heavily weighted toward agriculture, which represents 60% of the total
value of all Argentine exports. Primary products are livestock,
oilseeds, and grain. Argentina's single biggest trading partner is
Brazil, and the United States is the second. Primary imports are
machinery, vehicles and chemicals.
The resignation of Economy Minister Domingo Cavallo in July 1996 was
initially greeted with skepticism from the markets. Cavallo was widely
recognized as the man responsible for ensuring the convertibility of
the peso by pegging it to the dollar, a move which saved Argentina
from the hyperinflation and continuous drops in output which could
have followed from the Mexican crisis in 1994. Confidence was quickly
restored, however, with the appointment of Roque Fernandez, who
promptly reaffirmed commitment to Cavallo's plan and introduced
further measures for fiscal stability.
The next presidential election is due in 1999. In accordance with the
constitution, Menem, a member of the Peronist party, can not seek a
third consecutive term. The next election is likely to present a third
candidate to the voters beyond the traditional contestants from the
Peronist and Radical parties. Frepaso, a center-left alliance, first
emerged in the 1995 elections and by 1999 could build itself up enough
to promote a viable alternative to the older parties. It is uncertain
how policies would be effected by the systemic change from a
predominantly two party system to a three party one.
The Argentine stock mark et reached an all-time high in October of
1997 in response to rising corporate earnings and strong economic
growth. However, the market underwent a significant correction due
largely to the "contagion effect" of the Asian economic and currency
crisis and the Mervel index ended the year only 5.9% ahead. While
there was little direct impact from the Asian crisis on Argentina's
economy, foreign investors fled the market, as they feared that Asia's
currency problems would spread to Latin America.
The Argentine market may pose special risks for investors. As an
emerging nation, Argentina's stock market may be particularly
vulnerable to widespread economic, currency and market turmoil such as
we have seen recently in Asia. These crises may prompt investors to
become increasingly averse to emerging market exposure on concern that
the impact of these events will spread to other countries. In
addition, mutual funds that invest in emerging markets may be forced
to sell holdings in countries that have little similarity with the
markets in trouble, merely to raise cash to meet redemptions.
Similarly, the Asian crisis has accelerated a growing imbalance
between supply and demand for basic commodities such as oil, metals,
pulp, grains and others. This could impact the Argentinean stock
market where energy stocks (oil, gas and electricity) comprise
approximately 40% of the market's total value. A currency devaluation
by one or more of its Latin American neighbors could precipitate a
recession and political pressure for competitive devaluation to
protect the country's trade competitiveness.
While Argentina's political situation is relatively stable; there
is a high degree of dissatisfaction with the government's inability to
lower the country's high unemployment rate. This could eventually lead
to social unrest and a turnover of the government to the control of
parties less favorable to investors.
BRAZIL. Brazil is the largest country in South America and is home
to vast amounts of natural resources. Its 155 million people are
descendants from indigenous tribes and European immigrants. They live
in diverse socio-economic conditions, from the urban cities of Sao
Paolo to the undeveloped trading posts of the distant regions.
Industrial development has been concentrated in specific areas. The
disenfranchised population is quite large and is a source of many of
Brazil's social problems.
The Brazilian economy is currently undergoing extensive reforms,
stemming from a 1994 effort to stabilize the currency called the Real
Plan. With the aim of curbing inflation, a new currency, the Real, was
introduced and supported via a floating exchange band. The plan has
stabilized the exchange rate and controlled inflation which was at
2,700% in 1994. Inflation in 1995 dropped to 81%, and fell even
further in 1996, settling at 18.7%. P erhaps the most remarkable
achievement for the Brazilian economy in 1997 was the lowest rate of
inflation in the past 40 years, as the National Consumer Price Index
increased just 7.48%. At the same time, however, the Real Plan has
sent the trade and current account balances into a deficit. The
current account deficit is expected to reach $30 billion in 1998,
equivalent to 3.6% of GDP.
Other objectives of the administration of the current President,
Fernando Henrique Cardoso, are trade liberalization and privatization,
but these efforts are sporadic and often stalled by special interests
in the legislature. Some privatization efforts are performing well,
particularly in the utilities sector. Utilities and telecommunications
have been key draws for foreign investment, and foreign direct
investment (FDI) is coming in at record levels. In 1998 the country
received over $20 billion from privatizations. Still, there are
restrictions against investments in certain industries, such as metals
and mining.
Traditionally a primarily agricultural economy, a strong industrial
sector has developed which produces metals, chemical, and manufactured
consumer goods. Agriculture still plays a significant role, however,
representing 11% of the GDP, 40% of exports and employing over 35% of
the workforce. Primary agricultural products are grains, coffee, and
cattle. Regarding energy and utilities, the country is a leading
producer of hydroelectric power, but they are dep endent on
imports for oil.
Presidential elections were held in October of 1998 and President
Cardoso won with 53% of the vote. This should insure continuity in
policy, which will be much needed given the difficulties caused by the
recent instability in the global markets and its impact on Brazil.
In 1997 the Brazilia n stock market rose to an all-time high in the
first quarter. Over the summer, the speculative attack on the Thai
currency triggered a sharp reversal in the Brazilian market, as
investors feared a raid on the Brazilian real. However, the market
ended the year with a gain of 4.34%. By mid-year 1998 the Brazilian
market plummeted amid growing concern that Brazil, Latin America's
largest economy, might suffer the confidence crisis that had caused
large currency devaluations in Russia and Asia.
Investing in Brazil could entail special risks: High unemployment
is the chief challenge facing Brazil's president Cardoso following his
reelection in October of 1998. Joblessness is at a record high and
social unrest could hinder his progress in subduing inflation and
denationalizing government ownership of many of its businesses. Brazil
could be a likely target for a renewed attack on its currency. The
economy is in a more precarious state: interest rates remain high and,
despite austerity measures, little progress has been made in reducing
the current account deficit. This poses particular risk for U. S.
investors who would see their investment returns eroded if the
Brazilian real were to be devalued.
Overall, Brazil remains vulnerable to both external shocks and
changing sentiment due to worsening domestic indicators or political
risk.
CHILE. Chile is a transition economy which has recently made great
strides toward putting its authoritarian, statist, past behind itself.
In all of Latin America, it is the country with t he highest
rates of growth. Averaging 7.3% so far this decade, GDP grew at 6.0%
in 1996, down from 6. 6% th e previous year. Inflation has been
steadily declining and is down over 15% in the last five years.
Inflation in 1 99 7 was 6.0%, a 0.6% drop over 1996. Unemployment
in 1996 was 6.2%, particularly low for the Latin American region.
Chile is still considered to have one of the best performing stock
markets in the region.
Performance of the Chilean stock market was lackluster in 1997 as
weak copper prices and rising interest rates led to a contraction in
the domestic economy. Also contributing to the market's weakness was
the contagion effect of the Asian economic and currency crises, a
decline in pulp and steel prices; and uncertainty about the growth
prospects of its Latin American neighbors. These factors combined to
produce a 15% decline in the stock market for the 1997 calendar year.
The market weakness carried through into the first half of the next
year.
Eduardo Frei is President and is due for reelection in 1999. President
Frei has been trying to decentralize the government but encounters
stiff opposition from the powerful trade unions. Also high on Frei's
agenda is tax reform.
There is a considerable military component to political life in Chile.
In the legislature there is strong representation by parties with
authoritarian views. As part of the negotiated settlement with coup
leader General Augusto Pinochet in 1990, the army chain of command
ends with General Pinochet, not an elected official. Furthermore,
certain seats are reserved in the Senate for appointed officials from
the military. Pinochet must resign in 1998, and shortly thereafter the
reserved Senate seats will fall open to election. There are
constitutional reforms currently in progress further diminishing the
role and influence of the military, and thus the political transition
is still underway. A successful outcome requires that the military
acquiesce as it is stripped of its political powers.
Investors in the Chilean ma rket face special risks. The Chilean
market is particularly sensitive to the fluctuation in the
international price of copper and pulp on the international markets
and they have a significant impact on the nation's economy and stock
market.
As is typical of most emerging markets, much of the Chilean market
equity is firmly held by controlling families and their associates.
Accordingly, these owners may not always act in the interests of
outside shareholders. In addition, any weakness in the Chilean
currency versus the dollar could erode the investment returns to
United States investors upon currency conversion.
MEXICO. The Mexican economy has recovered fairly well since the
currency crisis of December 1994 thanks in large part to growth in
exports, peso stabilization, and massive financial assistance from the
United States. GDP growth rose to 7.3%, with consumer spending and
investment leading the way. A major positive factor supporting growth
during 1997 was the strength of the peso, which closed the year little
changed from its 1996 year-end level. In addition, the nation's
inflation rate declined to 15.7% from the 27.7% rate of 1996. This
marked the second straight year of improvement. Inflation is the chief
concern of the central bank, which takes active measures such as the
setting of wage ceilings and the adjustment of interest rates to
control it. Domestic consumption, while improved, has yet to return to
pre-1994 levels, and has also contributed to the co ntainment of
inflation.
The Mexican economy is very strong in manufacturing and natural
resources, specifically oil. Manufacturing alone counts for 22% of the
Mexican GDP and 21% of all urban employment. The economy is also very
closely tied to the United States, which is responsible for 60% of all
foreign investment and with whom it conducts over 75% of all trade.
Trade pacts such as the NAFTA further integrate the economies, giving
the United States strong incentives to provide assistance in times of
crisis. NAFTA also enabled the recent recovery , given the ease with
which it allows increases in exports and investment. The Mexican stock
market listed 194 companies with total capitaliza tion of $156
billion in 1997.
Internally, the various people of the Mexican states have recently
experienced a great deal of dissatisfaction with their relationship to
the federal government. Most notably, in Chiapas there have been armed
uprisings by indigenous groups demanding further autonomy. While the
rebellions have not strongly shaken financial markets, they serve as a
reminder of the diversity of Mexico, of the vast socio-economic gaps
between various peoples, and of the potential for such groups to
demand the attention of both their government and the world.
Politically, the landscape changed fundamentally in July 1997. The
defeat of candidates from the Institutional Revolutionary Party (PRI)
in legislative elections signaled the end of decades of one party
rule. Citizens now have the confidence that their votes count and that
the PRI is no longer invincible. Winning every presidential election
since its founding in 1929, the PRI was the country's monolithic
political machine, maintaining power through rigged elections and
ruling in an environment rife with intrigue and corruption. Internal
pressures including armed rebellion from domestic interest groups,
extensive crises and scandals caused by intra-party rivalries and
corruption, and deteriorating relationships with foreign countries
over financial mismanagement and mutual social problems all
contributed to the establishment of fully free and unfettered
elections. Numerous electoral reforms implemented since 1989 have
aided in the further opening of the Mexican political system and
opposition parties have made historic gains in elections at all
levels. Much of the impetus for establishing a real two party system
in Mexico can be credited to President Zedillo and the PRI majority in
COngress. During 1995-96 the political parties negotiated
constitutional amendments to address electoral campaign fairness
issues, which passed unanimously. The response from the Mexican people
was clear as a record number of registered voters cast ballots. Though
they took the most votes (39%) for the 500-member Lower House of
Congress, the PRI has lost their majority. Mid-term elections held in
July of 1997, also saw large gains for opposition parties and marked a
significant step in Mexico's political transformation. Market reaction
to the new Mexican political world was positive. The IPC index,
consisting of 35 of the most representative stocks on the Mexican
Stock Exchange, rose 3.25% the day after the election. Further
financial implications of the new landscape are as yet uncertain.
Relevant considerations are the effect of the new configurations on
government consensus and policy making, the demands of newly empowered
groups on economic and other resources, the balance of power between
the executive and the legislature, and the ability of the government
to maintain law and order.
Mexico's stock market fell sharply in late 1997 and continued its
descent through mid-1998 as the worsening Asian economic and currency
crises threatened to cause problems for Mexico's trade balance and
raised questions concerning the sustainability of its economic growth.
Foreign investors fled the Mexican market, as they feared that Asia's
currency problems would spread to Latin America.
Investors in Mexico face a number of potential risks. As an
emerging nation, Mexico's stock market may be particularly vulnerable
to widespread economic, currency and stock market turmoil such as that
recently experienced in Asia and Russia. These crises may prompt
investors to become increasingly averse to emerging market exposure on
concern that the impact of these events will spread to other
countries. In addition, mutual funds that invest in emerging markets
may be forced to sell holdings in countries that have little
similarity with the troubled markets, merely to raise cash to meet
redemptions. Similarly, because the United States is Mexico's largest
trading partner, any economic downturn in the U.S. economy can have a
strongly adverse impact upon Mexico's economy and stock market.
While Mexico's political situation is relatively stable, there is a
high degree of dissatisfaction with the government's inability to
effectively address the nation's growing social problems, particularly
in the country's less developed regions. Occasional flair-ups of
strikes and armed rebellion could pose a thr eat to Mexico's
political and economic stability.
SPECIAL CONSIDERATIONS REGARDING THE RUSSIAN FEDERATION
The Russian Federation is the largest republic of the Commonwealth
of Independent States with a 1995 population of 147,500,000. It is
about one and four fifths of the land area of the United States and
occupies most of Eastern Europe and north Asia.
Russia has had a long history of political and economic turbulence.
The USSR lasted 69 years and for more than half that time it ranked as
a nuclear superpower. In the 1930's tens of millions of its citizens
were collectivized under state agricultural and industrial enterprises
and millions died in political purges and the vast penal and labor
system or in state-created famines. During World War II, as many as 20
million Soviet citizens died. After decades of communist rule, the
Soviet Union was dissolved on December 8, 1991 following a failed coup
attempt against the government of Mikhail Gorbachev. On the day that
the leaders declared that the Soviet Union ceased to exist, the Soviet
republics were invited to join with Russia in the Commonwealth of
Independent states (CIS). At one time or another those that have
agreed to join have included the Ukraine, Belarus, Moldova, Georgia,
Armenia, Azerbaijan, Uzbekistan, Turkmenistan, Tajikistan, Kazakhstan
and Kyrgyzstan, but a number have dropped out since or have only
observer status. Each of the republics is a sovereign state that
controls its own economy and natural resources and collects its own
taxes, providing only minimal support to the CIS.
Boris Yeltsin, President of Russia, inherited the mantle of
economic and political chaos. With the freeing of most prices he
staked his political life on the rapid creation of a free market
economy. Since 1991 Yeltsin and his Russian reformers have been faced
with the daunting task of stabilizing the Russian economy while
transforming it into a modern and efficient structure able to compete
in international markets and respond to the needs of the Russian
people. To date, their efforts have yielded widely mixed results. On
the one hand, they have made some impressive progress. Since 1992,
they have abolished central planning, decontrolled prices, unified the
foreign exchange market, made the ruble convertible, and privatized
two thirds of the economy. They have accomplished this in spite of the
crushing burdens inherited from the communist system: huge industrial
enterprises that are unprofitable; an obsolete capital stock; a
crumbling energy sector, huge external debt; and armies that had to be
repatriated and resettled at home.
Russia remains a paradox among the major economies of the world in
that it is a country marked by stagnation in production levels, but
has few constraints on growth. Labor supply is adequate and savings
are high. In addition, there is almost unlimited scope for increasing
productivity through the introduction of improved technologies,
production process and market-oriented managerial development. There
are 147 million consumers who are slowly increasing their buying power
and education standards are high. Russia is also rich in natural
resources. It has 40% of the world's natural gas reserves, 6% of its
oil, 25% of coal, diamonds, gold and nickel, and 30% of timber and
bauxite. Approximately ten million people are engaged in agriculture
and they produce half of the region's grain, meat, milk, and other
dairy products.
The main reason for the continued poor performance of the Russian
economy is the country's failure to mobilize the resources that are
available. While the official unemployment rate was at 10.6% in 1996,
up to half of the working population is, in effect, unemployed or, to
a significant degree, underemployed in inefficient and unproductive
industries. Much of the country's savings have been siphoned off
through capital flight. Russia's technological potential for
assimilating both domestic and foreign technologies is not being
exploited. Industry privatization and restructuring initiatives have
generally failed to mobilize the available factors of production as
the country's privatization program virtually ensures the predominance
of the old management teams that are largely non market-oriented in
their management approach. Approximately 80% of Russian privatized
companies continue to be majority-owned by insiders and only 10% are
owned by investors with large enough stakes to influence the running
of the company.
In July 1996, Boris Yeltsin was re-elected for a second term and it
was hoped that the election would mark the start of a more stable
period of economic growth. However, macroeconomic indicators in 1996
proved contradictory. On the one hand, the Russian government
continued its strict credit policies, and the annual inflation rate
for 1997 dropped to 11%, down from 22% in 1996. Inflation has since
remained below 3% a month through the first half of 1997. In addition,
expenditure cuts trimmed the budget deficit to 7% of GDP for the first
nine months of 1996.
By the end of 1997, GDP was up 0.4% following 1996's 6% fall, and
industrial production was up by 1.9%. Non-payment continues to
represent a serious problem for the economy, particularly in the
energy sector.
While Russia is widely believed to be one of the most risky markets
in Eastern Europe, it is also recognized for its potential for
positive returns. However, the market has been essentially liquidity
driven and concentrated in very few of the country's largest
companies. At just $129 billion, the total capitalization of the stock
market accounts for just 28.7 percent of GDP. The majority of
investors in Russian equities are small and medium-sized United States
hedge funds. In addition, several country specific funds have been
established to make direct and portfolio investments in Russian
companies. To facilitate foreign investment, a number of the larger
Russian companies have issued equity in the form of American
depository receipts while six big firms have issued securities in the
form of Russian depository certificates. These certificates are issued
and marketed by the Bank of New York. Any investment in Russia is
risky and deciding which companies will perform well at this stage of
the country's transformation is far from easy. A combination of poor
accounting standards, inept management, limited shareholder rights and
the criminalization of large sectors of the economy pose a significant
risk, particularly to foreign investors.
In 1996 the Russian market delivered the world's best stock market
performance and was among the top performing markets in the first half
of 1997. However, the markets strength masked a rapidly deteriorating
political and economic picture. Many of the country's economic reform
initiatives have floundered as the proceeds of IMF and other
assistance have been squandered or stolen. Taxes were not being
collected and Russian banks, suffering from a collapsed ruble, could
not meet the demands of either domestic depositors or foreign
creditors. In July of 1998 the Yeltsin government effectively devalued
the Russian ruble by approximately 34% to strengthen the ailing
banking system and stimulate demand for Russian exports. In addition
the government announced a restructuring of their foreign debt that
would allow a 90-day moratorium on banks' foreign loans and a
rescheduling of $40 billion in domestic debt. These actions were
viewed by investors as being tantamount to default and they fled the
Russian stock market. President Yeltsin's relations with the communist
dominated Duma worsened and there was talk among the body of beginning
impeachment proceedings against the president. By August of 1998 the
ruble had fallen by 70 percent and food prices soared, heightening
fears of social unrest. By early September the Russian economy
appeared to be slipping out of control and the government in a state
of paralysis as the President and the Duma feuded over remedial
initiatives. Many observers fear that country's communist party could
regain control of the government and end free market reforms, which
could further negatively impact stock prices.
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. FMR is also responsible for the placement of
transaction orders for other investment companies and investment
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, if applicable, arrangements for payment of
fund expenses.
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described
above.
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.
Each fund may execute portfolio transactions with
broker-dealers who provide research and execution services to the fund
or other investment 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 i nvestment accounts; and effect securities
transactions and perform functions incidental thereto (such as
clearance and settlement).
The selection of such broker-dealers for transactions in equity
securities is generally made by FMR (to the extent possible consistent
with execution considerations) in accordance with a ranking of
broker-dealers determined periodically by FMR's investment staff based
upon the quality of research and execution services provided.
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering investment
management services to that fund 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 a fund . The receipt of such research has
not reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-deale r 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 that fund or 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.
To the extent permitted by applicable law, F MR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to us e the research services of brokerage
and other firms that have provided such assistance. FMR may us e
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC) and Fidelity Brokerage
Services Japan LLC (FBSJ), indirect subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions
charged by non-affiliated, qualified brokerage firms for similar
services. Prior to December 9, 1997, FMR used research services
provided by and placed agency transactions with Fidelity Brokerage
Services (FBS), an indirect subsidiary of FMR Corp.
FMR may allocate brokerage transactions to broker-dealers (including
affiliates of FMR) who have entered into arrangements with FMR under
which the broker-dealer allocates a portion of the commissions paid by
a fund toward the reduction of that fund's e xpenses . 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 investment 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.
The Trustees of each fund periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions paid by
the fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
[For the fiscal periods ended 1997 and 1998, the portfolio turnover
rates for each fund are presented in the table below. [Variations in
turnover rate may be due to fluctuating volume of shareholder purchase
and redemption orders, market conditions, or changes in FMR's
investment outlook.]]
FUND FISCAL PERIOD 1997 1998
ENDED
ADVISOR LATIN OCTOBER N/A *
AMERICA 31
ADVISOR JAPAN OCTOBER N/A *
31
ADVISOR EUROPE OCTOBER N/A *
CAPITAL 31
APPRECIATION
ADVISOR OCTOBER
INTERNATIONAL 31
CAPITAL
APPRECIATION
ADVISOR OCTOBER
OVERSEAS 31
ADVISOR OCTOBER N/A *
DIVERSIFIED 31
INTERNATIONAL
ADVISOR GLOBAL OCTOBER N/A *
EQUITY 31
ADVISOR NOVEMBE
TECHNOQUANT R 30
GROWTH
ADVISOR SMALL NOVEMBE N/A **
CAP R 30
ADVISOR NOVEMBE
STRATEGIC R 30
OPPORTUNITIES
ADVISOR MID NOVEMBE
CAP R 30
ADVISOR NOVEMBE N/A *
RETIREMENT R 30
GROWTH
ADVISOR EQUITY NOVEMBE
GROWTH R 30
ADVISOR LARGE NOVEMBE
CAP R 30
ADVISOR NOVEMBE N/A *
DIVIDEND R 30
GROWTH
ADVISOR NOVEMBE
GROWTH R 30
OPPORTUNITIES
ADVISOR NOVEMBE
GROWTH & R 30
INCOME
ADVISOR EQUITY NOVEMBE
INCOME R 30
ADVISOR ASSET NOVEMBE N/A *
ALLOCATION R 30
ADVISOR NOVEMBE
BALANCED+ R 30
ADVISOR DECEMBE
EMERGING R 31
MARKETS
INCOME
ADVISOR HIGH OCTOBER
YIELD 31
ADVISOR DECEMBE
STRATEGIC R 31
INCOME
ADVISOR OCTOBER
GOVERNMENT 31
INVESTMENT
ADVISOR OCTOBER
MORTGAGE 31
SECURITIES
ADVISOR OCTOBER
INTERMEDIATE 31
BOND ++
ADVISOR SHORT OCTOBER
FIXED-INCOME 31
ADVISOR OCTOBER
MUNICIPAL 31
INCOME
ADVISOR OCTOBER
INTERMEDIATE 31
MUNICIPAL
INCOME ++
* Estimated 1999 turnover rate
** Annualized
+ For the fiscal period November 1, 1998 through November 30,
1998.
++ For the fiscal period November 1, 1997 through October 31,
1998.
For the fiscal period ended October 31, 1998, the portfolio
turnover rate for Advisor Balanced was ___%.
The following tables show the brokerage commissions paid by the
funds. Significant changes in brokerage commissions paid by a fund
from year to year may result from changing asset levels throughout the
year. A fund may both commissions and spreads in connection with the
placement of portfolio transactions. [For the fiscal years ended ___,
___, and ___, _________ paid no brokerage commissions.]
The following table shows the total amount of brokerage commissions
paid by each fund.
FISCAL YEAR TOTAL
ENDED AMOUNT PAID
ADVISOR OCTOBER 31
INTERNATIONAL
CAPITAL
APPRECIATION
199 8 $
ADVISOR OCTOBER 31
OVERSEAS
199 8
1997
1996
ADVISOR NOVEMBER 30
TECHNOQUANT
GROWTH
199 8
1997++
ADVISOR SMALL NOVEMBER 30
CAP
199 8+
ADVISOR NOVEMBER 30
STRATEGIC
OPPORTUNITIES
1998
1/1/97-11/30/97
1996**
ADVISOR MID NOVEMBER 30
CAP
199 8
1997
1996 +++
ADVISOR NOVEMBER 30
EQUITY
GROWTH
199 8
1997
1996
ADVISOR LARGE NOVEMBER 30
CAP
199 8
1997
1996 +++
ADVISOR NOVEMBER 30
GROWTH
OPPORTUNITIES
1998
11/1/97-11/30/9
7
1997*
1996*
ADVISOR NOVEMBER 30
GROWTH &
INCOME
199 8
1997++
ADVISOR NOVEMBER 30
EQUITY INCOME
199 8
1997
1996
ADVISOR NOVEMBER 30
BALANCED
11/1/98-11/30/9
8
199 8*
1997*
1996*
ADVISOR DECEMBER 31
EMERGING
MARKETS
INCOME
199 8
1997
1996
ADVISOR HIGH OCTOBER 31
YIELD
199 8
1997
1996
FISCAL YEAR TOTAL
ENDED AMOUNT PAID
ADVISOR DECEMBER 31
STRATEGIC
INCOME
199 8
1997
1996
ADVISOR OCTOBER 31
GOVERNMENT
INVESTMENT
199 8
ADVISOR OCTOBER 31
MORTGAGE
SECURITIES
199 8
ADVISOR OCTOBER 31
INTERMEDIATE
BOND
12/1/97-10/31/
98
ADVISOR SHORT OCTOBER 31
FIXED-INCOME
199 8
ADVISOR OCTOBER 31
MUNICIPAL
INCOME
12/1/97-10/31/
98
ADVISOR OCTOBER 31
INTERMEDIATE
MUNICIPAL
INCOME
199 8
* Fiscal year ended October 31.
** Fiscal year ended December 31.
+ Advisor Small Cap commenced operations on September 9, 1998.
++ Advisor TechnoQuant Growth and Advisor Growth & Income commenced
operations on December 31, 1996.
+ ++ Advisor Large Cap and Advisor Mid Cap commenced
operations on February 20, 1996.
Of the following tables, the first shows the total amount of
brokerage commissions paid by each fund to NFSC, FBS [and FBSJ], as
applicable, for the past three fiscal years. The second table shows
the approximate percentage of aggregate brokerage commissions paid by
a fund to NFSC, FBS [and FBSJ] for transactions involving the
approximate percentage of the aggregate dollar amount of transactions
for which the fund paid brokerage commissions for the fiscal year
ended 1998. NFSC, FBS [and FBSJ] are paid on a commission basis.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL AMOUNT PAID
FISCAL YEAR TO NFSC TO FBS TO FBSJ
ENDED
ADVISOR OCTOBER 31
INTERNATIONAL
CAPITAL
APPRECIATION
199 8
ADVISOR OCTOBER 31
OVERSEAS
199 8
1997
1996
ADVISOR NOVEMBER
TECHNOQUANT 30
GROWTH
199 8
1997++
ADVISOR SMALL NOVEMBER
CAP 30
199 8+
ADVISOR NOVEMBER
STRATEGIC 30
OPPORTUNITIES
1998
1/1/97-11/30/97
1996**
ADVISOR MID NOVEMBER
CAP 30
199 8
1997
1996 +++
ADVISOR NOVEMBER
EQUITY 30
GROWTH
199 8
1997
1996
ADVISOR LARGE NOVEMBER
CAP 30
199 8
1997
1996 +++
ADVISOR NOVEMBER
GROWTH 30
OPPORTUNITIES
1998
11/1/97-11/30/9
7
1997*
1996*
ADVISOR NOVEMBER
GROWTH & 30
INCOME
199 8
1997++
ADVISOR NOVEMBER
EQUITY INCOME 30
199 8
1997
1996
ADVISOR NOVEMBER
BALANCED 30
11/1/98-11/30/9
8
199 8*
1997*
1996*
ADVISOR DECEMBER
EMERGING 31
MARKETS
INCOME
199 8
1997
1996
ADVISOR HIGH OCTOBER 31
YIELD
199 8
1997
1996
ADVISOR DECEMBER
STRATEGIC 31
INCOME
199 8
1997
1996
ADVISOR OCTOBER 31
GOVERNMENT
INVESTMENT
199 8
ADVISOR OCTOBER 31
MORTGAGE
SECURITIES
199 8
ADVISOR OCTOBER 31
INTERMEDIATE
BOND
12/1/97-10/31/
98
ADVISOR SHORT OCTOBER 31
FIXED-INCOME
199 8
ADVISOR OCTOBER 31
MUNICIPAL
INCOME
12/1/97-10/31/
98
ADVISOR OCTOBER 31
INTERMEDIATE
MUNICIPAL
INCOME
199 8
</TABLE>
* Fiscal year ended October 31.
** Fiscal year ended December 31.
+ Advisor Small Cap commenced operations on September 9, 1998.
++ Advisor TechnoQuant Growth and Advisor Growth & Income commenced
operations on December 31, 1996.
+ ++ Advisor Large Cap and Advisor Mid Cap commenced
operations on February 20, 1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FISCAL % OF % OF % OF % OF % OF % OF
YEAR AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE
ENDED COMMISSIO DOLLAR COMMISSIO DOLLAR COMMISSIO DOLLAR
199 8 NS PAID TO AMOUNT OF NS AMOUNT OF NS AMOUNT OF
NFSC TRANSACTIO PAID TO TRANSACTIO PAID TO TRANSACTIO
NS FBS NS FBSJ NS
EFFECTED EFFECTED EFFECTED
THROUGH THROUGH THROUGH
NFSC FBS FBSJ
ADVISOR OCTOBER % % % % % %
INTERNATIO 31
NAL
CAPITAL
APPRECIATI
ON
OCTOBER % % % % % %
ADVISOR 31
OVERSEAS
ADVISOR NOVEMBER % % % % % %
TECHNOQU 30
ANT
GROWTH
ADVISOR NOVEMBER % % % % % %
SMALL CAP 30
STRATEGIC NOVEMBER % % % % % %
OPPORTUNI 30
TIES
ADVISOR NOVEMBER % % % % % %
MID CAP 30
ADVISOR NOVEMBER % % % % % %
EQUITY 30
GROWTH
ADVISOR NOVEMBER % % % % % %
LARGE CAP 30
ADVISOR NOVEMBER % % % % % %
GROWTH 30
OPPORTUNI
TIES
ADVISOR NOVEMBER % % % % % %
GROWTH & 30
INCOME
ADVISOR NOVEMBER % % % % % %
EQUITY 30
INCOME
ADVISOR NOVEMBER % % % % % %
BALANCED 30*
OCTOBER % % % % % %
31**
ADVISOR DECEMBER % % % % % %
EMERGING 31
MARKETS
INCOME
ADVISOR OCTOBER % % % % % %
HIGH YIELD 31
ADVISOR DECEMBER % % % % % %
STRATEGIC 31
INCOME
ADVISOR OCTOBER % % % % % %
GOVERNME 31
NT
INVESTMEN
T
ADVISOR OCTOBER % % % % % %
MORTGAGE 31
SECURITIES
ADVISOR OCTOBER % % % % % %
INTERMEDI 31***
ATE BOND
FISCAL % OF % OF % OF % OF % OF % OF
YEAR AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE
ENDED COMMISSIO DOLLAR COMMISSIO DOLLAR COMMISSIO DOLLAR
199 8 NS PAID TO AMOUNT OF NS AMOUNT OF NS AMOUNT OF
NFSC TRANSACTIO PAID TO TRANSACTIO PAID TO TRANSACTIO
NS FBS NS FBSJ NS
EFFECTED EFFECTED EFFECTED
THROUGH THROUGH THROUGH
NFSC FBS FBSJ
ADVISOR OCTOBER % % % % % %
SHORT 31
FIXED-INCO
ME
ADVISOR OCTOBER % % % % % %
MUNICIPAL 31
INCOME
ADVISOR OCTOBER % % % % % %
INTERMEDI 31***
ATE
MUNICIPAL
INCOME
</TABLE>
* Period of November 1, 1998 through November 30, 1998.
** Period of November 1, 1997 through October 31, 1998.
*** Period of December 1, 1997 through October 31, 1998.
[(dagger) The difference between the percentage of aggregate brokerage
commissions paid to, and the percentage of the aggregate dollar amount
of transactions effected through, NFSC, FBS and FBSJ is a result of
the low commission rates charged by NFSC, FBS and FBSJ.]
[NFSC, FBS and FBSJ have used a portion of the commissions paid by a
fund to reduce that fund's custodian or transfer agent fees.]
The following table shows the dollar amount of brokerage
commissions paid to firms that provided research services and the
approximate dollar amount of the transactions involved for the fiscal
year ended 1998.
FISCAL YEAR $ AMOUNT $ AMOUNT
ENDED OF OF
199 8 COMMISSIO BROKERAGE
NS PAID TO TRANSACTIO
FIRMS THAT NS
PROVIDED INVOLVED+
RESEARCH
SERVICES+
ADVISOR OCTOB $ $
INTERNATIO ER 31
NAL
CAPITAL
APPRECIATI
ON
ADVISOR OCTOB
OVERSEAS ER 31
ADVISOR NOVE
TECHNOQU MBER
ANT 30
GROWTH
ADVISOR NOVE
SMALL CAP MBER
30
ADVISOR NOVE
STRATEGIC MBER
OPPORTUNI 30
TIES
ADVISOR NOVE
MID CAP MBER
30
ADVISOR NOVE
EQUITY MBER
GROWTH 30
ADVISOR NOVE
LARGE CAP MBER
30
ADVISOR NOVE
GROWTH MBER
OPPORTUNI 30
TIES
ADVISOR NOVE
GROWTH & MBER
INCOME 30
ADVISOR NOVE
EQUITY MBER
INCOME 30
ADVISOR NOVE
BALANCED MBER
30 *
OCTOB
ER
31 **
ADVISOR DECE
EMERGING MBER
MARKETS 31
INCOME
ADVISOR OCTOB
HIGH YIELD ER 31
ADVISOR DECE
STRATEGIC MBER
INCOME 31
ADVISOR OCTOB
GOVERNME ER 31
NT
INVESTMEN
T
ADVISOR OCTOB
MORTGAGE ER 31
SECURITIES
ADVISOR OCTOB
INTERMEDI ER
ATE BOND 31 **
*
ADVISOR OCTOB
SHORT ER 31
FIXED-INCO
ME
ADVISOR OCTOB
MUNICIPAL ER 31
INCOME
ADVISOR OCTOB
INTERMEDI ER
ATE 31 **
MUNICIPAL *
INCOME
+ The provision of research services was not necessarily a factor in
the placement of all this business with such firms.
* Period of November 1, 1998 through November 30, 1998.
** Period of November 1, 1997 through October 31, 1998.
*** Period of December 1, 1997 through October 31, 1998.
[For the fiscal year ended _________, 1998 [________] paid no
brokerage commissions to firms that provided research services.]
The Trustees of each fund have approved procedures in conformity
with Rule 10f-3 under the 1940 Act whereby a fund may purchase
securities that are offered in underwritings in which an affiliate of
FMR participates. These procedures prohibit the funds from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the funds could purchase in the underwriting.
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 or its affiliates,
investment decisions for each fund are made independently from those
of other funds managed by FMR or investment 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 investment accounts.
Simultaneous transactions are inevitable when several funds and
investment 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 investment 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
Each class's net asset value per share (NAV) is the value of a
single share. The NAV of each class is computed by adding the class's
pro rata share of the value of the applicable fund's investments,
cash, and other assets, subtracting the class's pro rata share of the
applicable fund's liabilities, subtracting the liabilities allocated
to the class, and dividing the result by the number of shares of that
class that are outstandin g.
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 closing bid
price normally is used. Securities of other open-end investment
companies are valued at their respective NAVs.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by
such securities' most recent bid prices (sales prices if the principal
market is an exchange) in the principal market in which they normally
are traded, as furnished by recognized dealers in such securities or
assets. Or, fixed-income securities and convertible securities may be
valued on the basis of information furnished by a pricing service that
uses a valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. Use of pricing
services has been approved by the Board of Trustees. A number of
pricing services are available, and the funds may use various pricing
services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available.
Independent brokers or qu otation s ervices provide prices of
foreign 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 event that
is ex pected to materially affect the value of a portfolio
security occurs after the close of an exchange or market on which that
security is traded, then that security will be valued 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.
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 value of such securities. For
example, 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. In making a good faith
determination of the value of a security, the committee may review
price movements in futures contracts and American Depositary Receipts
(ADRs), market and trading trends, the bid/ask quotes of brokers and
off-exchange institutional tradin g.
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 closing bid price normally is
used.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.
Independent brokers or quotation serv ices pr ovide prices of
foreign 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 even t
that is expected to materially affect the value of a portfolio
security occurs after the close of an exchange or market on which that
security is traded, then that security will be valued 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.
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 value of such securities. For
example, 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. In making a good faith
determination of the value of a security, the committee may review
price movements in futures contracts and ADRs, market and trading
trends, the bid/ask quotes of brokers and off-exchange institutional
trading.
TAX-FREE BOND FUNDS. Portfo lio sec urities are valued by various
methods. If quotations are not available, fixed-income securities are
usually valued on the basis of information furnished by a pricing
service that uses a valuation matrix which incorporates both
dealer-supplied valuations and electronic data processing techniques.
Use of pricing services has been approved by the Board of Trustees. A
number of pricing services are available, and the funds may use
various pricing services or discontinue the use of any pricing
service.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.
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 value of such securities. For
example, 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. In making a good faith
determination of the value of a security, the committee may review
price movements in futures contracts and ADRs, market and trading
trends, the bid/ask quotes of brokers and off-exchange institutional
trading.
PERFORMANCE
A class 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. Each class's share price,
yield, if available, and return fluctuate in response to market
conditions and other factors, and the value of fund shares when
redeemed may be more or less than their original cost.
YIELD CALCULATIONS. Yields for a class are computed by dividing a
class's pro rata share of the fund's interest and dividend income 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 NAV or offering
price, as applicable, 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 then are 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. 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 as are gains and losses from currency
exchange rate fluctuations.
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, a 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 a 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 a class's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
The tax-equivalent yield of a class of a municipal fund is the
rate an investor would have to earn from a fully taxable investment
before taxes to equal a class's tax-free yield. Tax-equivalent yields
are calculated by dividing a class's yield by the result of one minus
a specified federal income tax rate. If only a portion of a class's
yield is tax-exempt, only that portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1999 . It
shows the approximate yield a taxable security must provide at various
income brackets to produce after-tax yields equivalent to those of
hypothetical federally tax-exempt obligations yielding from _% to _%.
Of course, no assurance can be given tha t a class of a municipal
fund wi ll achieve any specific tax-exempt yield. While a municipal
fund invests principally in obligations whose interest is exempt from
federal income tax, other income received by the fund may be taxable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 TAX RATES AND TAX-EQUIVALENT YIELDS
FEDERAL IF
INDIVI
DUAL
TAX-EX
EMPT
YIELD
IS:
TAXABLE INCOME* MARGINAL % % % % % % % %
SINGLE RETURN JOINT RETURN RATE** THEN
TAXABL
E-EQUI
VALENT
YIELD
IS
$ $ % % % % % % % %
</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 municipal fund may invest a portion of its assets in obligations
that are subject to federal income tax. When a municipal 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.
RETURN CALCULATIONS. Ret urns qu oted in advertising reflect all
aspects of a class's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in a class's
NAV over a stated period. A class's return may be calculated by using
the performance data of a previously existing class prior to the date
that the new class commenced operations, adjusted to reflect
differences in sales charges but not 12b-1 fees. A cumulative
return reflects actual performance over a stated period of tim e.
Average annual 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 return of 100% over ten years would produce an
average annual 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 returns covering periods of less than one year
are calculated by determining a class's 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 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 returns represent averaged figures as opposed
to the actual year-to-year performance of a class.
In addition to average annual retur ns, a class may quote
unaveraged or cumulative returns reflecting the simple change in value
of an investment over a stated period. Average annual a nd
cumulative 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. 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 return. Re turns m ay be quoted on a before-tax or after-tax
basis. Returns may or may not include the effect of a class's
maximum sales charge. Excluding a class's sales charge from a return
calculation produces a higher return figure. Retur ns, yi elds,
if applicable, 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 indexes may be used to exhibit performance. An
adjusted NAV includes any distributions paid by a fund a nd
reflects all elements of a class's return. Unless otherwise
indicated, a class's adjusted NAVs are not adjusted for sales charges,
if any.
MOVING AVERAGES. An [equity, growth & income, or asset
allocatio n] 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 an 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
ADVISOR LATIN 10/30/98
AMERICA -
CLASS A
ADVISOR LATIN 10/30/98
AMERICA -
CLASS T
ADVISOR LATIN 10/30/98
AMERICA -
CLASS B
ADVISOR LATIN 10/30/98
AMERICA -
CLASS C
ADVISOR LATIN 10/30/98
AMERICA -
INSTITUTIONAL
CLASS
ADVISOR JAPAN 10/30/98
- - CLASS A
ADVISOR JAPAN 10/30/98
- - CLASS T
ADVISOR JAPAN 10/30/98
- - CLASS B
ADVISOR JAPAN 10/30/98
- - CLASS C
ADVISOR JAPAN 10/30/98
- - INSTITUTIONAL
ADVISOR EUROPE 10/30/98
CAPITAL
APPRECIATION -
CLASS A
ADVISOR EUROPE 10/30/98
CAPITAL
APPRECIATION -
CLASS T
ADVISOR EUROPE 10/30/98
CAPITAL
APPRECIATION -
CLASS B
ADVISOR EUROPE 10/30/98
CAPITAL
APPRECIATION -
CLASS C
ADVISOR EUROPE 10/30/98
CAPITAL
APPRECIATION -
INSTITUTIONAL
CLASS
ADVISOR 10/30/98
INTERNATIONAL
CAPITAL
APPRECIATION -
CLASS A
ADVISOR 10/30/98
INTERNATIONAL
CAPITAL
APPRECIATION -
CLASS T
ADVISOR 10/30/98
INTERNATIONAL
CAPITAL
APPRECIATION -
CLASS B
ADVISOR 10/30/98
INTERNATIONAL
CAPITAL
APPRECIATION -
CLASS C
INTERNATIONAL 10/30/98
CAPITAL
APPRECIATION -
INSTITUTIONAL
CLASS
ADVISOR 10/ 30 /98
OVERSEAS -
CLASS A
ADVISOR 10/ 30 /98
OVERSEAS -
CLASS T
ADVISOR 10/ 30 /98
OVERSEAS -
CLASS B
ADVISOR 10/ 30 /98
OVERSEAS -
CLASS C
ADVISOR 10/ 30 /98
OVERSEAS -
INSTITUTIONAL
ADVISOR 10/ 30 /98
DIVERSIFIED
INTERNATIONAL -
CLASS A
ADVISOR 10/ 30 /98
DIVERSIFIED
INTERNATIONAL -
CLASS T
ADVISOR 10/ 30 /98
DIVERSIFIED
INTERNATIONAL -
CLASS B
ADVISOR 10/ 30 /98
DIVERSIFIED
INTERNATIONAL -
CLASS C
ADVISOR 10/ 30 /98
DIVERSIFIED
INTERNATIONAL -
INSTITUTIONAL
CLASS
ADVISOR GLOBAL 10/ 30 /98
EQUITY - CLASS
A
ADVISOR GLOBAL 10/ 30 /98
EQUITY - CLASS
T
ADVISOR GLOBAL 10/ 30 /98
EQUITY - CLASS
B
ADVISOR GLOBAL 10/ 30 /98
EQUITY - CLASS
C
ADVISOR GLOBAL 10/ 30 /98
EQUITY -
INSTITUTIONAL
CLASS
ADVISOR 1 1 / 27 /98
TECHNOQUANT
GROWTH - CLASS
A
ADVISOR 11/27/98
TECHNOQUANT
GROWTH - CLASS
T
ADVISOR 11/27/98
TECHNOQUANT
GROWTH - CLASS
B
ADVISOR 11/27/98
TECHNOQUANT
GROWTH - CLASS
C
ADVISOR 11/27/98
TECHNOQUANT
GROWTH -
INSTITUTIONAL
CLASS
ADVISOR SMALL 11/27/98
CAP - CLASS A
ADVISOR SMALL 11/27/98
CAP - CLASS T
ADVISOR SMALL 11/27/98
CAP - CLASS B
ADVISOR SMALL 11/27/98
CAP - CLASS C
ADVISOR SMALL 11/27/98
CAP -
INSTITUTIONAL
CLASS
ADVISOR 1 1 / 27/98
STRATEGIC
OPPORTUNITIES -
CLASS A
ADVISOR 1 1 / 27/98
STRATEGIC
OPPORTUNITIES -
CLASS T
ADVISOR 1 1 / 27/98
STRATEGIC
OPPORTUNITIES -
CLASS B
ADVISOR 1 1 / 27/98
STRATEGIC
OPPORTUNITIES -
INSTITUTIONAL
CLASS
ADVISOR 1 1 / 27/98
STRATEGIC
OPPORTUNITIES -
INITIAL CLASS
ADVISOR MID 11/27/98
CAP - CLASS A
ADVISOR MID 11/27/98
CAP - CLASS T
ADVISOR MID 11/27/98
CAP - CLASS B
ADVISOR MID 11/27/98
CAP - CLASS C
ADVISOR MID 11/27/98
CAP -
INSTITUTIONAL
ADVISOR 11/27/98
RETIREMENT
GROWTH - CLASS
A
ADVISOR 11/27/98
RETIREMENT
GROWTH - CLASS
T
ADVISOR 11/27/98
RETIREMENT
GROWTH - CLASS
B
ADVISOR 11/27/98
RETIREMENT
GROWTH - CLASS
C
ADVISOR 11/27/98
RETIREMENT
GROWTH -
INSTITUTIONAL
CLASS
ADVISOR EQUITY 11/27/98
GROWTH - CLASS
A
ADVISOR EQUITY 11/27/98
GROWTH - CLASS
T
ADVISOR EQUITY 11/27/98
GROWTH - CLASS
B
ADVISOR EQUITY 11/27/98
GROWTH - CLASS
C
ADVISOR EQUITY 11/27/98
GROWTH -
INSTITUTIONAL
CLASS
ADVISOR LARGE 11/27/98
CAP - CLASS A
ADVISOR LARGE 11/27/98
CAP - CLASS T
ADVISOR LARGE 11/27/98
CAP - CLASS B
ADVISOR LARGE 11/27/98
CAP - CLASS C
ADVISOR LARGE 11/27/98
CAP -
INSTITUTIONAL
CLASS
ADVISOR 11/27/98
DIVIDEND
GROWTH - CLASS
A
ADVISOR 11/27/98
DIVIDEND
GROWTH - CLASS
T
ADVISOR 11/27/98
DIVIDEND
GROWTH - CLASS
B
ADVISOR 11/27/98
DIVIDEND
GROWTH - CLASS
C
ADVISOR 11/27/98
DIVIDEND
GROWTH -
INSTITUTIONAL
CLASS
ADVISOR 11/27/98
GROWTH
OPPORTUNITIES -
CLASS A
ADVISOR 11/27/98
GROWTH
OPPORTUNITIES -
CLASS T
ADVISOR 11/27/98
GROWTH
OPPORTUNITIES -
CLASS B
ADVISOR 11/27/98
GROWTH
OPPORTUNITIES -
CLASS C
ADVISOR 11/27/98
GROWTH
OPPORTUNITIES -
INSTITUTIONAL
CLASS
ADVISOR 11/27/98
GROWTH &
INCOME - CLASS
A
ADVISOR 11/27/98
GROWTH &
INCOME - CLASS
T
ADVISOR 11/27/98
GROWTH &
INCOME - CLASS
B
ADVISOR 11/27/98
GROWTH &
INCOME - CLASS
C
ADVISOR 11/27/98
GROWTH &
INCOME -
INSTITUTIONAL
CLASS
ADVISOR EQUITY 11/27/98
INCOME - CLASS
A
ADVISOR EQUITY 11/27/98
INCOME - CLASS
T
ADVISOR EQUITY 11/27/98
INCOME - CLASS
B
ADVISOR EQUITY 11/27/98
INCOME - CLASS
C
ADVISOR EQUITY 11/27/98
INCOME -
INSTITUTIONAL
CLASS
ADVISOR ASSET 11/27/98
ALLOCATION -
CLASS A
ADVISOR ASSET 11/27/98
ALLOCATION -
CLASS T
ADVISOR ASSET 11/27/98
ALLOCATION -
CLASS B
ADVISOR ASSET 11/27/98
ALLOCATION -
CLASS C
ADVISOR ASSET 11/27/98
ALLOCATION -
INSTITUTIONAL
CLASS
ADVISOR 11/27/98
BALANCED -
CLASS A
ADVISOR 11/27/98
BALANCED -
CLASS T
ADVISOR 11/27/98
BALANCED -
CLASS B
ADVISOR 11/27/98
BALANCED -
CLASS C
ADVISOR 11/27/98
BALANCED -
INSTITUTIONAL
CLASS
ADVISOR 12/24/98
EMERGING
MARKETS
INCOME - CLASS
A
ADVISOR 12/24/98
EMERGING
MARKETS
INCOME - CLASS
T
ADVISOR 12/24/98
EMERGING
MARKETS
INCOME - CLASS
B
ADVISOR 12/24/98
EMERGING
MARKETS
INCOME - CLASS
C
ADVISOR 12/24/98
EMERGING
MARKETS
INCOME -
INSTITUTIONAL
CLASS
ADVISOR HIGH 10/ 30 /98
YIELD - CLASS A
ADVISOR HIGH 10/ 30 /98
YIELD - CLASS T
ADVISOR HIGH 10/ 30 /98
YIELD - CLASS B
ADVISOR HIGH 10/ 30 /98
YIELD - CLASS C
ADVISOR HIGH 10/ 30 /98
YIELD -
INSTITUTIONAL
CLASS
ADVISOR 12/24/98
STRATEGIC
INCOME - CLASS
A
ADVISOR 12/24/98
STRATEGIC
INCOME - CLASS
T
ADVISOR 12/24/98
STRATEGIC
INCOME - CLASS
B
ADVISOR 12/24/98
STRATEGIC
INCOME - CLASS
C
ADVISOR 12/24/98
STRATEGIC
INCOME -
INSTITUTIONAL
CLASS
CALCULATING HISTORICAL BOND FUND RESULTS. The following
tables show performance for each class of each fund. Class A and Class
T of Advisor High Yield, Advisor Strategic Income,
Advisor Mortgage Securities, Advisor Government
Investment, Advisor Municipal Income, and Advisor
Emerging Markets Income have a maximum front-end sales charge of
4.75% and 3.50%, respectively, which is included in the yield, tax
equivalent yield, and average annual and cumulative returns. Class A
and Class T of Advisor Intermediate Bond and Advisor
Intermediate Municipal Income have a maximum front-end sales charge
of 3.75% and 2.75%, respectively, which is included in the yield, tax
equivalent yield, and average annual and cumulative returns. Class A
and Class T of Advisor Short Fixed-Income has a maximum
front-end sales charge of 1.50% which is included in the yield and
average annual and cumulative returns. Class B and Class C have a
maximum CDSC of 5.00% and 1.00%, respectively, which is included in
the average annual and cumulative returns. Class A, Class T, Class B
and Class C of Advisor Emerging Markets Income, Advisor
High Yield, Advisor Strategic Income, Advisor
Government Investment, Advisor Intermediate Bond,
Advisor Municipal Income, and Advisor Intermediate
Municipal Income have a 12b-1 fee of 0.15%, 0.25%, 0.90% and 1.00%,
respectively, which is included in the yield, tax-equivalent yield,
and average annual and cumulative returns. Class A, Class T and Class
B of Advisor Mortgage Securities have a 12b-1 fee of 0.15%,
0.25% and 0.90%, respectively, which is included in the yield and
average annual and cumulative returns. Class A, Class T and Class C of
Advisor Short Fixed-Income have a 12b-1 fee of 0.15%, 0.15% and
1.00%, respectively, which is included in the yield and average annual
and cumulative returns.
HISTORICAL BOND FUND RESULTS. The following tables show each
class's yield, tax-equivalent yield, and return for the fiscal periods
ended October 31, November 30, and December 31.
The tax-equivalent yields for Advisor Municipal Income and Advisor
Intermediate Municipal Income are based on a __% federal income tax
rate. Note that each municipal fund may invest securities whose income
is subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AVERAGE CUMUL
ANNUAL ATIVE
RETURNS RETURN
1 S1
FISCAL THIRTY- TAX ONE FIVE TEN ONE FIVE TEN YEARS/
PERIOD DAY EQUIVA YEAR YEARS YEARS/ YEAR YEARS LIFE OF
ENDED YIELD2 LENT LIFE OF FUND*
YIELD2 FUND*
ADVISOR 12/31
EMERGING
MARKETS
INCOME - CLASS
A
ADVISOR
EMERGING
MARKETS
INCOME - CLASS
T
ADVISOR
EMERGING
MARKETS
INCOME - CLASS
B
ADVISOR
EMERGING
MARKETS
INCOME - CLASS
C
ADVISOR
EMERGING
MARKETS
INCOME -
INSTITUTIONAL
ADVISOR HIGH 10/31
YIELD - CLASS A
ADVISOR HIGH
YIELD - CLASS T
ADVISOR HIGH
YIELD - CLASS B
ADVISOR HIGH
YIELD - CLASS C
ADVISOR HIGH
YIELD -
INSTITUTIONAL
ADVISOR 12/31
STRATEGIC
INCOME - CLASS
A
ADVISOR
STRATEGIC
INCOME -
CLASS T
ADVISOR
STRATEGIC
INCOME -
CLASS B
ADVISOR
STRATEGIC
INCOME -
CLASS C
ADVISOR
STRATEGIC
INCOME -
INSTITUTIONAL
ADVISOR 10/31
GOVERNMENT
INVESTMENT -
CLASS A
ADVISOR
GOVERNMENT
INVESTMENT -
CLASS T
ADVISOR
GOVERNMENT
INVESTMENT -
CLASS B
ADVISOR
GOVERNMENT
INVESTMENT -
CLASS C
ADVISOR
GOVERNMENT
INVESTMENT -
INSTITUTIONAL
ADVISOR 10/31
MORTGAGE
SECURITIES -
CLASS A
ADVISOR
MORTGAGE
SECURITIES -
CLASS T
ADVISOR
MORTGAGE
SECURITIES -
CLASS B
ADVISOR
MORTGAGE
SECURITIES -
INSTITUTIONAL
ADVISOR
MORTGAGE
SECURITIES -
INITIAL
ADVISOR 10/31
INTERMEDIATE
BOND - CLASS A
ADVISOR
INTERMEDIATE
BOND - CLASS T
ADVISOR
INTERMEDIATE
BOND - CLASS B
AVERAGE CUMULAT
ANNUAL IVE
RETURNS RETURNS1
1
FISCAL YIELD2 TAX ONE FIVE TEN ONE FIVE TEN YEARS/
PERIOD EQUIVA YEAR YEARS YEARS/ YEAR YEARS LIFE OF
ENDED LENT LIFE OF FUND*
YIELD2 FUND*
ADVISOR
INTERMEDIATE
BOND - CLASS C
ADVISOR
INTERMEDIATE
BOND -
INSTITUTIONAL
ADVISOR SHORT 10/31
FIXED-INCOME -
CLASS A
ADVISOR SHORT
FIXED-INCOME -
CLASS T
ADVISOR SHORT
FIXED-INCOME -
CLASS C
ADVISOR SHORT
FIXED-INCOME -
INSTITUTIONAL
ADVISOR 10/31
MUNICIPAL
INCOME - CLASS
A
ADVISOR
MUNICIPAL
INCOME - CLASS
T
ADVISOR
MUNICIPAL
INCOME - CLASS
B
ADVISOR
MUNICIPAL
INCOME - CLASS
C
ADVISOR
MUNICIPAL
INCOME -
INSTITUTIONAL
ADVISOR 10/31
INTERMEDIATE
MUNICIPAL
INCOME - CLASS
A
ADVISOR
INTERMEDIATE
MUNICIPAL
INCOME - CLASS
T
ADVISOR
INTERMEDIATE
MUNICIPAL
INCOME - CLASS
B
ADVISOR
INTERMEDIATE
MUNICIPAL
INCOME - CLASS
C
ADVISOR
INTERMEDIATE
MUNICIPAL
INCOME -
INSTITUTIONAL
</TABLE>
* Life of fund figures are from commencement of operations (March 10,
1994 for Advisor Emerging Markets Income and October 31, 1994 for
Advisor Strategic Income) through each fund's fiscal periods ended
199 8 .
1 Average annual and cumulative 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 the
Short-Term Bond Fund.
Average annual and cumulative 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 the
Short-Term Bond Fund.
Average annual and cumulative 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 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 Advisor Mortgage
Securities) took place on September 3, 1996. Class A returns prior to
September 3, 1996 (except for Advisor Intermediate Bond and Advisor
Intermediate Municipal Income) are those of Class T which reflect a
12b-1 fee of 0.25% for Bond funds and 0.15% for the Short-Term Bond
Fund. If Class A's 12b-1 fee had been reflected, returns prior to
September 3, 1996 for the Bond Funds would have been higher. For
Advisor Intermediate Bond and Advisor Intermediate Municipal Income
returns from September 3, 1996 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.25%. Class A returns prior to
September 10, 1992 are those of Institutional Class, which has no
12b-1 fee. If Class A's 12b-1 fee had been reflected, returns prior to
September 3, 1996 through September 10, 1992 would have been higher
and returns prior to September 10, 1992 would have been lower.
Initial offering of Class A, Class T, and Class B of Advisor 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, returns prior to March 3, 1997 would have
been lower.
Initial offering of Class T of Advisor Intermediate Bond and Advisor
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,
returns prior to September 10, 1992 would have been lower.
Initial offering of Class B of Advisor Intermediate Bond and Advisor
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, returns prior to June
30, 1994 would have been lower.
Initial offering of Class B of Advisor High Yield, Advisor Government
Investment, Advisor Municipal Income, and Advisor 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, returns prior to June 30, 1994 would
have been lower.
Class C of each fund (except Advisor Mortgage Securities) commenced
operations on November 3, 1997.
Class C returns for Advisor Strategic Income prior to November 3,
1997 are those of Class B which reflect a 12b-1 fee of 0.90% (1.00%
prior to January 1, 1996). If Class C's 12b-1 fee had been reflected,
returns prior to November 3, 1997 through January 1, 1996 would have
been lower.
Class C returns for Advisor High Yield, Advisor Government
Investment, and Advisor Municipal Income prior to November 3, 1997
through June 30, 1994 are those of Class B which reflect a 12b-1 fee
of 0.90% (1.00% prior to January 1, 1996). Class C returns prior to
June 30, 1994 are those of Class T which reflect a 12b-1 fee of 0.25%.
If Class C's 12b-1 fee had been reflected, returns prior to November
3, 1997 through January 1, 1996 and prior to June 30, 1994 would have
been lower.
Class C returns for Advisor Emerging Markets Income prior to November
3, 1997 through June 30, 1994 are those of Class B which reflect a
12b-1 fee of 0.90% (1.00% prior to January 1, 1996). Class C returns
prior to June 30, 1994 are those of Class T which reflect a 12b-1 fee
of 0.25%. If Class C's 12b-1 fee had been reflected, returns prior to
November 3, 1997 through December 31, 1995 and prior to June 30, 1994
would have been lower.
Class C returns for Advisor Short Fixed-Income prior to November 3,
1997 are those of Class T which reflect a 12b-1 fee of 0.15%. If Class
C's 12b-1 fee had been reflected, returns would have been lower.
Class C returns for Advisor Intermediate Bond and Advisor
Intermediate Municipal Income prior to November 3, 1997 through June
30, 1994 are those of Class B which reflect a 12b-1 fee of 0.90%
(1.00% prior to January 1, 1996). Class C returns prior to June 30,
1994 through September 10, 1992 are those of Class T which reflect a
12b-1 fee of 0.25%. Returns prior to September 10, 1992 are those of
Institutional Class which has no 12b-1 fee. If Class C's 12b-1 fee had
been reflected, returns prior to November 3, 1997 through January 1,
1996 and prior to June 30, 1994 would have been lower.
Initial offering of Institutional Class of Advisor High Yield,
Advisor Strategic Income, Advisor Government Investment, Advisor Short
Fixed-Income, Advisor Municipal Income, and Advisor 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% for Advisor High Yield, Advisor Strategic Income, Advisor
Government Investment, Advisor Emerging Markets Income, and Advisor
Municipal Income; and 0.15% for Advisor Short Fixed-Income. If Class
T's 12b-1 fee had not been reflected, returns prior to July 3, 1995
for Institutional Class would have been higher.
Initial offering of Institutional Class of Advisor 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 these
periods, [______________]'s returns would have been lower.]
[Note: If FMR had not reimbursed certain class expenses during these
periods, [_______________]'s yield [and tax equivalent yield] would
have been ___% [and __%, respectively].]
CALCULATING HISTORICAL EQUITY FUND RESULTS. The following tables
sho w performance for each class of each fund. Class A and Class T
have a maximum front-end sales charge of 5.75% and 3.50%,
respectively, which is included in the yield, if applicable, and
average annual and cumulative returns. Class B and Class C have a
maximum CDSC of 5.00% and 1.00%, respectively, which is included in
the average annual and cumulative returns. Class A, Class T, Class B
and Class C have a 12b-1 fee of 0.25%, 0.50%, 1.00%, and 1.00%,
respectively, which is included in the yield, if applicable, and
average annual and cumulative returns.
HISTORICAL EQUITY FUND RESULTS. The f ollo wing table shows each
class's return for the fiscal periods ended October 31, November 30
and December 31, as applicable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CUMULAT
AVERAGE IVE
ANNUAL RETURNS1
RETURNS1
FISCAL ONE FIVE TEN ONE FIVE YEARS TEN
YEAR YEAR YEARS YEARS/LIFE YEAR YEARS/LIFE OF
ENDED OF FUND+ FUND+
ADVISOR 10/31 N/A N/A N/A N/A N/A %
INTERNATIONA
L CAPITAL
APPRECIATIO
N - CLASS
A
ADVISOR N/A N/A N/A N/A N/A %
INTERNATIONA
L CAPITAL
APPRECIATIO
N - CLASS T
ADVISOR N/A N/A N/A N/A N/A %
INTERNATIONA
L CAPITAL
APPRECIATIO
N - CLASS B
ADVISOR N/A N/A N/A N/A N/A %
INTERNATIONA
L CAPITAL
APPRECIATIO
N - CLASS C
ADVISOR N/A N/A N/A N/A N/A %
INTERNATIONA
L CAPITAL
APPRECIATIO
N -
INSTITU
TIONAL
CLASS
ADVISOR 10/31 % % % % % %
OVERSEAS -
CLASS A
ADVISOR % % % % % %
OVERSEAS -
CLASS T
ADVISOR % % % % % %
OVERSEAS -
CLASS B
ADVISOR % % % % % %
OVERSEAS -
CLASS C
ADVISOR % % % % % %
OVERSEAS -
INSTITUTIONA
L CLASS
ADVISOR 11/30 % N/A % % N/A %
TECHNOQUA
NT GROWTH
- - CLASS A
ADVISOR % N/A % % N/A %
TECHNOQUA
NT GROWTH-
CLASS T
ADVISOR % N/A % % N/A %
TECHNOQUA
NT GROWTH
- - CLASS B
ADVISOR % N/A % % N/A %
TECHNOQUA
NT GROWTH
- - CLASS C
ADVISOR % N/A % % N/A %
TECHNOQUA
NT GROWTH
- -
INSTITUTIONAL
CLASS
ADVISOR 11/30 N/A N/A N/A N/A N/A %
SMALL CAP
- - CLASS A
ADVISOR N/A N/A N/A N/A N/A %
SMALL CAP
- - CLASS T
ADVISOR N/A N/A N/A N/A N/A %
SMALL CAP
- - CLASS B
ADVISOR N/A N/A N/A N/A N/A %
SMALL CAP
- - CLASS C
ADVISOR N/A N/A N/A N/A N/A %
SMALL CAP
- -
INSTITUTIONAL
CLASS
ADVISOR 11/30 % % % % % %
STRATEGIC
OPPORTUNIT
IES - CLASS
A
ADVISOR % % % % % %
STRATEGIC
OPPORTUNIT
IES - CLASS
T
ADVISOR % % % % % %
STRATEGIC
OPPORTUNIT
IES - CLASS
B
ADVISOR % % % % % %
STRATEGIC
OPPORTUNIT
IES -
INSTITU
TIONAL
CLASS
ADVISOR % % % % % %
STRATEGIC
OPPORTUNIT
IES -
INITIAL
CLASS
ADVISOR 11/30 % N/A % % N/A %
MID CAP -
CLASS A
ADVISOR % N/A % % N/A %
MID CAP -
CLASS T
ADVISOR % N/A % % N/A %
MID CAP -
CLASS B
ADVISOR % N/A % % N/A %
MID CAP -
CLASS C
ADVISOR % N/A % % N/A %
MID CAP -
INSTITUTIONA
L CLASS
ADVISOR 11/30 % % % % % %
EQUITY
GROWTH -
CLASS A
ADVISOR % % % % % %
EQUITY
GROWTH -
CLASS T
ADVISOR % % % % % %
EQUITY
GROWTH -
CLASS B
ADVISOR % % % % % %
EQUITY
GROWTH -
CLASS C
ADVISOR % % % % % %
EQUITY
GROWTH -
INSTITU
TIONAL
CLASS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
AVERAGE CUMULAT
ANNUAL IVE
RETURNS1 RETURNS1
FISCAL ONE FIVE TEN ONE FIVE YEARS TEN
YEAR YEAR YEARS YEARS/LIFE YEAR YEARS/LIFE OF
ENDED OF FUND+ FUND+
ADVISOR 11/30 % N/A % % N/A %
LARGE CAP
- - CLASS A
ADVISOR % N/A % % N/A %
LARGE CAP
- - CLASS T
ADVISOR % N/A % % N/A %
LARGE CAP
- - CLASS B
ADVISOR % N/A % % N/A %
LARGE CAP
- - CLASS C
ADVISOR % N/A % % N/A %
LARGE CAP
- -
INSTITUTIONA
L CLASS
ADVISOR 11/30 % % % % % %
GROWTH
OPPORTUNITI
ES - CLASS
A
ADVISOR % % % % % %
GROWTH
OPPORTUNITI
ES - CLASS
T
ADVISOR % % % % % %
GROWTH
OPPORTUNITI
ES - CLASS
B
ADVISOR % % % % % %
GROWTH
OPPORTUNITI
ES - CLASS
C
ADVISOR % % % % % %
GROWTH
OPPORTUNITI
ES -
INSTITUT
IONAL CLASS
ADVISOR 11/30 % N/A N/A N/A N/A %
GROWTH &
INCOME -
CLASS A
ADVISOR % N/A N/A N/A N/A %
GROWTH &
INCOME -
CLASS T
ADVISOR % N/A N/A N/A N/A %
GROWTH &
INCOME -
CLASS B
ADVISOR % N/A N/A N/A N/A %
GROWTH &
INCOME -
CLASS C
ADVISOR % N/A N/A N/A N/A %
GROWTH &
INCOME -
INSTITU
TIONAL
CLASS
ADVISOR 11/30 % % % % %
EQUITY %
INCOME -
CLASS A
ADVISOR % % % % %
EQUITY %
INCOME -
CLASS T
ADVISOR % % % % % %
EQUITY
INCOME -
CLASS B
ADVISOR % % % % % %
EQUITY
INCOME -
CLASS C
ADVISOR % % % % % %
EQUITY
INCOME -
INSTITUTIONA
L CLASS
ADVISOR 11/30 % % % % % %
BALANCED -
CLASS A
ADVISOR % % % % % %
BALANCED -
CLASS T
ADVISOR % % % % % %
BALANCED -
CLASS B
ADVISOR % % % % % %
BALANCED -
CLASS C
ADVISOR % % % % % %
BALANCED -
INSTITUTIONA
L CLASS
</TABLE>
+ Life of fund figures are from commencement of operations
(November 3, 1997 for Advisor International Capital Appreciation;
April 23, 1990 for Advisor Overseas; December 31, 1996 for Advisor
TechnoQuant Growth; September 9, 1998 for Advisor Small Cap; February
20, 1996 for Advisor Mid Cap and Advisor Large Cap; and December 31,
1996 for Advisor Growth & Income) through the fiscal periods ended
1998.
1 Average an nual and cumulative 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.
Aver age ann ual and cumulative 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.
Aver age annu al and cumulative 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%.
Avera ge annua l and cumulative returns for Class C shares
include the effect of paying Class C's CDSC of 1% for shares redeemed
within one year of purchase.
Initial offering of Class A for each fund (except Advisor
International Capital Appreciation, Advisor TechnoQuant Growth,
Advisor Small Cap and Advisor Growth & Income) took place on September
3, 1996. Class A returns prior to September 3, 1996 (except for
Advisor Equity Growth and Advisor 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, returns prior to September
3, 1996 would have been higher. For Advisor Equity Growth and Advisor
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, returns prior to
September 3, 1996 through September 10, 1992 would have been higher
and retur ns prior to September 10, 1992 would have been lower.
Initial offering of Class T of Advisor Equity Growth and Advisor
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, r eturns
prior to September 10, 1992 would have been lower.
Initial offering of Class B of Advisor 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, returns prior to
December 31, 1996 would have been lower.
Initial offering of Class B of Advisor 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, returns
prior to December 31, 1 996 would have been lower.
Initial offering of Class B of Advisor 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,
retu rns prior t o March 3, 1997 would have been lower.
Initial offering of Class B of Advisor 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, returns prior to June 30, 1994 would have been
lower.
Initial offering of Class B of Advisor 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, returns prior to June 30, 1994 would
have been lower.
Initial offering of Class B of Advisor 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
reflect e d, returns prior to July 3, 1995 would have been lower.
Prior to December 1, 1992, Advisor Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
Initial Offering of Class C of Advisor TechnoQuant Growth, Advisor
Mid Cap, Advisor Large Cap, and Advisor Growth & Income took place on
November 3, 1997. Class C returns prior to November 3, 1997 are those
of Class B which reflect a 12b-1 fee of 1.00%.
Initial offering of Class C of Advisor Equity Growth took place on
November 3, 1997. Class C returns prior to November 3, 1997 through
December 31, 1996 are those of Class B which reflect a 12b-1 fee of
1.00%. Class C returns prior to December 31, 1996 through September
10, 1992 are those of Class T which reflect a 12b-1 fee of 0.50%
(0.65% prior to January 1, 1996). Class C returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class C's 12b-1 fee had been reflected, returns prior to
De cembe r 31, 1996 would have been lower.
Initial Offering of Class C of Advisor Growth Opportunities took
place on November 3, 1997. Class C returns prior to November 3, 1997
through March 3, 1997 are those of Class B which reflect a 12b-1 fee
of 1.00%. Class C returns prior to March 3, 1997 are those of Class T
which reflect a 12b-1 fee of 0.50 (0.65% prior to January 1, 1996). If
Class C's 12b-1 fee had been reflected, returns prior to Ma rch
3, 1997 would have been lower.
Initial Offering of Class C of Advisor Balanced took place on
November 3, 1997. Class C returns prior to November 3, 1997 through
December 31, 1996 are those of Class B which reflect a 12b-1 fee of
1.00%. Class C returns prior to December 31, 1996 are those of Class T
which reflect a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996).
If Class C's 12b-1 fee had been reflected, returns prior to December
31, 1996 would have been lower.
Initial Offering of Class C of Advisor Equity Income took place on
November 3, 1997. Class C returns prior to November 3, 1997 through
June 30, 1994 are those of Class B which reflect a 12b-1 fee of 1.00%.
Class C returns prior to June 30, 1994 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.65%. Class C returns
prior to September 10, 1992 are those of Institutional Class which has
no 12b-1 fee. If Cla ss C 's 12b-1 fee had been reflected,
returns prior to June 30, 1994 would have been lower.
Initial Offering of Class C of Advisor Overseas took place on
November 3, 1997. Class C returns prior to November 3, 1997 through
July 3, 1995 are those of Class B which reflect a 12b-1 fee of 1.00%.
Class C returns prior to July 3, 1995 are those of Class T which
reflect a 12b-1 fee of 0.65%. If Class C's 12b-1 fee had been
reflected, returns prior to July 3, 1995 would have been lower.
Prior to December 1, 1992, Advisor Overseas operated under a
different investment objective. Accordingly, the fund's historical
performance may not represent its current investment policies.
Initial offering of Institutional Class of Advisor Growth
Opportunities, Advisor Balanced, and Advisor Overseas took place on
July 3, 1995. Institutional Class returns prior to July 3, 1995 are
those of Class T which reflect a 12 b-1 fee of 0. 65%. 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 Advisor Strategic
Opportunities took place on July 3, 1995. Institutional Class returns
prior to July 3, 1995 are those of Initial Class which has no
12b1-fee.
[Note: If FMR had not reimbursed certain class expenses during these
periods, [Name(s) of Class(es) in Reimbursement]'s returns would have
been lower.]
The following tables show the income and capital elements of each
class's cumulative return. The tables compare each class's return to
the record of the S&P 500, the Dow Jones Industrial Average (DJIA),
and the cost of living, as measured by the Consumer Price Index (CPI),
over the same period. The CPI information is as of the month-end
closest to the initial investment date for each class. The S&P 500 and
DJIA comparisons are provided to show how each class's 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 Advisor Emerging Markets
I ncome, Advisor High Yield, Advisor Strategic Income, Advisor
Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, Advisor Short Fixed-Income, Advisor Municipal
Income, and Advisor Intermediate Municipal Income invests in
fixed-income securities, common stocks represent a different type
of investment from the funds. Common stocks generally offer greater
growth potential than the funds, but generally experience greater
price volatility, which means greater potential for loss. In addition,
common stocks generally provide lower income than fixed-income
investments such as the funds. Each of Advisor Latin America ,
Advisor Japan, Advisor Europe Capital Appreciation, Advisor
International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, Advisor Global Equity, Advisor TechnoQuant
Growth, Advisor Small Cap, Advisor Strategic Opportunities, Advisor
Mid Cap, Advisor Retirement Growth, Advisor Equity Growth, Advisor
Large Cap, Advisor Dividend Growth, Advisor Growth Opportunities,
Advisor Growth & Income, Advisor Equity Income, Advisor Asset
Allocation, and Advisor Balanced has the ability to inv est in
securities not included in either index, and its investment portfolio
may or may not be similar in composition to the indexes. 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 during the past 10
fiscal years ended 1998 or life of each fund, as appl icable,
assuming all distributions were reinvested. Returns are based on past
results and are not an indi cation of future performance. Tax
consequences of different investments (with the exception of foreign
tax withholdings) have not been f actored into the figures below.
D uring the period from November 3, 1997 (commencement of
operations) to October 31, 1998, a hypothetical $10,000 investment in
Class A of Advisor International Capital Appreciation would have grown
to $______, including the effect of Class A's maximum sales
cha rge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVI INDEXES
SOR
INTE
RNAT
IONA
L
CAPI
TAL
APPR
ECIA
TION
- -
CLAS
S A
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
$10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
199 $ $ $ $ $ $ $
8*
</TABLE>
* Fro m November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of Advisor International Capital Appreciation on November 3, 1997,
assuming the maximum sales charge had been in effect, the net amount
invested in Class A shares was $_____. 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 $______. 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 $______ for
di vidends and $_____ for capital gain distributions.
During the period from November 3, 1997 (commencement of
operations) to October 31, 1998, a hypothetical $10,000 investment in
Class T of Advisor International Capital Appreciation would have grown
to $______, including the effect of Class T's maximum sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVI INDEXES
SO
R
IN
TE
R
N
AT
IO
N
A
L
C
AP
IT
A
L
AP
PR
E
CI
AT
IO
N
- -
C
L
AS
S
T
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
$10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
199 $ $ $ $ $ $ $
8*
</TABLE>
* From November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T
of Advisor International Capital Appreciation on November 3, 1997,
assuming the maximum sales charge had been in effect, the net amount
invested in Class T shares was $_____. 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 $______. 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 $______ for dividends
and $_____ for capital gain distributions.
During the per iod from November 3, 1997 (commencement of
operations) to October 31, 1998, a hypothetical $10,000 investment in
Class B of A dvisor International Capital Appreciation would have
grown to $______, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVI INDEXES
SOR
INTE
RNAT
IONA
L
CAPI
TAL
APPR
ECIA
TION
- -
CLAS
S B
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
$10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
199 $ $ $ $ $ $ $
8*
</TABLE>
* From Nove mber 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B
of Advisor International Capital Appreciation on November 3, 1997, 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 $______. 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 $______ for
dividends and $_____ for capital gain distributions.
During the period from N ovember 3, 1997 (commencement of
operations) to October 31, 1998, a hypothetical $10,000 investment in
Class C of Advisor International Capital Appreciation would have grown
to $______, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVI INDEXES
SOR
INTE
RNAT
IONA
L
CAPI
TAL
APPR
ECIA
TION
- -
CLAS
S C
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
$10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
199 $ $ $ $ $ $ $
8*
</TABLE>
* From November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C
of Advisor International Capital Appreciation on November 3, 1997, 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 $______. 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 $______ for
dividends and $_____ for capital gain distributions.
During the period from November 3, 1997 (commencement of
operations) to October 31, 1998, a hypothetical $10,000 investment in
Institutional Class of Advisor International Capital Appreciation
would have grown to $______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERNATIONAL CAPITAL APPRECIATION - INDEXES
INSTITUTIONAL CLASS
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P 500 DJIA COST OF
ENDED INITIAL REINVESTED REINVESTED VALUE LIVING**
$10,000 DIVIDEND CAPITAL GAIN
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
199 $ $ $ $ $ $ $
8*
</TABLE>
* From November 3, 1997 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor International Capital Appreciation on
November 3, 1997, 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 $______. 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 $______ for dividends and $_____ for capital
gain distributi ons.
During the period f rom April 23, 1990 (commencement of operations
of the fund) to October 31, 1998, a hypothetical $10,000 investment in
Class A of A dvisor Overseas would have grown to $_____, including
the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR OVERSEAS - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1
9
9
0
*
</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
Advisor Overseas on April 23, 1990, assuming the maximum sales charge
had been in effect, the net amount invested in Class A shares was
$_____. 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) amou nted to $_ _____. 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 $ ___ _ for dividends and $____ for capital gain
distributions. Initial offering of Class A of Overseas took place on
September 3, 1996. Class A returns prior to September 3, 1996 are
those of Class T, which reflect a 12b-1 fee of 0.50% (0.65% prior to
January 1, 1996). If Class A's 12b-1 fee had been reflected, returns
prior to September 3, 1996 would have been higher. Prior to December
1, 1992, Advisor Overseas operated under a different investment
objective. Accordingly, the fund's historical performance may not
represent its current investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1998, a hypothetical $10,000 investment in
Class T of Adviso r O verseas would have grown to $____,
including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR OVERSEAS - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1
9
9
0
*
</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
Advisor Overseas on April 23, 1990, assuming the maximum sales charge
had been in effect, the net amount invested in Class T shares was
$_____. 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
reinve sted) amounted to $_____. If distributions had not been
reinvested, the amount of distributions earned from the c lass
over time would have been smaller, and cash payments for the period
would have amounted to $___ for dividends and $___ f or capital
gain distributions. Prior to December 1, 1992, Advisor Overseas
operated under a different investment objective. Accordingly, the
fund's historical performance may not represent its current investment
policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1998, a hypothetical $10,000 investm ent
i n Class B of Advisor Overseas would have grown to $_______,
including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR OVERSEAS - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990*
</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
Advisor 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 $______. If distributi ons
ha d not been reinvested, the amount of distributions earned from
the class over time would have been smaller, and cash payments for the
period wo uld have amounted to $____ for dividends and $____ for
capital gain distributions. Initial offering of Advisor Class B of
Advisor 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, returns prior to July 3,
1995 would have been lower. Prior to December 1, 1992, Advisor
Overseas operated under a different investment objective. Accordingly,
the fund's historical performance may not represent its current
investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1998 a hypothetical $10,000 investment in
Class C of Advisor O verseas would have grown to $_____,
including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR OVERSEAS - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1
9
9
0
*
</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
Advisor 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 w ere r einvested) amounted to $_________. 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 amo unted to $____ for
dividends and $_____ for capital gain distributions. Initial offering
of Class C of Advisor Overseas took place on November 3, 1997. Class C
returns prior to November 3, 1997 through July 3, 1995 are those of
Class B which reflect a 12b-1 fee of 1.00%. Class C returns prior to
July 3, 1995 are those of Class T which reflect a 12b-1 fee of 0.65%.
If Class C's 12b-1 fee had been reflected, returns prior to July 3,
1995 would have been lower. Prior to December 1, 1992, Advisor
Overseas operated under a different investment objective. Accordingly,
the fund's historical performance may not represent its current
investment policies.
During the period from April 23, 1990 (commencement of operations of
the fund) to October 31, 1998, a hypothetical $10,000 investment in
I n stitutional Class of Advisor Overseas would have grown to
$_________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR OVERSEAS - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1
9
9
0
*
</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 Advisor 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 $___ _____. 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 pe riod would have
amounted to $_____ for dividends and $____ for capital gain
distributions. Initial offering of Institutional Class of Advisor
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%. Returns for Institutional Class prior to July 3, 1995 would
have been higher if Class T's 12b-1 fee had not been reflected. Prior
to December 1, 1992, Advisor Overseas operated under a different
investment objective. Accordingly, the fund's historical performance
may not represent its current investment policies.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class A of Advisor TechnoQu ant G rowth would have grown to
$_______, including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR TECHNOQUANT GROWTH - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997*
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor TechnoQuant Growth on December 31, 1996, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $_____. 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) am ounted to $_____. 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 $___ for d ividends and $___ for
capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class T o f A dvisor TechnoQuant Growth would have grown to
$_______, including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR TECHNOQUANT GROWTH - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997*
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor TechnoQuant Growth on December 31, 1996, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $_____. 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 reinveste d) am ounted to $______. 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 $______ for
d ividen ds and $______ for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class B of Advisor T echno Quant Growth would have grown to
$________, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR TECHNOQUANT GROWTH - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997* $ $
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor TechnoQuant Growth on December 31, 1996, the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $________ .
If distri butions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments fo r the period would have amounted to
$_______ for dividends and $______ for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class C of Advisor TechnoQuant Growth would have grown to
$_______, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR TECHNOQUANT GROWTH - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997*
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor TechnoQuant Growth on December 31, 1996, the net amount
invested in Class C shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinve sted) amounted to
$______. 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 $____ fo r
div idends and $____ for capital gain distributions. Initial
offering of Class C of Advisor TechnoQuant Growth took place on
November 3, 1997. Class C returns prior to November 3, 1997 are those
of Class B which reflect a 12b-1 fee of 1.00%
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Institutional Class o f Advisor TechnoQuant Growth would have
grown to $_______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR TECHNOQUANT GROWTH - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997*
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor TechnoQuant Growth on December 31,
1996, the net amount invested in Institutional Class shares was
$10,000. The cost of the initial investment ($10,000) together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time
they were reinvested) amounted to $______ __. If di stributions
had not been reinvested, the amount of distributions earned from the
class over time would have been smaller, and cash payments for the
period woul d have amounted to $___ for dividends and $____ for
capital gain distributions.
During the period f rom September 9, 1998 (commencement of
operations of the fund) to November 30, 1998, a hypothetical $10,000
investment in Class A of Advisor Small Cap would have grown to
$_______, including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SMALL CAP - CLASS A INDEXES
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
ENDED INITIAL REINVESTED REINVESTED VALUE 500 OF
NOVE $10,000 DIVIDEND CAPITAL GAIN LIVING**
MBER INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
30
1998* $ $ $ $ $ $ $
</TABLE>
* From Sept ember 9, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A
of Advisor Small Cap on September 9, 1998, assuming the maximum sales
charge had been in effect, the net amount invested in Class A shares
was $______. 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 $________. 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 $___ for dividends and $____ for capital gain
distributions.
During the period from September 9, 1998 (commencement of
operations of the fund) to November 30, 1998, a hypothetical $10,000
investment in Class T of Advisor Small Cap would have grown to
$_______, including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SMALL CAP - CLASS T INDEXES
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
ENDED INITIAL REINVESTED REINVESTED VALUE 500 OF
NOVE $10,000 DIVIDEND CAPITAL GAIN LIVING**
MBER INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
30
1998* $ $ $ $ $ $ $
</TABLE>
* From September 9, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T
of Advisor Small Cap on September 9, 1998, assuming the maximum sales
charge had been in effect, the net amount invested in Class T shares
was $_____. 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 $________. 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 $___ for dividends and $____ for capital gain
distributions.
Durin g the period from September 9, 1998 (commencement of
operations of the fund) to November 30, 1998, a hypothetical $10,000
investment in Class B of Advisor Small Cap would have grown to
$_______, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SMALL CAP - CLASS B INDEXES
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
ENDED INITIAL REINVESTED REINVESTED VALUE 500 OF
NOVE $10,000 DIVIDEND CAPITAL GAIN LIVING**
MBER INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
30
1998* $ $ $ $ $ $ $
</TABLE>
* From September 9, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B
of Advisor Small Cap on September 9, 1998, 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 $________. 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 $___ for dividends and $____ for capital
gain distributions.
During the period from September 9, 1998 (commencement of
operations of the fund) to November 30, 1998, a hypothetical $10,000
investment in Cla ss C of Advisor Small Cap would have grown to
$_______, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SMALL CAP - CLASS C INDEXES
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
ENDED INITIAL REINVESTED REINVESTED VALUE 500 OF
NOVE $10,000 DIVIDEND CAPITAL GAIN LIVING**
MBER INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
30
1998* $ $ $ $ $ $ $
</TABLE>
* From September 9, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C
of Advisor Small Cap on September 9, 1998, 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 $________. 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 $___ for dividends and $____ for capital
gain distributions.
During the period from September 9, 1998 (commencement of
operations of the fund) to November 30, 1998, a hypothetical $10,000
investment in Institutio nal Class of Advisor Small Cap would have
grown to $_______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SMALL CAP - INSTITUTIONAL CLASS INDEXES
PERIOD VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
ENDED INITIAL REINVESTED REINVESTED VALUE 500 OF
NOVE $10,000 DIVIDEND CAPITAL GAIN LIVING**
MBER INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
30
1998* $ $ $ $ $ $ $
</TABLE>
* From Septembe r 9, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Small Cap on September 9, 1998, 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 $________. If distributions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for t he period would have amounted to $___ for
dividends and $____ for capital gain distributions.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Class A of Advisor Strategic Opportunities would
have grown to $________, including the effect of Class A's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC OPPORTUNITIES - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997 1
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Strategic Opportunities on December 1, 1988, assuming the
maximum sales charge had been in effect, the net amount invested in
Class A shares was $______. 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) a mounte d to $________. 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 $_______ for dividends
and $_ _____ _ for capital gain distributions. Initial offering
of Class A of Advisor 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, returns prior to September
3, 1996 would have been higher.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Class T of Advisor Strategic Opportunities would
have grown to $ ____ _____, including the effect of Class T's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC OPPORTUNITIES - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Strategic Opportunities on December 1, 1988, assuming the
maximum sales charge had been in effect, the net amount invested in
Class T shares was $______. 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) am ounted t o $________. 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 $______for dividends
and $_ _____ fo r capital gain distributions.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Class B of Advisor Strategic Opportunities would
have gro wn to $________, including the effect of Class B's
maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC OPPORTUNITIES - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Strategic Opportunities on December 1, 1988, 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 re inve sted) amounted to
$_______. 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 amounte d to
$__ _____ for dividends and $________ for capital gain
distributions. Initial offering of Class B of Advisor 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, returns prior to June 30,
1994 would have been lower.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Institutional Class of Advisor Strategic
Opportunities woul d have gr own to $_________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Strategic Opportunities on December 1,
1988, 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 $___ ___. 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 amount ed to $______ for dividends and $______ for
capital gain distributions. Initial offering of Institutional Class of
Advisor Strategic Opportunities took place on July 3, 1995.
Institutional Class returns prior to July 3, 1995 are those of Initial
Class which has no 12b-1 fee.
During the 10-year period end ed Nov ember 30, 1998, a
hypothetical $10,000 investment in Initial Class of Advisor Strategic
Opportunities would have grown t o $___ _____.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC OPPORTUNITIES - INITIAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Advisor Strategic Opportunities on December 1, 1988, the net
amount invested in Initial Class shares was $______.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 re investe d)
amounted to $_______. 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
a moun ted to $_____ for dividends and $_______ for capital gain
distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class A of Advisor Mid Cap wo ul d have grown to $_______,
including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MID CAP - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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
Advisor Mid Cap on February 20, 1996, assuming the maximum sales
charge had been in effect, the net amount invested in Class A shares
was $_____. 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 ) am ounted to $_____. 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 $___ for dividends and $__ __ for capital
gain distributions. Initial offering of Class A for Advisor Mid Cap
took place on September 3, 1996. Class A returns prior to September 3,
1996 are those of Class T which reflect a 12b-1 fee of 0.50%. If Class
A's 12b-1 fee had been reflected, returns prior to September 3, 1996
would have been higher.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class T of Advisor Mid Cap would have grown to $_______,
including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MID CAP - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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
Advisor Mid Cap on February 20, 1996, assuming the maximum sales
charge had been in effect, the net amount invested in Class T shares
was $______. 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 t o $__ ___. 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 $__ for dividends and $__ __ for c apital
gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class B of Advisor Mid Ca p wou ld have grown to $______,
including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MID CAP - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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
Advisor Mid Cap on February 20, 1996, the net amount invested in Class
B shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $______. If
distrib utions had not been reinvested, the amount of distributions
earned from the class over time would have been smaller, and cash
payments for th e period would have amounted to $___ for
dividends and $____ for capital gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class C of Advisor Mid Cap w ould ha ve grown to $_____,
including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MID CAP - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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
Advisor Mid Cap on February 20, 1996, the net amount invested in Class
C shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $______. If distr ibutions
ha d 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 amounte d to $ __ for dividends and $____ for
capital gain distributions. Initial offering of Class C of Advisor Mid
Cap took place on November 3, 1997. Class C returns prior to November
3, 1997 are those of Class B which reflect a 12b-1 fee of 1.00%.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Institution al Class of Advisor Mid Cap would have grown to
$________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MID CAP - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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 Advisor 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 $______. If distribut ions had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments fo r the period would have amounted to $___ for
dividends and $____ for capital gain distributions.
During the 10-year peri od ende d November 30, 1998, a
hypothetical $10,000 investment in Class A of Advisor Equity Growth
would have grown to $__ _______, including the effect of Class
A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY GROWTH - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST OF
YEAR INITIAL REINVESTED REINVESTED VALUE 500 LIVING
ENDED $10,000 DIVIDEND CAPITAL GAIN
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment o f $10,0 00 in
Class A of Advisor Equity Growth on December 1, 1988 assuming the
maximum sales charge had been in effect, the net amount invested in
Class A shares was $_____. 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) amo unted t o $_______. 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 amount ed to $__ __ for
dividends and $_______ for capital gain distributions. Initial
offering of Class A of Advisor Equity Growth took place on September
3, 1996. Class A returns prior to September 3, 1996 through September
10, 1992 are those of Class T which reflect a 12b-1 fee of 0.50%
(0.65% prior to January 1, 1996). Class A returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class A's 12b-1 fee had been reflected, returns prior to September 3,
1996 through September 10, 1992 would have been higher and returns
prior to September 10, 1992 would have been lower.
During the 10-year period ended Novem ber 30, 1998, a hypothetical
$10,000 investment in Class T of Advisor Equity Growth would have
grown to $_______, including the e ffect of the Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY GROWTH - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T
of Advisor Equity Growth on December 1, 1988, assuming the maximum
sales charge had b een in effect, the net amount invested in Class
T shares was $______. 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) amoun ted to $_____. 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 $____ for dividends and $_______ for
capital gain distributions. Initial offering of Class T of Advisor
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, returns prior to
September 10, 1992 would have been lower.
During the 10-ye ar period ended November 30, 1998, a hypothetical
$10,000 investment in Class B of Advisor Equity Growth would have
grown to $__ ______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY GROWTH - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an ini tial i nvestment of $10,000 in
Class B of Advisor Equity Growth on December 1, 1988, 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 $_______. 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 peri od w ould have amounted to $_____ for
dividends and $________ for capital gain distributions. Initial
offering of Class B of Advisor 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, returns prior to December 31,
1996 would have been lower.
During the 10-year period ended Novemb er 30, 1998, a hypothetical
$10,000 investment in Class C of Advisor Equity Growth would have
grown to $_______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY GROWTH - CLASS C INDEXES
FISCAL YEAR VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
ENDED INITIAL REINVESTED REINVESTED VALUE 500 OF
NOVEMBER 30 $10,000 DIVIDEND CAPITAL GAIN LIVING
INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investme nt o f $10,000 in
Class C of Advisor Equity Growth on December 1, 1988, 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 $_______. 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 $___ __ for
dividends and $_______ for capital gain distributions. Initial
offering of Class C of Advisor Equity Growth took place on November 3,
1997. Class C returns prior to November 3, 1997 through December 31,
1996 are those of Class B which reflect a 12b-1 fee of 1.00%. Class C
returns prior to December 31, 1996 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.50% (0.65% prior to
January 1, 1996). Class C returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class C's
12b-1 fee had been reflected, returns prior to December 31, 1996 would
have been lower.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Institutional Class of Advisor Equity Growth
would have grown to $_______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY GROWTH - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Equity Growth on December 1, 1988, 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 $_______. If distributions had not been reinvested, the
amount of distributions earned from the class over time would have
been smaller, and cash paym ents for the period would have amounted
to $______ for dividends and $_______ for capital gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class A of Adv isor La rge Cap would have grown to $_______,
including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR LARGE CAP - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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
Advisor Large Cap on February 20, 1996, assuming the maximum sales
charge had been in effect, the net amount i nvested in Class A
shares was $_____. 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) amou nted to $______. 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 $___ for dividends and
$ ___ fo r capital gain distributions. Initial offering of Class
A of Advisor 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, returns prior to September 3, 1996 would
have been higher.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class T of Adviso r Larg e Cap would have grown to $_______,
including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR LARGE CAP - CLASS T INDEXES
FISCAL VALUE OF VALUE OF REINVESTED TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED CAPITAL GAIN VALUE 500 OF
ENDED $10,000 DIVIDEND DISTRIBUTIONS LIVING**
NOVE INVESTMENT DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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
Advisor Large Cap on February 20, 1996, assuming the maximum sales
charge had been in effect, the net amount invested in Class T shares
was $________. 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) amo unted to $_________. 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 $__ for dividends and $___ for
c apital gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class B of Advisor Large Cap would have grown to $_________,
including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR LARGE CAP - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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
Advisor Large Cap on February 20, 1996, the net amount invested in
Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $______. If
distributi ons ha d not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments fo r the period would have amounted to $___
for dividends and $___ for capital gain distributions.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class C o f Adv isor Large Cap would have grown to $_______,
including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR LARGE CAP - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1
9
9
6
*
</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
Advisor 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 reinveste d) am ounted to $______. 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 $__ for dividends
an d $__ __ for capital gain distributions. Initial offering of
Class C of Advisor Large Cap took place on November 3, 1997. Class C
returns prior to November 3, 1997 are those of Class B which reflect a
12b-1 fee of 1.00%.
During the period from February 20, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Institutional Class of Advisor Large Cap would have grown to
$_______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR LARGE CAP - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1 1
9
9
6
*
</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 Advisor Large Cap on February 20, 1996, the net
amount invested in Institutional Class shares was $10,000. The cost of
the initial investment ($10,000) together with the aggregate cost of
reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested) amounted
to $_________ _. If dis tributions 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
$___ f or dividends and $___ for capital gain distributions.
During the 10-year period ended N ovember 30, 1998, a hypothetical
$10,000 investment in Class A of Advisor Growth Opportunities would
have grown to $______ __, including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH OPPORTUNITIES - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial inv estment of $10,000 in
Class A of Advisor Growth Opportunities on December 1, 1988, assuming
the maximum sales charge had been in effect, the net amount invested
in Class A shares was $_____. 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 $__ ______. 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 $______ f or
div idends and $______ for capital gain distributions. Initial
offering of Class A of Advisor 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, returns
prior to September 3, 1996 would have been higher.
During the 10-ye ar period ended November 30, 1998, a hypothetical
$10,000 investment in Class T of Advisor Growth Opportunities would
hav e grown to $_______, including the effect of Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH OPPORTUNITIES - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment o f $10, 000 in
Class T of Advisor Growth Opportunities on December 1, 1988, assuming
the maximum sales charge had been in effect, the net amount invested
in Class T shares was $_____. 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) am ounte d to $______. 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 $______ for dividends
and $____ __ for capital gain distributions.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Class B of Advisor Growth Opportunities would
have grown to $________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH OPPORTUNITIES - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,0 00 in
Class B of Advisor Growth Opportunities on December 1, 1988, 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 $_______. If
dist ributi ons 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 a mounted to $______
for dividends and $______ for capital gain distributions. Initial
offering of Class B of Advisor 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, returns prior to
March 3, 1997 would have been lower.
During the 10-year period e nded November 30, 1998, a hypothetical
$10,000 investment in Class C of Advisor Growth Opportunities would
have grown to $________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH OPPORTUNITIES - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investm ent of $10,000 in
Class C of Advisor Growth Opportunities on December 1, 1988, 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 $_ ______.
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 am ounted to
$________ for dividends and $______ for capital gain distributions.
Initial offering of Class C of Advisor Growth Opportunities took place
on November 3, 1997. Class C returns prior to November 3, 1997 through
March 3, 1997 are those of Class B which reflect a 12b-1 fee of 1.00%.
Class C returns prior to March 3, 1997 are those of Class T which
reflect a 12b-1 fee of 0.50 (0.65% prior to January 1, 1996). If Class
C's 12b-1 fee had been reflected, returns prior to March 3, 1997 would
have been lower.
During the 10-year period ended Novem ber 30, 1998, a hypothetical
$10,000 investment in Institutional Class of Advisor Growth
Opportunities would have grown to $____ ___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investme nt of $10 ,000 in
Institutional Class of Advisor Growth Opportunities on December 1,
1988, 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) amounte d to $________. 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
per iod wo uld have amounted to $_______ for dividends and
$_______ for capital gain distributions. Initial offering of
Institutional Class of Advisor 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%. 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 December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class A of Advisor Growth & Income would have grown to
$_______, including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH & INCOME - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997*
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Growth & Income on December 31, 1996, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $______. 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 $_______. 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 $ ___ f or
dividends and $__ for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class T of Advi sor Gr owth & Income would have grown to
$_______, including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH & INCOME - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997* $
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Growth & Income on December 31, 1996, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $_____. 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) amo unte d to $______. 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 $___ for
d ivide nds and $__ for capital gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class B of Advisor Gro wth & Income would have grown to
$______, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH & INCOME - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997*
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Growth & Income on December 31, 1996, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $______. 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 $___ for dividends and $__ for capital
gain distributions.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Class C of A dvisor Growth & Income would have grown to
$_______, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH & INCOME - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997*
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Growth & Income on December 31, 1996, the net amount invested
in Class C shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $______. If
d istributi ons had not been reinvested, the amount of
distributions earned from the class over time would have been smaller,
and cash payments for the period wou ld ha ve amounted to $___
for dividends and $__ for capital gain distributions. Initial offering
of Class C of Advisor Growth & Income took place on November 3, 1997.
Class C returns prior to November 3, 1997 are those of Class B which
reflect a 12b-1 fee of 1.00%.
During the period from December 31, 1996 (commencement of operations
of the fund) to November 30, 1998, a hypothetical $10,000 investment
in Institutional Class of A dvisor Growth & Income would have
grown to $________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GROWTH & INCOME - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997*
</TABLE>
* From December 31, 1996 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Growth & Income on December 31, 1996,
the net amount invested in Institutional Class shares was $10,000. The
cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends and capital gain distributions for the
period covered (their cash value at the time they were reinvested)
amounted to $_______ . If distri butions 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 $___ for dividends and $__ for capital gain distributions.
During the 10-year perio d ended November 30, 1998, a hypothetical
$10,000 investment in Class A of Advisor Equity Income would have
grown to $____ ____, including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY INCOME - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial invest ment of $10,000 in Class A
of Advisor Equity Income on December 1, 1988, assuming the maximum
sales charge had been in effect, the n et amount invested in Class
A shares was $_____. 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) amoun ted to $_ ________. 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 am oun ted to $_____ for
dividends and $_____ for capital gain distributions. Initial offering
of Class A of Advisor Equity Income took place on September 3, 1996.
Class A returns from September 3, 1996 through September 10, 1992 are
those of Class T which reflect a 12b-1 fee of 0.50% (0.65% for prior
to January 1, 1996). Class A returns prior to September 10, 1992 are
those of Institutional Class which has no 12b-1 fee. If Class A's
12b-1 fee had been reflected, returns prior to September 3, 1996
through September 10, 1992 would have been higher and returns prior to
September 10, 1992 would have been lower.
During the 10-year period ended Nove mber 30, 1998, a hypothetical
$10,000 investment in Class T of Advisor Equity Income would have
grown to $________, including the effect of Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY INCOME - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investme nt of $10,000 in Class T
of Advisor Equity Income on December 1, 1988, assuming the maximum
sales charge had been in effect, the net amou nt invested in Class
T shares was $_____. 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 $__ ______. 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 $______ for dividends
and $______ for capita l gain dis tributions. Initial offering of
Class T of Advisor 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, returns prior to September 10, 1992 would have been lower.
During the 10-year period ende d November 30, 1998, a hypothetical
$10,000 investment in Class B of Advisor Equity Income would have
grown to $_______.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY INCOME - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
</TABLE>
Explanat ory Notes: With an initial investment of $10,000 in
Class B of Advisor Equity Income on December 1, 1988, 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 r einv ested) amounted to
$______. 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 $___ ___
for dividends and $______ for capital gain distributions. Initial
offering of Class B of Advisor 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,
returns prior to June 30, 1994 would have been lower.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Class C of Advisor Equity Income would have
grown to $___ ____.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY INCOME - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investm ent o f $10,000 in
Class C of Advisor Equity Income on December 1, 1988, 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 re invested) amounted to
$______. 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 am ounted to $______
for dividends and $______ for capital gain distributions. Initial
offering of Class C of Advisor Equity Income took place on November 3,
1997. Class C returns prior to November 3, 1997 through June 30, 1994
are those of Class B which reflect a 12b-1 fee of 1.00%. Class C
returns prior to June 30, 1994 through September 10, 1992 are those of
Class T which reflect a 12b-1 fee of 0.65%. Class C returns prior to
September 10, 1992 are those of Institutional Class which has no 12b-1
fee. If Class C's 12b-1 fee had been reflected, returns prior to June
30, 1994 would have been lower.
Duri ng the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Institutional Class of Advisor Equity Income
woul d have grown to $________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EQUITY INCOME - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial inv estment of $10,000 in
Institutional Class of Advisor Equity Income on December 1, 1988, 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 $_____ ___. I f 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
ha ve a mounted to $_______ for dividends and $________ for
capital gain distributions.
During the 10-year perio d ended November 30, 1998, a hypothetical
$10,000 investment in Class A of Advisor Balanced would have grown to
$________, includ ing the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR BALANCED - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial i nves tment of $10,000 in
Class A of Advisor Balanced on November 1, 1987, assuming the maximum
sales cha rge had been in effect, the net amount invested in
Class A shares was $_____. 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 r einve sted) amounted to $_______. 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 $______ for
divide nds and $_ _____ for capital gain distributions. Initial
offering of Class A of Advisor 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, returns prior to September
3, 1996 would have been higher.
During the 10-year period en ded November 30, 1998, a hypothetical
$10,000 investment in Class T of Advisor Balanced would have grown to
$________, including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR BALANCED - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial in vestm ent of $10,000 in
Class T of Advisor Balanced on November 1, 1988, assuming the
maxim um sale s charge had been in effect, the net amount
invested in Class T shares was $_____. 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 reinveste d) am ounted to
$_______. 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 $______ for
dividends and $ ______ f or capital gain distributions.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Class B of Advisor Balanced would have grown to
$_________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR BALANCED - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
</TABLE>
Explanatory Notes: With an initial inve stme nt of $10,000 in
Class B of Advisor Balanced on November 1, 1988, 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 $________. If
dis tributi ons 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 amounte d to $______
for dividends and $______ for capital gain distributions. Initial
offering of Class B of Advisor 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, returns prior to December
31, 1996 would have been lower.
During the 10 -year period ended November 30, 1998, a hypothetical
$10,000 investment in Class C of Advisor Balanced would have grown to
$_____ ____.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR BALANCED - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Class C of Advisor Balanced on November 1, 1988, 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 $_____ _.
If distrib utions 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 amounte d t o $______
for dividends and $________ for capital gain distributions. Initial
offering of Class C of Advisor Balanced took place on November 3,
1997. Class C returns prior to November 3, 1997 through December 31,
1996 are those of Class B which reflect a 12b-1 fee of 1.00%. Class C
returns prior to December 31, 1996 are those of Class T which reflect
a 12b-1 fee of 0.50% (0.65% prior to January 1, 1996). If Class C's
12b-1 fee had been reflected, returns prior to December 31, 1996 would
have been lower.
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Institutional Class of Advisor Balanced would
have grown to $________.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR BALANCED - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
NOVE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
30
1998 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an init ial inves tment of $10,000 in
Institutional Class of Advisor Balanced on November 1, 1988, 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 rein vested)
a mounted to $________. 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 woul d have
amounted to $_____ for dividends and $_____ for capital gain
distributions. Initial offering of Institutional Class of Advisor
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%. Returns for Institutional Class prior to July 3, 1995 would
have been higher if Class T's 12b-1 fee had not been reflected.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Class A of Advisor Emerging Markets Income would have
grown to $___, including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EMERGING MARKETS INCOME - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
1998 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
*
</TABLE>
* From March 10, 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
Advisor Emerging Markets Income on March 10, 1994, assuming the
maximum sales charge had been in effect, the net amount invested in
Class A shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A for Advisor Emerging
Markets Income took place on September 3, 1996. Class A returns prior
to September 3, 1996 are those of Class T which reflect a 12b-1 fee of
0.25%. If Class A's 12b-1 fee had been reflected, returns prior to
September 3, 1996 would have been higher.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Class T of Advisor Emerging Markets Income would have
grown to $___, including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EMERGING MARKETS INCOME - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
1998 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
*
</TABLE>
* From March 10, 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
Advisor Emerging Markets Income on March 10, 1994, assuming the
maximum sales charge had been in effect, the net amount invested in
Class T shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Class B of Advisor Emerging Markets Income would have
grown to $___, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EMERGING MARKETS INCOME - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
*
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Emerging Markets Income on March 10, 1994, the net amount
invested in Class B shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $___. 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 $___ for dividends and
$___ for capital gain distributions. Initial offering of Class B of
Advisor 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, returns
prior to June 30, 1994 would have been lower.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Class C of Advisor Advisor Emerging Markets Income would
have grown to $___, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EMERGING MARKETS INCOME - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
*
</TABLE>
* From March 10, 1994 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor 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 $___. 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 $___ for dividends and
$___ for capital gain distributions. Initial offering of Class C of
Advisor Emerging Markets Income took place on November 3, 1997. Class
C returns prior to November 3, 1997 through June 30, 1994 are those of
Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to January 1,
1996). Class C returns prior to June 30, 1994 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class C's 12b-1 fee had been
reflected, returns prior to November 3, 1997 through December 31, 1995
and prior to January 1, 1996 and prior to June 30, 1994 would have
been lower.
During the period from March 10, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Institutional Class of Advisor Emerging Markets Income
would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR EMERGING MARKETS INCOME - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
*
</TABLE>
* From March 10, 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 Advisor 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Institutional Class of Advisor
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%. If Class T's 12b-1 fee had not been reflected,
returns prior to July 3, 1995 for Institutional Class would have been
higher.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class A of Advisor High Yield would
have grown to $___, including the effect of Class A's maximum sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor High Yield on November 1, 1988, assuming the maximum sales
charge had been in effect, the net amount invested in Class A shares
was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A of Advisor High Yield took
place on September 3, 1996. Class A returns prior to September 3, 1996
are those of Class T which reflect a 12b-1 fee of 0.25%. If Class A's
12b-1 fee had been reflected, returns prior to September 3, 1996 would
have been higher.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class T of Advisor High Yield would
have grown to $___, including the effect of Class T's maximum sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor High Yield on November 1, 1988, assuming the maximum sales
charge had been in effect, the net amount invested in Class T shares
was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class B of Advisor High Yield would
have grown to $___, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor High Yield on November 1, 1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class B of Advisor High Yield took
place on June 30, 1994. Class B returns prior to June 30, 1994 are
those of Class T which reflect a 12b-1 fee of 0.25%. If Class B's
12b-1 fee had been reflected, returns prior to June 30, 1994 would
have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class C of Advisor High Yield would
have grown to $___, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR HIGH YIELD - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor High Yield on November 1, 1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class C of Advisor High Yield took
place on November 3, 1997. Class C returns prior to November 3, 1997
through June 30, 1994 are those of Class B which reflect a 12b-1 fee
of 0.90% (1.00% prior to January 1, 1996). Class C returns prior to
June 30, 1994 are those of Class T which reflect a 12b-1 fee of 0.25%.
If Class C's 12b-1 fee had been reflected, returns prior to November
3, 1997 through January 1, 1996 and prior to June 30, 1994 would have
been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Institutional Class of Advisor High
Yield would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR HIGH YIELD - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor High Yield on November 1, 1988, 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 $___. 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 $___ for
dividends and $___ for capital gain distributions. Initial offering of
Institutional Class of Advisor 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%. If Class T's 12b-1 fee had not
been reflected, returns prior to July 3, 1995 for Institutional Class
would have been higher.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Class A of Advisor Strategic Income would have grown to
$___, including the effect of Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC INCOME - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
199 8 $ $ $ $ $ $ $
1997
1996
1
9
9
5
1
9
9
4
*
</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
Advisor Strategic Income on October 31, 1994, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A of Advisor Strategic Income
took place on September 3, 1996. Class A returns prior to September 3,
1996 are those of Class T which reflect a 12b-1 fee of 0.25%. If Class
A's 12b-1 fee had been reflected, returns prior to September 3, 1996
would have been higher.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Class T of Advisor Strategic Income would have grown to
$___, including the effect of Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC INCOME - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
199 8 $ $ $ $ $ $ $
1997
1996
1
9
9
5
1
9
9
4
*
</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 T of
Advisor Strategic Income on October 31, 1994, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Class B of Advisor Strategic Income would have grown to
$___, including the effect of Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC INCOME - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
199 8 $ $ $ $ $ $ $
1997
1996
1
9
9
5
1
9
9
4
*
</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 B of
Advisor Strategic Income on October 31, 1994, the net amount invested
in Class B shares was $10,000. The cost of the initial investment
($10,000) together with the aggregate cost of reinvested dividends and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $___. 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 $___ for dividends and $___ for capital gain
distributions.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Class C of Advisor Strategic Income would have grown to
$___, including the effect of Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC INCOME - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
199 8 $ $ $ $ $ $ $
1997
1996
1
9
9
5
*
1
9
9
4
</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 C of
Advisor 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class C of Advisor Strategic Income
took place on November 3, 1997. Class C returns prior to November 3,
1997 are those of Class B which reflect a 12b-1 fee of 0.90% (1.00%
prior to January 1, 1996). If Class C's 12b-1 fees had been reflected,
returns prior to November 3, 1997 through January 1, 1996 would have
been lower.
During the period from October 31, 1994 (commencement of operations of
the fund) to December 31, 199 8 , a hypothetical $10,000
investment in Institutional Class of Advisor Strategic Income would
have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR STRATEGIC INCOME - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING**
DECE INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
MBER
31
199 8 $ $ $ $ $ $ $
1997
1996
1
9
9
5
1
9
9
4
*
</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
Institutional Class of Advisor 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 $_____. 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
$___ for dividends and $___ for capital gain distributions. Initial
offering of Institutional Class of Advisor 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%. If Class T's
12b-1 fee had not been reflected, returns prior to July 3, 1995 for
Institutional Class would have been higher.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class A of Advisor Mortgage
Securities would have grown to $___, including the effect of Class A's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
1
9
9
3
1
9
9
2
1
9
9
1
1
9
9
0
1
9
8
9
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Mortgage Securities on November 1, 1988, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $___. 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 $_____. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A of Advisor Mortgage
Securities took place on March 3, 1997. Class A returns prior to March
3, 1997 are those of Initial Class which has no 12b-1 fee. If Class
A's 12b-1 fee had been reflected, returns prior to March 3, 1997 would
have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class T of Advisor Mortgage
Securities would have grown to $___, including the effect of Class T's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
1
9
9
3
1
9
9
2
1
9
9
1
1
9
9
0
1
9
8
9
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Mortgage Securities on November 1, 1988, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class T of Advisor Mortgage
Securities took place on March 3, 1997. Class T returns prior to March
3, 1997 are those of Initial Class which has no 12b-1 fee. If Class
T's 12b-1 fee had been reflected, returns prior to March 3, 1997 would
have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class B of Advisor Mortgage
Securities would have grown to $___, including the effect of Class B's
maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - CLASS B INDEXE S
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
1
9
9
3
1
9
9
2
1
9
9
1
1
9
9
0
1
9
8
9
</TABLE>
Explanatory Notes: With an initial investment of $10,0000 in Class B
of Advisor Mortgage Securities on November 1, 1988, 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 $___. 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 $___ for dividends and
$___ for capital gain distributions. Initial offering of Class B of
Advisor 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, returns prior
to March 3, 1997 would have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Institutional Class of Advisor
Mortgage Securities would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
1
9
9
3
1
9
9
2
1
9
9
1
1
9
9
0
1
9
8
9
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Mortgage Securities on November 1,
1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Institutional Class of Advisor
Mortgage Securities took place on March 3, 1997. Returns prior to
March 3, 1997 are those of Initial Class which has no 12b-1 fee.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Initial Class of Advisor Mortgage
Securities would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MORTGAGE SECURITIES - INITIAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1
9
9
4
1
9
9
3
1
9
9
2
1
9
9
1
1
9
9
0
1
9
8
9
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Initial
Class of Advisor Mortgage Securities on November 1, 1988, 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 $___. 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 $___ for
dividends and $___ for capital gain distributions.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class A of Advisor Government
Investment would have grown to $___, including the effect of Class A's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Government Investment on November 1, 1988, assuming the
maximum sales charge had been in effect, the net amount invested in
Class A shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A for Advisor Government
Investment took place on September 3, 1996. Class A returns prior to
September 3, 1996 are those of Class T which reflect a 12b-1 fee of
0.25%. If Class A's 12b-1 fee had been reflected, returns prior to
September 3, 1996 would have been higher.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class T of Advisor Government
Investment would have grown to $___, including the effect of Class T's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Government Investment on November 1, 1988, assuming the
maximum sales charge had been in effect, the net amount invested in
Class T shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class B of Advisor Government
Investment would have grown to $___, including the effect of Class B's
maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Government Investment on November 1, 1988, 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 $___. 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 $___ for dividends and
$___ for capital gain distributions. Initial offering of Class B of
Advisor Government Investment took place on June 30, 1994. Class B
returns prior to June 30, 1994 are those of Class T which reflect a
12b-1 fee of 0.25%. If Class B's 12b-1 fee had been reflected, returns
prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class C of Advisor Government
Investment would have grown to $___, including the effect of Class C's
maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Government Investment on November 1, 1988, 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 $___. 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 $___ for dividends and
$___ for capital gain distributions. Initial offering of Class C of
Advisor Government Investment took place on November 3, 1997. Class C
returns prior to November 3, 1997 through June 30, 1994 are those of
Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to January 1,
1996). Class C returns prior to June 30, 1994 are those of Class T
which reflect a 12b-1 fee of 0.25%. If Class C's 12b-1 fee had been
reflected, returns prior to November 3, 1997 through January 1, 1996
and prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Institutional Class of Advisor
Government Investment would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Government Investment on November 1,
1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Institutional Class of Advisor
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%. If Class T's 12b-1 fee had not been reflected,
returns prior to July 3, 1995 for Institutional Class would have been
higher .
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Class A of Advisor Intermediate
Bond would have grown to $___, including the effect of Class A's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Intermediate Bond on November 1, 1988, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A of Advisor 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, returns prior to September 3, 1996
through September 10, 1992 would have been higher and returns prior to
September 10, 1992 would have been lower.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Class T of Advisor Intermediate
Bond would have grown to $___, including the effect of Class T's
maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Intermediate Bond on November 1, 1988, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class T of Advisor 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, returns prior to
September 10, 1992 would have been lower.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Class B of Advisor Intermediate
Bond would have grown to $___, including the effect of Class B's
maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Intermediate Bond on November 1, 1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class B of Advisor 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, returns prior to June 30, 1994 would
have been lower.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Class C of Advisor Intermediate
Bond would have grown to $___, including the effect of Class C's
maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Intermediate Bond on November 1, 1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class C of Advisor Intermediate
Bond took place on November 3, 1997. Class C returns prior to November
3, 1997 through June 30, 1994 are those of Class B which reflect a
12b-1 fee of 0.90% (1.00% prior to January 1, 1996). Class C returns
prior to June 30, 1994 through September 10, 1992 are those of Class T
which reflect a 12b-1 fee of 0.25%. Class C returns prior to September
10, 1992 are those of Institutional Class which has no 12b-1 fee. If
Class C's 12b-1 fee had been reflected, returns prior to November 3,
1997 through January 1, 1996 and prior to June 30, 1994 would have
been lower.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Institutional Class of Advisor
Intermediate Bond would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE BOND - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Intermediate Bond on November 1, 1988,
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 $___. 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 $___
for dividends and $___ for capital gain distributions.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class A of Advisor Short
Fixed-Income would have grown to $___, including the effect of Class
A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Short Fixed-Income on November 1, 1988, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A of Advisor Short
Fixed-Income took place on September 3, 1996. Class A returns prior to
September 3, 1996 are those of Class T which reflect a 12b-1 fee of
0.15%.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class T of Advisor Short
Fixed-Income would have grown to $___, including the effect of Class
T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Short Fixed-Income on November 1, 1988, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class C of Advisor Short
Fixed-Income would have grown to $___, including the effect of Class
C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Short Fixed-Income on November 1, 1988, 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 $___. 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 $___ for dividends and
$___ for capital gain distributions. Initial offering of Class C
Advisor Short Fixed-Income took place on November 3, 1997. Class C
returns prior to November 3, 1997 are those of Class T which reflect a
12b-1 fee of 0.15%. If Class C's 12b-1 fee had been reflected, returns
would have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Institutional Class of Advisor
Short Fixed-Income would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR SHORT FIXED-INCOME - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Short Fixed-Income on November 1, 1988,
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 $___. 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 $___
for dividends and $___ for capital gain distributions. Initial
offering of Institutional Class of Advisor 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%. If Class
T's 12b-1 fee had not been reflected, returns prior to July 3, 1995
for Institutional Class would have been higher.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class A of Advisor Municipal Income
would have grown to $___, including the effect of Class A's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Municipal Income on November 1, 1988, assuming the maximum
sales charge had been in effect, the net amount invested in Class A
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A of Advisor Municipal Income
took place on September 3, 1996. Class A returns prior to September 3,
1996 are those of Class T which reflect a 12b-1 fee of 0.25%. If Class
A's 12b-1 fee had been reflected, returns prior to September 3, 1996
would have been higher.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class T of Advisor Municipal Income
would have grown to $___, including the effect of Class T's maximum
sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Municipal Income on November 1, 1988, assuming the maximum
sales charge had been in effect, the net amount invested in Class T
shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class B of Advisor Municipal Income
would have grown to $___, including the effect of Class B's maximum
CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Municipal Income on November 1, 1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class B of Advisor Municipal Income
took place on June 30, 1994. Class B returns prior to June 30, 1994
are those of Class T which reflect a 12b-1 fee of 0.25%. If Class B's
12b-1 fee had been reflected, returns prior to June 30, 1994 would
have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Class C of Advisor Municipal Income
would have grown to $___, including the effect of Class C's maximum
CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Municipal Income on November 1, 1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class C of Advisor Municipal Income
took place on November 3, 1997. Class C returns prior to November 3,
1997 through June 30, 1994 are those of Class B which reflect a 12b-1
fee of 0.90% (1.00% prior to January 1, 1996). Class C returns prior
to June 30, 1994 are those of Class T which reflect a 12b-1 fee of
0.25%. If Class C's 12b-1 fee had been reflected, returns prior to
November 3, 1997 through January 1, 1996 and prior to June 30, 1994
would have been lower.
During the 10-year period ended October 31, 199 8 , a
hypothetical $10,000 investment in Institutional Class of Advisor
Municipal Income would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME - INSTITUTIONAL CLASS INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Municipal Income on November 1, 1988,
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 $___. 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 $___
for dividends and $___ for capital gain distributions. Initial
offering of Institutional Class of Advisor 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%. If Class T's
12b-1 fee had not been reflected, returns prior to July 3, 1995 for
Institutional Class would have been higher.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Class A of Advisor Intermediate
Municipal Income would have grown to $___, including the effect of
Class A's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS A INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class A of
Advisor Intermediate Municipal Income on November 1, 1988, assuming
the maximum sales charge had been in effect, the net amount invested
in Class A shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class A of Advisor 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, returns prior to September 3,
1996 through September 10, 1992 would have been higher and returns
prior to September 10, 1992 would have been lower.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Class T of Advisor Intermediate
Municipal Income would have grown to $___, including the effect of
Class T's maximum sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS T INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class T of
Advisor Intermediate Municipal Income on November 1, 1988, assuming
the maximum sales charge had been in effect, the net amount invested
in Class T shares was $___. 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 $___. 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 $___ for dividends and $___ for capital gain
distributions. Initial offering of Class T of Advisor 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, returns prior
to September 10, 1992 would have been lower.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Class B of Advisor Intermediate
Municipal Income would have grown to $___, including the effect of
Class B's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS B INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class B of
Advisor Intermediate Municipal Income on November 1, 1988, 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 $___. 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 $___ for dividends and
$___ for capital gain distributions. Initial offering of Class B of
Advisor 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, returns prior
to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Class C of Advisor Intermediate
Municipal Income would have grown to $___, including the effect of
Class C's maximum CDSC.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE MUNICIPAL INCOME - CLASS C INDEXES
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Class C of
Advisor Intermediate Municipal Income on November 1, 1988, 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 $___. 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 $___ for dividends and
$___ for capital gain distributions. Initial offering of Class C of
Advisor Intermediate Municipal Income took place on November 3, 1997.
Class C returns prior to November 3, 1997 through June 30, 1994 are
those of Class B which reflect a 12b-1 fee of 0.90% (1.00% prior to
January 1, 1996). Class C returns prior to June 30, 1994 through
September 10, 1992 are those of Class T which reflect a 12b-1 fee of
0.25%. Class C returns prior to September 10, 1992 are those of
Institutional Class which has no 12b-1 fee. If Class C's 12b-1 fee had
been reflected, returns prior to November 3, 1997 through January 1,
1996 and prior to June 30, 1994 would have been lower.
During the 10-year period ended October 31, 1998 , a
hypothetical $10,000 investment in Institutional Class of Advisor
Intermediate Municipal Income would have grown to $___.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ADVISOR INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL INDEXES
CLASS
FISCAL VALUE OF VALUE OF VALUE OF TOTAL S&P DJIA COST
YEAR INITIAL REINVESTED REINVESTED VALUE 500 OF
ENDED $10,000 DIVIDEND CAPITAL GAIN LIVING
OCTOB INVESTMENT DISTRIBUTIONS DISTRIBUTIONS
ER 31
199 8 $ $ $ $ $ $ $
1997
1996
1995
1994
1993
1992
1991
1990
1989
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Institutional Class of Advisor Intermediate Municipal Income on
November 1, 1988, 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 $___. 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 $___ for dividends and $___ for capital gain
distributions.
INTERNATIONAL INDEXES, 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
indexes database, the total market capitalization of Latin
American countries according to the International Finance Corporation
Emerging Markets database, and the performance of national stock
markets as measured in U.S. dollars by the Morgan Stanley Capital
International stock market indexes for the twelve months ended
December 31, 1998 . Of course, these results are not indicative
of future stock market performance or the funds' performance. Market
conditions during the periods measured fluctuated widely. Brokerage
commissions and other fees are not factored into the values of the
indexes.
MARKET CAPITALIZATION. Companies outside the United States now make up
nearly two-thirds of the world's stock market capitalization.
According to Morgan Stanley Capital International, the size of the
markets as measured in U.S. dollars grew from $____ billion in
19 97 to $____ billion in 1998 .
The following table measures the total market capitalization of
certain countries according to the Morgan Stanley Capital
International indexes database. The value of the markets are measured
in billions of U.S. dollars as of December 31, 1998 .
TOTAL MARKET CAPITALIZATION
AUSTRALIA $ JAPAN $
AUSTRIA NETHERLANDS
BELGIUM NORWAY
CANADA SINGAPORE/MALA
YSIA
DENMARK SPAIN
FRANCE SWEDEN
GERMANY SWITZERLAND
HONG KONG UNITED
KINGDOM
ITALY UNITED STATES
The following table measures the total market capitalization of Latin
American countries according to the International Finance Corporation
Emerging Markets database. The value of the markets is measured in
billions of U.S. dollars as of December 31. 1998 .
TOTAL MARKET CAPITALIZATION - LATIN AMERICA
Argentina $
Brazil
Chile
Colombia
Mexico
Venezuela
[Peru]
Total Latin $______
America
NATIONAL STOCK MARKET PERFORMANCE. Certain national stock markets have
outperformed the U.S. stock market. The first table below represents
the performance of national stock markets as measured in U.S. dollars
by the Morgan Stanley Capital International stock market indexes for
the twelve months ended December 31, 1998 . The second table
shows the same performance as measured in local currency. Each table
measures 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 indexes composed of
a sampling of selected companies representing an approximation of the
market structure of the designated country.
STOCK MARKET PERFORMANCE
MEASURED IN U.S. DOLLARS
Australia % Japan %
Austria Netherlands
Belgium Norway
Canada Singapore/Mala
ysia
Denmark Spain
France Sweden
Germany Switzerland
Hong Kong United
Kingdom
Italy United States
STOCK MARKET PERFORMANCE
MEASURED IN LOCAL CURRENCY
Australia % Japan %
Austria Netherlands
Belgium Norway
Canada Singapore/Mala
ysia
Denmark Spain
France Sweden
Germany Switzerland
Hong Kong United
Kingdom
Italy United States
The following table shows the average annualized stock market returns
measured in U.S. dollars as of December 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
STOCK MARKET PERFORMANCE
Five Years Ended December Ten Years Ended December 31,
31, 1998 1998
Germany
Hong Kong
Japan
Spain
United Kingdom
United States
</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 return, assume reinvestment of distributions, do not take
sales charges or trading fees into consideration, and are prepared
without regard to tax consequences. Lipper may also rank based on
yield. In addition to the mutual fund rankings, a class's
p erformance may be compared to stock, bond, and money market
mutual fund performance indexes prepared by Lipper or other
organizations. When comparing thes e indexe s, 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, a class's p erformance 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 bond fund may advertise risk
ratings, including symbols or numbers, prepared by independent rating
agencies.
A class's performance may also be compared to that of each index
representing the universe of securities in which the fund may invest.
The return of each index reflects reinvestment of all dividends and
capital gains paid by securities included in each index. Unlike a
class's returns, however, each index's returns do not reflect
brokerage commissions, transaction fees, or other costs of investing
directly in the securities included in the index.
Advisor Strategic Income may compare its performance to that of the
Fidelity Strategic Income Composite Index which is a hypothetical
representation of the performance of the fund's general investment
categories according to their respective weightings in the fund's
neutral mix. The Fidelity Strategic Income Composite Index represents
Strategic Income's four general investment categories according to
their respective weighting in the fund's neutral mix (40% high yield,
30% U.S. Government and investment-grade, 15% foreign developed
markets and 15% emerging markets). The following indexes are used to
calculate the Fidelity Strategic Income Composite Index: Merrill Lynch
High Yield Master Index for the high yield category, Lehman Brothers
Government Bond Index for the U.S. Government and investment grade
category, Salomon Brothers Non-U.S. Dollar World Government Bond Index
for foreign developed markets category, and J.P. Morgan Emerging
Markets Bond Index Plus for the emerging markets category. The index
weightings of the Fidelity Strategic Income Composite Index are
rebalanced monthly.
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.
LEHMAN BROTHERS GOVERNMENT BOND INDEX is a market
capitalization-weighted index of U.S. Government and government agency
securities (other than mortgage securities) with maturities of one
year or more. Issues include all public obligations of the U.S.
Treasury (excluding flower bonds and foreign-targeted issues) and U.S.
Government agencies and quasi-federal corporations, and corporate debt
guaranteed by the U.S. Government.
SALOMON BROTHERS NON-U.S. DOLLAR WORLD GOVERNMENT BOND INDEX
is a market capitalization-weighted index that is designed to reflect
the performance of 16 world government bond markets, excluding the
United States. Issues included in the index have fixed-rate coupons
and maturities of one year or more.
J.P. MORGAN EMERGING MARKETS BOND INDEX PLUS is a market
capitalization-weighted index of U.S. dollar- and other external
currency-denominated Brady bonds, loans, Eurobonds, and local market
debt instruments traded in emerging markets.
Advisor Balanced may compare its performance to that of the
Fidelity Balanced Composite Index which is a hypothetical
representation of the performance of the fund's general investment
categories using a weighting of 60% equity and 40% bond. The following
indexes are used to calculate the Fidelity Balanced Composite Index:
Standard & Poor's 500 Index (S&P 500) for the equity category and the
Lehman Brothers Aggregate Bond Index for the bond category. The index
weightings of the Fidelity Balanced Composite Index are rebalanced
monthly.
S&P 500 is a market capitalization-weighted index of common
stocks.
LEHMAN BROTHERS AGGREGATE BOND INDEX is a market
capitalization-weighted 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.
The Aggressive Asset Allocation Composite Index is a hypothetical
representation of the performance of Asset Allocation's three asset
classes according to their respective weighting in the fund's neutral
mix (5% short-term/money market; 25% bonds; and 70% stocks). The
weightings are rebalanced monthly. The following indices are used to
calculate the asset allocation composite index: The Lehman Brothers
3-month Treasury Bill Index, representing the average of T-Bill rates
for each of the prior three months, adjusted to a bond equivalent
yield basis (short-term and money market instruments); 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
with maturities of at least one year; and the S&P 500, a widely
recognized unmanaged index of common stocks.
Asset Allocation has the ability to invest in securities that are
not included in any of the indices, and the fund's actual investment
portfolio may not reflect the composition or the weighting of the
indices used. The S&P 500 and the asset allocation composite index
include reinvestment of income or dividends and are based on the
prices of unmanaged groups of stocks or U.S. Treasury obligations.
Unlike the fund's returns, the indices do not include the effect of
paying brokerage commissions, spreads, or other costs of investing.
Historical results are used for illustrative purposes only and do not
reflect the past or future performance of the fund.
Each of Advisor TechnoQuant Growth, Advisor Strategic Opportunities,
Advisor Retirement Growth, Advisor Equity Growth, Advisor Large
Cap, Advisor Dividend Growth, Advisor Growth Opportunities,
Advisor Growth & Income, Advisor Equity Income, Advisor
Asset Allocation, and Advisor Balanced may compare its
performance to that of the Standard & Poor's 500 Index, a market
capitalization weighted index of common stocks.
Advisor Small Cap may compare its performance to that of the
Russell 2000 Index, a market capitalization-weighted index of 2,000
small company stocks.
Advisor Mid Cap may compare its performance to that of the Standard
& Poor's MidCap 400(registered trademark)Index, a market
capitalization-weighted index of 400 medium-capitalization stocks.
Each of Advisor Overseas and Advisor Diversified
International may compare its performance to that of the Morgan
Stanley Capital International Europe, Australasia, Far East (EAFE)
Index, a market capitalization-weighted index that is designed to
represent the performance of developed stock markets outside of the
United States and Canada. The index returns for periods after January
1, 1997 are adjusted for tax withholding rates applicable to
U.S.-based mutual funds organized as Massachusetts business trusts.
Effective October 1, 1998, the country of Malaysia was removed from
this index. The index returns reflect the inclusion of Malaysia prior
to October 1, 1998.
Advisor International Capital Appreciation may compare its performance
to that of the Morgan Stanley Capital International AC World Index ex
USA (Gross), a market capitalization weighted equity index comprising
__ countries, __ developed markets and __ emerging markets.
Advisor Europe Capital Appreciation Fund may compare its performance
to that of the Morgan Stanley Capital International Europe Index, an
unmanaged, market capitalization-weighted index that is designed to
represent the performance of developed stock markets in Europe. The
index returns for periods after January 1, 1997 are adjusted for tax
withholding rates applicable to U.S.-based mutual funds organized as
Massachusetts business trusts.
Advisor Japan Fund may compare its performance to that of the Tokyo
Stock Price Index (TOPIX), a market capitalization-weighted index of
over 1100 stocks traded in the Japanese market.
Advisor Latin America Fund may compare its performance to that of
the Morgan Stanley Capital International Emerging Markets Free - Latin
America Index, a market capitalization-weighted index of approximately
170 stocks traded in seven Latin American markets.
Advisor Global Equity Fund may compare its performance to that of
the Morgan Stanley Capital International World Index, an unmanaged,
market capitalization-weighted index that is designed to represent the
performance of developed stock markets throughout the world. Effective
October 1, 1998, the country of Malaysia was removed from this index.
The index returns reflect the inclusion of Malaysia prior to October
1, 1998.
Stocks are selected for the Morgan Stanley Capital International
(MSCI) indexes on the basis of industry representation, liquidity,
sufficient float, and avoidance of cross-ownership. The MSCI Free
index excludes those stocks that cannot be purchased by foreign
investors in otherwise free markets.
Advisor Balanced may also compare its performance to the Lehman
Brothers Aggregate Bond Index, a market capitalization-weighted
index 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.
Each of Advisor High Yield and Advisor 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.
Advisor Mortgage Securities may compare its performance to that of the
Lehman Brothers Mortgage-Backed Securities Index, a m arket
capitalization-weighted index o f 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 ). Graduated payment mortgages and
balloons are included in the index, but buydowns, manufactured homes,
and graduated equity mortgages are not included in the index.
Advisor Government Investment may compare its performance to that of
the Lehman Brothers Government Bond Index, a market
capitalization-weighted inde x of U.S. Government and government
agency securities (other than mortgage securities) with maturities of
one year or more. Issues include all public obligations of the U.S.
Treasury (excluding flower bonds and foreign-targeted issues) and U.S.
Government agencies and quasi-federal corporations, and corporate debt
guaranteed by the U.S. Government.
Advisor Intermediate Bond may compare its performance to that of the
Lehman Brothers Intermediate Government/Corporate Bond Index, a market
capitalization-weighted index for go vernment 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.
Advisor Short Fixed-Income may compare its performance to that of the
Lehman Brothers 1-3 Year Government/Corporate Bond Index, a market
capitalization-weighted index 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.
Advisor Emerging Markets Income may compare its performance to that
of the J.P. Morgan Emerging Markets Bond Index Plus, a market
capitalization-weighted index of U.S. dollar- and other external
currency-denominated Brady bonds, loans, Eurobonds, and local market
debt instruments traded in emerging markets.
Each municipal bond fund may compare its performance to the Lehman
Brothers Municipal Bond Index, a market capitalization-weighted index
for investment-grade municipal bonds with maturities of one year or
more. In addition, Advisor Intermediate Municipal Income may compare
its performance to that of the Lehman Brothers 1-17 Year Municipal
Bond Index, a market capitalization-weighted index for
investment-grade municipal bonds with maturities between one and 17
years. Issues included in each index have been issued after December
31, 1990 and have an outstanding par value of at least $50 million.
Subsequent to December 31, 1995, zero coupon bonds and issues subject
to the alternative minimum tax are included in each index.
A class may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks or other depository
institutions. Mutual funds differ from bank investments in several
respects. For example, a fund may offer greater liquidity or higher
potential returns than CDs, a fund does not guarantee your principal
or your return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different
indexes .
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 returns in the
same method as th e funds . The funds may also compare
performance to that of other compilations or i ndexe s that may
be developed and made available in the future.
A municipal bond fund may compare and contrast in advertising
the relative advantages of investing in a mutual fund versus an
individual municipal bond. Unlike municipal bond 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 sales charges of many municipal bond mutual funds are
lower than the purchase cost of individual municipal bonds, which are
generally subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; model portfolios or allocations; and saving for
college or other goals. In addition, Fidelity may quote or reprint
financial or business publications and periodicals, as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products.
Each fund may be advertised as part of certain asset allocation
programs involving other Fidelity or non-Fidelity mutual funds. These
asset allocation programs may advertise a model portfolio and its
performance results.
Each fund may be advertised as part of a no transaction fee (NTF)
program in which Fidelity and non-Fidelity mutual funds are offered.
An NTF program may advertise performance results.
A class may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote the fund's current portfolio
manager.
VOLATILITY. A class may quote various measures of volatility and
benchmark correlation in advertising. In addition, the class
may compare these measures to those of other funds. Measures of
volatility seek to compare a class's historical share price
fluctuations or 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 a
class's percentage change in price movements over that period.
A fund ma y 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 fund
at periodic intervals, thereby purchasing fewer shares when prices
are high and more shares when prices are low. While such a strategy
does not assure a profit or guard against loss in a declining market,
the investor's average cost per share can be lower than if fixed
numbers of shares 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 November 30, FMR advised over $__ billion in municipa l
fund assets, $__ billion in taxable fixed-income fund assets, $__
billion in money market fund assets, $___ billion in equity fund
assets, $__ billion in international fund assets, and $___ 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 a 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.
PRIOR PERFORMANCE OF SIMILAR FUNDS
Because Dividend Growth, Retirement Growth, Asset Allocation,
Diversified International, Europe Capital Appreciation, Japan, Latin
America, and Global Equity (Corresponding Funds) were new when this
SAI was printed, their performance history is not included. However,
Dividend Growth, Retirement Growth, Asset Allocation, Diversified
International, Europe Capital Appreciation, Japan, and Latin America
are modeled after the following existing registered funds,
respectively: Fidelity Dividend Growth Fund, Fidelity Retirement
Growth Fund, Fidelity Asset Manager: Growth, Fidelity Diversified
International Fund, Fidelity Europe Capital Appreciation Fund,
Fidelity Japan Fund, and Fidelity Latin America Fund (Related
Funds).
The Related Funds are managed by FMR, and have investment
objectives, policies, and strategies that are substantially similar to
the Corresponding Funds described in this SAI. The Related Funds,
however, have different expenses and are sold through different
distribution channels.
Below you will find information about the prior performance of the
Related Funds, not the performance of the CorrespondingFunds described
in this SAI. The performance data of the Related Funds is net of
advisory fees and other expenses.
Although the Corresponding Funds described in this SAI have
substantially similar investment objectives, policies and strategies
as the corresponding Related Funds, you should not assume that the
Corresponding Funds will have the same performance as the Related
Funds. For example, a Corresponding Fund's future performance may be
better or worse than the performance of its Related Fund due to, among
other things, differences in sales charges, expenses, asset sizes and
cash flows between the Corresponding Fund and its Related Fund.
MOVING AVERAGES. Like the funds, a Related Fund may
illustrate performance using moving averages. For December 31, 1998,
the 13-week and 39-week long-term moving averages for each Related
Fund are outlined in the chart below.
Fund Name 13 Week Long-Term 39 Week Long-Term
Moving Average Moving Average
Fidelity $ $
Dividend
Growth Fund
Fidelity $ $
Retirement
Growth Fund
Fidelity Asset $ $
Manager:
Growth
Fidelity $ $
Diversified
International
Fund
Fidelity Europe $ $
Capital
Appreciation
Fund
Fidelity Japan $ $
Fund
Fidelity Latin $ $
America Fund
CALCULATING HISTORICAL FUND RESULTS. The following tables
show performance for each Related Fund calculated including certain
Related Fund expenses for the period ended December 31, 1998. Fidelity
Europe Capital Appreciation Fund, Fidelity Japan Fund, and Fidelity
Latin America Fund have a maximum front-end sales charge of 3%, which
is included in the average annual and cumulative returns. Return
figures do not include the effect of paying Fidelity Europe Capital
Appreciation Fund's, Fidelity Japan Fund's, or Fidelity Latin America
Fund's $25 exchange fee, which was in effect from December 1, 1987
through October 23, 1989, or other charges for special transactions or
services, such as Fidelity Europe Capital Appreciation Fund's 1.00%
short-term trading fee for shares held less than 90 days, or Fidelity
Japan Fund's or Fidelity Latin America Fund's 1.5% short-term trading
fee for shares held less than 90 days.
Average Cumulativ
Annual e Returns
Returns
One Five Ten Years/ One Five Ten Years/
Year Years Life of Year Years Life of
Fund Fund
Fidelity % % % % % %
Dividend
Growth
Fund
(4/27/93)*
Fidelity % % %+ % % %+
Retirement
Growth
Fund
Fidelity % % % % % %
Asset
Manager:
Growth
(12/30/91)
*
Fidelity % % % % % %
Diversified
Internation
al Fund
(12/27/91)
*
Fidelity % N/A % % N/A %
Europe
Capital
Appreciati
on Fund
(12/21/93)
*
Fidelity % % % % % %
Japan Fund
(9/15/92)*
Fidelity % % % % % %
Latin
America
Fund
(4/19/93)*
* Commencement of Operations
+ 10 year return
Note: If FMR had not reimbursed certain fund expenses during these
periods, Fidelity Asset Manager: Growth's, Fidelity Diversified
International Fund's, and Fidelity Japan Fund's returns would have
been lower.
The following tables show the income and capital elements of each
Related Fund's cumulative return. The tables compare each Related
Fund's return to the record of the Standard & Poor's 500 Index (S&P
500), the Dow Jones Industrial Average (DJIA), and the cost of living,
as measured by the CPI, over the same period. The CPI information is
as of the month-end closest to the initial investment date for each
Related Fund. The S&P 500 and DJIA comparisons are provided to show
how each Related Fund's 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. Each Related
Fund has the ability to invest in securities not included in either
index, and its investment portfolio may or may not be similar in
composition to the indexes. The S&P 500 and DJIA returns are based on
the prices of unmanaged groups of stocks and, unlike each Related
Fund'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 Related Fund during the past 10 years ended
on the most recent calendar quarter of each Related Fund or life of
each fund, as applicable, assuming all distributions were reinvested.
Returns are based on past results and are not an indication of future
performance. Tax consequences of different investments (with the
exception of foreign tax withholdings) have not been factored into the
figures below.
FIDELITY DIVIDEND GROWTH FUND: During the period from April
27, 1993 (commencement of operations) to December 31, 1998, a
hypothetical $10,000 investment in Fidelity Dividend Growth Fund would
have grown to $____, assuming all distributions were reinvested.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY DIVIDEND GROWTH FUND INDEXES
Period Value of Value of Value of Total S&P DJIA Cost of
Ended Initial Reinvested Reinvested Value 500 Living**
Dece $10,000 Dividend Capital Gain
mber Investment Distributions Distributions
31
1998 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993* $ $ $ $ $ $ $
</TABLE>
* From April 27, 1993 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Fidelity Dividend Growth Fund on April 27, 1993, the net amount
invested in fund 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 $____. If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $____ for dividends and
$____ for capital gains distributions.
FIDELITY RETIREMENT GROWTH FUND: During the ten-year period
ended December 31, 1998, a hypothetical $10,000 investment in Fidelity
Retirement Growth Fund would have grown to $____, assuming all
distributions were reinvested.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY RETIREMENT GROWTH FUND INDEXES
Period Value of Value of Value of Total S&P DJIA Cost of
Ended Initial Reinvested Reinvested Value 500 Living
Dece $10,000 Dividend Capital Gain
mber Investment Distributions Distributions
31
1998 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993 $ $ $ $ $ $ $
1992 $ $ $ $ $ $ $
1991 $ $ $ $ $ $ $
1990 $ $ $ $ $ $ $
1989 $ $ $ $ $ $ $
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in
Fidelity Retirement Growth Fund on January 1, 1989, the net amount
invested in fund 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 $____. If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $____ for dividends and
$____ for capital gains distributions.
FIDELITY ASSET MANAGER: GROWTH: During the period from
December 30, 1991 (commencement of operations) to December 31, 1998, a
hypothetical $10,000 investment in Fidelity Asset Manager: Growth
would have grown to $____, assuming all distributions were
reinvested.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY ASSET MANAGER: GROWTH INDEXES
Period Value of Value of Value of Total S&P DJIA Cost of
Ended Initial Reinvested Reinvested Value 500 Living**
Dece $10,000 Dividend Capital Gain
mber Investment Distributions Distributions
31
1998 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993 $ $ $ $ $ $ $
1992* $ $ $ $ $ $ $
</TABLE>
* From December 30, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Fidelity Asset Manager: Growth made on December 30, 1991, the net
amount invested in fund 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 $____. If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $____ for dividends and
$____ for capital gains distributions. Tax consequences of different
investments have not been factored into the above figures.
FIDELITY DIVERSIFIED INTERNATIONAL FUND: During the period
from December 27, 1991 (commencement of operations) to December 31,
1998, a hypothetical $10,000 investment in Fidelity Diversified
International Fund would have grown to $____, assuming all
distributions were reinvested.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY DIVERSIFIED INTERNATIONAL FUND INDEXES
Period Value of Value of Value of Total S&P DJIA Cost of
Ended Initial Reinvested Reinvested Value 500 Living**
Dece $10,000 Dividend Capital Gain
mber Investment Distributions Distributions
31
199 8 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993 $ $ $ $ $ $ $
1992* $ $ $ $ $ $ $
</TABLE>
* From December 27, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Fidelity Diversified International Fund on December 27, 1991, the net
amount invested in fund 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
case value at the time they were reinvested) amounted to $____. If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $____ for dividends and
$____ for capital gain distributions.
FIDELITY EUROPE CAPITAL APPRECIATION FUND: During the period
from December 21, 1993 (commencement of operations) to December 31,
1998, a hypothetical $10,000 investment in Fidelity Europe Capital
Appreciation Fund would have grown to $____, including the effect of
the fund's 3% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY EUROPE CAPITAL APPRECIATION FUND INDEXES
Period Value of Value of Value of Total S&P DJIA Cost of
Ended Initial Reinvested Reinvested Value 500 Living**
Dece $10,000 Dividend Capital Gain
mber Investment Distributions Distributions
31
199 8 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994* $ $ $ $ $ $ $
</TABLE>
* From December 21, 1993 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Fidelity Europe Capital Appreciation Fund on December 21, 1993,
assuming the 3% sales charge had been in effect, the net amount
invested in fund shares was $9,700. 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 $____. If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $____ for dividends and
$____ for capital gains distributions. The figures in the table do not
include the effect of the fund's 1.0% short-term trading fee
applicable to shares held less than 90 days.
FIDELITY JAPAN FUND: During the period from September 15,
1992 (commencement of operations) to December 31, 1998, a hypothetical
$10,000 investment in Fidelity Japan Fund would have grown to $____,
including the effect of the fund's 3% sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY JAPAN FUND INDEXES
Period Value of Value of Value of Total S&P DJIA Cost of
Ended Initial Reinvested Reinvested Value 500 Living**
Dece $10,000 Dividend Capital Gain
mber Investment Distributions Distributions
31
199 8 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993 $ $ $ $ $ $ $
1992* $ $ $ $ $ $ $
</TABLE>
* From September 15, 1992 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Fidelity Japan Fund on September 15, 1992, assuming the 3% sales
charge had been in effect, the net amount investment in fund shares
was $9,700. The cost of 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 $____. If distributions had not
been reinvested, the amount of distributions earned from the fund over
time would have been smaller, and cash payments for the period would
have amounted to $____ for dividends and $____ for capital gains
distributions. The figures in the table do not include the effect of
the fund's 1.5% short-term trading fee applicable to shares held less
than 90 days.
FIDELITY LATIN AMERICA FUND: During the period from April
19, 1993 (commencement of operations) to December 31, 1998, a
hypothetical $10,000 investment in Fidelity Latin America Fund would
have grown to $____, including the effect of the fund's 3% sales
charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY LATIN AMERICA FUND INDEXES
Period Value of Value of Value of Total S&P DJIA Cost of
Ended Initial Reinvested Reinvested Value 500 Living**
Dece $10,000 Dividend Capital Gain
mber Investment Distributions Distributions
31
199 8 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993* $ $ $ $ $ $ $
</TABLE>
* From April 19, 1993 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Fidelity Latin America Fund on April 19, 1993, assuming the 3% sales
charge had been in effect, the net amount invested in fund shares was
$9,700. 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 the
were reinvested), amounted to $____. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $____ for dividends and $____ for capital gains
distributions. The figures in the table do not include the effect of
the fund's 1.5% short-term trading fee applicable to shares held less
than 90 days.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
Pursuant to Rule 22d-1 und er the 1 940 Act, FDC exercises its
right to waive Class A and Class T's front-end sales charge on shares
acquired through reinvestment of dividends and capital gain
distributions or in connection with a fund's merger with or
acquisition of any investment company or trust. In add ition,
FDC has chosen to waive Class A and Class T's front-end sales
charge in certain instan ces du e to sales efficiencies and
competitive considerations. The sales charge will not apply:
CLASS A SHARES ONLY
1. to shares purchased for an insurance company separate account used
to fund annuity contracts for employee benefit plans (including 403(b)
programs, but otherwise as defined in ERISA);
2. to shares purchased by a trust institution or bank trust
department for a managed account that is charged an asset-based fee.
Employee benefit plans (including 403(b) programs, but otherwise as
defined in ERISA) and accounts managed by third parties do not qualify
for this waiver;
3. to shares purchased by a broker-dealer for a managed account
that is charged an asset-based fee. Employee benefit plans (including
403(b) programs, but otherwise as defined in ERISA) do not qualify for
this waiver;
4. to shares purchased by a registered investment advisor that is
not part of an organization primarily engaged in the brokerage
business for an account that is managed on a discretionary basis and
is charged an asset-based fee. Employee benefit plans (including
403(b) programs, but otherwise defined in ERISA) do not qualify for
this waiver; or
5. to shares purchased for (i) an employee benefit plan (including
403(b) programs, but otherwise as defined in ERISA) having $25 million
or more in plan assets or (ii) an employee benefit plan (including
403(b) programs, but otherwise as defined in ERISA) that is part of an
investment professional sponsored program that requires the
participating employee benefit plan to initially invest in Class C or
Class B shares and, upon meeting certain criteria, subsequently
requires the plan to invest in Class A shares.
A sales load waiver form must accompany these transactions.
CLASS T SHARES ONLY
1. to shares purchased for an insurance company separate account used
to fund annuity contracts for employee benefit plans (including 403(b)
programs, but otherwise as defined in ERISA);
2. to shares purchased by a trust institution or bank trust
department for a managed account that is charged an asset-based fee.
Accounts managed by third parties do not qualify for this waiver;
3. to shares purchased by a broker-dealer for a managed account that
is charged an asset-based fee;
4. to shares purchased by a registered investment adviser that is not
part of an organization primarily engaged in the brokerage business
for an account that is managed on a discretionary basis and is charged
an asset-based fee;
5. to shares purchased for an employ ee benefit plan (as defined by
ERISA (except SIMPLE IRA, SEP, and SARSEP plans and plans covering
self-employed individuals and their employees (formerly, Keogh/H.R. 10
plans), but including 403(b) programs));
6. to shares purchased for a Fidelity or Fidelity Advisor account
(including purchases by exchange) with the proceeds of a distribution
from (i) an insurance company separate account used to fund annuity
contracts for employee benefit plans (including 403(b) programs, but
otherwise as defined in ERISA) that are invested in Fidelity Advisor
or Fidelity funds or (ii) an employee benefit plan (including 403(b)
programs, but otherwise as defined in ERISA) that is invested in
Fidelity Advisor or Fidelity funds. (Distributions other than those
transferred to an IR A account must be transferred directly into a
Fidelity account.);
7. to shares purchased for any state, county, or city, or any
governmental instrumentality, department, authority or agency;
8. to shares purchased with redemption proceeds from other mutual fund
complexes on which the investor has paid a front-end or contingent
deferred sales charge;
9. to shares purchased by a current or former Trustee or officer of a
Fidelity fund or a current or retired officer, director, or regular
employee of FMR Corp. or FIL or their direct or indirect subsidiaries
(a Fidelity Trustee or employee), the spouse of a Fidelity Trustee or
employee, a Fidelity Trustee or employee acting as custodian for a
minor child, or a person acting as trustee of a trust for the sole
benefit of the minor child of a Fidelity Trustee or employee;
10. to shares purchased by a charitable organization (as defined for
purposes of Section 501(c)(3) of the Internal Revenue Code) investing
$100,000 or more;
11. to shares purchased by a bank trust officer, registered
representative, or other employee (or a member of one of their
immediate families) of investment professionals having agreements with
FDC;
12. to shares purchased for a charitable remainder trust or life
income pool established for the benefit of a charitable organization
(as defined for purposes of Section 501(c)(3) of the Internal Revenue
Code); or
13. to shares purchased with distributions of income, principal, and
capital gains from Fidelity Defined Trusts.
A sales load waiver form mu st acco mpany 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; (3) in
connection with redemptions through the Fidelity Advisor Systematic
Withdrawal Program; or (4) (for Class C only) in connection with any
redemptions from an employee benefit plan (including 403(b) programs
but otherwise as defined by ERISA).
A sales load waiver form must accompany these transactions.
INSTITUTIONAL CLASS SHARES ONLY
Institutional Class shares are offered to:
1. Broker-dealer managed account programs that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. In addition, employee
benefit plans (including 403(b) programs, but otherwise as defined by
ERISA) must have at least $50 million in plan assets;
2. Registered investment advisor managed account programs, provided
the registered investment advisor is not part of an organization
primarily engaged in the brokerage business and the program (i)
charges an asset-based fee and (ii) will have at least $1 million
invested in the Institutional Class of the Advisor funds. In addition,
non-employee benefit plan accounts in the program must be managed on a
discretionary basis;
3. Trust institution and bank trust department managed account
programs that (i) charge an asset-based fee and (ii) will have at
least $1 million invested in the Institutional Class of the Advisor
funds. Accounts managed by third parties are not eligible to purchase
Institutional Class shares;
4. Insurance company separate accounts that will have at least $1
million invested in the Institutional Class of the Advisor funds; and
5. Current or former Trustees or officers of a Fidelity fund or
current or retired officers, directors, or regular employees of FMR
Corp. or Fidelity International Limited or their direct or indirect
subsidiaries (Fidelity Trustee or employee), spouses of Fidelity
Trustees or employees, Fidelity Trustees or employees acting as a
custodian for a minor child, or persons acting as trustee of a trust
for the sole benefit of the minor child of a Fidelity Trustee or
employee.
6. Insurance company employee benefit plan programs (including 403
(b) programs, but otherwise as defined in ERISA) that (i) charge an
asset-based fee and (ii) will have at least $1 million invested in the
Institutional Class of the Advisor funds. Insurance company employee
benefit plan programs include such programs offered by a broker-dealer
affiliate of an insurance company, provided that the affiliate is not
part of an organization primarily engaged in the brokerage
business.
For purchases made by managed account programs, insurance company
separate accounts or insurance company employee benefit plan programs,
FDC reserves the right to waive the requirement that $1 million be
invested in the Institutional Class of the Advisor funds.
FOR CLASS A AND CLASS T SHARES ONLY
FINDER'S FEE. For all funds except Advisor Short Fixed-Inc ome, on
e ligible 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. Except as
provided bel ow, 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
(inclu din g 403(b) programs, but otherwise as defined in ERISA))
past $25 million; a load waived trade that brings the value of the
accumulated account(s) of an investor (including an employee benefit
plan (including 403(b) pro gram s, but otherwise as defined in
ERISA)) 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". Except as provided below, 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 (including 403(b) programs, but otherwise as
defin ed in ERISA)) 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 Sh ort Fix ed-Income, 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.
Except as prov ided below, 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 (including 403(b) programs, but otherwise as
defined in ERISA)) 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." Except as
provided below, 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
(including 403(b) programs, but othe rwise as defined in ERISA))
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."
Shar es 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 .25% fee with respect to shares held by
an insurance com pany separate account must provide FDC access to
records detailing purchases at the client level.
For the p urpose of determining the availability of Class A or Class
T finder's fees, purchases of Class A or Class T shares made with the
proceeds from the redemption of shares of any Fidelity fund will
not be considered "eligible purchases."
Except as provided below, any asse ts 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 those 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 will be
redeemed first, followed by those Class A or Class T shares that have
been held for the longest period of time.
With respect to sh ares held by an insurance company separate
account, the Class A or Class T CDSC does not apply.
With respect to employee benefit plans (including 403( b)
prog rams, but otherwise as defined in ERISA), 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.
Investment professionals must notify FDC in advance of a purchase
eligible for a finder's fee, and may be required to enter into an
agreement with FDC in order to recei ve the finder's fee.
CLASS A AND CLASS T SHARES ONLY
COMBINED PURCHASE, RIGHTS OF ACCUMULATION AND LETTER OF INTENT
PROGRAMS. The following qualify as an "individual" or "company" for
the purposes of determining eligibility for the Combined Purchase,
Rights of Accumulation or Letter of Intent program: 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 benefit plans" (as
defined in Section 3(3) of ERISA); and tax-exempt organizations (as
defined in Section 501(c)(3) of the Internal Revenue Code).
COMBINED PURCHASE. For your purchases to be aggregated for the
purpose of qualifying for the Combined Purchase program, they must be
made on the same day through one investment professional.
RIGHTS OF ACCUMULATION. The current value of your holdings is
determined at the NAV at the close of business on the day you purchase
the Class A or Class T shares to which the current value of your
holdings will be added. For your purchases and holdings to be
aggregated for the purpose of qualifying for the Rights of
Accumulation program, they must have been made through one investment
professional.
LETTER OF INTENT. You must file your Letter of Intent (Letter) with
Fidelity within 90 days of the start of your purchases toward
completing your Letter. For your purchases to be aggregated for the
purpose of completing your Letter, they must be made through one
investment professional. Your initial purchase toward completing your
Letter must be at least 5% of the total investment specified in your
Letter. Fidelity will register Class A or Class T shares equal to 5%
of the total investment specified in your Letter in your name and will
hold those shares in escrow. You will earn income dividends and
capital gain distributions on escrowed Class A and Class T shares. The
escrow will be released when you complete your Letter. You are not
obligated to complete your Letter. If you do not complete your Letter,
Fidelity will provide you with 30-days' written notice to pay the
increased front-end sales charges due. If you do not pay the increased
front-end sales charges within 30 days, Fidelity will redeem
sufficient escrowed Class A or Class T shares to pay any applicable
front-end sales charges. If you purchase more than the amount
specified in your Letter and qualify for additional Class A or Class T
front-end sales charge reductions, the front-end sales charge will be
adjusted to reflect your total purchase at the end of 13 months and
the surplus amount will be applied to your purchase of additional
Class A or Class T shares at the then-current offering price
applicable to the total investment.
ALL CLASSES
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 each 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.
DISTRIBUTIONS AND TAXES
DIVIDENDS. A portion of each fund's income may qualify for the
dividends-received deduction available to corporate shareholders to
the extent that the fund's income is derived from qualifying
dividends. Because each fund may earn other types of income, such as
interest, income from securities loans, non-qualifying dividends, and
short-term capital gains, the percentage of dividends from the funds
that qualify for the deduction will generally be less than 100%. For
those funds whose income is primarily derived from interest, dividends
will not qualify for the dividends-received deduction available to
corporate shareholders. To the extent that a municipal fund's income
is designated as federally tax-exempt interest, the daily dividends
declared by the fund are also federally tax-exempt. Short-term capital
gains are taxable as dividends, but do not qualify for the
dividends-received deduction. For any fund that invests significantly
in foreign securities, corporate shareholders should not expect fund
dividends to qualify for the dividends-received deduction.
Each municipal fund purchases municipal securities whose
interest FMR believes is free from federal income tax. Generally,
issuers or other parties have entered into covenants requiring
continuing compliance with federal tax requirements to preserve the
tax-free status of interest payments over the life of the security. If
at any time the covenants are not complied with, or if the IRS
otherwise determines that the issuer did not comply with relevant tax
requirements, interest payments from a security could become federally
taxable retroactive to the date the security was issued. For certain
types of structured securities, the tax status of the pass-through of
tax-free income may also be based on the federal tax treatment of the
structure.
Interest on certain "private activity" securities is subject to the
federal alternative minimum tax (AMT), although the interest continues
to be excludable from gross income for other tax purposes. Interest
from private activity securities is a tax preference item for the
purposes of determining whether a taxpayer is subject to the AMT and
the amount of AMT to be paid, if any.
A portion of the gain on municipal bonds purchased at market discount
after April 30, 1993 is taxable to shareholders a s ordinary
incom e, not as capital gains.
CAPITAL GAINS DISTRIBUTIONS. Each fund's long-term capital gains
distributions are federally taxable to shareholders generally as
capital gains.
[As of October 31, 1998, Advisor International Capital Appreciation
had a capital loss carryforward aggregating approximately $____. This
loss carryforward, of which $___, $___, and $___will expire on October
31, 199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of, October 31, 1998, Advisor Overseas had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on October 31, 199_, ____,
and ____ , respectively, is available to offset future capital
gains.]
[As of November 30, 1998, Advisor TechnoQuant Growth had a capital
loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on November 30,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of November 30, 1998, Advisor Small Cap had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on, 199_, ____, and ____ ,
respectively, is available to offset future capital gains.]
[As of November 30, 1998, Advisor Strategic Opportunities had a
capital loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on November 30,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of November 30, 1998, Advisor Mid Cap had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on November 30, 199_, ____,
and ____ , respectively, is available to offset future capital
gains.]
[As of November 30, 1998, Advisor Equity Growth had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on November 30, 199_, ____,
and ____ , respectively, is available to offset future capital
gains.]
[As of November 30, 1998, Advisor Large Cap had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on November 30, 199_, ____,
and ____ , respectively, is available to offset future capital
gains.]
[As of November 30, 1998, Advisor Growth Opportunities had a
capital loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on November 30,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of November 30, 1998, Advisor Growth & Income had a capital
loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on November 30,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of November 30, 1998, Advisor Equity Income had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on November 30, 199_, ____,
and ____ , respectively, is available to offset future capital
gains.]
[As of November 30, 1998, Advisor Balanced had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on November 30, 199_, ____,
and ____ , respectively, is available to offset future capital
gains.]
[As of December 31, 1998, Advisor Emerging Markets Income had a
capital loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on December 31,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of October 31, 1998, Advisor High Yield had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will expire on October 31, 199_, ____,
and ____ , respectively, is available to offset future capital
gains.]
[As of December 31, 1998, Advisor Strategic Income had a capital
loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on December 31,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of October 31, 1998, Advisor Government Investment had a
capital loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on October 31,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of October 31, 1998, Advisor Mortgage Securities had a capital
loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on October 31,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of October 31, 1998, Advisor Intermediate Bond had a capital
loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on October 31,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of October 31, 1998, Advisor Short Fixed-Income had a capital
loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on October 31,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of October 31, 1998, Advisor Municipal Income had a capital
loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on October 31,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
[As of October 31, 1998, Advisor Intermediate Municipal Income had
a capital loss carryforward aggregating approximately $____. This loss
carryforward, of which $___, $___, and $___will expire on October 31,
199_, ____, and ____ , respectively, is available to offset future
capital gains.]
RETURNS OF CAPITAL. If a fund's distributions exceed its
taxable income and capital gains realized during a taxable year, all
or a portion of the distributions made in the same taxable year may be
recharacterized as a return of capital to shareholders. A return of
capital distribution will generally not be taxable, but will reduce
each shareholder's cost basis in the fund and result in a higher
reported capital gain or lower reported capital loss when those shares
on which the distribution was received are sold.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business
trusts, state law provides for a pass-through of the state and local
income tax exemption afforded to direct owners of U.S. Government
securities. Some states limit this pass-through to mutual funds that
invest a certain amount in U.S. Government securities, and some types
of securities, such as repurchase agreements and some agency-backed
securities, may not qualify for this benefit. The tax treatment of
your dividends from a fund will be the same as if you directly
owned a proportionate share of the U.S. Government securities. Because
the income earned on certain U.S. Government securities is
exempt from state and local personal income taxes, the portion of
dividends from a fund attributable to these securities will also be
free from state and local personal income taxes. The exemption
from state and local personal income taxation does not preclude states
from assessing other taxes on the ownership of U.S. Government
securities.
FOREIGN TAX CREDIT OR DEDUCTION. Foreign governments may withhold
taxes on dividends and interest earned by a fund 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 is invested
in securities of foreign issuers, the fund may elect to pass through
eligible foreign taxes paid and thereby allow shareholders to take
a deduction or, if they meet certain holding period requirements
with respect to fund share s, a credit on their individual tax
returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code so that it will not be liable for federal tax on income
and capital gains distributed to shareholders. In order to qualify as
a regulated investment company, and avoid being subject to federal
income or excise taxes at the fund level, each fund intends to
distribute substantially all of its net investment income and net
realized capital gains within each calendar year as well as on a
fiscal year basis, and intends to comply with other tax rules
applicable to regulated investment companies.
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. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to yo u. In addition to federal
income taxes, shareholders may be subject to state and local taxes on
fund distributions, and shares may be subject to state and local
personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax
situation.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trusts are listed below. The Board of Trustees governs each
fund and is responsible for protecting the interests of shareholders.
The Trustees are experienced executives who meet periodically
throughout the year to oversee each fund's activities, review
contractual arrangements with companies that provide services to each
fund, and review each fund's performance. 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 or its affiliate s. The business
address of each Trustee, Member of the Advisory Board, and officer who
is an "interested person" (as defined in the 1940 Act) is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the
address of FMR. The business address of all the other Trustees is
Fidelity Investments(registered trademark), 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 (68), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman
of the Board and of the Executive Committee of FMR; Chairman and a
Director of Fidelity Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc. Abigail Johnson, Vice President of certain
Equity Funds, is Mr. Johnson's daughter.
J. GARY BURKHEAD (57), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments and Brokerage Group
(1997). Previously, Mr. Burkhead served as President of Fidelity
Management & Research Company.
RALPH F. COX (66), 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 (67), Trustee. Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of
BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (55), 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 a Director of 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). Mr. Gates also is a Trustee of the Forum for
International Policy and of the Endowment Association of the College
of William and Mary. In addition, he is a member of the National
Executiv e Board of the Boy Scouts of America.
E. BRADLEY JONES (71), 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 (66), 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 National Arts Stabilization Inc., Chairman of
the Board of Trustees of the Greenwich Hospital Association,
Director of the Yale-New Haven Health Services Corp. (1998), 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 (55), Trustee, is Vice Chairman and Director of FMR.
Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice
President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). In addition, he
serves as a Trustee of Boston College, Massachusetts Eye & Ear
Infirmary, Historic Deerfield (1989) and Society for the Preservation
of New England Antiquities, and as an Overseer of the Museum of Fine
Arts of Boston.
WILLIAM O. McCOY (65), 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 (70), Trustee and Chairman of the non-interested
Trustees, is Chairman of G.M. Management Group (strategic advisory
services). Mr. McDonough is a Director of York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp.
(hydraulic systems, building systems, and metal products, 1992), CUNO,
Inc. (liquid and gas filtration products, 1996), and Associated
Estates Realty Corporation (a real estate investment trust, 1993). Mr.
McDonough served as a Director of ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products) from 1987-1996 and
Brush-Wellman Inc. (metal refining) from 1983-1997.
MARVIN L. MANN (65), Trustee (1993), is Chairman of the Board, 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).
*ROBERT C. POZEN (52), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of Fidelity Investments Money Management, Inc. (1998),
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 (70), 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).
DWIGHT D. CHURCHILL (45), is Vice President of Bond Funds, Group
Leader of the Bond Group, Senior Vice President of FMR (1997), and
Vice President of FIMM (1998). Mr. Churchill joined Fidelity in 1993
as Vice President and Group Leader of Taxable Fixed-Income
Investments.
ABIGAIL P. JOHNSON (37), is Vice President of certain Equity Funds
(1997), and is a Director of FMR Corp. (1994). Before assuming her
current responsibilities, Ms. Johnson managed a number of Fidelity
funds. Edward C. Johnson 3d, Trustee and President of the Funds, is
Ms. Johnson's father.
FRED L. HENNING, JR. (59), is Vice President of Fidelity's
Fixed-Income Group (1995), Senior Vice President of FMR (1995), and
Senior Vice President of FIMM (1998). Before assuming his current
responsibilities, Mr. Henning was head of Fidelity's Money Market
Division.
BART A. GRENIER, (39), 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 a 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.
ROBERT A. LAWRENCE (46), is Vice President of certain Equity Funds
(1997), Vice President of Fidelity Real Estate High Income Fund (1995)
and Fidelity Real Estate High Income Fund II (1996), and Senior Vice
President of FMR (1993).
RICHARD A. SPILLANE, JR. (47), is Vice President of certain Equity
Funds and Senior Vice President of FMR (1997). Since joining Fidelity,
Mr. Spillane is Chief Investment Officer for Fidelity International,
Limited. Prior to that position, Mr. Spillane served as Director of
Research.
JOHN H. CARLSON (48), is Vice President of Advisor Emerging Markets
Income (1996), Advisor Strategic Income (1996), and other funds
advised by FMR. Prior to joining Fidelity in 1995, Mr. Carlson spent
three years with Lehman Brothers as executive director of emerging
markets and senior vice president and head trader at Lehman's Latin
American emerging markets fixed-income desk.
C. ROBERT CHOW (37), is Vice President of Advisor Equity Income
(1998). Prior to his current responsibilities, Mr. Chow worked as an
analyst and portfolio manager for a variety of Fidelity funds.
KATHERINE COLLINS (30), is Vice President of Advisor Mid Cap
(1998), and another fund advised by FMR. Prior to her current
responsibilities, Ms. Collins has managed a variety of other Fidelity
funds.
ANDREW J. DUDLEY (34), is Vice President of Advisor Short
Fixed-Income (1998), and other funds advised by FMR. Prior to joining
Fidelity as a portfolio manager in 1996, Mr. Dudley worked as a
quantitative analyst and portfolio manager at Putnam Investments for
five years.
MARGARET L. EAGLE (49), is Vice President of Advisor High Yield and
Advisor Strategic Income (1997). Prior to her current
responsibilities, Ms. Eagle was a fixed-income analyst and managed a
variety of Fidelity funds.
GREGORY FRASER (38), is Vice President of Advisor Diversified
International (1998). Prior to his current responsibilities, Mr.
Fraser has managed a variety of Fidelity funds.
KEVIN E. GRANT (38), is Vice President of Advisor Balanced (1996),
Advisor Strategic Income (1998) and Advisor Intermediate Bond
(1995), and other funds advised by FMR. Since joining Fidelity in
1993, Mr. Grant has managed a variety of Fidelity funds. Prior to
joining Fidelity, Mr. Grant was vice president and chief mortgage
strategist at Morgan Stanley for three years.
RICHARD C. HABERMANN (58), is Vice President of Advisor Asset
Allocation (1998) and Advisor Global Equity (1998). Prior to his
current responsibilities, Mr. Habermann has managed a variety of
Fidelity funds.
HARRIS LEVITON (37), is Vice President of Advisor Strategic
Opportunities (1996). Prior to his current responsibilities, Mr.
Leviton has managed a variety of Fidelity funds.
HARRY W. LANGE (46), is Vice President of Advisor Small Cap (1998).
Prior to his current responsibilities, Mr. Lange has managed a variety
of Fidelity funds.
NORMAN U. LIND (42), is Vice President of Advisor Intermediate
Municipal Income (1998) and other funds advised by FMR. Prior to his
current responsibilities, Mr. Lind has managed a variety of Fidelity
funds.
KEVIN R. McCAREY (38), is Vice President of Advisor International
Capital Appreciation (1997), Advisor Europe Capital Appreciation
(1998), and other funds advised by FMR. Prior to his current
responsibilities, Mr. McCarey has managed a variety of Fidelity
funds.
RICHARD R. MACE, JR. (37), is Vice President of Advisor Overseas
(1996), and other funds advised by FMR. Prior to his current
responsibilities, Mr. Mace has managed a variety of Fidelity funds.
CHARLES MANGUM (34), is Vice President of Advisor Dividend Growth
(1998). Prior to his current responsibilities, Mr. Mangum has managed
a variety of Fidelity funds.
BRENDA A. REED (37), is Vice President of Advisor Japan (1998).
Prior to her current responsibilities, Ms. Reed has managed a variety
of Fidelity funds.
PATRICIA SATTERTHWAITE (39), is Vice President of Advisor Latin
America (1998). Prior to her current responsibilities, Ms.
Satterthwaite has managed a variety of Fidelity funds.
J. FERGUS SHIEL (41), is Vice President of Advisor Retirement
Growth (1998). Prior to his current responsibilities, Mr. Shiel has
managed a variety of Fidelity funds.
THOMAS J. SILVIA (37), is Vice President of Advisor Mortgage
Securities (1998), Advisor Government Investment (1998), and another
fund advised by FMR. Prior to his current responsibilities, Mr. Silvia
worked as a senior mortgage trader.
BETH TERRANA (41), is Vice President of Advisor Growth & Income
(1996), and other funds advised by FMR. Prior to her current
responsibilities, Ms. Terrana managed a variety of Fidelity funds.
CHRISTINE JONES THOMPSON (40), is Vice President of Advisor
Municipal Income (1998), and other funds advised by FMR. Prior to her
current responsibilities, Ms. Thompson has managed a variety of
Fidelity funds.
JENNIFER S. UHRIG (37), is Vice President of Advisor Equity Growth
(1996), and other funds advised by FMR. Prior to her current
responsibilities, Ms. Uhrig has managed a variety of Fidelity funds.
GEORGE A. VANDERHEIDEN (53), is Vice President of Advisor Growth
Opportunities, and other funds advised by FMR. Prior to his current
responsibilities, Mr. Vanderheiden has managed a variety of Fidelity
funds.
ERIC D. ROITER (50), Secretary (1998), is Vice President (1998) and
General Counsel of FMR (1998). Mr. Roiter was an Adjunct Member,
Faculty of Law, at Columbia University Law School (1996-1997). Prior
to joining Fidelity, Mr. Roiter was a partner at Debevoise & Plimpton
(1981-1997) and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981).
RICHARD A. SILVER (51), 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).
MATTHEW N. KARSTETTER (37), Deputy Treasurer (1998), is Deputy
Treasurer of the Fidelity funds and is an employee of FMR (1998).
Before joining FMR, Mr. Karstetter served as Vice President of
Investment Accounting and Treasurer of IDS Mutual Funds at American
Express Financial Advisors (1996-1998). Prior to 1996, Mr. Karstetter
was Vice President, Mutual Fund Services at State Street Bank & Trust
(1991-1996).
STANLEY N. GRIFFITH (52), Assistant Vice President (1998), is
Assistant Vice President of Fidelity's Fixed-Income Funds (1998) and
an employee of FMR Corp.
JOHN H. COSTELLO (52), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (52), 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 (40), Assistant Treasurer (1996), is Assistant
Treasurer of Fidelity's Fixed-Income Funds (1998) and an employee of
FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and
Fund Controller of Liberty Investment Services (1987-1995).
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his
or her services for the fiscal year ended in 1998, or calendar year
ended December 31, 1998, as applicable.
COMPENSATION TABLE
AGGREGATE J. Gary Ralph F. Cox Phyllis Burke Davis Robert
COMPENSAT Burkhead** M.
ION FROM A Gates
FUND
Advisor Latin $ $ $ $
America+
Advisor Japan+ $ $ $ $
Advisor Europe $ $ $ $
Capital
Appreciation+
Advisor $ $ $ $
International
Capital
Appreciation
Advisor $ $ $ $
Overseas
Advisor $ $ $ $
Diversified
International+
Advisor Global $ $ $ $
Equity+
Advisor $ $ $ $
TechnoQuant
Growth
Advisor Small $ $ $ $
Cap+
Advisor $ $ $ $
Strategic
Opportunities
Advisor $ $ $ $
MidCap
Advisor $ $ $ $
Retirement
Growth+
Advisor Equity $ $ $ $
Growth
Advisor Large $ $ $ $
Cap
Advisor $ $ $ $
Dividend
Growth+
Advisor Growth $ $ $ $
Opportunities
Advisor Growth $ $ $ $
& Income
Advisor Equity $ $ $ $
Income
Advisor Asset $ $ $ $
Allocation+
Advisor $ $ $ $
Balanced
Advisor $ $ $ $
Emerging
Markets
Income
Advisor High $ $ $ $
Yield
Advisor $ $ $ $
Strategic
Income
Advisor $ $ $ $
Government
Investment
Advisor $ $ $ $
Mortgage
Securities
Advisor $ $ $ $
Intermediate
Bond
Advisor Short $ $ $ $
Fixed-Income
Advisor $ $ $ $
Municipal
Income
Advisor $ $ $ $
Intermediate
Municipal
Income
TOTAL $ $ $ $
COMPENSA
TION FROM
THE FUND
COMPLEX*,
A
AGGREGATE Edward E. Donald Peter
COMPENSAT C. Bradley Jones J. S.
ION FROM A Johnson Kirk Lynch
FUND 3d** **
Advisor Latin $ $ $ $
America+
Advisor Japan+ $ $ $ $
Advisor Europe $ $ $ $
Capital
Appreciation+
Advisor $ $ $ $
International
Capital
Appreciation
Advisor $ $ $ $
Overseas
Advisor $ $ $ $
Diversified
International+
Advisor Global $ $ $ $
Equity+
Advisor $ $ $ $
TechnoQuant
Growth
Advisor Small $ $ $ $
Cap+
Advisor $ $ $ $
Strategic
Opportunities
Advisor $ $ $ $
MidCap
Advisor $ $ $ $
Retirement
Growth+
Advisor Equity $ $ $ $
Growth
Advisor Large $ $ $ $
Cap
Advisor $ $ $ $
Dividend
Growth+
Advisor Growth $ $ $ $
Opportunities
Advisor Growth $ $ $ $
& Income
Advisor Equity $ $ $ $
Income
Advisor Asset $ $ $ $
Allocation+
Advisor $ $ $ $
Balanced
Advisor $ $ $ $
Emerging
Markets
Income
Advisor High $ $ $ $
Yield
Advisor $ $ $ $
Strategic
Income
Advisor $ $ $ $
Government
Investment
Advisor $ $ $ $
Mortgage
Securities
Advisor $ $ $ $
Intermediate
Bond
Advisor Short $ $ $ $
Fixed-Income
Advisor $ $ $ $
Municipal
Income
Advisor $ $ $ $
Intermediate
Municipal
Income
TOTAL $ $ $ $
COMPENSA
TION FROM
THE FUND
COMPLEX*,
A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
AGGREGATE William Gerald C. McDonough Marvin L. Mann Robert C. Thomas R.
COMPENSAT O. McCoy Pozen Williams
ION FROM A **
FUND
Advisor Latin $ $ $ $ $
America+
Advisor Japan+ $ $ $ $ $
Advisor Europe $ $ $ $ $
Capital
Appreciation+
Advisor $ $ $ $ $
International
Capital
Appreciation
Advisor $ $ $ $ $
Overseas
Advisor $ $ $ $ $
Diversified
International+
Advisor Global $ $ $ $ $
Equity+
Advisor $ $ $ $ $
TechnoQuant
Growth
Advisor Small $ $ $ $ $
Cap+
Advisor $ $ $ $ $
Strategic
Opportunities
Advisor $ $ $ $ $
MidCap
Advisor $ $ $ $ $
Retirement
Growth+
Advisor Equity $ $ $ $ $
Growth
Advisor Large $ $ $ $ $
Cap
Advisor $ $ $ $ $
Dividend
Growth+
Advisor Growth $ $ $ $ $
Opportunities
Advisor Growth $ $ $ $ $
& Income
Advisor Equity $ $ $ $ $
Income
Advisor Asset $ $ $ $ $
Allocation+
Advisor $ $ $ $ $
Balanced
Advisor $ $ $ $ $
Emerging
Markets
Income
Advisor High $ $ $ $ $
Yield
Advisor $ $ $ $ $
Strategic
Income
Advisor $ $ $ $ $
Government
Investment
Advisor $ $ $ $ $
Mortgage
Securities
Advisor $ $ $ $ $
Intermediate
Bond
Advisor Short $ $ $ $ $
Fixed-Income
Advisor $ $ $ $ $
Municipal
Income
Advisor $ $ $ $ $
Intermediate
Municipal
Income
TOTAL $ $ $ $ $
COMPENSA
TION FROM
THE FUND
COMPLEX*,
A
</TABLE>
* Information is for the calendar year ended December 31, 1998 for
___ funds in the complex.
** Interested trustees of each fund and Mr. Burkhead are compensated
by FMR.
+ Estimated
A Compensation figures include cash, amounts required to be deferred,
and may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 199 8 , the Trustees accrued
required deferred compensation from the funds as follows: Ralph F.
Cox, $___, Phyllis Burke Davis, $___, Robert M. Gates, $___, E.
Bradley Jones, $___, Donald J. Kirk, $___, William O. McCoy, $___,
Gerald C. McDonough, $___, Marvin L. Mann, $___, and Thomas R.
Williams, $___. Certain of the non-interested Trustees elected
voluntarily to defer a portion of their compensation: Ralph F. Cox,
$___, Marvin L. Mann, $___, and Thomas R. Williams, $___.
B Compensation figures include cash, and may include amounts required
to be deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Robert M. Gates, $__, E. Bradley Jones, $__,
Donald J. Kirk, $__, William O. McCoy, $__, Gerald C. McDonough, $__,
Marvin L. Mann, $__, and Thomas R. Williams, $__.
D The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
E The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
F The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
G The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
H The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
I The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
J The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
K The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
L The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
M The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
N The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
O The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
P The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
Q The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
R The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
S The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
T The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
U The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
V The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
W The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
X The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
Y The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
Z The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
++ The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
+++ The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
(dagger) The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis, $__,
Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
(dagger)(dagger) The following amounts are required to be deferred by
each non-interested Trustee: Ralph F. Cox, $__, Phyllis Burke Davis,
$__, Robert M. Gates, $__, E. Bradley Jones, $__, Donald J. Kirk, $__,
William O. McCoy, $__, Gerald C. McDonough, $__, Marvin L. Mann, $__,
and Thomas R. Williams, $__.
(dagger)(dagger)(dagger) The following amounts are required to be
deferred by each non-interested Trustee: Ralph F. Cox, $__, Phyllis
Burke Davis, $__, Robert M. Gates, $__, E. Bradley Jones, $__, Donald
J. Kirk, $__, William O. McCoy, $__, Gerald C. McDonough, $__, Marvin
L. Mann, $__, and Thomas R. Williams, $__.
++++ [Certain of the non-interested trustees' aggregate compensation
from certain funds includes accrued voluntary deferred compensation as
follows: ___________________.]
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 subject to vesting and are treated as though equivalent
dollar amounts had been invested in shares of a cross-section of
Fidelity funds including funds in each major investment discipline and
representing a majority of Fidelity's assets under management (the
Reference Funds). The amounts ultimately received by the Trustees
under the Plan will be directly linked to the investment performance
of the Reference Funds. Deferral of fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate a fund to retain the services
of any Trustee or to pay any particular level of compensation to the
Trustee. A fund may invest in the Reference Funds under the Plan
without shareholder approval.
As of the public offering of shares of Advisor Latin America,
Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, Advisor Global Equity, Advisor Small Cap,
Advisor Retirement Growth, Advisor Dividend Growth, and Advisor Asset
Allocation, 100% of each fund's total outstanding shares was held by
[FMR/an FMR affiliate]. FMR Corp. is the ultimate parent company of
[FMR/this FMR affiliate]. By virtue of his ownership interest in FMR
Corp., as described in the "Control of Investment Advisers" section on
page ___, Mr. Edward C. Johnson 3d, President and Trustee of the fund,
may be deemed to be a beneficial owner of these shares.
As of December 31, 1998, the Trustees, Members of the Advisory
Board, and officers of each fund owned, in the aggregate, less than
__% of the fund's total outstanding shares.
As of December 31, 1998 , the following owned of record or
beneficially 5% or more (up to and including 25%) of the classes of
the following Advisor funds:
[As of December 31, 1998 , approximately ____% of [__________]'s
total outstanding shares were held by [____________]; approximately
___% of [____________]'s total outstanding shares were held by
[____________]; and approximately ___% of [____________]'s total
outstanding shares were held by [______________].]
[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.]
CONTR OL O F INVESTMENT ADVISERS
FMR Corp., organized in 1 972, i s the ultimate parent company of
FMR, FIMM, FMR U.K., and FMR Far East. 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 Internation al Limited (FIL), a Bermuda company formed in
1968, is the ultimate parent company of FIIA, FIJ, and FIIA(U.K.)L.
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. FIL provides investment
advisory services to non-U.S. investment companies and institutional
in vestors investing in securities throughout the world.
Fidelity investment personnel may invest in securities for their own
investment 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.
MANAGEMENT CONTRACTS
Each fund h as entered into a management contract with FMR, pursuant
to which FMR furnishes investment advisory and other services.
MANAGEMENT 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 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, Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Diversified International, Advisor Global Equity, Advisor TechnoQuant
Growth, Advisor Small Cap, Advisor Mid Cap, Advisor Retirement Growth,
Advisor Equity Growth, Advisor Large Cap, Advisor Dividend Growth,
Adviso r Growth & Income, Advisor Equity Income, Advisor Asset
Allocation, Advisor Balanced, Advisor Emerging Markets Income, Advisor
High Yield, Advisor Strategic Income, Advisor Government Investment,
Advisor Mortgage Securities, Advisor Intermediate Bond, Advisor Short
Fixed-Income, Advisor Municipal Income, and Advisor Intermediate
Municipal Income each 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, Advisor
Overseas, Advisor Strategic Opportunities, and Advisor Growth
Opportunities each pays FMR a monthly management fee which has two
components: a basic fee, which is the sum of a group fee rate and an
individual fund fee rate, and a performance adjustment based on a
comparison of the performance of Advisor Strategic Opportunities and
Advisor Growth Opportunities to that of the S&P 500 and the
performance of Advisor Overseas to that of Morgan Stanley Capital
International Europe, Australasia, Far East Index (EAFE).
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
The fol lowing i s the fee schedule for the bond funds.
BOND FUNDS
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets 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
The group fee rate is calculated o n a cumulative basis pursuant to
the graduated fee rate schedule shown above on the left. The schedule
above 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 $___ billion of group net assets - the approximate level for
[December] 1998 - was __%, which is the weighted average of the
respective fee rates for each level of group net assets up to $__
bill io n.
The following is the f ee sche dule for the equity funds.
EQUITY FUNDS
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate
0 - $3 billion .5200% $ 0.5 billion .5200%
3 - 6 .4900 25 .4238
6 - 9 .4600 50 .3823
9 - 12 .4300 75 .3626
12 - 15 .4000 100 .3512
15 - 18 .3850 125 .3430
18 - 21 .3700 150 .3371
21 - 24 .3600 175 .3325
24 - 30 .3500 200 .3284
30 - 36 .3450 225 .3249
36 - 42 .3400 250 .3219
42 - 48 .3350 275 .3190
48 - 66 .3250 300 .3163
66 - 84 .3200 325 .3137
84 - 102 .3150 350 .3113
102 - 138 .3100 375 .3090
138 - 174 .3050 400 .3067
174 - 210 .3000 425 .3046
210 - 246 .2950 450 .3024
246 - 282 .2900 475 .3003
282 - 318 .2850 500 .2982
318 - 354 .2800 525 .2962
354 - 390 .2750 550 .2942
390 - 426 .2700
426 - 462 .2650
462 - 498 .2600
498 - 534 .2550
Over 534 .2500
The group fee rate is calculated on a cumulative basis pursuant to
the graduated fee rate schedule shown above on the left. The schedule
above 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 $___ billion of group net assets - the approximate level for
[December] 1998 - was __%, which is the weighted average of the
respective fee rates for each level of group net assets up to $__
billion.
The individual fund fee rate for each fund (ex cep t Advisor
Overseas, Advisor Strategic Opportunities and Advisor Growth
Opportunities) is set forth in the following chart. Based on the
average group net assets of the funds advised by F MR for
December 1998 the annual management fee rate would be calculated as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
GROUP FEE RATE INDIVIDUAL FUND FEE RATE MANAGEMENT FEE
RATE
Advisor Latin America* % + 0.45% = %
Advisor Japan* + 0.45% =
Advisor Europe Capital Appreciation* + 0.45% =
Advisor International Capital + 0.45% =
Appreciation
Advisor Diversified International* + 0.45% =
Advisor Global Equity* + 0.45% =
Advisor TechnoQuant Growth + 0.30% =
Advisor Small Cap* + 0.45% =
Advisor Mid Cap + 0.30% =
Advisor Retirement Growth* + 0.30% =
Advisor Equity Growth + 0.30% =
Advisor Large Cap + 0.30% =
Advisor Dividend Growth* + 0.30% =
Advisor Growth & Income + 0.20% =
Advisor Equity Income + 0.20% =
Advisor Asset Allocation* + 0.30% =
Advisor Balanced + 0.15% =
Advisor Emerging Markets Income + 0.55% =
Advisor High Yield + 0.45% =
Advisor Strategic Income + 0.45% =
Advisor Government Investment + 0.30% =
Advisor Mortgage Securities + 0.30% =
Advisor Intermediate Bond + 0.30% =
Advisor Short Fixed-Income + 0.30% =
Advisor Municipal Income + 0.25% =
Advisor Intermediate Municipal Income + 0.25% =
</TABLE>
* Estimated
Th e individual fund fee rate for Advisor Overseas, Advisor
Strategic Opportunities and Advisor Growth Opportunities is set forth
in the following chart. Based on the average group net assets of the
funds advised by FMR for December 1998, each fund's annual bas ic
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
Advisor Overseas + 0.45% =
Advisor Strategic Opportunities + 0.30% =
Advisor Growth Opportunities + 0.30% =
</TABLE>
One-twelfth of the basic fee rate or the management fee rate, as
applicable, is applied to each fund's average net assets for the
month, giving a dollar amount which is the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee for each of
Advisor Overseas, Advisor Strategic Opportunities, and Advisor Growth
Opportunities is subject to upward or downward adjustment, depending
upon whether, and to what extent, the fund's investment performance
for the performance period exceeds, or is exceeded by, the record of
the S&P 500 (Advisor Strategic Opportunities and Advisor Growth
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 Advisor Overseas, Advisor Strategic Opportunities, and Advisor
Growth Opportunities) (up to a maximum difference of(plus/minus)10.00)
is multiplied by a performance adjustment rate of 0.02%.
For the purposes of calculating the performance adjustment for each of
Advisor Overseas, Advisor Strategic Opportunities, and Advisor Growth
Opportunities, the fund's investment performance will be based on the
average performance of all classes of the fund weighted according to
their average assets for each month in the performance period.
The performance comparison is made at the end of each month. One
twelfth (1/12) of this rate is then applied to each fund's average net
assets throughout the month, giving a dollar amount which will be
added to (or subtracted from) the basic fee.
The maximum annualized adjustment rate is (plus/minus)0.20 %
(for Advisor Overseas, Advisor Strategic Opportunities, and Advisor
Growth Opportunities) of a fund's average net assets over the
performance period.
A class's performance is calculated based on change in NAV. For
purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the class are treated as if
reinvested in that class's shares at the NAV as of the record date for
payment. The record of the Index is based on change in value and is
adjusted for any cash distributions from the companies whose
securities compose the Index.
Because the adjustment to the basic fee is based on a fund's
performance compared to the investment record of the applicable Index,
the controlling factor is not whether the fund's performance is up or
down per se, but whether it is up or down more or less than the record
of the Index. Moreover, the comparative investment performance of each
fund is based solely on the relevant performance period without regard
to the cumulative performance over a longer or shorter period of time.
For Morgan Stanley Capital Interna tional Europe, Australasia, Far
East Index, the index returns for periods prior to January 1, 1997 are
adjusted for tax withholding at non-treaty rates. The index returns
for periods after January 1, 1997 are adjusted for tax withholding at
treaty rates applicable to U.S.-based mutu al funds organized as
Massachusetts business trusts.
The following table shows the am ount of m anagement fees paid by
each fund to FMR for the past three fiscal years, and the amount of
negative or positive performance adjustments to the management fees
paid by Advisor Overseas, Advisor Strategic Opportunities, and Advisor
Growth Opportunities.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FISCAL PERFORMANCE MANAGEMENT FEES PAID TO
YEAR ADJUSTMENT FMR+
ENDED
ADVISOR INTERNATIONAL CAPITAL 10/31
APPRECIATION
1998# N/A $
ADVISOR OVERSEAS 10/31
1998
1997
1996
ADVISOR TECHNOQUANT 11/30
GROWTH
1998 N/A
1997** N/A
ADVISOR SMALL CAP 11/30
1998*** N/A
ADVISOR STRATEGIC 11/30
OPPORTUNITIES
1998
1/1/97- 11/30/97++
1996
ADVISOR MID CAP 11/30
1998 N/A
1997
1996****
ADVISOR EQUITY GROWTH 11/30
1998 N/A
1997
1996
ADVISOR LARGE CAP 11/30
1998 N/A
1997
1996****
ADVISOR GROWTH 11/30
OPPORTUNITIES
1998
11/1/97 - 11/30/97+++
1997
1996
FISCAL PERFORMANCE MANAGEMENT FEES PAID TO
YEAR ADJUSTMENT FMR+
ENDED
ADVISOR GROWTH & INCOME 11/30
1998 N/A
1997** N/A
ADVISOR EQUITY INCOME 11/30
1998 N/A
1997 N/A
1996 N/A
ADVISOR BALANCED 11/30
11/1/98 - 11/30/98(dagger) N/A
1998 N/A
1997 N/A
1996 N/A
ADVISOR EMERGING MARKETS 12/31
INCOME
1998 N/A
1997 N/A
1996 N/A
ADVISOR HIGH YIELD 10/31
1998 N/A
1997 N/A
1996 N/A
ADVISOR STRATEGIC INCOME 12/31
1998 N/A
1997 N/A
1996 N/A
ADVISOR GOVERNMENT 10/31
INVESTMENT
1998 N/A
1997 N/A
1996 N/A
ADVISOR MORTGAGE SECURITIES 10/31
1998 N/A
8/1/97 - 10/31/97++++ N/A
1997 N/A
1996 N/A
ADVISOR INTERMEDIATE BOND 10/31
12/1/97 - 10/31/98(dagger)(dagger) N/A
1997 N/A
1996 N/A
ADVISOR SHORT FIXED-INCOME 10/31
1998 N/A
1997 N/A
1996 N/A
ADVISOR MUNICIPAL INCOME 10/31
1998 N/A
1997 N/A
1996 N/A
ADVISOR INTERMEDIATE 10/31
MUNICIPAL
INCOME
12/1/98 - 10/31/98(dagger)(dagger)(dagger) N/A
1997 N/A
1996 N/A
</TABLE>
# Adviso r Internati onal Capital Appreciation commenced
operations on November 3, 1997.
* Including the a mount of the performance adjustment.
** Advisor TechnoQuant Growth and Advisor Growth & Income commenced
operations on December 31, 1996.
*** Advisor Sm all Ca p commenced operations on September 9,
1998.
**** Advisor Mid Cap and Advisor Large Cap commenced operations on
February 20, 1996.
+ Including the amount of the performance adjustment.
++ For the fiscal period November 1, 1997 through November 30, 1997.
+++ For the fiscal period January 1, 1997 through November 30, 1997.
++++ For the fiscal period August 1, 1997 through October 31, 1997.
(dagger) For the fiscal perio d November 1, 1998 through November
30, 1998.
(dagger)(dagger) For the fiscal period December 1, 1997 through
October 31, 1998.
(dagger)(dagger)(dagger) For the fiscal period Dec ember 1, 1997
through October 31, 1998.
During the reporti ng period, FMR voluntarily modified the
breakpoints in the group fee rate schedules on January 1, 1996 to
provide for lower managem ent fee rates as FMR's assets under
management increase.
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), which is subject to revision
or termination. FMR retains the ability to be repaid for these expense
reimbursements in the amount that expenses fall below the limit prior
to the end of the fiscal year.
Expense reimbursements by FMR will increase a class's total returns
and yield, and repayment of the reimbursement by a class will lower
its total returns and yield.
SUB-ADVISERS. On behalf of Advisor Strategic Income, Advisor
Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, Advisor Short Fixed-Income, Advisor Municipal
Income, and Advisor Intermediate Municipal Income, FMR has entered
into a sub-advisory agreement with FIMM pursuant to which FIMM has
primary responsibility for choosing investments for the funds.
On behalf of Advisor Asset Allocation and Advisor Balanced, FMR has
entered into a sub-advisory agreement with FIMM pursuant to which FIMM
chooses certain investments for the funds.
Under the terms of the sub-advisory agreements for Advisor Strategic
Income, Advisor Government Investment, Advisor Mortgage Securities,
Advisor Intermediate Bond, Advisor Short Fixed-Income, Advisor
Municipal Income, and Advisor Intermediate Municipal Income, FMR pays
FIMM fees equal to 50% of the management fee payable to FMR under its
management contract with each fund. The fees paid to FIMM are not
reduced by any voluntary or mandatory expense reimbursements that may
be in effect from time to time.
Under the terms of the sub-advisory agreements for Advisor Asset
Allocation and Advisor Balanced, FMR pays FIMM fees equal to 50% of
the management fee payable to FMR with respect to that portion of the
fund's assets that are managed by FIMM. The fees paid to FIMM are not
reduced by any voluntary or mandatory expense reimbursements that may
be in effect from time to time.
On behalf of Advisor TechnoQuant Growth, A dvisor Small Cap, Advisor
Strategic Opportunities, Advisor Mid Cap, Advisor Retirement Growth,
Advisor Equity Growth, Advisor Large Cap, Advisor Dividend Growth,
Advisor Growth Opportunities, Advisor Growth & Income, Advisor Equity
Income, Advisor Ass et Allocation, Advisor Balanced, Advisor High
Yield, Advisor Strategic Income, Advisor Mortgage Securities, Advisor
Intermediate Bond, and Advisor Short Fixed-Income, FMR has entered
into sub-advisory agreements with FMR U.K. and FMR Far East. On behalf
of Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Overseas, Advisor Diversified International, Advisor Global Equity,
Advisor Emerging Markets Income, and Advisor 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 e ach fund, FMR may also grant FMR U.K., FMR Far East,
FIJ, FIIA, and FIIA (U.K.)L investment management authority as well as
the authority to buy and sell securities if FM R believes it would
be beneficial to the funds.
Under the sub-advisory agreements FMR pays the fees of FMR U.K., FMR
Far East, FIJ, and FIIA. FIIA, in turn, pays the fees of FIIA(U.K.)L.
For providing non-discretionary investment advice and research
services the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K. and FMR Far East fees equal to
110% and 105%, respectively, of FMR U.K.'s and FMR Far East's costs
incurred in connection with providing investment advice and research
services.
(small solid bullet) FMR pays FIIA and FIJ fees equal to 30% of FMR's
monthly management fee with respect to the average net assets held by
the fund for which the sub-adviser has provided FMR with investment
advice and research services.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing investment
advice and research services.
For providing discretionary investment management and executing
portfolio transactions, the sub-advisers are compensated as follows:
(small solid bullet) FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a
fee equal to 50% of its monthly management fee (including any
performance adjustment) with respect to the fund's average net assets
managed by the sub-adviser on a discretionary basis.
(small solid bullet) FIIA pays FIIA(U.K.)L a fee equal to 110% of
FIIA(U.K.)L's costs incurred in connection with providing
discretionary investment management services.
[For investment advice and research services, no fees were paid to[
FMR U.K., FMR Far East, FIJ, FIIA, and FIIA(U.K.)L] on behalf of [the
fund[s]/[Name(s) of Fund(s)] for the past three fiscal years.]
For providing investment advice and research services, fees paid to
[Names of Foreign Sub-advisers] on behalf of [Advisor Overseas,
Advisor Strategic Opportunities, Advisor Equity Growth, Advisor Growth
Opportunities, Advisor Equity Income, [and ]Advisor Balanced, [and
[Name(s) of Fund(s)]] fo r the past three fiscal years are shown in
the table below.
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
October 31
Advisor Overseas
1998 $ $ $ $ $
1997
1996
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
November 30
Advisor Strategic
Opportunities
1998 $ $ $ $ $
1/1/97 - 11/30/97
1996
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
November 30
Advisor Equity
Growth
1998 $ $ $ 0 $ $
1997
1996
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
November 30
Advisor Growth
Opportunities
1998 $ $ $ $ $
11/1/97 -
11/30/97
11/1/96 -
10/31/97
1996
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
November 30
Advisor Equity
Income
1998 $ $ $ $ $
1997
1996
Fiscal Year Ended FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
November 30
Advisor Balanced
11/1/98 - $ $ $ $ $
11/30/98
11/1/97 -
10/31/98
1997
1996
Currently, FIJ is primarily responsible for choosing
inves tments for Advisor Japan Fund.
[For discretionary investment management and execution of portfolio
transactions, no fees were paid to [the sub-advisers/[Name(s) of
Foreign Sub-adviser(s)]] on behalf of [the fund[s]/[Name(s) of
Fund(s)] for the past three fiscal years.]
[For discretionary investment management and execution of portfolio
transactions, fees paid to [the sub-advisers/[Name(s) of Foreign
Sub-adviser(s)]] [on behalf of [Name(s) of Fund(s)]] for the past
three fiscal years are shown in the table below.]
Fiscal
Year FMR U.K. FMR Far East FIIA FIIA(U.K.)L FIJ
Ended
[Mont
h Day]
[F
u
n
d
N
a
m
e]
1 $ $ $ $ $
9
9
_
1 $ $ $ $ $
9
9
_
1 $ $ $ $ $
9
9
_
[No fees were paid to [FMR U.K., FMR Far East, FIJ, FIIA, and
FIIA(U.K.)L] by FMR on behalf of [the fund[s]/[Name(s) of Fund(s)] for
the past three fiscal years.]
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements
call for FDC to use all reasonable efforts, consistent with its other
business, to secure purchasers for shares of the 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>
Sales Charge CDSC
Revenue Revenue
Fiscal Year Amount Paid Amount Retained Amount Paid Amount
Ended to FDC by FDC to FDC Retained by FDC
Advisor Oct. 31, 1998* $ $ $ $
International
Capital
Appreciation -
Class A
Advisor Oct. 31, 1998*
International
Capital
Appreciation -
Class T
Advisor Oct. 31, 1998*
International
Capital
Appreciation -
Class B
Advisor Oct. 31, 1998*
International
Capital
Appreciation -
Class C
Advisor Oct. 31, 1998*
International
Capital
Appreciation -
Institutional
Class
Advisor Oct. 31, 1998
Overseas -
Class A
1997
1996
Advisor Oct. 31, 199 8
Overseas -
Class T
1997
1996
Advisor Oct. 31, 199 8
Overseas -
Class B
1997
1996
Advisor Oct. 31, 199 8
Overseas -
Class C
Advisor Oct. 31, 199 8
Overseas -
Institutional
Class
1997
1996
Advisor Nov. 30, 199 8
TechnoQuant
Growth - Class
A
1997**
Advisor Nov. 30, 1998
TechnoQuant
Growth - Class
T
1997**
Advisor Nov. 30, 199 8
TechnoQuant
Growth - Class
B
1997**
Advisor Nov. 30, 199 8
TechnoQuant
Growth - Class
C
1997**
Advisor Nov. 30, 199 8
TechnoQuant
Growth -
Institutional
Class
1997**
Advisor Small Nov. 30, 1998***
Cap - Class A
Advisor Small Nov. 30, 1998***
Cap - Class T
Advisor Small Nov. 30, 1998***
Cap - Class B
Advisor Small Nov. 30, 1998***
Cap - Class C
Advisor Small Nov. 30, 1998***
Cap -
Institutional
Class
Sales Charge CDSC
Revenue Revenue
Fiscal Year Amount Paid Amount Retained Amount Paid Amount
Ended to FDC by FDC to FDC Retained by FDC
Advisor Nov. 30, 1998
Strategic
Opportunities -
Class A
Nov. 30, 1997(dagger)
Dec. 31, 1996
Advisor Nov. 30, 1998
Strategic
Opportunities -
Class T
Nov. 30, 1997(dagger)
Dec. 31, 1996
Advisor Nov. 30, 1998
Strategic
Opportunities -
Class B
Nov. 30, 1997(dagger)
Dec. 31, 1996
Advisor Nov. 30, 1998
Strategic
Opportunities -
Institutional
Class
Nov. 30, 1997(dagger)
Dec. 31, 1996
Advisor Nov. 30, 1998
Strategic
Opportunities -
Initial Class
Nov. 30, 1997(dagger)
Dec. 31, 1996
Advisor Mid Nov. 30, 199 8
Cap - Class A
1997
1996****
Advisor Mid Nov. 30, 199 8
Cap - Class T
1997
1996****
Advisor Mid Nov. 30, 199 8
Cap - Class B
1997
1996****
Advisor Mid Nov. 30, 199 8
Cap - Class C
1997
1996****
Advisor Mid Nov. 30, 199 8
Cap -
Institutional
Class
1997
1996****
Advisor Equity Nov. 30, 1998
Growth - Class
A
1997
1996
Advisor Equity Nov. 30, 1998
Growth - Class
T
1997
1996
Advisor Equity Nov. 30, 1998
Growth - Class
B
1997
1996
Advisor Equity Nov. 30, 1998
Growth - Class
C
1997
1996
Sales Charge CDSC
Revenue Revenue
Fiscal Year Amount Paid Amount Retained Amount Paid Amount
Ended to FDC by FDC to FDC Retained by FDC
Advisor Equity Nov. 30, 1998
Growth -
Institutional
Class
1997
1996
Advisor Large Nov. 30, 199 8
Cap - Class A
1997
1996****
Advisor Large Nov. 30, 199 8
Cap - Class T
1997
1996****
Advisor Large Nov. 30, 199 8
Cap - Class B
1997
1996****
Advisor Large Nov. 30, 199 8
Cap - Class C
1997
1996****
Advisor Large Nov. 30, 199 8
Cap -
Institutional
Class
1997
1996****
Advisor Nov. 30, 199 8
Growth
Opportunities -
Class A
Nov. 30, 1997+
Oct. 31, 1997
1996
Advisor Nov. 30, 199 8
Growth
Opportunities -
Class T
Nov. 30, 1997+
Oct. 31, 1997
1996
Advisor Nov. 30, 199 8
Growth
Opportunities -
Class B
Nov. 30, 1997+
Oct. 31, 1997
1996
Advisor Nov. 30, 199 8
Growth
Opportunities -
Class C
Nov. 30, 1997+
Oct. 31, 1997
1996
Advisor Nov. 30, 199 8
Growth
Opportunities -
Institutional
Class
Nov. 30, 1997+
Oct. 31, 1997
1996
Advisor Nov. 30, 19 98
Growth &
Income - Class
A
1997**
Advisor Nov. 30, 199 8
Growth &
Income - Class
T
1997**
Advisor Nov. 30, 199 8
Growth &
Income - Class
B
1997**
Sales Charge CDSC
Revenue Revenue
Fiscal Year Amount Paid Amount Retained Amount Paid Amount
Ended to FDC by FDC to FDC Retained by FDC
Advisor Nov. 30, 199 8
Growth &
Income - Class
C
1997**
Advisor Nov. 30, 199 8
Growth &
Income -
Institutional
Class
1997**
Advisor Equity Nov. 30, 199 8
Income - Class
A
1997
1996
Advisor Equity Nov. 30, 199 8
Income - Class
T
1997
1996
Advisor Equity Nov. 30, 199 8
Income - Class
B
1997
1996
Advisor Equity Nov. 30, 199 8
Income - Class
C
1997
1996
Advisor Equity Nov. 30, 199 8
Income -
Institutional
Class
1997
1996
Advisor Nov. 30, 1998 (dagger)(dagger)
Balanced -
Class A
Oct. 31, 1998
Oct. 31, 1997
1996
Advisor Nov. 30, 1998 (dagger)(dagger)
Balanced -
Class T
Oct. 31, 1998
Oct. 31, 1997
1996
Advisor Nov. 30, 1998 (dagger)(dagger)
Balanced -
Class B
Oct. 31, 1998
Oct. 31, 1997
1996
Advisor Nov. 30, 1998 (dagger)(dagger)
Balanced -
Class C
Oct. 31, 1998
Oct. 31, 1997
1996
Advisor Nov. 30, 1998 (dagger)(dagger)
Balanced -
Institutional
Class
Oct. 31, 1998
Oct. 31, 1997
1996
Advisor Dec. 31, 199 8
Emerging
Markets - Class
A
1997
1996
Advisor Dec. 31, 199 8
Emerging
Markets - Class
T
1997
1996
Sales Charge CDSC
Revenue Revenue
Fiscal Year Amount Paid Amount Retained Amount Paid Amount
Ended to FDC by FDC to FDC Retained by FDC
Advisor Dec. 31, 199 8
Emerging
Markets - Class
B
1997
1996
Advisor Dec. 31, 199 8 $ $ $ $
Emerging
Markets - Class
C
1997
1996
Advisor Dec. 31, 199 8
Emerging
Markets -
Institutional
Class
1997
1996
Advisor High Oct. 31, 199 8
Yield - Class A
1997
1995
Advisor High Oct. 31, 199 8
Yield - Class T
1997
1996
Advisor High Oct. 31, 199 8
Yield - Class B
1997
1996
Advisor High Oct. 31, 199 8
Yield - Class C
1997
1996
Advisor High Oct. 31, 199 8
Yield -
Institutional
Class
1997
1996
Advisor Dec. 31, 199 8
Strategic
Income - Class
A
1997
1996
Advisor Dec. 31, 199 8
Strategic
Income - Class
T
1997
1996
Advisor Dec. 31, 199 8
Strategic
Income - Class
B
1997
1996
Advisor Dec. 31, 199 8
Strategic
Income - Class
C
1997
1996
Advisor Dec. 31, 199 8
Strategic
Income -
Institutional
Class
1997
1996
Advisor Oct. 31, 199 8
Government
Investment -
Class A
1997
1996
Advisor Oct. 31, 199 8
Government
Investment -
Class T
1997
1996
Sales Charge CDSC
Revenue Revenue
Fiscal Year Amount Paid Amount Retained Amount Paid Amount
Ended to FDC by FDC to FDC Retained by FDC
Advisor Oct. 31, 199 8
Government
Investment -
Class B
1997
1996
Advisor Oct. 31, 199 8
Government
Investment -
Class C
1997
1996
Advisor Oct. 31, 199 8
Government
Investment -
Institutional
Class
1997
1996
Advisor Oct. 31, 199 8 $ $ $ $
Mortgage
Securities -
Class A
Oct. 31, 1997++
July 31, 1997
1996
Advisor Oct. 31, 199 8
Mortgage
Securities -
Class T
Oct. 31, 1997++
July 31, 1997
1996
Advisor Oct. 31, 199 8
Mortgage
Securities -
Class B
Oct. 31, 1997++
July 31, 1997
1996
Advisor Oct. 31, 199 8
Mortgage
Securities -
Institutional
Class
Oct. 31, 1997++
July 31, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Bond - Class A
Nov. 30, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Bond - Class T
Nov. 30, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Bond - Class B
Nov. 30, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Bond - Class C
Nov. 30, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Bond -
Institutional
Class
Nov. 30, 1997
1996
Sales Charge CDSC
Revenue Revenue
Fiscal Year Amount Paid Amount Retained Amount Paid Amount Retained
Ended to FDC by FDC to FDC by FDC
Advisor Short Oct. 31, 199 8
Fixed-Income -
Class A
1997
1996
Advisor Short Oct. 31, 199 8
Fixed-Income -
Class T
1997
1996
Short Oct. 31, 199 8
Fixed-Income -
Class C
1997
1996
Short Oct. 31, 199 8
Fixed-Income -
Institutional
Class
1997
1996
Advisor Oct. 31, 199 8
Municipal
Income - Class
A
1997
1996
Advisor Oct. 31, 199 8
Municipal
Income - Class
T
1997
1996
Advisor Oct. 31, 199 8
Municipal
Income - Class
B
1997
1996
Advisor Oct. 31, 199 8
Municipal
Income - Class
C
1997
1996
Advisor Oct. 31, 199 8
Municipal
Income -
Institutional
Class
1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Municipal
Income - Class
A
Nov. 30, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Municipal
Income - Class
T
Nov. 30, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Municipal
Income - Class
B
Nov. 30, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Municipal
Income - Class
C
Nov. 30, 1997
1996
Advisor Oct. 31, 1998 +++
Intermediate
Municipal
Income -
Institutional
Class
Nov. 30, 1997
1996
</TABLE>
* Advisor International Capital Appreciation commenced operations on
November 3, 1997.
** Advisor TechnoQuant Growth and Advisor Growth & Income commenced
operations on December 31, 1996.
*** Advisor Small Cap commenced operations on September 9, 1998.
**** Advisor Mid Cap and Advisor Large Cap commenced operations on
February 20, 1996
(dagger) For the fiscal period January 1, 1997 through November 30,
1997.
(dagger)(dagger) For the fiscal period November 1, 1998 through
November 30, 1998.
+ For the fiscal period November 1, 1997 through November 30, 1997.
++ For the fiscal period August 1, 1997 through October 31, 1997.
+++ For the fiscal period December 1, 1997 through October 31, 1998.
The Trustees have approved Distribution and Service Plans on behalf
of Class A, Class T, Class B, Class C, Institutional Class and Initial
Class of each fund, except Advisor Strategic Opportunities: Initial
Class, (the Plans) pursuant to Rule 12b-1 under the 1940 Act (the
Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow Class A, Class T, Class B,
Class C, Institutional Class, and Initial Class 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 Plan for Advisor Latin America, Advisor
Japan, Advisor Europe Capital Appreciation, Advisor International
Capital Appreciation, Advisor Overseas, Advisor Diversified
International, Advisor Global Equity, Advisor TechnoQuant Growth,
Advisor Small Cap, Advisor Strategic Opportunities, Advisor Mid Cap,
Advisor Retirement Growth, Advisor Equity Growth, Advisor Large Cap,
Advisor Dividend Growth, Advisor Growth Opportunities, Advisor Growth
& Income, Advisor Equity Income, Advisor Asset Allocation, and Advisor
Balanced (the Equity Funds), FDC is paid a monthly fee at an annual
rate of up to 0.75% of Class A's average net assets determined at the
close of each business day throughout the month. Pursuant to the Class
A Plan for Advisor Emerging Markets Income, Advisor High Yield,
Advisor Strategic Income, Advisor Government Investment, Advisor
Mortgage Securities, and Advisor Municipal Income (the Bond Funds),
Advisor Intermediate Bond and Advisor Intermediate Municipal Income
(the Intermediate-Term Bond Funds), and Advisor Short Fixed-Income
(the Short-Term Bond Fund), FDC is paid a monthly fee at an annual
rate of up to 0.40% of Class A's average net assets determined at the
close of each business day throughout the month. Currently, the
Trustees have approved a monthly 12b-1 fee for Class A of each of the
Equity Funds at an annual rate of 0.25% of its average net assets; and
for Class A of each of the Bond Funds, Intermediate-Term Bond Funds,
and Short-Term Bond Fund at an annual rate of 0.15% of its average net
assets. This fee rate 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.
Currently, FDC may reallow to intermediaries, such as banks,
broker-dealers and other service-providers, and including its
affiliates, up to the full amount of 12b-1 fees paid by Class A for
providing services intended to result in the sale of Class A shares
and/or shareholder support services.
Pursuant to the Class T Plan for Advisor Latin America, Advisor
Japan, Advisor Europe Capital Appreciation, Advisor International
Capital Appreciation, Advisor Diversified International, Advisor
Global Equity, Advisor TechnoQuant Growth, Advisor Small Cap, Advisor
Mid Cap, Advisor Retirement Growth, Advisor Equity Growth, Advisor
Large Cap, Advisor Dividend Growth, Advisor Growth & Income, Advisor
Equity Income, and Advisor Asset Allocation, FDC is paid a monthly
12b-1 fee at an annual rate of up to 0.75% of Class T's average net
assets determined at the close of business on each day throughout the
month. Pursuant to the Class T Plan for Advisor Overseas, Advisor
Strategic Opportunities, Advisor Growth Opportunities, and Advisor
Balanced, FDC is paid a monthly 12b-1 fee at an annual rate of up to
0.65% of Class T's average net assets determined at the close of
business on each day throughout the month. Pursuant to the Class T
Plan for the Bond Funds and Intermediate-Term Bond Funds, FDC is paid
a monthly 12b-1 fee at an annual rate of up to 0.40% of Class T's
average net assets determined at the close of business on each day
throughout the month. Pursuant to the Class T Plan for the Short-Term
Bond Fund, FDC is paid a monthly 12b-1 fee at an annual rate of up to
0.15% of Class T's average net assets determined at the close of
business on each day throughout the month. Currently, the Trustees
have approved a monthly 12b-1 fee for Class T of each of the Equity
Funds at an annual rate of 0.50% of its average net assets; for Class
T of each of the Bond Funds and the Intermediate-Term Bond Funds at an
annual rate of 0.25% of its average net assets; and for Class T of the
Short-Term Bond Fund at an annual rate of 0.15% of its average net
assets. This fee rate 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.
Currently, FDC may reallow to intermediaries, such as banks,
broker-dealers and other service-providers, and including its
affiliates, up to the full amount of 12b-1 fees paid by Class T for
providing services intended to result in the sale of Class T shares
and/or shareholder support services.
Pursuant to the Class B Plan for each fund, FDC is paid a monthly
12b-1 (distribution) fee at an annual rate of up to 0.75% of Class B's
average net assets determined at the close of business on each day
throughout the month. Currently, the Trustees have approved a monthly
12b-1 (distribution) fee for Class B of the Equity Funds at an annual
rate of 0.75% of its average net assets; and for Class B of the Bond
Funds and the Intermediate Bond Funds at an annual rate of 0.65% of
its average net assets. This fee rate may be increased only when, in
the opinion of the Trustees, it is in the best interests of the
shareholders of the class to do so.
Pursuant to the Class B Plan for each fund, FDC is also paid a
monthly 12b-1 (service) fee at an annual rate of 0.25% of Class B's
average net assets determined at the close of business on each day
throughout the month.
Currently, FDC retains the full amount of 12b-1 (distribution) fees
paid by Class B as compensation for providing services intended to
result in the sale of Class B shares, and FDC may reallow up to the
full amount of 12b-1 (service) fees paid by Class B to intermediaries,
such as banks, broker-dealers and other service-providers, for
providing shareholder support services.
Pursuant to the Class C Plan for each fund, FDC is paid a monthly
12b-1 (distribution) fee at an annual rate of 0.75% of Class C's
average net assets determined at the close of business on each day
throughout the month.
Pursuant to the Class C Plan for each fund, FDC is also paid a
monthly 12b-1 (service) fee at an annual rate of 0.25% of Class C's
average net assets determined at the close of business on each day
throughout the month.
Currently and except as provided below, for the first year of
investment, FDC retains the full amount of 12b-1 (distribution) fees
paid by Class C as compensation for providing services intended to
result in the sale of Class C shares and retains the full amount of
12b-1 (service) fees paid by Class C for providing shareholder
support services. Normally, after the first year of investment, FDC
may reallow up to the full amount of 12b-1 (distribution) fees paid by
Class C to intermediaries, such as banks, broker-dealers and other
service-providers, for providing services intended to result in the
sale of Class C shares and may reallow up to the full amount of 12b-1
(service) fees paid by Class C to intermediaries for providing
shareholder support services. For purchases of Class C shares made for
an employee benefit plan (including 403(b) programs, but otherwise as
defined in ERISA) or through reinvestment of dividends or capital
gains distributions, during the first year of investment and
thereafter, FDC may reallow up to the full amount of 12b-1
(distribution) fees paid by such Class C shares to intermediaries,
including its affiliates, for providing services intended to result in
the sale of Class C shares and may reallow up to the full amount of
12b-1 (service) fees paid by such Class C shares to intermediaries for
providing shareholder support services.
The table below shows the distribution fees paid by Class A for the
fiscal years ended 1998.
CLASS A DISTRIBUTION FEES
FUND FEES PAID TO PAID BY FDC TO RETAINED BY
FDC INTERMEDIARIES FDC+++++
Advisor $ $ $
International
Capital
Appreciation*
Advisor
Overseas
Advisor
TechnoQuant
Growth
Advisor Small
Cap+
Advisor
Strategic
Opportunities
Advisor Mid
Cap
Advisor Equity
Growth
Advisor Large
Cap
Advisor Growth
Opportunities
Advisor Growth
& Income
Advisor Equity
Income
Advisor
Balanced++
Advisor
Balanced+++
Advisor
Emerging
Markets Income
Advisor High
Yield
Advisor
Strategic
Income
Advisor
Government
Investment
Advisor
Mortgage
Securities
Advisor
Intermediate
Bond++++
Advisor Short
Fixed-Income
Advisor
Municipal
Income
Advisor
Intermediate
Municipal
Income++++
* Advisor International Capital Appreciation commenced operations on
November 3, 1997.
+ Advisor Small Cap commenced operations on September 9, 1998.
++ For the fiscal period November 1, 1998 through November 30,
1998.
+++ For the fiscal period November 1, 1997 through October 31,
1998.
++++ For the fiscal period December 1, 1997 through October 31,
1998.
+++++ Amounts retained by FDC represent fees paid to FDC but not yet
reallowed to intermediaries as of the close of the period reported and
fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
The table below shows the distribution fees paid by Class T for the
fiscal years ended 1998.
CLASS T DISTRIBUTION FEES
FUND FEES PAID TO PAID BY RETAINED
FDC FDC PAID BY
TO FDC+++++
INTERMEDI
ARIES
Advisor $ $ $
International
Capital
Appreciation*
Advisor
Overseas
Advisor
TechnoQuant
Advisor Small
Cap
Advisor
Strategic
Opportunities
Advisor Mid
Cap
Advisor Equity
Growth
Advisor Large
Cap
Advisor Growth
Opportunities
Advisor Growth
& Income
Advisor Equity
Income
Advisor
Balanced++
Advisor
Balanced+++
Advisor
Emerging
Markets Income
Advisor High
Yield
Advisor
Strategic
Income
Advisor
Government
Investment
Advisor
Mortgage
Securities
Advisor
Intermediate
Bond++++
Advisor Short
Fixed-Income
Advisor
Municipal
Income
Advisor
Intermediate
Municipal
Income++++
* Advisor International Capital Appreciation commenced operations on
November 3, 1997.
+ Advisor Small Cap commenced operations on September 9, 1998.
++ For the fiscal period November 1, 1998 through November 30,
1998.
+++ For the fiscal period November 1, 1997 through October 31,
1998.
++++ For the fiscal period December 1, 1997 through October 31,
1998.
+++++ Amounts retained by FDC represent fees paid to FDC but not yet
reallowed to intermediaries as of the close of the period reported and
fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
The table below shows the distribution and service fees paid by Class
B for the fiscal years ended 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CLASS B DISTRIBUTION AND SERVICE FEES
Fund Distribution Distribution Service Fees Service Fees Service Fees
Fees Paid to Fees Retained Paid to FDC FDC Paid to Retained by
FDC by FDC* Intermediaries FDC**
Advisor International $ $ $ $ $
Capital
Appreciation+
Advisor Overseas
Advisor
TechnoQuant
Growth
Advisor Small
Cap++
Advisor Strategic
Opportunities
Advisor Mid Cap
Advisor Equity
Growth
Advisor Large Cap
Advisor Growth
Opportunities
Advisor Growth &
Income
Advisor Equity
Income
Advisor
Balanced+++
Advisor
Balanced++++
Advisor Emerging
Markets Income
Advisor High Yield
Advisor Strategic
Income
Advisor Government
Investment
Advisor Mortgage
Securities
Advisor Intermediate
Bond+++++
Advisor Municipal
Income
Advisor Intermediate
Municipal
Income+++++
</TABLE>
* These amounts are retained by FDC for use in its capacity as
distributor.
** Amounts retained by FDC represent fees paid to FDC but not yet
reallowed to intermediaries as of the close of the period reported and
fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
+ Advisor International Capital Appreciation commenced operations
on November 3, 1997.
++ Advisor Small Cap commenced operations on September 9, 1998.
+++ For the fiscal period November 1, 1998 through November 30,
1998.
++++ For the fiscal period November 1, 1997 through October 31,
1998.
+++++ For the fiscal period December 1, 1997 through October 31,
1998.
The table below shows the distribution and service fees paid by Class
C for the fiscal years ended 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS C DISTRIBUTION AND SERVICE FEES
Fund Distribution Distribution Distribution Service Fees Paid to Service Fees Paid Service Fees
Fees Paid to FDC Fees Paid by FDC to Fees Retained by FDC by FDC to Retained by
Intermediaries FDC+ Intermediaries FDC+
Advisor
Internati
onal $ $ $ $ $ $
Capital
Appreciation*
Advisor Overseas
Advisor
TechnoQuant
Growth
Advisor Small
Cap**
Advisor Mid Cap
Advisor Equity
Growth
Advisor Large Cap
Advisor Growth
Opportunities
Advisor Growth &
Income
Advisor Equity
Income
Advisor
Balanced***
Advisor
Balanced****
Advisor Emerging
Markets Income
Advisor High Yield
Advisor Strategic
Income
Advisor Government
Investment
Advisor Intermediate
Bond*****
Advisor Short
Fixed-Income
Advisor Municipal
Income
Advisor Intermediate
Municipal
Income*****
</TABLE>
+ Amounts retained by FDC represent fees paid to FDC but not yet
reallowed to intermediaries as of the close of the period reported and
fees paid to FDC that are not eligible to be reallowed to
intermediaries. Amounts not eligible for reallowance are retained by
FDC for use in its capacity as distributor.
* Advisor International Capital Appreciation commenced operations
on November 3, 1997.
** Advisor Small Cap commenced operations on September 9, 1998.
*** For the fiscal period November 1, 1998 through November 30,
1998.
**** For the fiscal period November 1, 1997 through October 31,
1998.
***** For the fiscal period December 1, 1997 through October 31,
1998.
Under each Institutional Class and Initial Class Plan, if the
payment of management fees by the fund to FMR is deemed to be indirect
financing by the fund of the distribution of its shares, such payment
is authorized by the Plan. Each Institutional Class and Initial
Class Plan specifically recognizes that FMR ma y use its management
fee revenue, as well as its past profits or its other resources, to
pay FDC for expenses incurred in connection with providing services
intended to result in the sale of Inst itutional Class and Initial
Class shares and/or shareholder support services. In addition,
each Institutional Class and Initial Class Plan provides that FMR,
directly or through FDC, may pay intermediaries, such as banks,
broker-dealers and other service-providers, that provide those
services. Currently, the Board of Trustees has authorized such
payments for Institutional Class and Initial Class shares.
Under each Class A, Class T, Class B and Class C Plan, if the
payment of management fees by the fund to FMR is deemed to be indirect
financing by the fund of the distribution of its shares, such payment
is authorized by the Plan. 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 providing services
intended to result in the sale of Class A, Class T, Class B and Class
C shares and/or shareholder support services, including payments made
to intermediaries that provide those services. Currently, the Board of
Trustees has authorized such payments for Class A, Class T, Class B
and Class C shares.
Payments made by FMR either directly or through FDC, to
intermediaries for the fiscal year ended 1998 amounted to $__ for
Initial Class of Advisor Strategic Opportunities and $__ for Initial
Class of Advisor Mortgage Securities and, for Class A, Class T, Class
B, Class C, and Institutional Class of each fund, amounted to the
following:
FUND CLASS A CLASS T CLASS B CLASS C INSTITUTIONAL
Advisor $ $ $ $ $
International
Capital
Appreciation
Advisor
Overseas
Advisor
TechnoQuant
Growth
Advisor Small
Cap
Advisor **
Strategic
Opportunities
Advisor Mid
Cap
Advisor Equity
Growth
Advisor Large
Cap
Advisor Growth
Opportunities
Advisor Growth
& Income
Advisor Equity
Income
Advisor
Balanced
Advisor
Emerging
Markets Income
Advisor High
Yield
Advisor
Strategic
Income
Advisor
Government
Investment
Advisor **
Mortgage
Securities
Advisor
Intermediate
Bond
Advisor Short *
Fixed-Income
Advisor
Municipal
Income
Advisor
Intermediate
Municipal
Income
* Class B is not available for this fund.
** Class C is not available for this fund.
[FMR made no payments [either directly or] through FDC to
intermediaries for the fiscal year ended 1998 .]
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the 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 each Institutional Class and
Initial Class Plan does not authorize payments by
Institutional Class and Initial Clas s of the 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 Class A, Class T, Class B,
Class C, Institutional Class, and Initial Class shar es, additional
sales of fund shares or stabilization of cash flow s may result.
Furthermore, certain shareholder support services may be provided more
effectively under the Plans by local entities with whom shareholders
have other relationships.
Each Class A, Class T, Class B and Class C Plan doe s 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.
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.
TRANSFER AN D S ERVICE AGENT AGREEMENTS
Class A, Class T, Class B, Class C, and Institutional Cl ass of
Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Overseas, Advisor Diversified International, Advisor Global Equity,
Advisor TechnoQuant Growth, Advisor Small Cap, Advisor Strategic
Opportunities, Advisor Mid Cap, Advisor Retirement Growth, Advisor
Equity Growth, Advisor Large Cap, Advisor Dividend Growth, Advisor
Growth Opportunities, Advisor Growth & Income, Advisor Equity Income,
Advisor Asset Allocation, Advisor Bala nced, Advisor Emerging
Markets Income, Advisor High Yield, Advisor Strategic Income, Advisor
Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, and Advisor 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.
Each class of Advisor Municipal Income and Advisor Intermediate
Municipal Income has entered into a transfer agent agreement with UMB,
which is located at 1010 Grand Avenu e, K ansas City, Missouri.
Under the terms of the agreements, UMB provides transfer agency,
dividend disbursing, and shareholder services for each class of each
fund. UMB in turn has entered into sub-transfer agent agreements with
FIIOC. Under the terms of the sub-agreements, FI IOC p erforms
all processing activities associated with providing these services for
each class of each fund and receives all related transfer agency fees
paid to UMB.
For providing transfer agency services, FSC and FIIOC receive an
account fee and an asset-based fee each paid monthly with respect to
each account in a fund. For retail accounts and certain institutional
accounts, these fees are based on account size and fund type. For
certain institutional retirement accou nts, these fees are based on
fund type. For certain other institutional retirement accounts, these
fees are based on account type and fund typ e. The account fees are
subject to increase based on postage rate changes.
For the equity funds 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%.
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 Advisor Latin America, Advisor Japan, Advisor Europe
Capital Appreciation, Advisor International Capital Appreciation,
Advisor Overseas, Advisor Diversified International, Advisor Global
Equity, Advisor TechnoQuant Growth, Advisor Small Cap, Advisor
Strategic Opportunities, Advisor Mid Cap, Advisor Retirement Growth,
Advisor Equity Growth, Advisor Large Cap, Advisor Dividend Growth,
Advisor Growth Opportunities, Advisor Growth & Income, Advisor Equity
Income, Advisor Asset Allocation, Advisor Balanced, Advisor Emerging
M arkets Income, Advisor High Yield, Advisor Strategic Income,
Advisor Government Investment, Advisor Mortgage Securities, Advisor
Intermediate Bond, and Advisor Short Fixed-Income has also entered
into a service agent agreement with FSC. Under the terms of the
agreements, FSC calculates the NAV and dividends for each class of
each fund, maintains each fund's portfolio and general accounting
records, and administers each fund's securities lending program.
Each of Advisor Mun icipal I ncome and Advisor Intermediate
Municipal Income 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
sub-service agent agreements with FSC. Under the terms of the
sub-agreements, FSC performs all processing activities associated with
providing these services, including calculating the NAV and dividends
for each class of each fund and maintaining each fund's portfolio and
general accounting records, and receives all related pricing and
bookkeeping fees paid to UMB.
For providing pricing and bookkeeping services, FSC receives a monthly
fee based on each fund's average daily net assets throughout the
month. The annual fee rates for pricing and bookkeeping services are
.0600% for equity funds, .0400% for fixed-income funds, .0750% for
international funds, .0750% for high yield funds of the first $500
million of average net assets and .0300% for equity funds, .0200% for
fixed-income funds, .0375% for international funds, .0375% for high
yield funds of average net assets in excess of $500 million. The fee,
not including reimbursement for out-of-pocket expenses, is limited to
a minimum of $60,000 and a maximum of $800,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by the funds to FSC for the past three
fiscal years are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FUND FISCAL YEAR END 1998 1997 1996
Advisor 10/31 $ # N/A N/A
International
Capital
Appreciation
Advisor 10/31 $ $
Overseas
Advisor 11/30 ## N/A
TechnoQuant
Growth
Advisor Small 11/30 * N/A N/A
Cap
Advisor 11/30 **
Strategic
Opportunities
Advisor Mid 11/30 ***
Cap
Advisor Equity 11/30
Growth
Advisor Large 11/30 ***
Cap
Advisor 11/30 +
Growth
Opportunities
++
Advisor 11/30 ## N/A
Growth &
Income
Advisor Equity 11/30
Income
Advisor 11/30 (double dagger)
Balanced
(double dagger)(double dagger)
Advisor 12/31
Emerging
Markets
Income
Advisor High 10/31
Yield
Advisor 12/31
Strategic
Income
Advisor 10/31
Government
Investment
Advisor 10/31 +++
Mortgage
Securities
Advisor 10/31 (double dagger)(double dagger)(double dagger)
Intermediate
Bond
Advisor Short 10/31
Fixed-Income
Advisor 10/31
Municipal
Income
Advisor 10/31 (double dagger)(double dagger)(double dagger)(double dagger)
Intermediate
Municipal
Income
</TABLE>
# Advisor In ternational Capital Appreciation commenced operations
on November 3, 1997
## Advisor TechnoQuant Growth and Advisor Growth &
Income commenced operations on December 31 1996
* Advisor Sma ll Cap commenced operations on September 9,
1998
** From 1/1 /97 - 11/30/97
*** Advisor Mid Cap and Advisor Large Cap commenced operations on
February 20, 1996
+ From 11/1/97 - 11/30/97
++ From 11/1/96 - 10/31/97
+++ From 8/1/97 - 10/31/97
++++ From 8/1/96 - 7/31/97
(double dagger) From 11/1/98 - 11/30/98
(double dagger)(double dagger) From11/1/97 - 10/31/98
(double dagger)(double dagger)(double dagger) From 12/1/97 -
10/31/98
(double dagger)(double dagger)(double dagger)(double dagger) From
12/1 /98 - 10/31/98
For administering the securities lending program for each taxable
fund, FSC receives fees based on the number and duration of individual
securities loans.
[For the fiscal years ended October 31, November 30, and December 31,
1998, 1997, and 1996, [Name(s) of Taxable Fund(s)] paid no securities
lending fees.]
[For the fiscal years ended [Fiscal Year End], 199_, 199_, and 199_,
[the fund/[Name of Taxable Bond or Equity Fund with Flat or Group Fee]
paid securities lending fees of $__, $__, and $__, respectively.]
[Securities lending fees paid by the funds to FSC for the past three
fiscal years are shown in the table below.]
Fund 1998 1997_ 1996_
[Fund Name] $ $ $
[Fund Name] $ $ $
[REPEAT AS $ $ $
NECESSARY.]
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Advisor TechnoQuant Growth, Advisor
Small Cap, Advisor Strategic Opportunities, Advisor Mid Cap, Advisor
Retirement Growth, Advisor Equity Growth, Advisor Large Cap, Advisor
Dividend Growth, Advisor Growth Opportunities, Advisor Growth &
Income, Advisor Equity Income, Advisor Asset Allocation, and Advisor
Balanced are funds of Fidelity Advisor Series I , an open-end
management investment company organized as a Massachusetts business
trust on June 24, 1983. Currently, there are thirteen funds in
Fidelity Advisor Series I: Advisor TechnoQuant Growth, Advisor Small
Cap, Advisor Strategic Opportunities, Advisor Mid Cap, Advisor
Retirement Growth, Advisor Equity Growth, Advisor Large Cap, Advisor
Dividend Growth, Advisor Growth Opportunities, Advisor Growth &
Income, Advisor Equity Income, Advisor Asset Allocation, and Advisor
Balanced. The Trustees are permitted to create additional funds in the
trust and to create additional classes of the funds.
Advisor High Yield, Advisor Strategic Income, Advisor Government
Investment, Advisor Mortgage Securities, Advisor Intermediate Bond,
Advisor Short Fixed-Income, Advisor Municipal Income, and Advisor
Intermediate Municipal Income are funds of Fidelity Advisor Series II,
an open-end management investment company organized as a Massachusetts
business trust on April 23, 1986. On January 16, 1998, Advisor
Municipal Income Fund changed its name from Advisor High Income
Municipal to Advisor Municipal Income. Currently, there are eight
funds in Fidelity Advisor Series II: Advisor High Yield, Advisor
Strategic Income, Advisor Government Investment, Advisor Mortgage
Securities, Advisor Intermediate Bond, Advisor Short Fixed-Income,
Advisor Municipal Income, and Advisor Intermediate Municipal Income.
The Trustees are permitted to create additional funds in the trust and
to create additional classes of the funds.
Advisor Latin America, Advisor Japan, Advisor Europe Capital
Appreciation, Advisor International Capital Appreciation, Advisor
Overseas, Advisor Diversified International, Advisor Global Equity,
and Advisor Emerging Markets Income are funds of Fidelity Advisor
Series VIII, an open-end management investment company organized as a
Massachusetts business trust on September 23, 1983. Currently, there
are eight funds in Fidelity Advisor Series VIII: Advisor Latin
America, Advisor Japan, Advisor Europe Capital Appreciation, Advisor
International Capital Appreciation, Advisor Overseas, Advisor
Diversified International, Advisor Global Equity, and Advisor Emerging
Markets Income. The Trustees are permitted to create additional funds
in the trust and to create additional classes of the funds.
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 to the rights of creditors, are allocated to such
fund, and constitute the underlying assets of such fund. The
underlying assets of each fund in a trust shall be charged with the
liabilities and expenses attributable to such fund, except that
liabilities and expenses may be allocated to a particular class. Any
general expenses of the respective trusts shall be allocated between
or among any one or more of its funds or classes.
SHAREHOLDER 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.
The Declaration of Trust for each of Fidelity Advisor Series I and
Fidelity Advisor Series VIII provides that the trust shall not have
any claim against shareholders except for the payment of the purchase
price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or the Trustees
relating to the trust shall include a provision limiting the
obligations created thereby to the trust and its assets. The
Declaration of Trust for Fidelity Advisor Series II contains an
express disclaimer of shareholder liability for the debts,
liabilities, obligations, and expenses of the trust or fund. The
Declaration of Trust for Fidelity Advisor Series II provides that the
trust shall not have any claim against shareholders except for the
payment of the purchase price of shares and requires that each
agreement, obligation, or instrument entered into or executed by the
trust or the Trustees relating to the trust or to a fund shall include
a provision limiting the obligations created thereby to the trust or
to one or more funds and its or their assets. The Declaration of Trust
for Fidelity Advisor Series II further provides that shareholders of a
fund shall not have a claim on or right to any assets belonging to any
other fund.
Each Declaration of Trust provides for indemnification out of each
fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. Each Declaration of
Trust also provides that each fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a 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. Claims asserted against one class of shares may subject
holders of another class of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you are entitled to one vote for
each dollar of net asset value you own. The voting rights of
shareholders can be changed only by a shareholder vote. Shares may
be voted in the aggregate, by fund and by class.
The shares have no preemptive or, for Class A, Class T, Class C,
Institutional Class, and Initial Class shares, conversion rights.
Shares are fully paid and nonassessable, except as set forth under the
heading "Shareholder Liability" above.
Each of Fidelity Advisor Series I and Fidelity Advisor Series VIII
or any of its funds may be terminated upon the sale of its assets to
another open-end management investment company, or upon liquidation
and distribution of its assets, if approved by a vote of shareholders
of the trust or the fund. In the event of the dissolution or
liquidation of a trust, shareholders of each of its funds are entitled
to receive the underlying assets of such fund available for
distribution. In the event of the dissolution or liquidation of a
fund, shareholders of that fund are entitled to receive the underlying
assets of the fund available for distribution.
Fidelity Advisor Series II or any of its funds may be terminated
upon the sale of its assets to, or merger with, another open-end
management investment company or series thereof, or upon liquidation
and distribution of its assets. Generally, the merger of a trust or a
fund with another entity or the sale of substantially all of the
assets of a trust or a fund to another entity requires approval by a
vote of shareholders of the trust or the fund. The Trustees may,
however, reorganize or terminate the trust or any of its funds without
prior shareholder approval. In the event of the dissolution or
liquidation of the trust, shareholders of each of its funds are
entitled to receive the underlying assets of such fund available for
distribution. In the event of the dissolution or liquidation of a
fund, shareholders of that fund are entitled to receive the underlying
assets of the fund available for distribution.
CUSTODIANS. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of Advisor International
Capital Appreciation, Advisor Mid Cap, Advisor Growth Opportunities,
Advisor Strategic Opportunities, and Advisor Large Cap. State
Street Bank and Trust Company, 1776 Heritage Drive, Quincy,
Massachusetts, is custodian of the assets of Advisor Latin America,
Advisor Japan, Advisor Europe Capital Appreciation, Advisor
Diversified International, Advisor Global Equity,Advisor Small Cap,
Advisor Retirement Growth, Advisor Dividend Growth, and Advisor Asset
Allocation. The Chase Manhattan Bank, 4 Chase MetroTech Center,
Brooklyn, New York, is custodian of the assets of Advisor TechnoQuant
Growth, Advisor Overseas, Advisor Equity Growth, Advisor Growth &
Income, Advisor Equity Income, Advisor Balanced, and Advisor Emerging
Markets Income. The Bank of New York, 110 Washington Street, New York,
New York, is custodian of the assets of Advisor High Yield, Advisor
Strategic Income, Advisor Government Investment, Advisor Intermediate
Bond, Advisor Mortgage Securities and Advisor Short Fixed-Income. UMB
Bank, n.a., 1010 Grand Avenue, Kansas City, Missouri, is custodian of
the assets of Advisor Municipal Income and Advisor Intermediate
Municipal Income. Each custodian is responsible for the safekeeping of
a fund's assets and the appointment of subcustodian banks and clearing
agencies. 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 members
of the Board of Trustees may, from time to time, conduct transactions
with various banks, including banks serving as custodians for certain
funds advised by FMR. The Boston branch of the custodian bank of
Advisor International Capital Appreciation, A dvisor Mid Cap,
Advisor Growth Opportunities, Advisor Strategic Opportunities, and
Advisor 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. _______________________ serves as the funds' independent
accountant. The auditor examines financial statements for the funds
and provides other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's (except A dvisor Latin America, Advisor Japan, Advisor
Europe Capital Appreciation, Advisor Diversified International,
Advisor Global Equity, Advisor Retirement Growth, Advisor Dividend
Growth, and Advisor Asset Allocation) financial statements and
fi nancial highlights for the fiscal periods ended October 31, 1998,
November 30 , 1998, and December 31, 1998, as appropriate, and
report s of the auditor, are included in each fund's Annual Report
and are incorporated herein by reference.
APPENDIX
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity
Investments, Magellan, and Fidelity Focus are registered trademarks of
FMR Corp.
TechnoQuant is a service mark of FMR Corp.
The third party marks appearing above are the marks of their
respective owners.
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) (1) 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.
(2) 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.
(3) Supplement to the Declaration of Trust, dated July 15,
1993, is incorporated herein by reference to Exhibit 1(c) of
Post-Effective Amendment No. 37.
(4) 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.
(b) Bylaws of the Trust, as amended and dated May 19, 1994, are
incorporated herein by reference to Exhibit 2(a) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(c) Not Applicable.
(d) (1) Management Contract between Fidelity Advisor Diversified
International Fund and Fidelity Management & Research Company, dated
November 19, 1998, is incorporated herein by reference to Exhibit 5(s)
of Post-Effective Amendment No. 51.
(2) Form of Management Contract between Fidelity Advisor
Emerging Asia Fund and Fidelity Management & Research Company is
incorporated herein by reference to Exhibit 5(uu) of Post-Effective
Amendment No. 50.
(3) 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.
(4) Management Contract between Fidelity Advisor Europe
Capital Appreciation Fund and Fidelity Management & Research Company,
dated November 19, 1998, is incorporated herein by reference to
Exhibit 5(ee) of Post-Effective Amendment No. 51.
(5) Management Contract between Fidelity Advisor Global Equity
Fund and Fidelity Management & Research Company, dated November 19,
1998, is incorporated herein by reference to Exhibit 5(y) of
Post-Effective Amendment No. 51.
(6) Management Contract between Fidelity Advisor International
Capital Appreciation Fund and Fidelity Management & Research Company,
dated October 16, 1997, is incorporated herein by reference to Exhibit
5(j) of Post-Effective Amendment No. 47.
(7) Management Contract between Fidelity Advisor Japan Fund
and Fidelity Management & Research Company, dated November 19, 1998,
is incorporated herein by reference to Exhibit 5(jj) of Post-Effective
Amendment No. 51.
(8) Management Contract between Fidelity Advisor Latin America
Fund and Fidelity Management & Research Company, dated November 19,
1998, is incorporated herein by reference to Exhibit 5(pp) of
Post-Effective Amendment No. 51.
(9) Management Contract between Fidelity Advisor Overseas Fund
and Fidelity Management & Research Co., dated October 31, 1997, is
incorporated herein by reference to Exhibit 5(p) of Post-Effective
Amendment No. 46.
(10) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Diversified International
Fund, and Fidelity Management & Research (U.K.) Inc., dated November
19, 1998, is incorporated herein by reference to Exhibit 5(t) of
Post-Effective Amendment No. 51.
(11) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Diversified International
Fund, and Fidelity Management & Research (Far East) Inc., dated
November 19, 1998, is incorporated herein by reference to Exhibit 5(u)
of Post-Effective Amendment No. 51.
(12) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Diversified International
Fund, and Fidelity International Investment Advisors, dated November
19, 1998, is incorporated herein by reference to Exhibit 5(v) of
Post-Effective Amendment No. 51.
(13) Form of Sub-Advisory Agreement between Fidelity
International Investment Advisors (U.K.) Limited and Fidelity
International Investment Advisors, on behalf of Fidelity Advisor
Diversified International Fund, is incorporated herein by reference to
Exhibit 5(w) of Post-Effective Amendment No. 49.
(14) Form of Sub-Advisory Agreement between Fidelity Management
& Research Co., on behalf of Fidelity Advisor Diversified
International Fund, and Fidelity Investments Japan Limited, is
incorporated herein by reference to Exhibit 5(x) of Post-Effective
Amendment No. 49.
(15) Form of Sub-Advisory Agreement between Fidelity Management
& Research Co., on behalf of Fidelity Advisor Emerging Asia Fund, and
Fidelity Management & Research (U.K.) Inc., is incorporated herein by
reference to Exhibit 5(vv) of Post-Effective Amendment No. 50.
(16) Form of Sub-Advisory Agreement between Fidelity Management
& Research Co., on behalf of Fidelity Advisor Emerging Asia Fund, and
Fidelity Management & Research (Far East) Inc., is incorporated herein
by reference to Exhibit 5(ww) of Post-Effective Amendment No. 50.
(17) Form of Sub-Advisory Agreement between Fidelity Management
& Research Co., on behalf of Fidelity Advisor Emerging Asia Fund, and
Fidelity International Investment Advisors, is incorporated herein by
reference to Exhibit 5(xx) of Post-Effective Amendment No. 50.
(18) Form of Sub-Advisory Agreement between Fidelity
International Investment Advisors (U.K.) Limited and Fidelity
International Investment Advisors, on behalf of Fidelity Advisor
Emerging Asia Fund, is incorporated herein by reference to Exhibit
5(yy) of Post-Effective Amendment No. 50.
(19) Form of Sub-Advisory Agreement between Fidelity Management
& Research Co., on behalf of Fidelity Advisor Emerging Asia Fund, and
Fidelity Investments Japan Limited, is incorporated herein by
reference to Exhibit 5(zz) of Post-Effective Amendment No. 50.
(20) 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.
(21) 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.
(22) 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.
(23) 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.
(24) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Emerging Markets Income
Fund, and Fidelity Investments Japan Limited, dated January 20, 1994,
is incorporated herein by reference to Exhibit 5(i) of Post-Effective
Amendment No. 32.
(25) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Europe Capital
Appreciation Fund, and Fidelity Management & Research (U.K.) Inc.,
dated November 19, 1998, is incorporated herein by reference to
Exhibit 5(ff) of Post-Effective Amendment No. 51.
(26) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Europe Capital
Appreciation Fund, and Fidelity Management & Research (Far East) Inc.,
dated November 19, 1998, is incorporated herein by reference to
Exhibit 5(gg) of Post-Effective Amendment No. 51.
(27) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Europe Capital
Appreciation Fund, and Fidelity International Investment Advisors,
dated November 19, 1998, is incorporated herein by reference to
Exhibit 5(hh) of Post-Effective Amendment No. 51.
(28) Form of Sub-Advisory Agreement between Fidelity
International Investment Advisors (U.K.) Limited and Fidelity
International Investment Advisors, on behalf of Fidelity Advisor
Europe Capital Appreciation Fund, is incorporated herein by reference
to Exhibit 5(ii) of Post-Effective Amendment No. 49.
(29) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Global Equity Fund, and
Fidelity Management & Research (U.K.) Inc., dated November 19, 1998,
is incorporated herein by reference to Exhibit 5(z) of Post-Effective
Amendment No. 51.
(30) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Global Equity Fund, and
Fidelity Management & Research (Far East) Inc., dated November 19,
1998, is incorporated herein by reference to Exhibit 5(aa) of
Post-Effective Amendment No. 51.
(31) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Global Equity Fund, and
Fidelity International Investment Advisors, dated November 19, 1998,
is incorporated herein by reference to Exhibit 5(bb) of Post-Effective
Amendment No. 51.
(32) Form of Sub-Advisory Agreement between Fidelity
International Investment Advisors (U.K.) Limited and Fidelity
International Investment Advisors, on behalf of Fidelity Advisor
Global Equity Fund, is incorporated herein by reference to Exhibit
5(cc) of Post-Effective Amendment No. 49.
(33) Form of Sub-Advisory Agreement between Fidelity Management
& Research Co., on behalf of Fidelity Advisor Global Equity Fund, and
Fidelity Investments Japan Limited, is incorporated herein by
reference to Exhibit 5(dd) of Post-Effective Amendment No. 49.
(34) 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 incorporated herein by reference to Exhibit
5(k) of Post-Effective Amendment No. 47.
(35) 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 incorporated herein by reference to Exhibit
5(l) of Post-Effective Amendment No. 47.
(36) 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 incorporated herein by reference to Exhibit
5(m) of Post-Effective Amendment No. 47.
(37) 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 incorporated
herein by reference to Exhibit 5(k) of Post-Effective Amendment No.
48.
(38) 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 incorporated herein by reference to Exhibit 5(o)
of Post-Effective Amendment No. 47.
(39) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Japan Fund, and Fidelity
Management & Research (U.K.) Inc., dated November 19, 1998, is
incorporated herein by reference to Exhibit 5(kk) of Post-Effective
Amendment No. 51.
(40) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Japan Fund, and Fidelity
Management & Research (Far East) Inc., dated November 19, 1998, is
incorporated herein by reference to Exhibit 5(ll) of Post-Effective
Amendment No. 51.
(41) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Japan Fund, and Fidelity
International Investment Advisors, is incorporated herein by reference
to Exhibit 5(mm) of Post-Effective Amendment No. 51.
(42) Form of Sub-Advisory Agreement between Fidelity
International Investment Advisors (U.K.) Limited and Fidelity
International Investment Advisors, on behalf of Fidelity Advisor Japan
Fund, is incorporated herein by reference to Exhibit 5(nn) of
Post-Effective Amendment No. 49.
(43) Form of Sub-Advisory Agreement between Fidelity Management
& Research Co., on behalf of Fidelity Advisor Japan Fund, and Fidelity
Investments Japan Limited, is incorporated herein by reference to
Exhibit 5(oo) of Post-Effective Amendment No. 49.
(44) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Latin America Fund, and
Fidelity Management & Research (U.K.) Inc., dated November 19, 1998,
is incorporated herein by reference to Exhibit 5(qq) of Post-Effective
Amendment No. 51.
(45) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Latin America Fund, and
Fidelity Management & Research (Far East) Inc., dated November 19,
1998, is incorporated herein by reference to Exhibit 5(rr) of
Post-Effective Amendment No. 51.
(46) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Latin America Fund, and
Fidelity International Investment Advisors, dated November 19, 1998,
is incorporated herein by reference to Exhibit 5(ss) of Post-Effective
Amendment No. 51.
(47) Form of Sub-Advisory Agreement between Fidelity
International Investment Advisors (U.K.) Limited and Fidelity
International Investment Advisors, on behalf of Fidelity Advisor Latin
America Fund, is incorporated herein by reference to Exhibit 5(tt) of
Post-Effective Amendment No. 49.
(48) 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
incorporated herein by reference to Exhibit 5(q) of Post-Effective
Amendment No. 46.
(49) Sub-Advisory Agreement between Fidelity Management &
Research Co., on behalf of Fidelity Advisor Overseas Fund, and
Fidelity Management & Research (Far East) Inc., dated October 31,
1997, is incorporated herein by reference to Exhibit 5(r) of
Post-Effective Amendment No. 46.
(50) 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
incorporated herein by reference to Exhibit 5(t) of Post-Effective
Amendment No. 47.
(51) 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 incorporated herein by reference to Exhibit
5(s) of Post-Effective Amendment No. 47.
(52) 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
incorporated herein by reference to Exhibit 5(u) of Post-Effective
Amendment No. 47.
(e) (1) General Distribution Agreement between Fidelity Advisor
Diversified International Fund and Fidelity Distributors Corporation,
dated November 19, 1998, is incorporated herein by reference to
Exhibit 6(e) of Post-Effective Amendment No. 51.
(2) Form of General Distribution Agreement between
Fidelity Advisor Emerging Asia Fund and Fidelity Distributors
Corporation is incorporated herein by reference to Exhibit 6(j) of
Post-Effective Amendment No. 50.
(3) 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.
(4) Amendments to the General Distribution Agreement
between Fidelity Advisor Series VIII on behalf of 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.
(5) General Distribution Agreement between Fidelity
Advisor Europe Capital Appreciation Fund and Fidelity Distributors
Corporation, dated November 19, 1998, is incorporated herein by
reference to Exhibit 6(g) of Post-Effective Amendment No. 51.
(6) General Distribution Agreement between Fidelity
Advisor Global Equity Fund and Fidelity Distributors Corporation,
dated November 19, 1998, is incorporated herein by reference to
Exhibit 6(f) of Post-Effective Amendment No. 51.
(7) General Distribution Agreement between Fidelity
Advisor International Capital Appreciation Fund and Fidelity
Distributors Corporation, dated October 16, 1997, is incorporated
herein by reference to Exhibit 6(e) of Post-Effective Amendment No.
47.
(8) General Distribution Agreement between Fidelity Advisor
Japan Fund and Fidelity Distributors Corporation, dated November 19,
1998, is incorporated herein by reference to Exhibit 6(h) of
Post-Effective Amendment No. 51.
(9) General Distribution Agreement between Fidelity Advisor
Latin America Fund and Fidelity Distributors Corporation, dated
November 19, 1998, is incorporated herein by reference to Exhibit 6(i)
of Post-Effective Amendment No. 51.
(10) General Distribution Agreement between Fidelity Advisor
Overseas Fund and Fidelity Distributors Corporation, dated October 31,
1997, is incorporated herein by reference to Exhibit 6(f) of
Post-Effective Amendment No. 47.
(11) Form of Bank Agency Agreement (most recently revised
January, 1997) is incorporated herein by reference to Exhibit 6(e) of
Post-Effective Amendment No. 48.
(12) Form of Selling Dealer Agreement (most recently revised
January, 1997) is incorporated herein by reference to Exhibit 6(f) of
Post-Effective Amendment No. 48.
(13) Form of Selling Dealer Agreement for Bank-Related
Transactions (most recently revised January, 1997) is incorporated
herein by reference to Exhibit 6(g) of Post-Effective Amendment No.
48.
(f) (1) 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.
(2) The Fee Deferral Plan for Non-Interested Person Directors
and Trustees of the Fidelity Funds, effective as of September 14, 1995
and amended through November 14, 1996, is incorporated herein by
reference to Exhibit 7(b) of Fidelity Aberdeen Street Trust's (File
No. 33-43529) Post-Effective Amendment No. 19.
(g) (1) Forms of Custodian Agreement, Appendix B, and Appendix C,
between State Street Bank and Trust Company and Fidelity Advisor
Series VIII on behalf of Fidelity Advisor Diversified International
Fund, Fidelity Advisor Europe Capital Appreciation Fund, Fidelity
Advisor Global Equity Fund, Fidelity Advisor Japan Fund, and Fidelity
Advisor Latin America Fund are incorporated herein by reference to
Exhibit 8(g) and Exhibit 8(h) of Post-Effective Amendment No. 51.
(2) Forms of Custodian Agreement and Appendix C, dated
September 1, 1994, between Brown Brothers Harriman & Company and
Fidelity Advisor Series VIII on behalf of Fidelity Advisor Emerging
Asia Fund is filed herein as Exhibit (g)(2).
(3) 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 and
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.
(4) Appendix A, dated February 26, 1998, 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 and Fidelity Advisor Overseas Fund is
incorporated herein by reference to Exhibit 8(b) of Fidelity Puritan
Trust's (File No. 2-11884) Post-Effective Amendment No. 116.
(5) Appendix B, dated June 18, 1998, 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 and Fidelity Advisor Overseas Fund is
incorporated herein by reference to Exhibit 8(c) of Fidelity Puritan
Trust's (File No. 2-11884) Post-Effective Amendment No. 116.
(6) Custodian Agreement and Appendix C, dated September 1,
1994, between Brown Brothers Harriman & Company and Fidelity Advisor
Series VIII on behalf of Fidelity Advisor International Capital
Appreciation Fund is incorporated herein by reference to Exhibit 8(a)
of Fidelity Commonwealth Trust's (File No. 2-52322) Post-Effective
Amendment No. 56.
(7) Appendix A, dated March 19, 1998, to the Custodian
Agreement, dated September 1, 1994, between Brown Brothers Harriman &
Company and Fidelity Advisor Series VIII on behalf of Fidelity Advisor
International Capital Appreciation Fund is incorporated herein by
reference to Exhibit 8(e) of Fidelity Puritan Trust's (File No.
2-11884) Post-Effective Amendment No. 116.
(8) Appendix B, dated June 18, 1998, to the Custodian
Agreement, dated September 1, 1994, between Brown Brothers Harriman &
Company and Fidelity Advisor Series VIII on behalf of Fidelity Advisor
International Capital Appreciation Fund is incorporated herein by
reference to Exhibit 8(f) of Fidelity Puritan Trust's (File No.
2-11884) Post-Effective Amendment No. 116.
(9) 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 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.
(10) 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 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.
(11) Fidelity Group Repo Custodian Agreement among Chemical
Bank, Greenwich Capital Markets, Inc., and Fidelity Advisor Series
VIII on behalf of 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.
(12) Schedule 1 to the Fidelity Group Repo Custodian Agreement
between Chemical Bank and Fidelity Advisor Series VIII on behalf of
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.
(13) Joint Trading Account Custody Agreement between the The
Bank of New York and Fidelity Advisor Series VIII on behalf of
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.
(14) 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 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.
(15) Forms of Fidelity Group Repo Custodian Agreement and
Schedule 1 among The Bank of New York, J.P. Morgan Securities, Inc.,
and Fidelity Advisor Series VIII on behalf of Fidelity Advisor
Diversified International Fund, Fidelity Advisor Emerging Asia Fund,
Fidelity Advisor Europe Capital Appreciation Fund, Fidelity Advisor
Global Equity Fund, Fidelity Advisor International Capital
Appreciation Fund, Fidelity Advisor Japan Fund, Fidelity Advisor Latin
America Fund, and Fidelity Advisor Overseas Fund are filed herein as
Exhibit (g)(15).
(16) Forms of Fidelity Group Repo Custodian Agreement and
Schedule 1 among Chemical Bank, Greenwich Capital Markets, Inc., and
Fidelity Advisor Series VIII on behalf of Fidelity Advisor Diversified
International Fund, Fidelity Advisor Emerging Asia Fund, Fidelity
Advisor Europe Capital Appreciation Fund, Fidelity Advisor Global
Equity Fund, Fidelity Advisor International Capital Appreciation Fund,
Fidelity Advisor Japan Fund, Fidelity Advisor Latin America Fund, and
Fidelity Advisor Overseas Fund are filed herein as Exhibit (g)(16).
(17) Forms of Joint Trading Account Custody Agreement and
First Amendment to Joint Trading Account Custody Agreement between The
Bank of New York and Fidelity Advisor Series VIII on behalf of
Fidelity Advisor Diversified International Fund, Fidelity Advisor
Emerging Asia Fund, Fidelity Advisor Europe Capital Appreciation Fund,
Fidelity Advisor Global Equity Fund, Fidelity Advisor International
Capital Appreciation Fund, Fidelity Advisor Japan Fund, Fidelity
Advisor Latin America Fund, and Fidelity Advisor Overseas Fund are
filed herein as Exhibit (g)(17).
(h) Not applicable.
(i) Not applicable.
(j) Not applicable.
(k) Not applicable.
(l) Not applicable.
(m) (1) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Diversified International Fund: Class A is
incorporated herein by reference to Exhibit 15(p) of Post-Effective
Amendment No. 51.
(2) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Diversified International Fund: Class T is
incorporated herein by reference to Exhibit 15(q) of Post-Effective
Amendment No. 51.
(3) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Diversified International Fund: Class B is
incorporated herein by reference to Exhibit 15(r) of Post-Effective
Amendment No. 51.
(4) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Diversified International Fund: Class C is
incorporated herein by reference to Exhibit 15(s) of Post-Effective
Amendment No. 51.
(5) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Diversified International Fund: Institutional Class
is incorporated herein by reference to Exhibit 15(t) of Post-Effective
Amendment No. 51.
(6) Form of Distribution and Service Plan pursuant to Rule
12b-1 for Fidelity Advisor Emerging Asia Fund: Class A is incorporated
herein by reference to Exhibit 12(oo) of Post-Effective Amendment No.
50.
(7) Form of Distribution and Service Plan pursuant to Rule
12b-1 for Fidelity Advisor Emerging Asia Fund: Class T is incorporated
herein by reference to Exhibit 12(pp) of Post-Effective Amendment No.
50.
(8) Form of Distribution and Service Plan pursuant to Rule
12b-1 for Fidelity Advisor Emerging Asia Fund: Class B is incorporated
herein by reference to Exhibit 12(qq) of Post-Effective Amendment No.
50.
(9) Form of Distribution and Service Plan pursuant to Rule
12b-1 for Fidelity Advisor Emerging Asia Fund: Class C is incorporated
herein by reference to Exhibit 12(rr) of Post-Effective Amendment No.
50.
(10) Form of Distribution and Service Plan pursuant to Rule
12b-1 for Fidelity Advisor Emerging Asia Fund: Institutional Class is
incorporated herein by reference to Exhibit 12(ss) of Post-Effective
Amendment No. 50.
(11) 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.
(12) 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.
(13) 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.
(14) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Emerging Markets Income Fund: Class C is incorporated
herein by reference to Exhibit 15(n) of Post-Effective Amendment No.
46.
(15) 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.
(16) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Europe Capital Appreciation Fund: Class A is
incorporated herein by reference to Exhibit 15(z) of Post-Effective
Amendment No. 51.
(17) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Europe Capital Appreciation Fund: Class T is
incorporated herein by reference to Exhibit 15(aa) of Post-Effective
Amendment No. 51.
(18) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Europe Capital Appreciation Fund: Class B is
incorporated herein by reference to Exhibit 15(bb) of Post-Effective
Amendment No. 51.
(19) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Europe Capital Appreciation Fund: Class C is
incorporated herein by reference to Exhibit 15(cc) of Post-Effective
Amendment No. 51.
(20) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Europe Capital Appreciation Fund: Institutional Class
is incorporated herein by reference to Exhibit 15(dd) of
Post-Effective Amendment No. 51.
(21) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Global Equity Fund: Class A is incorporated herein by
reference to Exhibit 15(u) of Post-Effective Amendment No. 51.
(22) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Global Equity Fund: Class T is incorporated herein by
reference to Exhibit 15(v) of Post-Effective Amendment No. 51.
(23) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Global Equity Fund: Class B is incorporated herein by
reference to Exhibit 15(w) of Post-Effective Amendment No. 51.
(24) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Global Equity Fund: Class C is incorporated herein by
reference to Exhibit 15(x) of Post-Effective Amendment No. 51.
(25) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Global Equity Fund: Institutional Class is
incorporated herein by reference to Exhibit 15(y) of Post-Effective
Amendment No. 51.
(26) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor International Capital Appreciation Fund: Class A is
incorporated herein by reference to Exhibit 15(i) of Post-Effective
Amendment No. 46.
(27) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor International Capital Appreciation Fund: Class T is
incorporated herein by reference to Exhibit 15(j) of Post-Effective
Amendment No. 46.
(28) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor International Capital Appreciation Fund: Class B is
incorporated herein by reference to Exhibit 15(k) of Post-Effective
Amendment No. 46.
(29) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor International Capital Appreciation Fund: Class C is
incorporated herein by reference to Exhibit 15(m) of Post-Effective
Amendment No. 46.
(30) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor International Capital Appreciation Fund:
Institutional Class is incorporated herein by reference to Exhibit
15(l) of Post-Effective Amendment No. 46.
(31) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Japan Fund: Class A is incorporated by reference to
Exhibit 15(ee) of Post-Effective Amendment No. 51.
(32) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Japan Fund: Class T is incorporated by reference to
Exhibit 15(ff) of Post-Effective Amendment No. 51.
(33) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Japan Fund: Class B is incorporated by reference to
Exhibit 15(gg) of Post-Effective Amendment No. 51.
(34) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Japan Fund: Class C is incorporated by reference to
Exhibit 15(hh) of Post-Effective Amendment No. 51.
(35) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Japan Fund: Institutional Class is incorporated by
reference to Exhibit 15(ii) of Post-Effective Amendment No. 51.
(36) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Latin America Fund: Class A is incorporated by
reference to Exhibit 15(jj) of Post-Effective Amendment No. 51.
(37) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Latin America Fund: Class T is incorporated by
reference to Exhibit 15(kk) of Post-Effective Amendment No. 51.
(38) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Latin America Fund: Class B is incorporated by
reference to Exhibit 15(ll) of Post-Effective Amendment No. 51.
(39) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Latin America Fund: Class C is incorporated by
reference to Exhibit 15(mm) of Post-Effective Amendment No. 51.
(40) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Latin America Fund: Institutional Class is
incorporated by reference to Exhibit 15(nn) of Post-Effective
Amendment No. 51.
(41) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Overseas Fund: Class A is incorporated herein by
reference to Exhibit 15(s) of Post-Effective Amendment No. 46.
(42) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Overseas Fund: Class T is incorporated herein by
reference to Exhibit 15(p) of Post-Effective Amendment No. 46.
(43) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Overseas Fund: Class B is incorporated herein by
reference to Exhibit 15(q) of Post-Effective Amendment No. 46.
(44) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Overseas Fund: Class C is incorporated herein by
reference to Exhibit 15(o) of Post-Effective Amendment No. 46.
(45) Distribution and Service Plan pursuant to Rule 12b-1 for
Fidelity Advisor Overseas Fund: Institutional Class is incorporated
herein by reference to Exhibit 15(r) of Post-Effective Amendment No.
46.
(n) Not applicable.
(o) (1) Multiple Class of Shares Plan pursuant to Rule 18f-3, dated
March 19, 1998, is incorporated herein by reference to Exhibit 18(a)
of Post-Effective Amendment No. 49.
(2) Form of Schedule I, dated November 19, 1998, to Multiple
Class of Shares Plan pursuant to Rule 18f-3 on behalf of Fidelity
Advisor Diversified International Fund, Fidelity Advisor Emerging
Markets Income Fund, Fidelity Advisor Europe Capital Appreciation
Fund, Fidelity Advisor Global Equity Fund, Fidelity Advisor
International Capital Appreciation Fund, Fidelity Advisor Japan Fund,
Fidelity Advisor Latin America Fund, and Fidelity Advisor Overseas
Fund is filed herein as Exhibit (o)(2).
(3) Form of Schedule I to Multiple Class of Shares Plan
pursuant to Rule 18f-3 on behalf of Fidelity Advisor Emerging Asia
Fund is incorporated herein by reference to Exhibit 18(c) of
Post-Effective Amendment No. 50.
Item 24. Trusts Controlled by or under Common Control with this Trust
The Board of Trustees of the Trust is the same as the board of other
Fidelity funds, each of which has Fidelity Management & Research
Company, or an affiliate, as its investment adviser. In addition, the
officers of the Trust are substantially identical to those of the
other Fidelity funds. Nonetheless, the Trust takes the position that
it is not under common control with other Fidelity funds because the
power residing in the respective boards and officers arises as the
result of an official position with the respective trusts.
Item 25. 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 Trust 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 or her in connection with any
claim, action, suit or proceeding in which he or she is involved by
virtue of his or her service as a trustee or officer and against any
amount incurred in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other adjudicatory body to
be liable to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his
or her duties (collectively, "disabling conduct"), or not to have
acted in good faith in the reasonable belief that his or her action
was in the best interest of the Trust. In the event of a settlement,
no indemnification may be provided unless there has been a
determination, as specified in the Declaration of Trust, that the
officer or trustee did not engage in disabling conduct.
Pursuant to Section 11 of the Distribution Agreement, the Trust
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
Trust (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 Trust 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
Trust by or on behalf of the Distributor. In no case is the indemnity
of the Trust in favor of the Distributor or any person indemnified to
be deemed to protect the Distributor or any person against any
liability to the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
Pursuant to the agreement by which Fidelity Investments Institutional
Operations Company, Inc. ("FIIOC") is appointed transfer agent, the
Registrant agrees to indemnify and hold FIIOC harmless against any
losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names FIIOC
and/or the Registrant as a party and is not based on and does not
result from FIIOC's willful misfeasance, bad faith or negligence or
reckless disregard of duties, and arises out of or in connection with
FIIOC's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by FIIOC's willful misfeasance, bad faith or negligence
or reckless disregard of duties) which results from the negligence of
the Registrant, or from FIIOC's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of FIIOC's
acting in reliance upon advice reasonably believed by FIIOC to have
been given by counsel for the Registrant, or as a result of FIIOC's
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Item 26. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
82 Devonshire Street, Boston, MA 02109
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 and Director of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman
of the Board and Director of FMR Corp., Fidelity
Investments Money Management, Inc. (FIMM), Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), and
Fidelity Management & Research (Far East) Inc. (FMR
Far East); Chairman of the Executive Committee of
FMR; Director of Fidelity Investments Japan Limited
(FIJ); President and Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FIMM, FMR U.K., and FMR Far East;
Previously, General Counsel, Managing Director, and
Senior Vice President of FMR Corp.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
John H. Carlson Vice President of FMR and of funds advised by FMR.
Dwight D. Churchill Senior Vice President of FMR and Vice President of
Bond Funds advised by FMR; Vice President of FIMM.
Brian Clancy Vice President of FMR and Treasurer of FMR, FIMM,
FMR U.K., and FMR Far East.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Frederic G. Corneel Tax Counsel of FMR.
Stephen G. Manning Assistant Treasurer of FMR, FIMM, FMR U.K., FMR
Far East; Vice President and Treasurer of FMR Corp.;
Treasurer of Strategic Advisers, Inc.
William Danoff Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Scott E. DeSano Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Walter C. Donovan Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and of funds advised by FMR.
William R. Ebsworth Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR
U.K., FMR Far East, and Strategic Advisers, Inc.;
Secretary of FIMM; Associate General Counsel FMR
Corp.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Senior Vice President of FMR and Vice President of
Money Market Funds advised by FMR; Vice President
of FIMM.
Bart A. Grenier Senior Vice President of FMR; Vice President of
High-Income Funds advised by FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR and Vice President of
Fixed-Income Funds advised by FMR.
Bruce T. Herring Vice President of FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Abigail P. Johnson Senior Vice President of FMR and Vice President of
funds advised by FMR; Director of FMR Corp.;
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.
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.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Charles A. Mangum Vice President of FMR and of a fund advised by FMR.
Kevin McCarey Vice President of FMR and of a fund advised by FMR.
Neal P. Miller Vice President of FMR.
Jacques Perold Vice President of FMR.
Alan Radlo Vice President of FMR.
Eric D. Roiter Senior Vice President and General Counsel of FMR and
Secretary of funds advised by FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Richard A. Silver Vice President of FMR.
Carol A. Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR and of funds advised by FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity Funds advised by FMR;
Previously, Senior Vice President and Director of
Operations and Compliance of FMR U.K.
Thomas M. Sprague Vice President of FMR and of funds advised by FMR.
Robert E. Stansky Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Scott D. Stewart Vice President of FMR.
Thomas Sweeney Vice President of FMR.
Beth F. Terrana Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR and Vice President of
funds advised by FMR; Director of FMR Corp.
Steven S. Wymer Vice President of FMR and of a fund advised by FMR.
</TABLE>
(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
25 Lovat Lane, London, EC3R 8LL, England
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board and Director of FMR U.K.,
FMR, FMR Corp., FIMM, and FMR Far East; President
and Chief Executive Officer of FMR Corp.; Chairman
of the Executive Committee of FMR; Director of
Fidelity Investments Japan Limited (FIJ); President and
Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FIMM, FMR U.K., and FMR Far East;
Previously, General Counsel, Managing Director, and
Senior Vice President of FMR Corp.
Brian Clancy Treasurer of FMR U.K., FMR Far East, FMR, and
FIMM and Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR U.K., FMR, FMR Far East,
and FIMM; Vice President and Treasurer of FMR
Corp.; Treasurer of Strategic Advisers, Inc.
Francis V. Knox Compliance Officer of FMR U.K. and FMR Far East;
Vice President of FMR.
Jay Freedman Clerk of FMR U.K., FMR Far East, FMR Corp. and
Strategic Advisers, Inc.; Assistant Clerk of FMR;
Secretary of FIMM; Associate General Counsel FMR
Corp.
Susan Englander Hislop Assistant Clerk of FMR U.K., FMR Far East and
FIMM.
Sarah H. Zenoble Senior Vice President and Director of Operations and
Compliance.
</TABLE>
(3) FIDELITY MANAGEMENT & RESEARCH (Far East) INC. (FMR Far East)
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
FMR Far East provides investment advisory services to Fidelity
Management & Research Company and Fidelity Management Trust Company.
The directors and officers of the Sub-Adviser have held the following
positions of a substantial nature during the past two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FMR Far
East, FMR, FMR Corp., FIMM, and FMR U.K.;
Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR
Corp.; Director of Fidelity Investments Japan
Limited (FIJ); President and Trustee of funds
advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice
President and Trustee of funds advised by FMR;
President and Director of FIMM, FMR U.K., and
FMR Far East; Previously, General Counsel,
Managing Director, and Senior Vice President of
FMR Corp.
Robert H. Auld Senior Vice President of FMR Far East.
Brian Clancy Treasurer of FMR Far East, FMR U.K., FMR,
and FIMM and Vice President of FMR.
Francis V. Knox Compliance Officer of FMR Far East and FMR
U.K.; Vice President of FMR.
Jay Freedman Clerk of FMR Far East, FMR U.K., FMR Corp.
and Strategic Advisers, Inc.; Assistant Clerk of
FMR; Secretary of FIMM; Associate General
Counsel FMR Corp.
Susan Englander Hislop Assistant Clerk of FMR Far East, FMR U.K. and
FIMM.
Stephen G. Manning Assistant Treasurer of FMR Far East, FMR,
FMR U.K., and FIMM; Vice President and
Treasurer of FMR Corp.; Treasurer of Strategic
Advisers, Inc.
Billy Wilder Vice President of FMR Far East; President and
Representative Director of Fidelity Investments
Japan Limited.
(4) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (FIIA)
Pembroke Hall, 42 Crow Lane, Pembroke HM19, Bermuda
The directors and officers of FIIA have held, during the past two
fiscal years, the following positions of a substantial nature.
Robert H. Auld Director of FIIA and Senior Vice President of
Fidelity Management & Research (Far East) Inc.
(FMR Far East).
Anthony J. Bolton Director of FIIA, Fidelity International
Investment Advisors (U.K.) Limited
(FIIA(U.K.)L), Fidelity Investment Management
Limited (FIML (U.K.)), Fidelity Investment
Services Limited (FISL (U.K.)), and Fidelity
Investments International (FII).
Brett P. Goodin Director, Vice President, Secretary and Chief
Legal Officer of many Fidelity International
Limited (FIL) companies.
Simon Haslam Director of FIIA, FISL (U.K.), and FII;
Previously, 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; Previously,
Director of Fidelity International Limited; and
numerous companies and funds in the FIL group.
(5) FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
(FIIA(U.K.)L)
26 Lovat Lane, London, EC3R 8LL, England
The directors and officers of 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, Fidelity International
Investment Advisors (FIIA), Fidelity Investment
Management Limited (FIML (U.K.)), Fidelity
Investment Services Limited (FISL (U.K.)), and
Fidelity Investments International (FII).
Pamela Edwards Director of FIIA(U.K.)L, FISL (U.K.), and FII;
Previously, Director of Legal Services for
Europe.
Simon Haslam Director of FIIA, FISL (U.K.), and FII; Chief
Financial Officer of FIL (U.K.); Previously,
Company Secretary of Fidelity Investments
Group of Companies (U.K.).
Sally Walden Director of FIIA(U.K.)L and FISL (U.K.).
Sally Hinchliffe 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 (FIJ)
Shiroyama JT Mori Bldg., 4-3-1 Toranomon Minato-ku, Tokyo 105,
Japan
The directors and officers of FIJ have held, during the past two
fiscal years, the following positions of a substantial nature.
Edward C. Johnson 3d Director of FIJ; Chairman of the Board and
Director of FMR Far East, FMR, FMR Corp.,
FMR U.K., and FIMM; 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.
Simon Fraser Director and Chief Investment Officer of FIJ.
Simon Haslam Director of FIJ; Chief Financial Officer of
Fidelity International Limited.
Noboru Kawai Director and General Manager of
Administration of FIJ.
Tetsuzo Nishimura Director and Vice President of Broker
Distribution of FIJ.
Hiroshi Yamashita Managing Director and Portfolio Manager of
FIJ.
Item 27. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
all funds advised by FMR or an affiliate.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Eric D. Roiter Senior Vice President Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 28. Location of Accounts and Records.
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the
funds' respective custodians: Brown Brothers Harriman & Co., 40 Water
Street, Boston, MA, The Chase Manhattan Bank, 1 Chase Manhattan Plaza,
New York, NY, or State Street Bank & Trust Company, 1776 Heritage
Drive, North Quincy, MA.
Item 29. Management Services.
Not Applicable.
Item 30. Undertakings
(a) The Registrant undertakes for Fidelity Advisor Diversified
International Fund, Fidelity Advisor Emerging Asia Fund, Fidelity
Advisor Emerging Markets Income Fund, Fidelity Advisor Europe Capital
Appreciation Fund, Fidelity Advisor Global Equity Fund, Fidelity
Advisor International Capital Appreciation Fund, Fidelity Advisor
Japan Fund, Fidelity Advisor Latin America Fund, and Fidelity Advisor
Overseas Fund: (1) to call a meeting of shareholders for the purpose
of voting upon the questions of removal of a trustee or trustees, when
requested to do so by record holders of not less than 10% of its
outstanding shares; and (2) to assist in communications with other
shareholders pursuant to Section 16(c)(1) and (2) of the 1934 Act,
whenever shareholders meeting the qualifications set forth in Section
16(c) seek the opportunity to communicate with other shareholders with
a view toward requesting a meeting.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 52 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 18th day
of December 1998.
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.
<TABLE>
<CAPTION>
<S> <C> <C>
(Signature) (Title) (Date)
/s/Edward C. Johnson 3d (dagger) President and Trustee December 18, 1998
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer December 18, 1998
Richard A. Silver
/s/Robert C. Pozen Trustee December 18, 1998
Robert C. Pozen
/s/Ralph F. Cox * Trustee December 18, 1998
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee December 18, 1998
Phyllis Burke Davis
/s/Robert M. Gates ** Trustee December 18, 1998
Robert M. Gates
/s/E. Bradley Jones * Trustee December 18, 1998
E. Bradley Jones
/s/Donald J. Kirk * Trustee December 18, 1998
Donald J. Kirk
/s/Peter S. Lynch * Trustee December 18, 1998
Peter S. Lynch
/s/Marvin L. Mann * Trustee December 18, 1998
Marvin L. Mann
/s/William O. McCoy * Trustee December 18, 1998
William O. McCoy
/s/Gerald C. McDonough * Trustee December 18, 1998
Gerald C. McDonough
/s/Thomas R. Williams * Trustee December 18, 1998
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
POWER OF ATTORNEY
I, the undersigned 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
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
Exhibit (g)(2)
FORM OF
CUSTODIAN AGREEMENT
Dated as of: ________________
Between
Each of the Investment Companies
Listed on Appendix "A" Attached Hereto
and
Brown Brothers Harriman & Company
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
ARTICLE Page
I. APPOINTMENT OF CUSTODIAN 1
II. POWERS AND DUTIES OF CUSTODIAN 1
2.01 Safekeeping 1
2.02 Manner of Holding Securities 1
2.03 Security Purchases 2
2.04 Exchanges of Securities 2
2.05 Sales of Securities 3
2.06 Depositary Receipts 3
2.07 Exercise of Rights; Tender Offers 3
2.08 Stock Dividends, Rights, Etc. 3
2.09 Options 4
2.10 Futures Contracts 4
2.11 Borrowing 4
2.12 Interest Bearing Deposits 5
2.13 Foreign Exchange Transactions 5
2.14 Securities Loans 5
2.15 Collections 6
2.16 Dividends, Distributions and Redemptions 6
2.17 Proceeds from Shares Sold 6
2.18 Proxies, Notices, Etc. 6
2.19 Bills and Other Disbursements 7
2.20 Nondiscretionary Functions 7
2.21 Bank Accounts 7
2.22 Deposit of Fund Assets in Securities Systems 7
2.23 Other Transfers 8
2.24 Establishment of Segregated Account 9
2.25 Custodian's Books and Records . 9
2.26 Opinion of Fund's Independent Certified Public
Accountants 9
2.27 Reports of Independent Certified Public Accountants 10
2.28 Overdraft Facility 10
III. PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS 10
3.01 Proper Instructions and Special Instructions 10
3.02 Authorized Persons 11
3.03 Persons Having Access to Assets of the Portfolios 11
3.04 Actions of the Custodian Based on Proper Instructions
and Special Instructions 11
i
IV. SUBCUSTODIANS 11
4.01 Domestic Subcustodians 12
4.02 Foreign Subcustodians and Interim Subcustodians 12
4.03 Special Subcustodians 13
4.04 Termination of a Subcustodian 13
4.05 Certification Regarding Foreign Subcustodians 13
V. STANDARD OF CARE; INDEMNIFICATION 14
5.01 Standard of Care 14
5.02 Liability of Custodian for Actions of Other Persons 15
5.03 Indemnification 15
5.04 Investment Limitations 16
5.05 Fund's Right to Proceed 16
VI. COMPENSATION 17
VII. TERMINATION 17
7.01 Termination of Agreement as to One or More Funds 17
7.02 Termination as to One or More Portfolios 18
VIII. DEFINED TERMS 18
IX. MISCELLANEOUS 19
9.01 Execution of Documents, Etc 19
9.02 Representative Capacity; Nonrecourse Obligations 19
9.03 Several Obligations of the Funds and the Portfolios 19
9.04 Representations and Warranties 19
9.05 Entire Agreement 20
9.06 Waivers and Amendments 20
9.07 Interpretation 20
9.08 Captions 20
9.09 Governing Law 20
9.10 Notices 21
IX. MISCELLANEOUS 21
9.11 Assignment 21
9.12 Counterparts 21
9.13 Confidentiality; Survival of Obligations 21
</TABLE>
ii
APPENDICES
Appendix "A" - List of Funds and Portfolios
Appendix "B" - List of Additional Custodians,
Special Subcustodians and Foreign Subcustodians
Appendix "C" - Procedures Relating to
Custodian's Security Interest
Exhibit (g)(2)
FORM OF
CUSTODIAN AGREEMENT
AGREEMENT made as of the ___ day of ______ between each of the
Investment Companies Listed on Appendix "A" hereto, as the same may be
amended from time to time (each a "Fund" and collectively the "Funds")
and Brown Brothers Harriman & Company (the "Custodian").
W I T N E S S E T H
WHEREAS, each Fund is or may be organized with one or more series of
shares, each of which shall represent an interest in a separate
portfolio of cash, securities and other assets (all such existing and
additional series now or hereafter listed on Appendix "A" being
hereinafter referred to individually, as a "Portfolio," and
collectively, as the "Portfolios"); and
WHEREAS, each Fund desires to appoint the Custodian as custodian on
behalf of each of its Portfolios in accordance with the provisions of
the Investment Company Act of 1940, as amended (the "1940 Act"), and
the rules and regulations thereunder, under the terms and conditions
set forth in this Agreement, and the Custodian has agreed so to act as
custodian.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF CUSTODIAN
On behalf of each of its Portfolios, each Fund hereby employs and
appoints the Custodian as a custodian, subject to the terms and
provisions of this Agreement. Each Fund shall deliver to the
Custodian, or shall cause to be delivered to the Custodian, cash,
securities and other assets owned by each of its Portfolios from time
to time during the term of this Agreement and shall specify to which
of its Portfolios such cash, securities and other assets are to be
specifically allocated.
ARTICLE II
POWERS AND DUTIES OF CUSTODIAN
As custodian, the Custodian shall have and perform the powers and
duties set forth in this Article II. Pursuant to and in accordance
with Article IV hereof, the Custodian may appoint one or more
Subcustodians (as hereinafter defined) to exercise the powers and
perform the duties of the Custodian set forth in this Article II and
references to the Custodian in this Article II shall include any
Subcustodian so appointed.
Section 2.01. Safekeeping. The Custodian shall keep safely all
cash, securities and other assets of each Fund's Portfolios delivered
to the Custodian and, on behalf of such Portfolios, the Custodian
shall, from time to time, accept delivery of cash, securities and
other assets for safekeeping.
Section 2.02. Manner of Holding Securities.
(a) The Custodian shall at all times hold securities of each Fund's
Portfolios either: (i) by physical possession of the share
certificates or other instruments representing such securities in
registered or bearer form; or (ii) in book-entry form by a Securities
System (as hereinafter defined) in accordance with the provisions of
Section 2.22 below.
(b) The Custodian shall at all times hold registered securities of
each Portfolio in the name of the Custodian, the Portfolio or a
nominee of either of them, unless specifically directed by Proper
Instructions to hold such registered securities in so-called street
name; provided that, in any event, all such securities and other
assets shall be held in an account of the Custodian containing only
assets of a Portfolio, or only assets held by the Custodian as a
fiduciary or custodian for customers; and provided further, that the
records of the Custodian shall indicate at all times the Portfolio or
other customer for which such securities and other assets are held in
such account and the respective interests therein.
Section 2.03. Security Purchases. Upon receipt of Proper
Instructions (as hereinafter defined), the Custodian shall pay for and
receive securities purchased for the account of a Portfolio, provided
that payment shall be made by the Custodian only upon receipt of the
securities: (a) by the Custodian; (b) by a clearing corporation of a
national securities exchange of which the Custodian is a member; or
(c) by a Securities System. Notwithstanding the foregoing, upon
receipt of Proper Instructions: (i) in the case of a repurchase
agreement, the Custodian may release funds to a Securities System
prior to the receipt of advice from the Securities System that the
securities underlying such repurchase agreement have been transferred
by book-entry into the Account (as hereinafter defined) maintained
with such Securities System by the Custodian, provided that the
Custodian's instructions to the Securities System require that the
Securities System may make payment of such funds to the other party to
the repurchase agreement only upon transfer by book-entry of the
securities underlying the repurchase agreement into the Account; (ii)
in the case of time deposits, call account deposits, currency
deposits, and other deposits, foreign exchange transactions, futures
contracts or options, pursuant to Sections 2.09, 2.10, 2.12 and 2.13
hereof, the Custodian may make payment therefor before receipt of an
advice or confirmation evidencing said deposit or entry into such
transaction; (iii) in the case of the purchase of securities, the
settlement of which occurs outside of the United States of America,
the Custodian may make payment therefor and receive delivery of such
securities in accordance with local custom and practice generally
accepted by Institutional Clients (as hereinafter defined) in the
country in which the settlement occurs, but in all events subject to
the standard of care set forth in Article V hereof; and (iv) in the
case of the purchase of securities in which, in accordance with
standard industry custom and practice generally accepted by
Institutional Clients with respect to such securities, the receipt of
such securities and the payment therefor take place in different
countries, the Custodian may receive delivery of such securities and
make payment therefor in accordance with standard industry custom and
practice for such securities generally accepted by Institutional
Clients, but in all events subject to the standard of care set forth
in Article V hereof. For purposes of this Agreement, an
"Institutional Client" shall mean a major commercial bank,
corporation, insurance company, or substantially similar institution,
which, as a substantial part of its business operations, purchases or
sells securities and makes use of custodial services.
Section 2.04. Exchanges of Securities. Upon receipt of Proper
Instructions, the Custodian shall exchange securities held by it for
the account of a Portfolio for other securities in connection with any
reorganization, recapitalization, split-up of shares, change of par
value, conversion or other event relating to the securities or the
issuer of such securities, and shall deposit any such securities in
accordance with the terms of any reorganization or protective plan.
The Custodian shall, without receiving Proper Instructions: surrender
securities in temporary form for definitive securities; surrender
securities for transfer into the name of the Custodian, a Portfolio or
a nominee of either of them, as permitted by Section 2.02(b); and
surrender securities for a different number of certificates or
instruments representing the same number of shares or same principal
amount of indebtedness, provided that the securities to be issued will
be delivered to the Custodian or a nominee of the Custodian.
Section 2.05. Sales of Securities. Upon receipt of Proper
Instructions, the Custodian shall make delivery of securities which
have been sold for the account of a Portfolio, but only against
payment therefor in the form of: (a) cash, certified check, bank
cashier's check, bank credit, or bank wire transfer; (b) credit to the
account of the Custodian with a clearing corporation of a national
securities exchange of which the Custodian is a member; or (c) credit
to the Account of the Custodian with a Securities System, in
accordance with the provisions of Section 2.22 hereof.
Notwithstanding the foregoing: (i) in the case of the sale of
securities, the settlement of which occurs outside of the United
States of America, such securities shall be delivered and paid for in
accordance with local custom and practice generally accepted by
Institutional Clients in the country in which the settlement occurs,
but in all events subject to the standard of care set forth in Article
V hereof; (ii) in the case of the sale of securities in which, in
accordance with standard industry custom and practice generally
accepted by Institutional Clients with respect to such securities, the
delivery of such securities and receipt of payment therefor take place
in different countries, the Custodian may deliver such securities and
receive payment therefor in accordance with standard industry custom
and practice for such securities generally accepted by Institutional
Clients, but in all events subject to the standard of care set forth
in Article V hereof; and (iii) in the case of securities held in
physical form, such securities shall be delivered and paid for in
accordance with "street delivery custom" to a broker or its clearing
agent, against delivery to the Custodian of a receipt for such
securities, provided that the Custodian shall have taken reasonable
steps to ensure prompt collection of the payment for, or the return
of, such securities by the broker or its clearing agent, and provided
further that the Custodian shall not be responsible for the selection
of or the failure or inability to perform of such broker or its
clearing agent.
Section 2.06. Depositary Receipts. Upon receipt of Proper
Instructions, the Custodian shall surrender securities to the
depositary used for such securities by an issuer of American
Depositary Receipts or International Depositary Receipts (hereinafter
referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such securities and written evidence
satisfactory to the Custodian that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such securities
in the name of the Custodian or a nominee of the Custodian, for
delivery to the Custodian at such place as the Custodian may from time
to time designate. Upon receipt of Proper Instructions, the Custodian
shall surrender ADRs to the issuer thereof, against a written receipt
therefor adequately describing the ADRs surrendered and written
evidence satisfactory to the Custodian that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to
deliver the securities underlying such ADRs to the Custodian.
Section 2.07. Exercise of Rights; Tender Offers. Upon receipt of
Proper Instructions, the Custodian shall: (a) deliver warrants, puts,
calls, rights or similar securities to the issuer or trustee thereof,
or to the agent of such issuer or trustee, for the purpose of exercise
or sale, provided that the new securities, cash or other assets, if
any, acquired as a result of such actions are to be delivered to the
Custodian; and (b) deposit securities upon invitations for tenders
thereof, provided that the consideration for such securities is to be
paid or delivered to the Custodian, or the tendered securities are to
be returned to the Custodian. Notwithstanding any provision of this
Agreement to the contrary, the Custodian shall take all necessary
action, unless otherwise directed to the contrary in Proper
Instructions, to comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall promptly notify each applicable Fund of such
action in writing by facsimile transmission or in such other manner as
such Fund and the Custodian may agree in writing.
Section 2.08. Stock Dividends, Rights, Etc. The Custodian shall
receive and collect all stock dividends, rights and other items of
like nature and, upon receipt of Proper Instructions, take action with
respect to the same as directed in such Proper Instructions.
Section 2.09. Options. Upon receipt of Proper Instructions and in
accordance with the provisions of any agreement between the Custodian,
any registered broker-dealer and, if necessary, a Fund on behalf of
any applicable Portfolio relating to compliance with the rules of the
Options Clearing Corporation or of any registered national securities
exchange or similar organization(s), the Custodian shall: (a) receive
and retain confirmations or other documents, if any, evidencing the
purchase or writing of an option on a security or securities index by
the applicable Portfolio; (b) deposit and maintain in a segregated
account, securities (either physically or by book-entry in a
Securities System), cash or other assets; and (c) pay, release and/or
transfer such securities, cash or other assets in accordance with
notices or other communications evidencing the expiration, termination
or exercise of such options furnished by the Options Clearing
Corporation, the securities or options exchange on which such options
are traded, or such other organization as may be responsible for
handling such option transactions. Each Fund, on behalf of its
applicable Portfolios, and the broker-dealer shall be responsible for
the sufficiency of assets held in any segregated account established
in compliance with applicable margin maintenance requirements and the
performance of other terms of any option contract.
Section 2.10. Futures Contracts. Upon receipt of Proper
Instructions, or pursuant to the provisions of any futures margin
procedural agreement among a Fund, on behalf of any applicable
Portfolio, the Custodian and any futures commission merchant (a
"Procedural Agreement"), the Custodian shall: (a) receive and retain
confirmations, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by the applicable
Portfolio; (b) deposit and maintain in a segregated account, cash,
securities and other assets designated as initial, maintenance or
variation "margin" deposits intended to secure the applicable
Portfolio's performance of its obligations under any futures contracts
purchased or sold or any options on futures contracts written by the
Portfolio, in accordance with the provisions of any Procedural
Agreement designed to comply with the rules of the Commodity Futures
Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organization(s),
regarding such margin deposits; and (c) release assets from and/or
transfer assets into such margin accounts only in accordance with any
such Procedural Agreements. Each Fund, on behalf of its applicable
Portfolios, and such futures commission merchant shall be responsible
for the sufficiency of assets held in the segregated account in
compliance with applicable margin maintenance requirements and the
performance of any futures contract or option on a futures contract in
accordance with its terms.
Section 2.11. Borrowing. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of a Portfolio to lenders or their
agents, or otherwise establish a segregated account as agreed to by
the applicable Fund on behalf of such Portfolio and the Custodian, as
collateral for borrowings effected by such Portfolio, provided that
such borrowed money is payable by the lender (a) to or upon the
Custodian's order, as Custodian for such Portfolio, and (b)
concurrently with delivery of such securities.
Section 2.12. Interest Bearing Deposits.
Upon receipt of Proper Instructions directing the Custodian to
purchase interest bearing fixed term and call deposits (hereinafter
referred to collectively, as "Interest Bearing Deposits") for the
account of a Portfolio, the Custodian shall purchase such Interest
Bearing Deposits in the name of the Portfolio with such banks or trust
companies (including the Custodian, any Subcustodian or any subsidiary
or affiliate of the Custodian) (hereinafter referred to as "Banking
Institutions") and in such amounts as the applicable Fund may direct
pursuant to Proper Instructions. Such Interest Bearing Deposits may
be denominated in U.S. Dollars or other currencies, as the applicable
Fund on behalf of its Portfolio may determine and direct pursuant to
Proper Instructions. The Custodian shall include in its records with
respect to the assets of each Portfolio appropriate notation as to the
amount and currency of each such Interest Bearing Bank Deposit, the
accepting Banking Institution and all other appropriate details, and
shall retain such forms of advice or receipt evidencing such account,
if any, as may be forwarded to the Custodian by the Banking
Institution. The responsibilities of the Custodian to each Fund for
Interest Bearing Deposits accepted on the Custodian's books in the
United States on behalf of the Fund's Portfolios shall be that of a
U.S. bank for a similar deposit. With respect to Interest Bearing
Deposits other than those accepted on the Custodian's books, (a) the
Custodian shall be responsible for the collection of income as set
forth in Section 2.15 and the transmission of cash and instructions to
and from such accounts; and (b) the Custodian shall have no duty with
respect to the selection of the Banking Institution or, so long as the
Custodian acts in accordance with Proper Instructions, for the failure
of such Banking Institution to pay upon demand. Upon receipt of
Proper Instructions, the Custodian shall take such reasonable actions
as the applicable Fund deems necessary or appropriate to cause each
such Interest Bearing Deposit Account to be insured to the maximum
extent possible by all applicable deposit insurers including, without
limitation, the Federal Deposit Insurance Corporation.
Section 2.13. Foreign Exchange Transactions
(a) Foreign Exchange Transactions Other Than as Principal. Upon
receipt of Proper Instructions, the Custodian shall settle foreign
exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery on behalf of and for the account of a
Portfolio with such currency brokers or Banking Institutions as the
applicable Fund may determine and direct pursuant to Proper
Instructions. The Custodian shall be responsible for the transmission
of cash and instructions to and from the currency broker or Banking
Institution with which the contract or option is made, the safekeeping
of all certificates and other documents and agreements evidencing or
relating to such foreign exchange transactions and the maintenance of
proper records as set forth in Section 2.25. The Custodian shall have
no duty with respect to the selection of the currency brokers or
Banking Institutions with which a Fund deals on behalf of its
Portfolios or, so long as the Custodian acts in accordance with Proper
Instructions, for the failure of such brokers or Banking Institutions
to comply with the terms of any contract or option.
(b) Foreign Exchange Contracts as Principal. The Custodian shall
not be obligated to enter into foreign exchange transactions as
principal. However, if the Custodian has made available to a Fund its
services as a principal in foreign exchange transactions, upon receipt
of Proper Instructions, the Custodian shall enter into foreign
exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery on behalf of and for the account of a
Portfolio of such Fund with the Custodian as principal. The Custodian
shall be responsible for the selection of the currency brokers or
Banking Institutions and the failure of such currency brokers or
Banking Institutions to comply with the terms of any contract or
option.
(c) Payments. Notwithstanding anything to the contrary contained
herein, upon receipt of Proper Instructions the Custodian may, in
connection with a foreign exchange contract, make free outgoing
payments of cash in the form of U.S. Dollars or foreign currency prior
to receipt of confirmation of such foreign exchange contract or
confirmation that the countervalue currency completing such contract
has been delivered or received.
Section 2.14. Securities Loans. Upon receipt of Proper
Instructions, the Custodian shall, in connection with loans of
securities by a Portfolio, deliver securities of such Portfolio to the
borrower thereof prior to receipt of the collateral, if any, for such
borrowing; provided that, in cases of loans of securities secured by
cash collateral, the Custodian's instructions to the Securities System
shall require that the Securities System deliver the securities of the
Portfolio to the borrower thereof only upon receipt of the collateral
for such borrowing.
Section 2.15. Collections. The Custodian shall, and shall cause any
Subcustodian to: (a) collect amounts due and payable to each Fund
with respect to portfolio securities and other assets of each of such
Fund's Portfolios; (b) promptly credit to the account of each
applicable Portfolio all income and other payments relating to
portfolio securities and other assets held by the Custodian hereunder
upon Custodian's receipt of such income or payments or as otherwise
agreed in writing by the Custodian and the applicable Fund; (c)
promptly endorse and deliver any instruments required to effect such
collections; (d) promptly execute ownership and other certificates and
affidavits for all federal, state and foreign tax purposes in
connection with receipt of income, capital gains or other payments
with respect to portfolio securities and other assets of each
applicable Portfolio, or in connection with the purchase, sale or
transfer of such securities or other assets; and (e) promptly file any
certificates or other affidavits for the refund or reclaim of foreign
taxes paid, and promptly notify each applicable Fund of any changes to
law, interpretative rulings or procedures regarding such reclaims, and
otherwise use all available measures customarily used to minimize the
imposition of foreign taxes at source, and promptly inform each
applicable Fund of alternative means of minimizing such taxes of which
the Custodian shall become aware (or with the exercise of reasonable
care should have become aware); provided, however, that with respect
to portfolio securities registered in so-called street name, the
Custodian shall use its best efforts to collect amounts due and
payable to each Fund with respect to its Portfolios. The Custodian
shall promptly notify each applicable Fund in writing by facsimile
transmission or in such other manner as each such Fund and the
Custodian may agree in writing if any amount payable with respect to
portfolio securities or other assets of the Portfolios of such Fund(s)
is not received by the Custodian when due. The Custodian shall not be
responsible for the collection of amounts due and payable with respect
to portfolio securities or other assets that are in default.
Section 2.16. Dividends, Distributions and Redemptions. The
Custodian shall promptly release funds or securities: (a) upon
receipt of Proper Instructions, to one or more Distribution Accounts
designated by the applicable Fund or Funds in such Proper
Instructions; or (b) upon receipt of Special Instructions, as
otherwise directed by the applicable Fund or Funds, for the purpose of
the payment of dividends or other distributions to shareholders of
each applicable Portfolio, and payment to shareholders who have
requested repurchase or redemption of their shares of the Portfolio(s)
(collectively, the "Shares"). For purposes of this Agreement, a
"Distribution Account" shall mean an account established at a Banking
Institution designated by the applicable Fund on behalf of one or more
of its Portfolios in Special Instructions.
Section 2.17. Proceeds from Shares Sold. The Custodian shall
receive funds representing cash payments received for Shares issued or
sold from time to time by the Funds, and shall promptly credit such
funds to the account(s) of the applicable Portfolio(s). The Custodian
shall promptly notify each applicable Fund of Custodian's receipt of
cash in payment for Shares issued by such Fund by facsimile
transmission or in such other manner as the Fund and Custodian may
agree in writing. Upon receipt of Proper Instructions, the Custodian
shall: (a) deliver all federal funds received by the Custodian in
payment for Shares in payment for such investments as may be set forth
in such Proper Instructions and at a time agreed upon between the
Custodian and the applicable Fund; and (b) make federal funds
available to the applicable Fund as of specified times agreed upon
from time to time by the applicable Fund and the Custodian, in the
amount of checks received in payment for Shares which are deposited to
the accounts of each applicable Portfolio.
Section 2.18. Proxies, Notices, Etc. The Custodian shall deliver to
each applicable Fund, in the most expeditious manner practicable, all
forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to securities owned by one or more
of the applicable Fund's Portfolios that are received by the
Custodian, any Subcustodian, or any nominee of either of them, and,
upon receipt of Proper Instructions, the Custodian shall execute and
deliver, or cause such Subcustodian or nominee to execute and deliver,
such proxies or other authorizations as may be required. Except as
directed pursuant to Proper Instructions, neither the Custodian nor
any Subcustodian or nominee shall vote upon any such securities, or
execute any proxy to vote thereon, or give any consent or take any
other action with respect thereto.
Section 2.19. Bills and Other Disbursements. Upon receipt of Proper
Instructions, the Custodian shall pay or cause to be paid, all bills,
statements, or other obligations of each Portfolio.
Section 2.20. Nondiscretionary Functions. The Custodian shall
attend to all nondiscretionary details in connection with the sale,
exchange, substitution, purchase, transfer or other dealings with
securities or other assets of each Portfolio held by the Custodian,
except as otherwise directed from time to time pursuant to Proper
Instructions.
Section 2.21. Bank Accounts
(a) Accounts with the Custodian and any Subcustodians. The Custodian
shall open and operate a bank account or accounts (hereinafter
referred to collectively, as "Bank Accounts") on the books of the
Custodian or any Subcustodian provided that such account(s) shall be
in the name of the Custodian or a nominee of the Custodian, for the
account of a Portfolio, and shall be subject only to the draft or
order of the Custodian; provided however, that such Bank Accounts in
countries other than the United States may be held in an account of
the Custodian containing only assets held by the Custodian as a
fiduciary or custodian for customers, and provided further, that the
records of the Custodian shall indicate at all times the Portfolio or
other customer for which such securities and other assets are held in
such account and the respective interests therein. Such Bank Accounts
may be denominated in either U.S. Dollars or other currencies. The
responsibilities of the Custodian to each applicable Fund for deposits
accepted on the Custodian's books in the United States shall be that
of a U.S. bank for a similar deposit. The responsibilities of the
Custodian to each applicable Fund for deposits accepted on any
Subcustodian's books shall be governed by the provisions of Section
5.02.
(b) Accounts With Other Banking Institutions. The Custodian may open
and operate Bank Accounts on behalf of a Portfolio, in the name of the
Custodian or a nominee of the Custodian, at a Banking Institution
other than the Custodian or any Subcustodian, provided that such
account(s) shall be in the name of the Custodian or a nominee of the
Custodian, for the account of a Portfolio, and shall be subject only
to the draft or order of the Custodian; provided however, that such
Bank Accounts may be held in an account of the Custodian containing
only assets held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the Custodian
shall indicate at all times the Portfolio or other customer for which
such securities and other assets are held in such account and the
respective interests therein. Such Bank Accounts may be denominated
in either U.S. Dollars or other currencies. Subject to the provisions
of Section 5.01(a), the Custodian shall be responsible for the
selection of the Banking Institution and for the failure of such
Banking Institution to pay according to the terms of the deposit.
(c) Deposit Insurance. Upon receipt of Proper Instructions, the
Custodian shall take such reasonable actions as the applicable Fund
deems necessary or appropriate to cause each deposit account
established by the Custodian pursuant to this Section 2.21 to be
insured to the maximum extent possible by all applicable deposit
insurers including, without limitation, the Federal Deposit Insurance
Corporation.
Section 2.22. Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain domestic securities owned by a
Portfolio in: (a) The Depository Trust Company; (b) the Participants
Trust Company; (c) any book-entry system as provided in (i) Subpart O
of Treasury Circular No. 300, 31 CFR 306.115, (ii) Subpart B of
Treasury Circular Public Debt Series No. 27-76, 31 CFR 350.2, or (iii)
the book-entry regulations of federal agencies substantially in the
form of 31 CFR 306.115; or (d) any other domestic clearing agency
registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Securities Exchange Act of 1934 (or as may
otherwise be authorized by the Securities and Exchange Commission to
serve in the capacity of depository or clearing agent for the
securities or other assets of investment companies) which acts as a
securities depository and the use of which each applicable Fund has
previously approved by Special Instructions (as hereinafter defined)
(each of the foregoing being referred to in this Agreement as a
"Securities System"). Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following provisions:
(A) The Custodian may deposit and/or maintain securities held
hereunder in a Securities System, provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which Account shall not contain any assets of the
Custodian other than assets held as a fiduciary, custodian, or
otherwise for customers and shall be so designated on the books and
records of the Securities System.
(B) The Securities System shall be obligated to comply with the
Custodian's directions with respect to the securities held in such
Account and shall not be entitled to a lien against the assets in such
Account for extensions of credit to the Custodian other than for
payment of the purchase price of such assets.
(C) Each Fund hereby designates the Custodian as the party in whose
name any securities deposited by the Custodian in the Account are to
be registered.
(D) The books and records of the Custodian shall at all times
identify those securities belonging to each Portfolio which are
maintained in a Securities System.
(E) The Custodian shall pay for securities purchased for the account
of a Portfolio only upon (w) receipt of advice from the Securities
System that such securities have been transferred to the Account of
the Custodian, and (x) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account of such
Portfolio. The Custodian shall transfer securities sold for the
account of a Portfolio only upon (y) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account of the Custodian, and (z) the making of an
entry on the records of the Custodian to reflect such transfer and
payment for the account of such Portfolio. Copies of all advices from
the Securities System relating to transfers of securities for the
account of a Portfolio shall identify such Portfolio and shall be
maintained for such Portfolio by the Custodian. The Custodian shall
deliver to each applicable Fund on the next succeeding business day
daily transaction reports which shall include each day's transactions
in the Securities System for the account of each applicable Portfolio.
Such transaction reports shall be delivered to each applicable Fund or
any agent designated by such Fund pursuant to Proper Instructions, by
computer or in such other manner as such Fund and the Custodian may
agree in writing.
(F) The Custodian shall, if requested by a Fund pursuant to Proper
Instructions, provide such Fund with all reports obtained by the
Custodian or any Subcustodian with respect to a Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System.
(G) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any Securities System (except the federal
book-entry system) on behalf of any Portfolio as promptly as
practicable and shall take all actions reasonably practicable to
safeguard the securities of any Portfolio maintained with such
Securities System.
Section 2.23. Other Transfers.
(a) Upon receipt of Proper Instructions, the Custodian shall transfer
to or receive from a third party that has been appointed to serve as
an additional custodian of one or more Portfolios (an "Additional
Custodian") securities, cash and other assets of such Portfolio(s) in
accordance with such Proper Instructions. Each Additional Custodian
shall be identified as such on Appendix B, as the same may be amended
from time to time in accordance with the provisions of Section
9.06(c).
(b) Upon receipt of Special Instructions, the Custodian shall make
such other dispositions of securities, funds or other property of a
Portfolio in a manner or for purposes other than as expressly set
forth in this Agreement, provided that the Special Instructions
relating to such disposition shall include a statement of the purpose
for which the delivery is to be made, the amount of funds and/or
securities to be delivered, and the name of the person or persons to
whom delivery is to be made, and shall otherwise comply with the
provisions of Sections 3.01 and 3.03 hereof.
Section 2.24. Establishment of Segregated Account. Upon receipt of
Proper Instructions, the Custodian shall establish and maintain on its
books a segregated account or accounts for and on behalf of a
Portfolio, into which account or accounts may be transferred cash
and/or securities or other assets of such Portfolio, including
securities maintained by the Custodian in a Securities System pursuant
to Section 2.22 hereof, said account or accounts to be maintained:
(a) for the purposes set forth in Sections 2.09, 2.10 and 2.11 hereof;
(b) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the SEC relating to the
maintenance of segregated accounts by registered investment companies;
or (c) for such other purposes as set forth, from time to time, in
Special Instructions.
Section 2.25. Custodian's Books and Records. The Custodian shall
provide any assistance reasonably requested by a Fund in the
preparation of reports to such Fund's shareholders and others, audits
of accounts, and other ministerial matters of like nature. The
Custodian shall maintain complete and accurate records with respect to
securities and other assets held for the accounts of each Portfolio as
required by the rules and regulations of the SEC applicable to
investment companies registered under the 1940 Act, including: (a)
journals or other records of original entry containing a detailed and
itemized daily record of all receipts and deliveries of securities
(including certificate and transaction identification numbers, if
any), and all receipts and disbursements of cash; (b) ledgers or other
records reflecting (i) securities in transfer, (ii) securities in
physical possession, (iii) securities borrowed, loaned or
collateralizing obligations of each Portfolio, (iv) monies borrowed
and monies loaned (together with a record of the collateral therefor
and substitutions of such collateral), (v) dividends and interest
received, (vi) the amount of tax withheld by any person in respect of
any collection made by the Custodian or any Subcustodian, and (vii)
the amount of reclaims or refunds for foreign taxes paid; and (c)
cancelled checks and bank records related thereto. The Custodian
shall keep such other books and records of each Fund as such Fund
shall reasonably request. All such books and records maintained by
the Custodian shall be maintained in a form acceptable to the
applicable Fund and in compliance with the rules and regulations of
the SEC, including, but not limited to, books and records required to
be maintained by Section 31(a) of the 1940 Act and the rules and
regulations from time to time adopted thereunder. All books and
records maintained by the Custodian pursuant to this Agreement shall
at all times be the property of each applicable Fund and shall be
available during normal business hours for inspection and use by such
Fund and its agents, including, without limitation, its independent
certified public accountants. Notwithstanding the preceding sentence,
no Fund shall take any actions or cause the Custodian to take any
actions which would cause, either directly or indirectly, the
Custodian to violate any applicable laws, regulations or orders.
Section 2.26. Opinion of Fund's Independent Certified Public
Accountants. The Custodian shall take all reasonable action as a Fund
may request to obtain from year to year favorable opinions from such
Fund's independent certified public accountants with respect to the
Custodian's activities hereunder in connection with the preparation of
the Fund's Form N-1A and the Fund's Form N-SAR or other periodic
reports to the SEC and with respect to any other requirements of the
SEC.
Section 2.27. Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund a
written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the
Custodian under this Agreement, including, without limitation, the
Custodian's accounting system, internal accounting control and
procedures for safeguarding cash, securities and other assets,
including cash, securities and other assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report
shall be of sufficient scope and in sufficient detail as may
reasonably be required by any Fund and as may reasonably be obtained
by the Custodian.
Section 2.28. Overdraft Facility. In the event that the Custodian
is directed by Proper Instructions to make any payment or transfer of
funds on behalf of a Portfolio for which there would be, at the close
of business on the date of such payment or transfer, insufficient
funds held by the Custodian on behalf of such Portfolio, the Custodian
may, in its discretion, provide an overdraft (an "Overdraft") to the
applicable Fund on behalf of such Portfolio, in an amount sufficient
to allow the completion of such payment. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the applicable Fund and the Custodian; and (b)
shall accrue interest from the date of the Overdraft to the date of
payment in full by the applicable Fund on behalf of the applicable
Portfolio at a rate agreed upon in writing, from time to time, by the
Custodian and the applicable Fund. The Custodian and each Fund
acknowledge that the purpose of such Overdrafts is to temporarily
finance the purchase or sale of securities for prompt delivery in
accordance with the terms hereof, or to meet emergency expenses not
reasonably foreseeable by such Fund. The Custodian shall promptly
notify each applicable Fund in writing (an "Overdraft Notice") of any
Overdraft by facsimile transmission or in such other manner as such
Fund and the Custodian may agree in writing. At the request of the
Custodian, each applicable Fund, on behalf of one or more of its
Portfolios, shall pledge, assign and grant to the Custodian a security
interest in certain specified securities of the applicable Portfolio,
as security for Overdrafts provided to such Portfolio, under the terms
and conditions set forth in Appendix "C" attached hereto.
ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS
Section 3.01. Proper Instructions and Special Instructions.
(a) Proper Instructions. As used herein, the term "Proper
Instructions" shall mean: (i) a tested telex, a written (including,
without limitation, facsimile transmission) request, direction,
instruction or certification signed or initialed by or on behalf of
the applicable Fund by one or more Authorized Persons (as hereinafter
defined); (ii) a telephonic or other oral communication by one or more
Authorized Persons; or (iii) a communication effected directly between
an electro-mechanical or electronic device or system (including,
without limitation, computers) by or on behalf of the applicable Fund
by one or more Authorized Persons; provided, however, that
communications of the types described in clauses (ii) and (iii) above
purporting to be given by an Authorized Person shall be considered
Proper Instructions only if the Custodian reasonably believes such
communications to have been given by an Authorized Person with respect
to the transaction involved. Proper Instructions in the form of oral
communications shall be confirmed by the applicable Fund by tested
telex or in writing in the manner set forth in clause (i) above, but
the lack of such confirmation shall in no way affect any action taken
by the Custodian in reliance upon such oral instructions prior to the
Custodian's receipt of such confirmation. Each Fund and the Custodian
are hereby authorized to record any and all telephonic or other oral
instructions communicated to the Custodian. Proper Instructions may
relate to specific transactions or to types or classes of
transactions, and may be in the form of standing instructions.
(b) Special Instructions. As used herein, the term "Special
Instructions" shall mean Proper Instructions countersigned or
confirmed in writing by the Treasurer or any Assistant Treasurer of
the applicable Fund or any other person designated by the Treasurer of
such Fund in writing, which countersignature or confirmation shall be
(i) included on the same instrument containing the Proper Instructions
or on a separate instrument relating thereto, and (ii) delivered by
hand, by facsimile transmission, or in such other manner as the
applicable Fund and the Custodian agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, telecopy or telex number
agreed upon from time to time by the Custodian and the applicable
Fund.
Section 3.02. Authorized Persons. Concurrently with the execution
of this Agreement and from time to time thereafter, as appropriate,
each Fund shall deliver to the Custodian, duly certified as
appropriate by a Treasurer or Assistant Treasurer of such Fund, a
certificate setting forth: (a) the names, titles, signatures and
scope of authority of all persons authorized to give Proper
Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of such Fund (collectively, the
"Authorized Persons" and individually, an "Authorized Person"); and
(b) the names, titles and signatures of those persons authorized to
issue Special Instructions. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set
forth therein and shall be considered to be in full force and effect
until delivery to the Custodian of a similar certificate to the
contrary. Upon delivery of a certificate which deletes the name(s) of
a person previously authorized by a Fund to give Proper Instructions
or to issue Special Instructions, such persons shall no longer be
considered an Authorized Person or authorized to issue Special
Instructions for that Fund.
Section 3.03. Persons Having Access to Assets of the Portfolios.
Notwithstanding anything to the contrary contained in this Agreement,
no Authorized Person, Trustee, officer, employee or agent of any Fund
shall have physical access to the assets of any Portfolio of that Fund
held by the Custodian nor shall the Custodian deliver any assets of a
Portfolio for delivery to an account of such person; provided,
however, that nothing in this Section 3.03 shall prohibit (a) any
Authorized Person from giving Proper Instructions, or any person
authorized to issue Special Instructions from issuing Special
Instructions, so long as such action does not result in delivery of or
access to assets of any Portfolio prohibited by this Section 3.03; or
(b) each Fund's independent certified public accountants from
examining or reviewing the assets of the Portfolios of the Fund held
by the Custodian. Each Fund shall deliver to the Custodian a written
certificate identifying such Authorized Persons, Trustees, officers,
employees and agents of such Fund.
Section 3.04. Actions of Custodian Based on Proper Instructions and
Special Instructions. So long as and to the extent that the Custodian
acts in accordance with (a) Proper Instructions or Special
Instructions, as the case may be, and (b) the terms of this Agreement,
the Custodian shall not be responsible for the title, validity or
genuineness of any property, or evidence of title thereof, received by
it or delivered by it pursuant to this Agreement.
ARTICLE IV
SUBCUSTODIANS
The Custodian may, from time to time, in accordance with the relevant
provisions of this Article IV, appoint one or more Domestic
Subcustodians, Foreign Subcustodians, Interim Subcustodians and
Special Subcustodians to act on behalf of a Portfolio. (For purposes
of this Agreement, all duly appointed Domestic Subcustodians, Foreign
Subcustodians, Interim Subcustodians, and Special Subcustodians are
hereinafter referred to collectively, as "Subcustodians.")
Section 4.01. Domestic Subcustodians. The Custodian may, at any
time and from time to time, appoint any bank as defined in Section
2(a)(5) of the 1940 Act meeting the requirements of a custodian under
Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act on behalf of one or more Portfolios as a
subcustodian for purposes of holding cash, securities and other assets
of such Portfolios and performing other functions of the Custodian
within the United States (a "Domestic Subcustodian"); provided, that,
the Custodian shall notify each applicable Fund in writing of the
identity and qualifications of any proposed Domestic Subcustodian at
least thirty (30) days prior to appointment of such Domestic
Subcustodian, and such Fund may, in its sole discretion, by written
notice to the Custodian executed by an Authorized Person disapprove of
the appointment of such Domestic Subcustodian. If, following notice
by the Custodian to each applicable Fund regarding appointment of a
Domestic Subcustodian and the expiration of thirty (30) days after the
date of such notice, such Fund shall have failed to notify the
Custodian of its disapproval thereof, the Custodian may, in its
discretion, appoint such proposed Domestic Subcustodian as its
subcustodian.
Section 4.02. Foreign Subcustodians and Interim Subcustodians.
(a) Foreign Subcustodians. The Custodian may, at any time and from
time to time, appoint: (i) any bank, trust company or other entity
meeting the requirements of an "eligible foreign custodian" under
Section 17(f) of the 1940 Act and the rules and regulations thereunder
or by order of the Securities and Exchange Commission exempted
therefrom, or (ii) any bank as defined in Section 2(a)(5) of the 1940
Act meeting the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder to act on behalf of
one or more Portfolios as a subcustodian for purposes of holding cash,
securities and other assets of such Portfolios and performing other
functions of the Custodian in countries other than the United States
of America (a "Foreign Subcustodian"); provided, that, prior to the
appointment of any Foreign Subcustodian, the Custodian shall have
obtained written confirmation of the approval of the Board of Trustees
or other governing body or entity of each applicable Fund on behalf of
its applicable Portfolio(s) (which approval may be withheld in the
sole discretion of such Board of Trustees or other governing body or
entity) with respect to (i) the identity and qualifications of any
proposed Foreign Subcustodian, (ii) the country or countries in which,
and the securities depositories or clearing agencies, if any, through
which, any proposed Foreign Subcustodian is authorized to hold
securities and other assets of the applicable Portfolio(s), and (iii)
the form and terms of the subcustodian agreement to be entered into
between such proposed Foreign Subcustodian and the Custodian. Each
such duly approved Foreign Subcustodian and the countries where and
the securities depositories and clearing agencies through which they
may hold securities and other assets of the applicable Portfolios
shall be listed on Appendix "B" attached hereto, as it may be amended,
from time to time, in accordance with the provisions of Section
9.05(c) hereof. Each Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment by one of
its Portfolios which is to be held in a country in which no Foreign
Subcustodian is authorized to act, in order that there shall be
sufficient time for the Custodian to effect the appropriate
arrangements with a proposed foreign subcustodian, including obtaining
approval as provided in this Section 4.02(a). The Custodian shall not
amend any subcustodian agreement entered into with a Foreign
Subcustodian, or agree to change or permit any changes thereunder, or
waive any rights under such agreement, which materially affect a
Fund's rights or the Foreign Subcustodian's obligations or duties to
a Fund under such agreement, except upon prior approval pursuant to
Special Instructions.
(b) Interim Subcustodians. Notwithstanding the foregoing, in the
event that a Portfolio shall invest in a security or other asset to be
held in a country in which no Foreign Subcustodian is authorized to
act, the Custodian shall promptly notify the applicable Fund in
writing by facsimile transmission or in such other manner as such Fund
and Custodian shall agree in writing of the unavailability of an
approved Foreign Subcustodian in such country; and the Custodian
shall, upon receipt of Special Instructions, appoint any Person
designated by the applicable Fund in such Special Instructions to hold
such security or other asset. (Any Person appointed as a subcustodian
pursuant to this Section 4.02(b) is hereinafter referred to as an
"Interim Subcustodian.")
Section 4.03. Special Subcustodians. Upon receipt of Special
Instructions, the Custodian shall, on behalf of one or more
Portfolios, appoint one or more banks, trust companies or other
entities designated in such Special Instructions to act as a
subcustodian for purposes of: (i) effecting third-party repurchase
transactions with banks, brokers, dealers or other entities through
the use of a common custodian or subcustodian; (ii) establishing a
joint trading account for the applicable Portfolio(s) and other
registered open-end management investment companies for which Fidelity
Management & Research Company serves as investment adviser, through
which such Portfolios and such other investment companies shall
collectively participate in certain repurchase transactions; (iii)
providing depository and clearing agency services with respect to
certain variable rate demand note securities; and (iv) effecting any
other transactions designated by each applicable Fund in Special
Instructions. (Each such designated subcustodian is hereinafter
referred to as a "Special Subcustodian.") Each such duly appointed
Special Subcustodian shall be listed on Appendix "B" attached hereto,
as it may be amended from time to time in accordance with the
provisions of Section 9.05(c) hereof. In connection with the
appointment of any Special Subcustodian, the Custodian shall enter
into a subcustodian agreement with the Special Subcustodian in form
and substance approved by each applicable Fund, provided that such
agreement shall in all events comply with the provisions of the 1940
Act and the rules and regulations thereunder and the terms and
provisions of this Agreement. The Custodian shall not amend any
subcustodian agreement entered into with a Special Subcustodian, or
agree to change or permit any changes thereunder, or waive any rights
under such agreement, except upon prior approval pursuant to Special
Instructions.
Section 4.04. Termination of a Subcustodian. The Custodian shall
(i) cause each Domestic Subcustodian and Foreign Subcustodian to, and
(ii) use its best efforts to cause each Interim Subcustodian and
Special Subcustodian to, perform all of its obligations in accordance
with the terms and conditions of the subcustodian agreement between
the Custodian and such Subcustodian. In the event that the Custodian
is unable to cause such Subcustodian to fully perform its obligations
thereunder, the Custodian shall forthwith, upon the receipt of Special
Instructions, terminate such Subcustodian with respect to each
applicable Fund and, if necessary or desirable, appoint a replacement
Subcustodian in accordance with the provisions of Section 4.01 or
Section 4.02, as the case may be. In addition to the foregoing, the
Custodian (A) may, at any time in its discretion, upon written
notification to each applicable Fund, terminate any Domestic
Subcustodian, Foreign Subcustodian or Interim Subcustodian, and (B)
shall, upon receipt of Special Instructions, terminate any
Subcustodian with respect to each applicable Fund, in accordance with
the termination provisions under the applicable subcustodian
agreement.
Section 4.05. Certification Regarding Foreign Subcustodians. Upon
request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign Subcustodian
then acting on behalf of the Custodian for such Fund and its
Portfolios; (ii) the countries in which and the securities
depositories and clearing agents through which each such Foreign
Subcustodian is then holding cash, securities and other assets of any
Portfolio of such Fund; and (iii) such other information as may be
requested by such Fund to ensure compliance with Rule 17(f)-5 under
the 1940 Act.
ARTICLE V
STANDARD OF CARE; INDEMNIFICATION
Section 5.01. Standard of Care.
(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and
obligations under this Agreement, and shall be liable to each Fund for
all loss, damage and expense suffered or incurred by such Fund or its
Portfolios resulting from the failure of the Custodian to exercise
such reasonable care and diligence.
(b) Actions Prohibited by Applicable Law, Etc. In no event shall the
Custodian incur liability hereunder if the Custodian or any
Subcustodian or Securities System, or any subcustodian, securities
depository or securities system utilized by any such Subcustodian, or
any nominee of the Custodian or any Subcustodian (individually, a
"Person") is prevented, forbidden or delayed from performing, or omits
to perform, any act or thing which this Agreement provides shall be
performed or omitted to be performed, by reason of: (i) any provision
of any present or future law or regulation or order of the United
States of America, or any state thereof, or of any foreign country, or
political subdivision thereof or of any court of competent
jurisdiction; or (ii) any act of God or war or other similar
circumstance beyond the control of the Custodian, unless, in each
case, such delay or nonperformance is caused by (A) the negligence,
misfeasance or misconduct of the applicable Person, or (B) a
malfunction or failure of equipment operated or utilized by the
applicable Person other than a malfunction or failure beyond such
Person's control and which could not reasonably be anticipated and/or
prevented by such Person.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to any Fund or
Portfolio, (i) the Custodian shall, (ii) the Custodian shall cause any
applicable Domestic Subcustodian or Foreign Subcustodian to, and (iii)
the Custodian shall use its best efforts to cause any applicable
Interim Subcustodian or Special Subcustodian to, use all commercially
reasonable efforts and take all reasonable steps under the
circumstances to mitigate the effects of such event and to avoid
continuing harm to the Funds and the Portfolios.
(d) Advice of Counsel. The Custodian shall be entitled to receive
and act upon advice of counsel on all matters. The Custodian shall be
without liability for any action reasonably taken or omitted in good
faith pursuant to the advice of (i) counsel for the applicable Fund or
Funds, or (ii) at the expense of the Custodian, such other counsel as
the applicable Fund(s) and the Custodian may agree upon; provided,
however, with respect to the performance of any action or omission of
any action upon such advice, the Custodian shall be required to
conform to the standard of care set forth in Section 5.01(a).
(e) Expenses of the Funds. In addition to the liability of the
Custodian under this Article V, the Custodian shall be liable to each
applicable Fund for all reasonable costs and expenses incurred by such
Fund in connection with any claim by such Fund against the Custodian
arising from the obligations of the Custodian hereunder, including,
without limitation, all reasonable attorneys' fees and expenses
incurred by such Fund in asserting any such claim, and all expenses
incurred by such Fund in connection with any investigations, lawsuits
or proceedings relating to such claim; provided, that such Fund has
recovered from the Custodian for such claim.
(f) Liability for Past Records. The Custodian shall have no
liability in respect of any loss, damage or expense suffered by a
Fund, insofar as such loss, damage or expense arises from the
performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for such Fund
by entities other than the Custodian prior to the Custodian's
appointment as custodian for such Fund.
Section 5.02. Liability of Custodian for Actions of Other Persons.
(a) Domestic Subcustodians and Foreign Subcustodians. The Custodian
shall be liable for the actions or omissions of any Domestic
Subcustodian or any Foreign Subcustodian to the same extent as if such
action or omission were performed by the Custodian itself. In the
event of any loss, damage or expense suffered or incurred by a Fund
caused by or resulting from the actions or omissions of any Domestic
Subcustodian or Foreign Subcustodian for which the Custodian would
otherwise be liable, the Custodian shall promptly reimburse such Fund
in the amount of any such loss, damage or expense.
(b) Interim Subcustodians. Notwithstanding the provisions of Section
5.01 to the contrary, the Custodian shall not be liable to a Fund for
any loss, damage or expense suffered or incurred by such Fund or any
of its Portfolios resulting from the actions or omissions of an
Interim Subcustodian unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, in the event of any such loss, damage or
expense, the Custodian shall take all reasonable steps to enforce such
rights as it may have against such Interim Subcustodian to protect the
interests of the Funds and the Portfolios.
(c) Special Subcustodians and Additional Custodians. Notwithstanding
the provisions of Section 5.01 to the contrary and except as otherwise
provided in any subcustodian agreement to which the Custodian, a Fund
and any Special Subcustodian or Additional Custodian are parties, the
Custodian shall not be liable to a Fund for any loss, damage or
expense suffered or incurred by such Fund or any of its Portfolios
resulting from the actions or omissions of a Special Subcustodian or
Additional Subcustodian, unless such loss, damage or expense is caused
by, or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, that in the event of any such loss,
damage or expense, the Custodian shall take all reasonable steps to
enforce such rights as it may have against any Special Subcustodian or
Additional Custodian to protect the interests of the Funds and the
Portfolios.
(d) Securities Systems. Notwithstanding the provisions of Section
5.01 to the contrary, the Custodian shall not be liable to a Fund for
any loss, damage or expense suffered or incurred by such Fund or any
of its Portfolios resulting from the use by the Custodian of a
Securities System, unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Custodian; provided, however, that in the event of any such loss,
damage or expense, the Custodian shall take all reasonable steps to
enforce such rights as it may have against the Securities System to
protect the interests of the Funds and the Portfolios.
(e) Reimbursement of Expenses. Each Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the
Custodian on behalf of such Fund in connection with the fulfillment of
its obligations under this Section 5.02; provided, however, that such
reimbursement shall not apply to expenses occasioned by or resulting
from the negligence, misfeasance or misconduct of the Custodian.
Section 5.03. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, each Fund severally and not jointly agrees to
indemnify and hold harmless the Custodian and its nominees from all
loss, damage and expense (including reasonable attorneys' fees)
suffered or incurred by the Custodian or its nominee caused by or
arising from actions taken by the Custodian on behalf of such Fund in
the performance of its duties and obligations under this Agreement;
provided, however, that such indemnity shall not apply to loss, damage
and expense occasioned by or resulting from the negligence,
misfeasance or misconduct of the Custodian or its nominee. In
addition, each Fund agrees severally and not jointly to indemnify any
Person against any liability incurred by reason of taxes assessed to
such Person, or other loss, damage or expenses incurred by such
Person, resulting from the fact that securities and other property of
such Fund's Portfolios are registered in the name of such Person;
provided, however, that in no event shall such indemnification be
applicable to income, franchise or similar taxes which may be imposed
or assessed against any Person.
(b) Notice of Litigation, Right to Prosecute, Etc. No Fund shall be
liable for indemnification under this Section 5.03 unless a Person
shall have promptly notified such Fund in writing of the commencement
of any litigation or proceeding brought against such Person in respect
of which indemnity may be sought under this Section 5.03. With
respect to claims in such litigation or proceedings for which
indemnity by a Fund may be sought and subject to applicable law and
the ruling of any court of competent jurisdiction, such Fund shall be
entitled to participate in any such litigation or proceeding and,
after written notice from such Fund to any Person, such Fund may
assume the defense of such litigation or proceeding with counsel of
its choice at its own expense in respect of that portion of the
litigation for which such Fund may be subject to an indemnification
obligation; provided, however, a Person shall be entitled to
participate in (but not control) at its own cost and expense, the
defense of any such litigation or proceeding if such Fund has not
acknowledged in writing its obligation to indemnify the Person with
respect to such litigation or proceeding. If such Fund is not
permitted to participate or control such litigation or proceeding
under applicable law or by a ruling of a court of competent
jurisdiction, such Person shall reasonably prosecute such litigation
or proceeding. A Person shall not consent to the entry of any
judgment or enter into any settlement in any such litigation or
proceeding without providing each applicable Fund with adequate notice
of any such settlement or judgment, and without each such Fund's prior
written consent. All Persons shall submit written evidence to each
applicable Fund with respect to any cost or expense for which they are
seeking indemnification in such form and detail as such Fund may
reasonably request.
Section 5.04. Investment Limitations. If the Custodian has
otherwise complied with the terms and conditions of this Agreement in
performing its duties generally, and more particularly in connection
with the purchase, sale or exchange of securities made by or for a
Portfolio, the Custodian shall not be liable to the applicable Fund
and such Fund agrees to indemnify the Custodian and its nominees, for
any loss, damage or expense suffered or incurred by the Custodian and
its nominees arising out of any violation of any investment or other
limitation to which such Fund is subject.
Section 5.05. Fund's Right to Proceed. Notwithstanding anything to
the contrary contained herein, each Fund shall have, at its election
upon reasonable notice to the Custodian, the right to enforce, to the
extent permitted by any applicable agreement and applicable law, the
Custodian's rights against any Subcustodian, Securities System, or
other Person for loss, damage or expense caused such Fund by such
Subcustodian, Securities System, or other Person, and shall be
entitled to enforce the rights of the Custodian with respect to any
claim against such Subcustodian, Securities System or other Person,
which the Custodian may have as a consequence of any such loss, damage
or expense, if and to the extent that such Fund has not been made
whole for any such loss or damage. If the Custodian makes such Fund
whole for any such loss or damage, the Custodian shall retain the
ability to enforce its rights directly against such Subcustodian,
Securities System or other Person. Upon such Fund's election to
enforce any rights of the Custodian under this Section 5.05, such Fund
shall reasonably prosecute all actions and proceedings directly
relating to the rights of the Custodian in respect of the loss, damage
or expense incurred by such Fund; provided that, so long as such Fund
has acknowledged in writing its obligation to indemnify the Custodian
under Section 5.03 hereof with respect to such claim, such Fund shall
retain the right to settle, compromise and/or terminate any action or
proceeding in respect of the loss, damage or expense incurred by such
Fund without the Custodian's consent and provided further, that if
such Fund has not made an acknowledgement of its obligation to
indemnify, such Fund shall not settle, compromise or terminate any
such action or proceeding without the written consent of the
Custodian, which consent shall not be unreasonably withheld or
delayed. The Custodian agrees to cooperate with each Fund and take
all actions reasonably requested by such Fund in connection with such
Fund's enforcement of any rights of the Custodian. Each Fund agrees
to reimburse the Custodian for all reasonable out-of-pocket expenses
incurred by the Custodian on behalf of such Fund in connection with
the fulfillment of its obligations under this Section 5.05; provided,
however, that such reimbursement shall not apply to expenses
occasioned by or resulting from the negligence, misfeasance or
misconduct of the Custodian.
ARTICLE VI
COMPENSATION
On behalf of each of its Portfolios, each Fund shall compensate the
Custodian in an amount, and at such times, as may be agreed upon in
writing, from time to time, by the Custodian and such Fund.
ARTICLE VII
TERMINATION
Section 7.01. Termination of Agreement as to One or More Funds.
With respect to each Fund, this Agreement shall continue in full force
and effect until the first to occur of: (a) termination by the
Custodian by an instrument in writing delivered or mailed to such
Fund, such termination to take effect not sooner than ninety (90) days
after the date of such delivery; (b) termination by such Fund by an
instrument in writing delivered or mailed to the Custodian, such
termination to take effect not sooner than thirty (30) days after the
date of such delivery; or (c) termination by such Fund by written
notice delivered to the Custodian, based upon such Fund's
determination that there is a reasonable basis to conclude that the
Custodian is insolvent or that the financial condition of the
Custodian is deteriorating in any material respect, in which case
termination shall take effect upon the Custodian's receipt of such
notice or at such later time as such Fund shall designate. In the
event of termination pursuant to this Section 7.01 by any Fund (a
"Terminating Fund"), each Terminating Fund shall make payment of all
accrued fees and unreimbursed expenses with respect to such
Terminating Fund within a reasonable time following termination and
delivery of a statement to the Terminating Fund setting forth such
fees and expenses. Each Terminating Fund shall identify in any notice
of termination a successor custodian or custodians to which the cash,
securities and other assets of its Portfolios shall, upon termination
of this Agreement with respect to such Terminating Fund, be delivered.
In the event that no written notice designating a successor custodian
shall have been delivered to the Custodian on or before the date when
termination of this Agreement as to a Terminating Fund shall become
effective, the Custodian may deliver to a bank or trust company doing
business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all securities
and other assets of such Terminating Fund's Portfolios held by the
Custodian and all instruments held by the Custodian relative thereto
and all other property of the Terminating Fund's Portfolios held by
the Custodian under this Agreement. Thereafter, such bank or trust
company shall be the successor of the Custodian with respect to such
Terminating Fund under this Agreement. In the event that securities
and other assets of such Terminating Fund's Portfolios remain in the
possession of the Custodian after the date of termination hereof with
respect to such Terminating Fund owing to failure of the Terminating
Fund to appoint a successor custodian, the Custodian shall be entitled
to compensation for its services in accordance with the fee schedule
most recently in effect, for such period as the Custodian retains
possession of such securities and other assets, and the provisions of
this Agreement relating to the duties and obligations of the Custodian
and the Terminating Fund shall remain in full force and effect. In
the event of the appointment of a successor custodian, it is agreed
that the cash, securities and other property owned by a Terminating
Fund and held by the Custodian, any Subcustodian or nominee shall be
delivered to the successor custodian; and the Custodian agrees to
cooperate with such Terminating Fund in the execution of documents and
performance of other actions necessary or desirable in order to
substitute the successor custodian for the Custodian under this
Agreement.
Section 7.02. Termination as to One or More Portfolios. This
Agreement may be terminated as to one or more of a Fund's Portfolios
(but less than all of its Portfolios) by delivery of an amended
Appendix "A" deleting such Portfolios pursuant to Section 9.05(b)
hereof, in which case termination as to such deleted Portfolios shall
take effect thirty (30) days after the date of such delivery. The
execution and delivery of an amended Appendix "A" which deletes one or
more Portfolios shall constitute a termination of this Agreement only
with respect to such deleted Portfolio(s), shall be governed by the
preceding provisions of Section 7.01 as to the identification of a
successor custodian and the delivery of cash, securities and other
assets of the Portfolio(s) so deleted, and shall not affect the
obligations of the Custodian and any Fund hereunder with respect to
the other Portfolios set forth in Appendix "A," as amended from time
to time.
ARTICLE VIII
DEFINED TERMS
The following terms are defined in the following sections:
<TABLE>
<CAPTION>
<S> <C>
Term Section
Account 2.22
ADRs 2.06
Additional Custodian 2.23(a)
Authorized Person(s) 3.02
Banking Institution 2.12(a)
Business Day Appendix "C"
Bank Accounts 2.21
Distribution Account 2.16
Domestic Subcustodian 4.01
Foreign Subcustodian 4.02(a)
Fund Preamble
Institutional Client 2.03
Interim Subcustodian 4.02(b)
Overdraft 2.28
Overdraft Notice 2.28
Person 5.01(b)
Portfolio Preamble
Procedural Agreement 2.10
Proper Instructions 3.01(a)
SEC 2.22
Securities System 2.22
Shares 2.16
Special Instructions 3.01(b)
Special Subcustodian 4.03
Subcustodian Article IV
Terminating Fund 7.01
1940 Act Preamble
</TABLE>
ARTICLE IX
MISCELLANEOUS
Section 9.01. Execution of Documents, Etc.
(a) Actions by each Fund. Upon request, each Fund shall execute and
deliver to the Custodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in
connection with the performance by the Custodian or any Subcustodian
of their respective obligations to such Fund under this Agreement or
any applicable subcustodian agreement with respect to such Fund,
provided that the exercise by the Custodian or any Subcustodian of any
such rights shall in all events be in compliance with the terms of
this Agreement.
(b) Actions by Custodian. Upon receipt of Proper Instructions, the
Custodian shall execute and deliver to each applicable Fund or to such
other parties as such Fund(s) may designate in such Proper
Instructions, all such documents, instruments or agreements as may be
reasonable and necessary or desirable in order to effectuate any of
the transactions contemplated hereby.
Section 9.02. Representative Capacity; Nonrecourse Obligations. A
COPY OF THE DECLARATION OF TRUST OR OTHER ORGANIZATIONAL DOCUMENT OF
EACH FUND IS ON FILE WITH THE SECRETARY OF THE STATE OF THE FUND'S
FORMATION, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT
EXECUTED ON BEHALF OF THE TRUSTEES OF ANY FUND AS INDIVIDUALS, AND THE
OBLIGATIONS OF THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE
TRUSTEES, OFFICERS, SHAREHOLDERS OR PARTNERS OF ANY FUND INDIVIDUALLY,
BUT ARE BINDING ONLY UPON THE ASSETS AND PROPERTY OF EACH FUND'S
RESPECTIVE PORTFOLIOS. THE CUSTODIAN AGREES THAT NO SHAREHOLDER,
TRUSTEE, OFFICER OR PARTNER OF ANY FUND MAY BE HELD PERSONALLY LIABLE
OR RESPONSIBLE FOR ANY OBLIGATIONS OF ANY FUND ARISING OUT OF THIS
AGREEMENT.
Section 9.03. Several Obligations of the Funds and the Portfolios.
WITH RESPECT TO ANY OBLIGATIONS OF A FUND ON BEHALF OF ANY OF ITS
PORTFOLIOS ARISING OUT OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE OBLIGATIONS ARISING UNDER SECTIONS 2.28, 5.03, 5.05
and ARTICLE VI HEREOF, THE CUSTODIAN SHALL LOOK FOR PAYMENT OR
SATISFACTION OF ANY OBLIGATION SOLELY TO THE ASSETS AND PROPERTY OF
THE PORTFOLIO TO WHICH SUCH OBLIGATION RELATES AS THOUGH EACH FUND HAD
SEPARATELY CONTRACTED WITH THE CUSTODIAN BY SEPARATE WRITTEN
INSTRUMENT WITH RESPECT TO EACH OF ITS PORTFOLIOS.
Section 9.04. Representations and Warranties.
(a) Representations and Warranties of Each Fund. Each Fund hereby
severally and not jointly represents and warrants that each of the
following shall be true, correct and complete with respect to each
Fund at all times during the term of this Agreement: (i) the Fund is
duly organized under the laws of its jurisdiction of organization and
is registered as an open-end management investment company under the
1940 Act; and (ii) the execution, delivery and performance by the Fund
of this Agreement are (w) within its power, (x) have been duly
authorized by all necessary action, and (y) will not (A) contribute to
or result in a breach of or default under or conflict with any
existing law, order, regulation or ruling of any governmental or
regulatory agency or authority, or (B) violate any provision of the
Fund's corporate charter, Declaration of Trust or other organizational
document, or bylaws, or any amendment thereof or any provision of its
most recent Prospectus or Statement of Additional Information.
(b) Representations and Warranties of the Custodian. The Custodian
hereby represents and warrants to each Fund that each of the following
shall be true, correct and complete at all times during the term of
this Agreement: (i) the Custodian is duly organized under the laws of
its jurisdiction of organization and qualifies to act as a custodian
to open-end management investment companies under the provisions of
the 1940 Act; and (ii) the execution, delivery and performance by the
Custodian of this Agreement are (w) within its power, (x) have been
duly authorized by all necessary action, and (y) will not (A)
contribute to or result in a breach of or default under or conflict
with any existing law, order, regulation or ruling of any governmental
or regulatory agency or authority, or (B) violate any provision of the
Custodian's corporate charter, or other organizational document, or
bylaws, or any amendment thereof.
Section 9.05. Entire Agreement. This Agreement constitutes the
entire understanding and agreement of the Fund, on the one hand, and
the Custodian, on the other, with respect to the subject matter hereof
and accordingly, supersedes as of the effective date of this Agreement
any custodian agreement heretofore in effect between each Fund and the
Custodian.
Section 9.06. Waivers and Amendments. No provision of this
Agreement may be waived, amended or terminated except by a statement
in writing signed by the party against which enforcement of such
waiver, amendment or termination is sought; provided, however: (a)
Appendix "A" listing the Portfolios of each Fund for which the
Custodian serves as custodian may be amended from time to time to add
one or more Portfolios for one or more Funds, by each applicable
Fund's execution and delivery to the Custodian of an amended Appendix
"A", and the execution of such amended Appendix by the Custodian, in
which case such amendment shall take effect immediately upon execution
by the Custodian; (b) Appendix "A" may be amended from time to time to
delete one or more Portfolios (but less than all of the Portfolios) of
one or more of the Funds, by each applicable Fund's execution and
delivery to the Custodian of an amended Appendix "A", in which case
such amendment shall take effect thirty (30) days after such delivery,
unless otherwise agreed by the Custodian and each applicable Fund in
writing; (c) Appendix "B" listing Foreign Subcustodians, Special
Subcustodians and Additional Custodians approved by any Fund may be
amended from time to time to add or delete one or more Foreign
Subcustodians, Special Subcustodians or Additional Custodians for a
Fund or Funds by each applicable Fund's execution and delivery to the
Custodian of an amended Appendix "B", in which case such amendment
shall take effect immediately upon execution by the Custodian; and (d)
Appendix "C" setting forth the procedures relating to the Custodian's
security interest with respect to each Fund may be amended only by an
instrument in writing executed by each applicable Fund and the
Custodian.
Section 9.07. Interpretation. In connection with the operation of
this Agreement, the Custodian and any Fund may agree in writing from
time to time on such provisions interpretative of or in addition to
the provisions of this Agreement with respect to such Fund as may in
their joint opinion be consistent with the general tenor of this
Agreement. No interpretative or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment
of this Agreement or affect any other Fund.
Section 9.08. Captions. Headings contained in this Agreement, which
are included as convenient references only, shall have no bearing upon
the interpretation of the terms of the Agreement or the obligations of
the parties hereto.
Section 9.09. Governing Law. Insofar as any question or dispute may
arise in connection with the custodianship of foreign securities
pursuant to an agreement with a Foreign Subcustodian that is governed
by the laws of the State of New York, the provisions of this Agreement
shall be construed in accordance with and governed by the laws of the
State of New York, provided that in all other instances this Agreement
shall be construed in accordance with and governed by the laws of the
Commonwealth of Massachusetts, in each case without giving effect to
principles of conflicts of law.
Section 9.10. Notices. Except in the case of Proper Instructions or
Special Instructions, notices and other writings contemplated by this
Agreement shall be delivered by hand or by facsimile transmission
(provided that in the case of delivery by facsimile transmission,
notice shall also be mailed postage prepaid to the parties at the
following addresses:
(a) If to any Fund:
c/o Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02109
Attn: Treasurer of the Fidelity Funds
Telephone: (617) 563-7000
Telefax: (617) 476-4195
(b) If to the Custodian:
Brown Brothers Harriman & Company
40 Water Street
Boston, Massachusetts 02109
Attn: W. Casey Gildea, Assistant Manager
Telephone: (617) 772-1330
Telefax: (617) 772-2263
or to such other address as a Fund or the Custodian may have
designated in writing to the other.
Section 9.11. Assignment. This Agreement shall be binding on and
shall inure to the benefit of each Fund severally and the Custodian
and their respective successors and assigns, provided that, subject to
the provisions of Section 7.01 hereof, neither the Custodian nor any
Fund may assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of the other party.
Section 9.12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
With respect to each Fund, this Agreement shall become effective when
one or more counterparts have been signed and delivered by such Fund
and the Custodian.
Section 9.13. Confidentiality; Survival of Obligations. The parties
hereto agree that each shall treat confidentially the terms and
conditions of this Agreement and all information provided by each
party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by
any other party hereto solely for the purpose of rendering services
pursuant to this Agreement and, except as may be required in carrying
out this Agreement, shall not be disclosed to any third party without
the prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when provided
or thereafter becomes publicly available other than through a breach
of this Agreement, or that is required to be disclosed by any bank
examiner of the Custodian or any Subcustodian, any auditor of the
parties hereto, by judicial or administrative process or otherwise by
applicable law or regulation. The provisions of this Section 9.13 and
Sections 9.01, 9.02, 9.03, 9.09, Section 2.28, Section 3.04, Section
7.01, Article V and Article VI hereof and any other rights or
obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in its name and behalf on the day and year first above
written.
Each of the Investment Companies Listed on Brown Brothers Harriman &
Company
Appendix "A" Attached Hereto, on Behalf
of each of Their Respective Portfolios
[Signature Lines Omitted]
Exhibit (g)(2)
Appendix "B"
To
Custodian Agreement
Between
Brown Brothers Harriman & Co. and Each of the Investment
Companies Listed on Appendix "A" thereto
Dated as of ______________
The following is a list of Additional Custodians, Special
Subcustodians and Foreign Subcustodians under the Custodian Agreement
dated as of September 1, 1994 (the "Custodian Agreement"):
A. Additional Custodians
CUSTODIAN PURPOSE
Bank of New York FICASH
FITERM
B. Special Subcustodians:
SUBCUSTODIAN PURPOSE
Bank of New York FICASH
C. Foreign Subcustodians:
<TABLE>
<CAPTION>
<S> <C> <C>
COUNTRY FOREIGN SUBCUSTODIAN DEPOSITORY
Argentina Citibank, N.A., Buenos Aires Caja de Valores, S.A.;
(Citibank, N.A., New York Agt. 7/16/81 Central de Registracion y
New York Agreement Amendment 8/31/90) Liquidacion de Instrumentos
de Endeudamiento Publico (CRYL)
First National Bank of Boston, Buenos Aires
(First Nat. Bank of Boston Agreement 1/15/88
Omnibus Amendment 2/22/94)
Australia National Australia Bank Ltd., Melbourne Austraclear Limited;
(National Australia Bank Agt. 5/1/85 Reserve Bank Information and
Agreement Amendment 2/13/92 Transfer System (RITS)
Omnibus Amendment 11/22/93)
Austria Creditanstalt-Bankverein, Vienna Oesterreichische Kontrollbank
(Creditanstalt Bankverein Agreement 12/18/89 Aktiengesellschaft (OEKB)
Omnibus Amendment 1/17/94)
Bahrain British Bank of the Middle East, Manama None
Bangladesh Standard Chartered Bank, Dhaka None
(Standard Chartered Bank Agreement 2/18/92)
Belgium Banque Bruxelles Lambert, Brussels Caisse Interprofessionnelle de Depot
(Banque Bruxelles Lambert Agreement 11/15/90 et Virements de Titres (CIK)
Omnibus Amendment 3/1/94)
Banque Nationale de Belgique (BNB)
Bostwana Barclays Bank of Bostwana Ltd., Gaborone None
(Barclays Bank Agreement 10/5/94)
Brazil First National Bank of Boston, Sao Paulo Sao Paulo Stock Exchange
(First National Bank of Boston Agreement 1/5/88 (BOVESPA), Sistema Especial de
Omnibus Amendment 2/22/94) Liquidacao e Custodia (SELIC);
Rio de Janeiro Exchange (BVRJ)
Canada Canadian Imperial Bank of Commerce, Toronto Canadian Depository for Securities,
(Canadian Imperial Bank of Commerce Ltd., (CDS)
Agreement 9/9/88
Omnibus Amendment 12/1/93)
Royal Bank of Canada, Toronto Bank of Canada
Proposed Agreement
Chile Citibank, N.A., Santiago None
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
China-Shanghai Standard Chartered Bank, Shanghai Shanghai Securities Central Clearing
(Standard Chartered Bank Agreement 2/18/92) & Registration Corporation
(SSCCRC)
China-Shenzhen Standard Chartered Bank, Shenzhen Shenzhen Securities Registration
(Standard Chartered Bank Agreement 2/18/92) Corp. Ltd., (SSRC)
Colombia Cititrust Colombia , S.A., Sociedad Fiduciaria, Bogota None
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
Citibank N.A. Subsidiary Amendment 10/19/95
Citibank N.A./Cititrust Colombia Agreement 12/2/91)
Czech Republic Ceskoslovenska Obchodni Banka, S.A., Prague Stredisko Cennych Papiru (SCP)
(Ceskoslovenska Obchodni Banka Agreement 2/28/94)
Czech National Bank
Denmark Den Danske Bank, Copenhagen Vaerdipapircentralen - VP Center
(Den Danske Bank Agreement 1/1/89
Omnibus Amendment 12/1/93)
Ecuador Citibank, N.A., Quito None
(Citibank, N.A. New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
Citibank, Quito Side Letter 7/3/95)
Egypt Citibank, N.A., Cairo Misr for Clearing, Settlement
(Citibank, N.A. New York Agreement 7/16/81 and Depository
New York Agreement Amendment 8/31/90)
Finland Merita Bank Ltd., Helsinki Central Share Register of
Finland Cooperative (CSR)
Helsinki Money Market Center, Ltd.
(HMMC)
Finnish Central Securities
Depository Ltd.
France Banque Paribas, Paris SICOVAM
Agreement 4/2/93) Banque de France
Germany Dresdner Bank AG, Frankfurt Deutscher Kassenverein AG (DKV)
(Dresdner Bank Agreement 10/6/95)
Ghana Barclays Bank of Ghana Ltd., Accra None
(Barclays Bank Agreement 10/5/94)
Greece Citibank, N.A., Athens Apothetirion Titlon A.E.
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
Hong Kong The Hongkong & Shanghai Banking Hong Kong Securities Clearing Co.
Corp., Ltd., Hong Kong Ltd. (HKSCC);
(Hongkong & Shanghai Banking Corp. Agt. 4/19/91 Central Clearing and
Omnibus Supplement 12/29/93) Settlement System (CCASS)
Hungary Citibank Budapest, Rt. Central Depository and Clearing
(Citibank N.A., New York Agreement 7/16/81 House (Budapest) Ltd.,
New York Agreement Amendment 8/31/90 (KELER Ltd.)
Citibank N.A. Subsidiary Amendment 10/19/95
Citibank N.A./Citibank Budapest Agmt. 1/24/92
(amended 6/23/92 and 9/29/92))
India Citibank, N.A., Mumbai National Securities Depository Limted
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
Citibank, Mumbai Amendment 11/17/93)
Standard Chartered Bank, Mumbai
(Standard Chartered Bank Agreement 2/18/92
SCB, Mumbai Annexure and Side Letter 7/18/94)
Indonesia Citibank, N.A., Jakarta None
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
Ireland Allied Irish Banks, plc., Dublin Gilt Settlement Office (GSO)
(Allied Irish Banks Agreement 1/10/89
Omnibus Amendment 4/8/94) CREST
Israel Bank Hapoalim, B.M. Tel-Aviv Stock Exchange
(Bank Hapoalim Agreement 8/27/92) (TASE) Clearinghouse Ltd.
Italy Banca Commerciale Italiana, Milan Monte Titoli S.p.A.
(Banca Commerciale Italiana Agreement 5/8/89
Agreement Amendment 10/8/93 Banca D'Italia
Omnibus Amendment 12/14/93)
Japan Sumitomo Trust & Banking Co., Tokyo Japan Securities Depository Center
(Sumitomo Trust & Banking Agreement 7/17/92 (JASDEC)
Omnibus Amendment 1/13/94); Bank of Japan
Jordan Arab Bank, plc, Amman None
(Arab Bank Agreement 4/5/95
Kenya Barclays Bank of Kenya Ltd., Nairobi None
(Barclays Bank Agreement 10/5/94)
Lebanon British Bank of the Middle East, Beirut Midclear
Malaysia Hongkong Bank Malaysia Berhad Malaysian Central Depository Sdn.
(Hongkong & Shanghai Banking Corp. Agt. 4/19/91 Bhd. (MCD)
Omnibus Supplement 12/29/93
Malaysia Subsidiary Supplement 5/23/94) Bank Negara Malaysia
Mauritius Hongkong & Shanghai Banking Corp., Ltd., Central Depository & Settlement Co.,
Port Louis Ltd.
Mexico Citibank Mexico, S.A., Mexico City Institucion para el Deposito de
(Citibank N.A., New York Agreement 7/16/81 Valores- S.D. INDEVAL, S.A. de
New York Agreement Amendment 8/31/90 C.V.
Citibank, Mexico, S.A. Amendment 2/7/95)
Banco de Mexico
Morocco Banque Marocaine du Commerce Exterieur, None
Casablanca
(BMCE Agreement 7/6/94)
Namibia Standard Bank Namibia Ltd., Windhoek None
Netherlands ABN-AMRO, Bank N. V., Amsterdam Nederlands Centraal Instituut voor
Giraal Effektenverkeer BV (NECIGEF)/KAS Associatie N.V.
(ABN-AMRO Agreement 12/19/88) (KAS)
De Nederlandsche Bank (DNB)New
New Zealand National Australia Bank Ltd., Melbourne Reserve Bank of New Zealand
(RBNZ)
(National Australia Bank Agreement 5/1/85
Agreement Amendment 2/13/92 New Zealand Securities
Omnibus Amendment 11/22/93 Depository Limited (NZCDS)
New Zealand Addendum 3/7/89)
Norway Den norske Bank ASA, Oslo Verdipapirsentralen (VPS)
(Den norske Bank Agreement 11/16/94)
Oman British Bank of the Middle East, Muscat Muscat Securities Market
Pakistan Standard Chartered Bank, Karachi None
(Standard Chartered Bank Agreement 2/18/92)
Peru Citibank, N.A., Lima Caja de Valores (CAVAL)
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
Philippines Citibank, N.A., Manila The Philippines Central Depository,
(Citibank N.A., New York Agreement 7/16/81 Inc.
New York Agreement Amendment 8/31/90)
Poland Citibank Poland, S.A. National Depository of Securities
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90 National Bank of Poland
Citibank Subsidiary Amendment 10/19/95
Citibank, N.A./Citibank Poland S.A. Agt. 11/6/92)
Bank Polska Kasa Opieki S.A., Warsaw
Portugal Banco Espirito Santo e Comercial Central de Valores Mobiliaros
de Lisboa, S.A., Lisbon (Interbolsa)
(BESCL Agreement 4/26/89
Omnibus Amendment 2/23/94)
Russia Credit Suisse First Boston (Moscow), Ltd Rosvneshtorgbank
Singapore Hongkong & Shanghai Banking Central Depository Pte Ltd. (CDP)
Corp., Ltd., Singapore
(Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93)
Slovak Republic Ceskoslovenska Obchodna Banka, S.A., Bratislava Stredisko Cennych Papeirov (SCP)
(Ceskoslovenska Obchodna Banka Agmt. 10/12/94)
National Bank of Slovakia
South Africa First National Bank of Southern Africa Ltd., The Central Depository (Pty) Ltd.
Johannesburg (CD)
(First National Bank of Southern Africa Agmt. 8/7/91)
South Korea Citibank, N.A., Seoul Korean Securities Depository (KSD)
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90
Citibank, Seoul Agreement Supplement 10/28/94)
Spain Banco Santander S.A., Madrid Servicio de Compensacion y
(Banco Santander Agreement 12/14/88) Liquidacion de Valores (SCLV)
Banco de Espana
Sri Lanka Hongkong & Shanghai Banking Corp. Ltd., Central Depository System (Pvt)
Colombo Limited (CDS)
(Hongkong & Shanghai Banking Corp. Agt. 4/19/91
Omnibus Supplement 12/29/93)
Swaziland Barclays Bank of Swaziland Ltd., Mbabne None
(Barclays Bank Agreement 10/5/94)
Sweden Skandinaviska Enskilda Banken, Stockholm Vardepappercentralen VPC AB
(Skandinaviska Enskilda Banken Agreement 2/20/89
Omnibus Amendment 12/3/93)
Switzerland Swiss Bank Corporation, Basel Schweizerische Effekten - Giro A.G.
(Swiss Bank Corporation Agreement 3/1/94) (SEGA)
Taiwan Standard Chartered Bank, Taipei Taiwan Securities Central Depository
(Standard Chartered Bank Agmt. 2/18/92) Co. Ltd. (TSCD)
Thailand Hongkong & Shanghai Banking Corp. Ltd., Thailand Securities Depository
Bangkok Company (TSD)
(Hongkong & Shanghai Banking Corp. Agmt. 4/19/91
Omnibus Amendment 12/29/93)
Transnational Cedel Bank Societe
Anonyme, Luxembourg
Euroclear Clearance System
Societe Cooperative, Belgium
Turkey Citibank, N.A., Istanbul Takas ve Saklama Bankasi A.S. (TvS)
(Citibank N.A., New York Agmt. 7/16/81
New York Agmt. Amendment 8/31/90) Central Bank of Turkey (CBT)
United Kingdom Lloyds Bank PLC, London Central Gilts Office (CGO);
CREST;
Central Money Markets Office
(CMO)
Uruguay First National Bank of Boston, Montevideo None
Venezuela Citibank, N.A., Caracas None
(Citibank N.A., New York Agreement 7/16/81
New York Agreement Amendment 8/31/90)
Zambia Stanbic Bank Zambia Ltd., Lusaka Lusaka Central Depository
Zimbabwe Stanbic Bank Zimbabwe Ltd., Harare None
</TABLE>
Each of the Investment Companies Listed on Appendix "A" to the
Custodian Agreement,
on Behalf of Each of Their Respective Portfolios
[Signature Lines Omitted]
Exhibit (g)(2)
FORM OF
Appendix "C" to the
Custodian Agreement
Between
Each of the Investment Companies
Listed on Appendix "A" Thereto
And
BROWN BROTHERS HARRIMAN & COMPANY
Dated as of ____________
PROCEDURES RELATING TO CUSTODIAN'S SECURITY INTEREST
As security for any Overdrafts (as defined in the Custodian
Agreement) of any Portfolio, the applicable Fund, on behalf of such
Portfolio, shall pledge, assign and grant to the Custodian a security
interest in Collateral (as hereinafter defined), under the terms,
circumstances and conditions set forth in this Appendix "C".
Section 1. Defined Terms. As used in this Appendix "C" the
following terms shall have the following respective meanings:
(a) "Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which the Custodian is closed for business.
(b) "Collateral" shall mean, with respect to any Portfolio,
securities held by the Custodian on behalf of the Portfolio having a
fair market value (as determined in accordance with the procedures set
forth in the prospectus for the Portfolio) equal to the aggregate of
all Overdraft Obligations of such Portfolio: (i) identified in any
Pledge Certificate executed on behalf of such Portfolio; or (ii)
designated by the Custodian for such Portfolio pursuant to Section 3
of this Appendix C. Such securities shall consist of marketable
securities held by the Custodian on behalf of such Portfolio or, if no
such marketable securities are held by the Custodian on behalf of such
Portfolio, such other securities designated by the applicable Fund in
the applicable Pledge Certificate or by the Custodian pursuant to
Section 3 of this Appendix C.
(c) "Overdraft Obligations" shall mean, with respect to any
Portfolio, the amount of any outstanding Overdraft(s) provided by the
Custodian to such Portfolio together with all accrued interest
thereon.
(d) "Pledge Certificate" shall mean a Pledge Certificate in the form
attached to this Appendix "C" as Schedule 1 executed by a duly
authorized officer of the applicable Fund and delivered by such Fund
to the Custodian by facsimile transmission or in such other manner as
the applicable Fund and the Custodian may agree in writing.
(e) "Release Certificate" shall mean a Release Certificate in the
form attached to this Appendix "C" as Schedule 2 executed by a duly
authorized officer of the Custodian and delivered by the Custodian to
the applicable Fund by facsimile transmission or in such other manner
as such Fund and the Custodian may agree in writing.
(f) "Written Notice" shall mean a written notice executed by a duly
authorized officer of the party delivering the notice and delivered by
facsimile transmission or in such other manner as the applicable Fund
and the Custodian shall agree in writing.
Section 2. Pledge of Collateral. To the extent that any Overdraft
Obligations of a Portfolio are not satisfied by the close of business
on the first Business Day following the Business Day on which the
applicable Fund receives Written Notice requesting security for such
Overdraft Obligation and stating the amount of such Overdraft
Obligation, the applicable Fund, on behalf of such Portfolio, shall
pledge, assign and grant to the Custodian a first priority security
interest, by delivering to the Custodian, a Pledge Certificate
executed by such Fund on behalf of such Portfolio describing the
applicable Collateral. Such Written Notice may, in the discretion of
the Custodian, be included within or accompany the Overdraft Notice
relating to the applicable Overdraft Obligations.
Section 3. Failure to Pledge Collateral. In the event that the
applicable Fund shall fail: (a) to pay, on behalf of the applicable
Portfolio, the Overdraft Obligation described in such Written Notice;
(b) to deliver to the Custodian a Pledge Certificate pursuant to
Section 2; or (c) to identify substitute securities pursuant to
Section 6 upon the sale or maturity of any securities identified as
Collateral, the Custodian may, by Written Notice to the applicable
Fund specify Collateral which shall secure the applicable Overdraft
Obligation. Such Fund, on behalf of any applicable Portfolio, hereby
pledges, assigns and grants to the Custodian a first priority security
interest in any and all Collateral specified in such Written Notice;
provided that such pledge, assignment and grant of security shall be
deemed to be effective only upon receipt by the applicable Fund of
such Written Notice.
Section 4. Delivery of Additional Collateral. If at any time the
Custodian shall notify a Fund by Written Notice that the fair market
value of the Collateral securing any Overdraft Obligation of one of
such Fund's Portfolios is less than the amount of such Overdraft
Obligation, such Fund, on behalf of the applicable Portfolio, shall
deliver to the Custodian, within one (1) Business Day following the
Fund's receipt of such Written Notice, an additional Pledge
Certificate describing additional Collateral. If such Fund shall fail
to deliver such additional Pledge Certificate, the Custodian may
specify Collateral which shall secure the unsecured amount of the
applicable Overdraft Obligation in accordance with Section 3 of this
Appendix C.
Section 5. Release of Collateral. Upon payment by a Fund, on behalf
of one of its Portfolios, of any Overdraft Obligation secured by the
pledge of Collateral, the Custodian shall promptly deliver to such
Fund a Release Certificate pursuant to which the Custodian shall
release Collateral from the lien under the applicable Pledge
Certificate or Written Notice pursuant to Section 3 having a fair
market value equal to the amount paid by such Fund on account of such
Overdraft Obligation. In addition, if at any time a Fund shall notify
the Custodian by Written Notice that such Fund desires that specified
Collateral be released and: (a) that the fair market value of the
Collateral securing any Overdraft Obligation shall exceed the amount
of such Overdraft Obligation; or (b) that the Fund has delivered a
Pledge Certificate substituting Collateral for such Overdraft
Obligation, the Custodian shall deliver to such Fund, within one (1)
Business Day following the Custodian's receipt of such Written Notice,
a Release Certificate relating to the Collateral specified in such
Written Notice.
Section 6. Substitution of Collateral. A Fund may substitute
securities for any securities identified as Collateral by delivery to
the Custodian of a Pledge Certificate executed by such Fund on behalf
of the applicable Portfolio, indicating the securities pledged as
Collateral.
Section 7. Security for Individual Portfolios' Overdraft
Obligations. The pledge of Collateral by a Fund on behalf of any of
its individual Portfolios shall secure only the Overdraft Obligations
of such Portfolio. In no event shall the pledge of Collateral by one
of a Fund's Portfolios be deemed or considered to be security for the
Overdraft Obligations of any other Portfolio of such Fund or of any
other Fund.
Section 8. Custodian's Remedies. Upon (a) a Fund's failure to pay
any Overdraft Obligation of an applicable Portfolio within thirty (30)
days after receipt by such Fund of a Written Notice demanding security
therefore, and (b) one (1) Business Day's prior Written Notice to such
Fund, the Custodian may elect to enforce its security interest in the
Collateral securing such Overdraft Obligation, by taking title to (at
the then prevailing fair market value), or selling in a commercially
reasonable manner, so much of the Collateral as shall be required to
pay such Overdraft Obligation in full. Notwithstanding the provisions
of any applicable law, including, without limitation, the Uniform
Commercial Code, the remedy set forth in the preceding sentence shall
be the only right or remedy to which the Custodian is entitled with
respect to the pledge and security interest granted pursuant to any
Pledge Certificate or Section 3. Without limiting the foregoing, the
Custodian hereby waives and relinquishes all contractual and common
law rights of set off to which it may now or hereafter be or become
entitled with respect to any obligations of any Fund to the Custodian
arising under this Appendix "C" to the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Appendix to
be executed in its name and behalf on the day and year first above
written.
Each of the Investment Companies Listed on BROWN BROTHERS HARRIMAN &
Schedule "A" to the Custodian Agreement, on COMPANY
Behalf of Each of Their Respective Portfolios
[Signature Lines Omitted]
SCHEDULE 1
TO
APPENDIX "C"
PLEDGE CERTIFICATE
This Pledge Certificate is delivered pursuant to the Custodian
Agreement dated as of [ ] (the "Agreement"), between [
] (the "Fund") and [ ] (the "Custodian"). Capitalized terms
used herein without definition shall have the respective meanings
ascribed to them in the Agreement. Pursuant to [Section 2 or Section
4] of Appendix "C" attached to the Agreement, the Fund, on behalf of [
] (the "Portfolio"), hereby pledges, assigns and grants to the
Custodian a first priority security interest in the securities listed
on Exhibit "A" attached to this Pledge Certificate (collectively, the
"Pledged Securities"). Upon delivery of this Pledge Certificate, the
Pledged Securities shall constitute Collateral, and shall secure all
Overdraft Obligations of the Portfolio described in that certain
Written Notice dated , 19 , delivered by the Custodian to
the Fund. The pledge, assignment and grant of security in the Pledged
Securities hereunder shall be subject in all respect to the terms and
conditions of the Agreement, including, without limitation, Sections 7
and 8 of Appendix "C" attached thereto.
IN WITNESS WHEREOF, the Fund has caused this Pledge Certificate to be
executed in its name, on behalf of the Portfolio this day of
19 .
[FUND], on Behalf of [Portfolio]
By: ___________________
Name: ___________________
Title: ___________________
EXHIBIT "A"
TO
PLEDGE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
SCHEDULE 2
TO
APPENDIX "C"
RELEASE CERTIFICATE
This Release Certificate is delivered pursuant to the Custodian
Agreement dated as of [ ] (the "Agreement"), between [
] (the "Fund") and [ ] (the "Custodian"). Capitalized terms
used herein without definition shall have the respective meanings
ascribed to them in the Agreement. Pursuant to Section 5 of Appendix
"C" attached to the Agreement, the Custodian hereby releases the
securities listed on Exhibit "A" attached to this Release Certificate
from the lien under the [Pledge Certificate dated ___________, 19 or
the Written Notice delivered pursuant to Section 3 of Appendix "C"
dated _________, 19 ].
IN WITNESS WHEREOF, the Custodian has caused this Release Certificate
to be executed in its name and on its behalf this day of 19 .
BROWN BROTHERS HARRIMAN & COMPANY
By: _____________________
Name: _____________________
Title: _____________________
EXHIBIT "A"
TO
RELEASE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
Exhibit (g)(15)
Form of
FIDELITY GROUP
REPO CUSTODIAN AGREEMENT
FOR JOINT TRADING ACCOUNT
AGREEMENT dated as of ______, among THE BANK OF NEW YORK, a banking
corporation organized under the laws of the State of New York ("Repo
Custodian"), J.P. MORGAN SECURITIES INC. ("Seller") and each of the
entities listed on Schedule A-1, A-2, A-3 and A-4 (collectively, the
"Funds" and each a "Fund") hereto, acting on behalf of itself or (i)
in the case of the Funds listed on Schedule A-1 or A-2 hereto which
are portfolios or series, acting through the series company listed on
Schedule A-1 or A-2 hereto, (ii) in the case of the accounts listed on
Schedule A-3 hereto, acting through Fidelity Management & Research
Company, and (iii) in the case of the commingled or individual
accounts listed on Schedule A-4 hereto, acting through Fidelity
Management Trust Company (collectively, the "Funds" and each, a
"Fund").
WITNESSETH
WHEREAS, each of the Funds has entered into a master repurchase
agreement dated as of ___________, (the "Master Agreement") with
Seller pursuant to which from time to time one or more of the Funds,
as buyers, and Seller, as seller, may enter into repurchase
transactions effected through one or more joint trading accounts
(collectively, the "Joint Trading Account") established and
administered by one or more custodians of the Funds identified on
Schedule C hereto (each a "Custodian"); and,
WHEREAS, in each such repurchase transaction Seller will sell to such
Funds certain Securities (as hereinafter defined) selected from
Eligible Securities (as hereinafter defined) held by Repo Custodian,
subject to an agreement by Seller to repurchase such Securities; and
WHEREAS, Repo Custodian currently maintains a cash and securities
account (the "Seller Account") for Seller for the purpose of, among
other things, effecting repurchase transactions hereunder; and
WHEREAS, the Funds desire that the Repo Custodian serve as the
custodian for the Funds in connection with the repurchase transactions
effected hereunder, and that the Repo Custodian hold cash, Cash
Collateral (as hereinafter defined) and Securities for the Funds for
the purpose of effecting repurchase transactions hereunder.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Definitions.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "Banking Day" shall mean any day on which the Funds, Seller
Custodian, Repo Custodian, and the Federal Reserve Banks where the
Custodian and the Repo Custodian are located, are each open for
business.
(b) "Cash Collateral" shall mean all cash, denominated in U.S.
Dollars, credited by Repo Custodian to a Transaction Account pursuant
to Paragraphs 3, 6, 8 or 9 of the Master Agreement.
(c) "Custodian" shall have the meaning set forth in the preamble of
this Agreement.
(d) "Eligible Securities" shall mean those securities which are
identified as permissible securities for a particular Transaction
Category.
(e) "FICASH I Transaction" and "FICASH III Transaction " shall mean a
repurchase transaction in which the Repurchase Date is the Banking Day
next following the Sale Date and for which securities issued by the
government of the United States of America that are direct obligations
of the government of the United States of America shall constitute
Eligible Securities.
(f) "FICASH II Transaction" shall mean a repurchase transaction in
which the Repurchase Date is the Banking Day next following the Sale
Date and for which one or more of the following two categories of
securities, as specified by the Funds, shall constitute Eligible
Securities: (x) securities issued by the government of the United
States of America that are direct obligations of the government of the
United States of America, or (y) securities issued by or guaranteed as
to principal and interest by the government of the United States of
America, or by its agencies and/or instrumentalities, including, but
not limited to, the Federal Home Loan Bank, Federal Home Loan Mortgage
Corp., Government National Mortgage Association, Federal National
Mortgage Association, Federal Farm Credit Bank, Federal Intermediate
Credit Bank, Banks for Cooperatives, and Federal Land Banks.
(g) "FITERM I Transaction" and "FITERM III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is a date fixed by
agreement between Seller and the Participating Funds which is not the
Banking Day next following the Sale Date and for which securities
issued by the government of the United States of America that are
direct obligations of the government of the United States of America
shall constitute Eligible Securities.
(h) "FITERM II Transaction" shall mean a repurchase transaction in
which the Repurchase Date is a date fixed by agreement between Seller
and the Participating Funds which is not the Banking Day next
following the Sale Date and for which one or more of the following two
categories of securities, as specified by the Funds, shall constitute
Eligible Securities: (x) securities issued by the government of the
United States of America that are direct obligations of the government
of the United States of America, or (y) securities issued by or
guaranteed as to principal and interest by the government of the
United States of America, or by its agencies and/or instrumentalities,
including, but not limited to, the Federal Home Loan Bank, Federal
Home Loan Mortgage Corp., Government National Mortgage Association,
Federal National Mortgage Association, Federal Farm Credit Bank,
Federal Intermediate Credit Bank, Banks for Cooperatives, and Federal
Land Banks.
(i) "Fund" shall have the meaning set forth in the preamble of this
Agreement.
(j) "Fund Agent" shall mean the agent for the Participating Funds
designated in Paragraph 18 of the Master Agreement.
(k) "Joint Trading Account" shall have the meaning set forth in the
preamble of this Agreement.
(l) "Margin Percentage" with respect to any repurchase transaction
shall be 102% or such other percentage as is agreed to by Seller and
the Participating Funds (except that in no event shall the Margin
Percentage be less than 100%).
(m) "Market Value" shall have the meaning set forth in Paragraph 4 of
the Master Agreement.
(n) "Master Agreement" shall have the meaning set forth in the
preamble of this Agreement.
(o) "1940 Act" shall mean have the meaning set forth in Paragraph
3(c) of this Agreement.
(p) "Partial Payment" shall have the meaning set forth in Section
4(g) of this Agreement.
(q) "Participating Funds" shall mean those Funds that are parties to
a particular repurchase transaction effected through the Joint Trading
Account.
(r) "Pricing Rate" shall mean the per annum percentage rate agreed to
by Seller and the Participating Funds for a repurchase transaction.
(s) "Pricing Services" shall have the meaning set forth in Paragraph
7 of this Agreement.
(t) "Repo Custodian" shall have the meaning set forth in the preamble
of this Agreement.
(u) "Repurchase Date" shall mean the date fixed by agreement between
Seller and the Participating Funds on which the Seller is to
repurchase Securities and Cash Collateral, if any, from the
Participating Funds and the Participating Funds are to resell the
Securities and Cash Collateral, if any, including any date determined
by application of the provisions of Paragraphs 7 and 15 of the Master
Agreement.
(v) "Repurchase Price" for each repurchase transaction shall mean the
Sale Price, plus an incremental amount determined by applying the
Pricing Rate to the Sale Price, calculated on the basis of a 360-day
year and the number of actual days elapsed from (and including) the
Sale Date to (but excluding) the Repurchase Date.
(w) "Sale Date" shall mean the Banking Day on which Securities and
Cash Collateral, if any, are to be sold to the Participating Funds by
Seller pursuant to a repurchase transaction hereunder.
(x) "Sale Price" shall mean the price agreed upon by the
Participating Funds and Seller at which the Securities and Cash
Collateral, if any, are to be sold to the Participating Funds by
Seller.
(y) "Securities" shall mean all Eligible Securities delivered by
Seller or to be delivered by Seller to the Participating Funds
pursuant to a particular repurchase transaction and not yet
repurchased hereunder, together with all rights related thereto and
all proceeds thereof.
(z) "Securities System" shall have the meaning set forth in Paragraph
3(c) of this Agreement.
(aa) "Seller" shall have the meaning set forth in the preamble to
this Agreement.
(bb) "Seller Account" shall have the meaning set forth in the
preamble of this Agreement.
(cc) "Transaction Account" shall mean a cash account established and
maintained by Repo Custodian for the Funds to effect repurchase
transactions pursuant to the Master Agreement.
(dd) "Transaction Category" shall mean the particular type of
repurchase transaction effected hereunder, as determined with
reference to the term of the transaction and the categories of
Securities that constitute Eligible Securities therefor, which term
shall include FICASH I Transactions, FICASH II Transactions, FICASH
III Transactions, FITERM I Transactions, FITERM II Transactions,
FITERM III Transactions, and such other transaction categories as may
from time to time be designated by the Funds by notice to Seller,
Custodian and Repo Custodian.
2. Appointment of Repo Custodian. Upon the terms and conditions set
forth in this Agreement, Repo Custodian is hereby appointed by the
Funds to act as the custodian for the Participating Funds to hold
cash, Cash Collateral and Securities for the purpose of effecting
repurchase transactions for the Participating Funds through the Joint
Trading Account pursuant to the Master Agreement. Repo Custodian
hereby acknowledges the terms of the Master Agreement between the
Funds and Seller (attached as an Exhibit hereto), as amended from time
to time, and agrees to abide by the provisions thereof to the extent
such provisions relate to the responsibilities and operations of Repo
Custodian hereunder.
3. Maintenance of Transaction Accounts.
(a) Repo Custodian shall establish and maintain one or more
Transaction Accounts for the purpose of effecting repurchase
transactions hereunder for the Funds, in each case pursuant to the
Master Agreement. From time to time the Funds may cause Custodian, on
behalf of the Funds, to deposit Securities and cash with Repo
Custodian in the designated Transaction Account, in each case in
accordance with Paragraph 3 of the Master Agreement.
(b) Repo Custodian shall keep all Securities, cash and Cash
Collateral received for the Participating Funds segregated at all
times from those of any other person, firm or corporation in its
possession and shall identify all such Securities, cash and Cash
Collateral as subject to this Agreement and the Master Agreement.
Segregation may be accomplished by physical segregation with respect
to certificated securities held by the Repo Custodian and, in
addition, by appropriate identification on the books and records of
Repo Custodian in the case of all other Securities, cash and Cash
Collateral. Title to all Securities and Cash Collateral under a
repurchase transaction shall pass to the Participating Funds that are
parties to such repurchase transaction. All such Securities and Cash
Collateral shall be held by Repo Custodian for the Participating
Funds, and shall be subject at all times to the proper instructions of
the Participating Funds, or the Custodian on behalf of the
Participating Funds, with respect to the holding, transfer or
disposition of such Securities and Cash Collateral. Repo Custodian
shall include in its records for each Transaction Account all
instructions received by it which evidence an interest of the
Participating Funds in the Securities and Cash Collateral and shall
hold physically segregated any written agreement, receipt or other
writing received by it which evidences an interest of the
Participating Funds in the Securities and Cash Collateral.
(c) Any requirement to "deliver" or "transfer" cash or Cash
Collateral to the Participating Funds or to "credit" a Transaction
Account under this or any other paragraph of this Agreement shall be
made in immediately available funds. If Repo Custodian is required to
"deliver" or "transfer" Securities to the Participating Funds under
this or any other paragraph of this Agreement, Repo Custodian shall
take, or cause to be taken, the following actions to perfect the
Participating Funds' interest in such Securities as an outright
purchaser: (i) in the case of certificated securities and instruments
held by Seller, by physical delivery of the share certificates or
other instruments representing the Securities and by physical
segregation of such certificates or instruments from the Repo
Custodian's other assets in a manner indicating that the Securities
are being held for the Participating Funds (such securities and
instruments to be delivered in form suitable for transfer or
accompanied by duly executed instruments of transfer or assignment in
blank and accompanied by such other documentation as the Participating
Funds may request), (ii) in the case of Securities held in a customer
only account in a clearing agency or federal book-entry system
authorized for use by the Funds and meeting the requirements of Rule
17f-4 under the Investment Company Act of 1940, as amended (the "1940
Act") (such authorized agency or system being referred to herein as a
"Securities System"), by appropriate entry on the books and records of
Repo Custodian identifying the Securities as belonging to the
Participating Funds, or (iii) in the case of Securities held in Repo
Custodian's own account in a Securities System, by transfer to a
customer only account in the Securities System and by appropriate
entry on the books and records of Repo Custodian identifying such
Securities as belonging to the Participating Funds; provided, further,
that Repo Custodian shall confirm to the Participating Funds the
identity of the Securities transferred or delivered. Acceptance of a
"due bill", "trust receipt" or similar receipt or notification of
segregation issued by a third party with respect to Securities held by
such third party shall not constitute good delivery of Securities to
Repo Custodian for purposes of this Agreement or the Master Agreement
and shall expressly violate the terms of this Agreement and the Master
Agreement. The Funds shall identify by notice to Repo Custodian and
Seller those agencies or systems which have been approved by the Funds
for use under this Agreement and the Master Agreement. The Funds
hereby notify Repo Custodian and Seller that the following agencies
and systems have been approved by the Funds for use under this
Agreement and the Master Agreement, until such time as Repo Custodian
and Seller shall have been notified by the Funds to the contrary: (i)
Participants Trust Company; (ii) The Depository Trust Company; and
(iii) any book-entry system as provided in (A) Subpart O of Treasury
Circular No. 300, 31 CFR 306.115, (B) Subpart B of Treasury Circular
Public Debt Series No. 27-76, 31 CFR 350.2, or (C) the book-entry
regulations of federal agencies substantially in the form of 31 CFR
306.115.
4. Repurchase Transactions.
(a) Repo Custodian shall make all credits and debits to the
Transaction Account and effect the transfer of Securities to or from
the Participating Funds upon proper instructions received from the
Participating Funds, or the Custodian on behalf of the Participating
Funds, and shall make all credits and debits to the Seller Account and
effect the transfer of Securities to or from the Seller upon proper
instructions received from Seller. In the event that Repo Custodian
receives conflicting proper instructions from Seller and the
Participating Funds, or the Custodian on behalf of the Participating
Funds, Repo Custodian shall follow the Participating Funds' or the
Custodian's proper instructions. The Participating Funds shall give
Repo Custodian only such instructions as shall be permitted by the
Master Agreement. Notwithstanding the preceding sentence, the
Participating Funds, or the Custodian on behalf of the Participating
Funds, may from time to time instruct Repo Custodian to transfer cash
from the Transaction Account to Custodian.
(b) (i) Whenever on any Banking Day one or more Funds and Seller agree
to enter into a repurchase transaction, Seller and the Participating
Funds, or the Custodian on behalf of the Participating Funds, will
give Repo Custodian proper instructions by telephone or otherwise on
the Sale Date, specifying the Transaction Category, Repurchase Date,
Sale Price, Repurchase Price or the applicable Pricing Rate and the
Margin Percentage for each such repurchase transaction.
(ii) In the case of repurchase transactions in which the Repurchase
Date is the Banking Day next following the Sale Date (x) the
Participating Funds may increase or decrease the Sale Price for any
such repurchase transaction by no more than 10% of the initial Sale
Price by causing to be delivered further proper instructions by
telephone or otherwise to Repo Custodian prior to the close of
business on the Sale Date and (y) Seller and the Participating Funds
may by mutual consent agree to increase or decrease the Sale Price by
more than 10% of the initial Sale Price by causing to be provided
further proper instructions to Repo Custodian by the close of business
on the Sale Date. In any event, Repo Custodian shall not be
responsible for determining whether any such increase or decrease of
the Sale Price exceeds the 10% limitation.
(c) Seller will take such actions as are necessary to ensure that on
the Sale Date the aggregate Market Value of all Securities held by
Repo Custodian for Seller and cash in the Seller Account equals or
exceeds the Margin Percentage of the Sale Price. Seller shall give
Repo Custodian proper instructions specifying with respect to each of
the Securities which is to be the subject of a repurchase transaction
(a) the name of the issuer and the title of the Securities, and (b)
the Market Value of such Securities. Such instructions shall
constitute Seller's instructions to Repo Custodian to transfer the
Securities to the Participating Funds and/or Cash Collateral from the
Seller Account to the Transaction Account.
(d) Prior to the close of business on the Sale Date, the
Participating Funds shall transfer to, or maintain on deposit with,
Repo Custodian in the Transaction Account immediately available funds
in an amount equal to the Sale Price with respect to a particular
repurchase transaction.
(e) Prior to the close of business on the Sale Date, Repo Custodian
shall transfer Securities from Seller to the Participating Funds
and/or cash held in the Seller Account to the Transaction Account and
shall transfer to the Seller Account immediately available funds from
the Transaction Account in accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be
transferred by Seller to the Participating Funds are Eligible
Securities. Any securities which are not Eligible Securities for a
particular repurchase transaction hereunder shall not be included in
the calculations set forth below and shall not be transferred to the
Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value
of the Securities and cash, if any, to be so transferred.
(iii) Repo Custodian shall notify Seller in the event that the
aggregate Market Value of Securities and cash, if any, applicable to
the repurchase transaction is less than the Margin Percentage of the
Sale Price and Seller shall transfer, by the close of business on the
Sale Date, to Repo Custodian additional Securities and/or cash in the
amount of such deficiency. If Seller does not, by the close of
business on the Sale Date, transfer additional Securities and/or cash,
the Market Value of which equals or exceeds such deficiency, Repo
Custodian may, at its option, without notice to Seller, advance the
amount of such deficiency to Seller in order to effectuate the
repurchase transaction. It is expressly agreed that Repo Custodian is
not obligated to make an advance to Seller to enable it to complete
any repurchase transaction.
(iv) Subject to the provisions of Subparagraph (v) below, Repo
Custodian shall cause the Securities applicable to the repurchase
transaction received from Seller to be transferred to the
Participating Funds and shall cause any cash received from Seller to
be transferred to the Transaction Account, against transfer of the
Sale Price from the Transaction Account to the Seller Account, such
transfers of Securities and/or cash and funds to occur simultaneously
on a delivery versus payment basis.
(v) Notwithstanding anything to the contrary, if, for any repurchase
transaction, the amount of immediately available funds in the
Transaction Account is less than the agreed upon Sale Price in
connection with the repurchase transaction immediately prior to
effectuating such repurchase transaction, or if the aggregate Market
Value of the Securities and cash, if any, applicable to such
repurchase transaction is less than the Sale Price multiplied by the
Margin Percentage immediately prior to effectuating such repurchase
transaction, Repo Custodian shall effect the repurchase transaction to
the best of its ability by transferring Securities from Seller to the
Participating Funds and/or cash from the Seller Account to the
Transaction Account with an aggregate Market Value equal to the lesser
of (x) the amount of immediately available funds in the Transaction
Account multiplied by the Margin Percentage and (y) the aggregate
Market Value of the Securities available for transfer from Seller to
the Participating Funds and cash, if any, in the Seller Account,
against the transfer of immediately available funds from the
Transaction Account to the Seller Account in an amount equal to the
aggregate Market Value of the Securities and/or cash to be transferred
divided by the Margin Percentage; provided, however, that in either
such event Repo Custodian shall have the right not to transfer to the
Participating Funds such Securities and not to transfer such cash, if
any, to the Transaction Account and not to transfer from the
designated Transaction Account such funds as Repo Custodian
determines, in its sole discretion, will not be the subject of a
repurchase transaction. The actions of Repo Custodian pursuant to
this subparagraph (e)(v) shall not affect the obligations and
liabilities of the parties to each other pursuant to the Master
Agreement with regard to such repurchase transaction.
(f) In the event that on a Banking Day Seller desires to substitute
Securities applicable to such repurchase transaction with Eligible
Securities and/or Cash Collateral (to the extent provided in the
Master Agreement), Repo Custodian shall perform such substitution in
accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be
transferred to the Participating Funds are Eligible Securities. Any
securities which are not eligible for repurchase transactions
hereunder shall not be included in the calculations set forth below
and shall not be transferred to the Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value
of the Eligible Securities and/or Cash Collateral to be transferred.
Repo Custodian shall not make any substitution if, at the time of
substitution, the aggregate Market Value of all Securities and any
Cash Collateral applicable to such repurchase transaction immediately
after such substitution would be less than the Margin Percentage of
the Repurchase Price (calculated as if the Repurchase Date were the
date of substitution).
(iii) Repo Custodian shall then deliver to the Seller, subject to the
qualifications set forth above, the Securities to be substituted
against the delivery by Repo Custodian of substitute Eligible
Securities to the Participating Funds and/or the crediting of the
Transaction Account with Cash Collateral.
(iv) In the event Seller has caused Repo Custodian to credit the
Transaction Account with Cash Collateral in lieu of substitute
Eligible Securities, and has failed to deliver Eligible Securities
against such Cash Collateral not later than the close of business on
such Banking Day in accordance with the terms of the Master Agreement,
Repo Custodian shall promptly, but in no event later than 10:00 a.m.
the following Banking Day, notify the Participating Funds and Seller
of such failure.
(g) With respect to each repurchase transaction, at 10:00 a.m. New
York time, or at such other time as specified in proper instructions
of the Participating Funds (or the Custodian on behalf of the
Participating Funds) on the Repurchase Date, Repo Custodian shall
debit the Seller Account and credit the Transaction Account in the
amount of the Repurchase Price and shall transfer Securities from the
Participating Funds to the Seller and Cash Collateral, if any, from
the Transaction Account to the Seller Account in accordance with the
following provisions:
(i) If the amount of available funds in the Seller Account equals or
exceeds the Repurchase Price, Repo Custodian shall debit the Seller
Account and credit the Transaction Account in the amount of the
Repurchase Price and shall transfer all Securities applicable to such
repurchase transaction from the Participating Funds to the Seller and
debit the Transaction Account and credit the Seller Account in the
amount of any Cash Collateral applicable to such repurchase
transaction.
(ii) If the amount of available funds in the Seller Account is less
than the Repurchase Price, then Repo Custodian shall notify the Seller
of the amount of the deficiency and Seller shall promptly cause such
amount to be transferred to the Seller Account. If Seller fails to
cause the transfer of the entire amount of the deficiency to the
Seller Account, then Repo Custodian may, at its option and without
notice to Seller, advance to Seller the amount of such remaining
deficiency. It is expressly agreed that Repo Custodian is not
obligated to make any advance to Seller. If, following such transfer
and/or advance, the amount of available funds in the Seller Account
equals or exceeds the Repurchase Price then Repo Custodian shall debit
the Seller Account and credit the Transaction Account in the amount of
the Repurchase Price and shall transfer from the Participating Funds
to the Seller all Securities applicable to such repurchase transaction
and debit the Transaction Account and credit the Seller Account in the
amount of any Cash Collateral applicable to such repurchase
transaction.
(iii) If the Seller fails to cause the transfer of the entire amount
of the deficiency, as required by (ii) above, and Repo Custodian fails
to advance to Seller an amount sufficient to eliminate the entire
deficiency, then Repo Custodian shall debit the Seller Account in the
amount of all immediately available funds designated by Seller as
applicable to the repurchase transaction and credit the Transaction
Account in such amount (such amount being referred to as the "Partial
Payment") and shall transfer Securities from the Participating Funds
to the Seller such that the aggregate Market Value of all remaining
Securities and Cash Collateral in the Transaction Account with respect
to such repurchase transaction shall at least equal the difference
between Margin Percentage of the Repurchase Price and the Partial
Payment.
5. Payments on Securities. Repo Custodian shall credit to the Seller
Account as soon as received, all principal, interest and other sums
paid by or on behalf of the issuer in respect of the Securities and
collected by Repo Custodian, except as otherwise provided in Paragraph
8 of the Master Agreement.
6. Daily Statement. On each Banking Day on which any Participating
Funds have an outstanding repurchase transaction, Repo Custodian shall
deliver by facsimile to Custodian and to the Participating Funds a
statement identifying the Securities held by Repo Custodian with
respect to such repurchase transaction and the cash and Cash
Collateral, if any, held by Repo Custodian in the Transaction Account,
including a statement of the then current Market Value of such
Securities and the amounts, if any, credited to the Transaction
Account as of the close of trading on the previous Banking Day. Repo
Custodian shall also deliver to Custodian and the Participating Funds
such additional statements as the Participating Funds may reasonably
request.
7. Valuation.
(a) Repo Custodian shall confirm the Market Value of Securities and
the amount of Cash Collateral, if any (i) on the Sale Date prior to
transferring the Sale Price out of the Transaction Account to the
Seller Account against the receipt from Seller of the Securities and
Cash Collateral, if any, and (ii) on each Banking Day on which such
repurchase transaction is outstanding. If on any Banking Day the
aggregate Market Value of the Securities and Cash Collateral with
respect to any repurchase transaction is less than the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Banking Day) for such transaction, Repo Custodian shall
promptly, but in any case no later than 10:00 a.m. the following
Banking Day, notify Seller. If on any Banking Day the aggregate
market value of the Securities and Cash Collateral with respect to any
repurchase transaction is less than the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such
Banking Day) for such transaction, and Seller fails to deliver
additional Eligible Securities applicable to such repurchase
transaction or an additional amount of Cash Collateral by the close of
business on such Banking Day such that the aggregate market value of
the Securities and Cash Collateral at least equals the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Banking Day), Repo Custodian shall promptly, but in any
event no later than 10:00 a.m. the following Banking Day, notify the
Participating Funds of such failure. For purposes of determining
Seller's margin maintenance requirements on the Sale Date for
repurchase transactions in which the Repurchase Date is the Banking
Day immediately following the Sale Date, such aggregate market value
shall equal at least the Margin Percentage of the Sale Price.
(b) Repo Custodian shall determine the bid side portion of the Market
Value of the Securities by reference to the independent pricing
services ("Pricing Services") set forth on Schedule B. It is
understood and agreed that Repo Custodian shall use the prices made
available by the Pricing Services on the Banking Day of such
determination unless Seller and the Participating Funds mutually agree
that some other prices shall be used and so notify Repo Custodian by
proper instructions of the sum of the prices of all such Securities
priced in such different manner. In the event that Repo Custodian is
unable to obtain a valuation of any Securities from the Pricing
Services, Repo Custodian shall request a bid quotation from a broker's
broker or a broker dealer, set forth in Schedule B, other than Seller.
In the event Repo Custodian is unable to obtain a bid quotation for
any Securities from such a broker's broker or a broker dealer, Repo
Custodian (i) shall not include any such Securities in the
determination of whether the aggregate Market Value of the Securities
and any Cash Collateral equals at least the Margin Percentage of the
Repurchase Price and (ii) shall redeliver such Securities to Seller if
the Market Value of all other Securities and any Cash Collateral with
respect to such repurchase transaction equals at least the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Banking Day). The Repo Custodian may rely on prices
quoted by Pricing Services, broker's brokers or broker dealers, except
Seller, as set forth in Schedule B.
(c) (i) If, on any Banking Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase
transaction is less than the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Banking Day)
applicable to such repurchase transaction, Repo Custodian shall
deliver to the Participating Funds an amount of additional Eligible
Securities applicable to such repurchase transaction and/or debit the
Seller Account and credit the Transaction Account with an additional
amount of Cash Collateral, such that the aggregate Market Value of all
Securities and any Cash Collateral with respect to such repurchase
transaction shall equal at least the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such
Banking Day) applicable to such repurchase transaction; except that,
for purposes of determining Seller's margin maintenance requirements
on the Sale Date for repurchase transactions in which the Repurchase
Date is the Banking Day immediately following the Sale Date, such
aggregate market value shall equal at least the Margin Percentage of
the Sale Price.
(ii) If, on any Banking Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase
transaction exceeds the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Banking Day)
applicable to such repurchase transaction, Repo Custodian shall return
to the Seller all or a portion of such Securities or Cash Collateral,
if any; provided that the Market Value of the remaining Securities and
any Cash Collateral with respect to the repurchase transaction shall
be at least equal to the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Banking Day)
applicable to such repurchase transaction. At any time and from time
to time with respect to any repurchase transaction, if authorized by
the Participating Funds, or the Custodian on behalf of the
Participating Funds, the Repo Custodian shall debit the Transaction
Account by an amount of Cash Collateral and credit the Seller Account
by the same amount of Cash Collateral against simultaneous delivery
from Seller to the Participating Funds of Eligible Securities
applicable to such repurchase transaction with a Market Value at least
equal to the amount of Cash Collateral credited and debited.
8. Authorized Persons. Schedule C hereto sets forth those persons
who are authorized to act for Repo Custodian, Custodian, Seller and
the Funds, respectively, under this Agreement.
9. Proper Instructions. Proper instructions shall mean a tested
telex, facsimile, a written request, direction, instruction or
certification signed or initialed by or on behalf of the party giving
the instructions by one or more authorized persons (as provided in
Paragraph 8); provided, however, that no instructions directing the
delivery of Securities or the payment of funds to any individual who
is an authorized signatory of Custodian or Repo Custodian shall be
signed by that individual. Telephonic, other oral or
electro-mechanical or electronic instructions (including the code
which may be assigned by Repo Custodian to Custodian from time to
time) given by one of the above authorized persons shall also be
considered proper instructions if the party receiving such
instructions reasonably believes them to have been given by an
authorized person with respect to the transaction involved. Oral
instructions will be confirmed by tested telex, facsimile or in
writing in the manner set forth above. The Funds authorize Repo
Custodian to tape record any and all telephonic or other oral
instructions given to Repo Custodian. Proper instructions may relate
to specific transactions or to types or classes of transactions, and
may be in the form of standing instructions.
10. Standard of Care.
(a) Repo Custodian shall be obligated to exercise reasonable care and
diligence in carrying out the provisions of this Agreement and the
Master Agreement and shall be liable to each of the Funds and Seller
for any expenses or damages to the Funds or Seller for breach of Repo
Custodian's standard of care in this Agreement, as further provided in
this Paragraph. Repo Custodian assumes responsibility for loss to any
property held by it pursuant to the provisions of this Agreement which
is occasioned by the negligence of, or conversion, misappropriation or
theft by, Repo Custodian's officers, employees and agents. Repo
Custodian, at its option, may insure itself against loss from any
cause but shall be under no obligation to obtain insurance directly
for the benefit of the Funds. So long as and to the extent that Repo
Custodian exercises reasonable care and diligence and acts without
negligence, misfeasance or misconduct, Repo Custodian shall not be
liable to Seller or the Funds for (i) any action taken or omitted in
good faith in reliance upon proper instructions, (ii) any action taken
or omitted in good faith upon any notice, request, certificate or
other instrument reasonably believed by it to be genuine and to be
signed by the proper party or parties, (iii) any delay or failure to
act as may be required under this Agreement or under the Master
Agreement when such delay or failure is due to any act of God or war,
(iv) the actions or omissions of a Securities System, (v) the title,
validity or genuineness of any security received, delivered or held by
it pursuant to this Agreement or the Master Agreement, (vi) the
legality of the purchase or sale of any Securities by or to the
Participating Funds or Seller or the propriety of the amount for which
the same are purchased or sold (except to the extent of Repo
Custodian's obligations hereunder to determine whether securities are
Eligible Securities and to calculate the Market Value of Securities
and any Cash Collateral), (vii) the due authority of any person listed
on Schedule C to act on behalf of Custodian, Seller or the Funds, as
the case may be, with respect to this Agreement or (viii) the errors
of the Pricing Services, broker's brokers or broker dealers set forth
in Schedule B.
(b) Repo Custodian shall not be liable to Seller or the Funds for, or
considered to be the custodian of, any Eligible Securities or any
money to be used in a repurchase transaction, whether or not such
money is represented by any check, draft, or other instrument for the
payment of money, until the Eligible Securities have been delivered in
accordance with Paragraph 3 or until Repo Custodian actually receives
and collects such money on behalf of Seller or the Funds directly or
by the final crediting of the Seller Account or a Transaction Account
through the Securities System, except that this Paragraph 10(b) shall
not be deemed to limit the liability of Repo Custodian to Seller or
the Funds if the non-delivery of such Eligible Securities or the
failure to receive and collect such money results from the breach by
Repo Custodian of its obligations under this Agreement or the Master
Agreement.
(c) Repo Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by
it are such as properly may be held by the Participating Funds;
provided that notwithstanding anything to the contrary herein, Repo
Custodian shall be obligated to act in accordance with the guidelines
and proper instructions of the Participating Funds, or the Custodian
on behalf of the Participating Funds, with respect to the types of
Eligible Securities and the issuers of such Eligible Securities that
may be used in specific repurchase transactions.
(d) Repo Custodian promptly shall notify the Fund Agent and the
Custodian if Securities held by Repo Custodian are in default or if
payment on any Securities has been refused after due demand and
presentation and Repo Custodian shall take action to effect collection
of any such amounts upon the proper instructions of the Participating
Funds, or the Custodian on behalf of the Participating Funds, and
assurances satisfactory to it that it will be reimbursed for its costs
and expenses in connection with any such action.
(e) Repo Custodian shall have no duties, other than such duties as
are necessary to effectuate repurchase transactions in accordance with
this Agreement and the Master Agreement within the standard of care
set forth in Paragraph 10(a) above and in a commercially reasonable
manner.
11. Representations and Additional Covenants of Repo Custodian.
(a) Repo Custodian represents and warrants that (i) it is duly
authorized to execute and deliver this Agreement and to perform its
obligations hereunder and has taken all necessary action to authorize
such execution, delivery and performance, (ii) the execution, delivery
and performance of this Agreement do not and will not violate any
ordinance, declaration of trust, partnership agreement, articles of
incorporation, charter, rule or statute applicable to it or any
agreement by which it is bound or by which any of its assets are
affected, (iii) the person executing this Agreement on its behalf is
duly and properly authorized to do so, (iv) it has (and will maintain)
a copy of this Agreement and evidence of its authorization in its
official books and records, and (v) this Agreement has been executed
by one of its duly authorized officers at the level of Vice President
or higher.
(b) Repo Custodian further represents and warrants that (i) it has
not pledged, encumbered, hypothecated, transferred, disposed of, or
otherwise granted, any third party an interest in any Securities, (ii)
it does not have any security interest, lien or right of setoff in the
Securities, and (iii) it has not been notified by any third party, in
its capacity as Repo Custodian, custodian bank or clearing bank, of
the existence of any lien, claim, charge or encumbrance with respect
to any Securities that are the subject of such repurchase transaction.
Repo Custodian agrees that (i) it will not pledge, encumber,
hypothecate, transfer, dispose of, or otherwise grant, any third party
an interest in any Securities, (ii) it will not acquire any security
interest, lien or right of setoff in the Securities, and (iii) it will
promptly notify the Fund Agent, if, during the term of any outstanding
repurchase transaction, it is notified by any third party, in its
capacity as Repo Custodian, custodian bank or clearing bank, of the
Participating Funds or Seller, of the existence of any lien, claim,
charge or encumbrance with respect to any Securities that are the
subject of such repurchase transaction.
12. Indemnification.
(a) Notwithstanding the Participating Fund's obligation to the Repo
Custodian under Paragraph 12(b) below, so long as and to the extent
that Repo Custodian is in the exercise of reasonable care and
diligence and acts without negligence, misfeasance or misconduct,
Seller will indemnify Repo Custodian and hold it harmless against any
and all losses, claims, damages, liabilities or actions to which it
may become subject, and reimburse it for any expenses (including
attorneys' fees and expenses) incurred by it in connection therewith,
insofar as such losses, claims, damages, liabilities or actions arise
out of or are based upon or in any way related to this Agreement, the
Master Agreement or those arrangements. Without limiting the
generality of the foregoing indemnification, Repo Custodian shall be
indemnified by Seller for all costs and expenses, including attorneys'
fees, for its successful defense against claims that Repo Custodian
breached its standard of care and was negligent or engaged in
misfeasance or misconduct.
(b) So long as and to the extent that Repo Custodian is in the
exercise of reasonable care and diligence and acts without negligence,
misconduct or misfeasance, the Participating Funds will indemnify Repo
Custodian and hold it harmless against any and all losses, claims,
damages, liabilities or actions to which it may become subject, and
reimburse it for any expenses (including attorneys' fees and expenses)
incurred by it in connection therewith, insofar as such losses,
claims, damages, liabilities or actions result from the negligence,
misconduct or misfeasance of the Participating Funds under this
Agreement.
13. Rights and Remedies. The rights and remedies conferred upon the
parties hereto shall be cumulative, and the exercise or waiver of any
thereof shall not preclude or inhibit the exercise of any additional
rights and remedies.
14. Modification or Amendment. Except as otherwise provided in this
Paragraph 14, no modification, waiver or amendment of this Agreement
shall be binding unless in writing and executed by the parties hereto.
Schedule A, listing the Funds, may be amended from time to time to add
or delete Funds by the Funds (i) delivering an executed copy of an
addendum to Schedule A to Seller and Repo Custodian, and (ii)
amending Schedule A to the Master Agreement in accordance with the
provisions therein. The amendment of Schedule A as provided above
shall constitute appointment of Repo Custodian as a custodian for such
Fund. Schedule B may be amended from time to time by an instrument in
writing, or counterpart thereof, executed by Repo Custodian, Seller
and the Funds. Schedule C may be amended from time to time to change
an authorized person of: (i) the Funds, by written notice to Repo
Custodian and Seller by Ms. Sarah Zenoble or the Treasurer of the
Funds (or such persons who may be authorized from time to time in
writing by Ms. Zenoble or the President or Treasurer of Fidelity
Management and Research Company to trade on behalf of Fidelity's
taxable money market funds); (ii) Seller, by written notice to Repo
Custodian and the Funds by any Vice President of Seller; (iii) Repo
Custodian, by written notice to Seller, Custodian and the Funds by any
Vice President of Repo Custodian; and (iv) Custodian, by written
notice to Repo Custodian by any Vice President of Custodian. Schedule
D may be amended from time to time by any party hereto by delivery of
written notice to the other parties hereto. Repo Custodian shall
receive notice of any amendment to the Master Agreement at the address
set forth in Schedule D hereto; and, if such amendment would have a
material adverse effect on the rights of, or would materially increase
the obligations of Repo Custodian under this Agreement, any such
amendment shall also require the consent of Repo Custodian. Any such
amendment shall be deemed not to be material if Repo Custodian fails
to object in writing within 21 days after receipt of notice thereof.
No amendment to this Agreement shall affect the rights or obligations
of any Fund with respect to any outstanding repurchase transaction
entered into under this Agreement and the Master Agreement prior to
such amendment or with respect to any actions or omissions by any
party hereto prior to such amendment. In the event of conflict
between this Agreement and the Master Agreement, the Master Agreement
shall control.
15. Termination. This Agreement shall terminate forthwith upon
termination of the Master Agreement or may be terminated by any party
hereto on ten Banking Days' written notice to the other parties;
provided, however, that any such termination shall not affect any
repurchase transaction then outstanding or any rights or obligations
under this Agreement or the Master Agreement with respect to any
actions or omissions of any party hereto prior to termination. In the
event of termination, Repo Custodian will deliver any Securities, Cash
Collateral or cash held by it or any agent to Custodian or to such
successor custodian or custodian or subcustodian as the Participating
Funds shall instruct.
16. Compensation. Seller agrees to pay Repo Custodian compensation
for the services to be rendered hereunder, based upon rates which
shall be agreed upon from time to time.
17. Notices. Except with respect to communications between Custodian
and the Funds which shall be governed by the custodian agreement or
subcustodian agreement between such parties, as the case may be, and
except as otherwise provided herein or as the parties to the Agreement
shall from time to time otherwise agree, all instructions, notices,
reports and other communications contemplated by this Agreement shall
be given to the party entitled to receive such notice at the telephone
number and address listed on Schedule D hereto.
18. Severability. If any provision of this Agreement is held to be
unenforceable as a matter of law, the other terms and provisions
hereof shall not be affected thereby and shall remain in full force
and effect.
19. Binding Nature. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their successors and
assignees; provided that, no party hereto may assign this Agreement or
any of the rights or obligations hereunder without the prior written
consent of the other parties.
20. Headings. Section headings are for reference purposes only and
shall not be construed as a part of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one
instrument.
22. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
23. Limitation of Liability. Seller is hereby expressly put on
notice that the Declarations of Trust or the Certificates and
Agreements of Limited Partnership, as the case may be, of each
Participating Fund contain a limitation of liability provision
pursuant to which the obligations assumed by such Participating Fund
hereunder shall be limited in all cases to such Participating Fund and
its assets or, in the case of a series Fund, to the assets of that
series only, and neither Seller nor its respective agents or assigns
shall seek satisfaction of any such obligation from the officers,
employees, agents, directors, trustees, shareholders or partners of
any such Participating Fund or series.
24. Rights and Obligations of Each Fund. The rights and obligations
set forth in this Agreement with respect to each repurchase
transaction shall accrue only to the Participating Funds in accordance
with their respective interests therein. No other Fund shall receive
any rights or have any liabilities arising from any action or inaction
of any Participating Fund under this Agreement with respect to such
repurchase transaction.
25. General Provisions. This Agreement supersedes any other
custodian agreement by and among Seller, the Funds, and Repo Custodian
concerning repurchase transactions effected through the Joint Trading
Account. It is understood and agreed that time is of the essence with
respect to the performance of each party's respective obligations
hereunder.
26. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) In the case of transactions in which one of the parties is a
broker or dealer registered with the SEC under Section 15 of the
Exchange Act, the Securities Investor Protection Corporation has taken
the position that the provisions of the Securities Investor Protection
Act of 1970 (the "SIPA") do not protect the other party with respect
to any transaction hereunder; and
(b) In the case of transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the Exchange Act, SIPA
will not provide protection to the other party with respect to any
transaction hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
[Signature Lines Omitted]
SCHEDULE B
PRICING SOURCES
PRICING SERVICES
U.S. Government Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller
and the Funds)
GNMA - The Bond Buyer
FHLMC - The Bond Buyer
All other U.S. Government
and Agency Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller
and the Funds)
BROKERS' BROKERS AND BROKER DEALERS
U.S. Government Securities - Any Primary Dealer
GNMA - Any Primary Broker-Dealer's bid rate for such security
FHLMC - Any Primary Broker-Dealer's bid rate for such security
All other U.S. Government and Agency Securities - Any Primary
Broker-Dealer's bid rate for such security
Prices shall be as of the business day of the date of determination
or the last quote available. The pricing services, Brokers' Brokers
and Broker Dealers may be changed from time to time by agreement of
all the parties.
SCHEDULE C
AUTHORIZED PERSONS
Repo Custodian
Ken Rindos
Kurt Woetzel
Custodian
Ken Rindos
Kurt Woetzel
Seller
Joseph P. Blauvelt
Michael B. Boyer
Robert E. Curry
Patrick Doyle
Frank Forgione
Edward J. Frederick
Christopher Juliano
Joseph Marrone
Thomas T. McGee
John S. Mehrtens
John A. Michielini
Allen Smith, II
The Funds
Barron, Leland C. Harlow, Katharyn M. Stehman, Burnell R.
Carbone, John M. Henning, Frederick L. Jr. Todd, Deborah
Curtis, Fritz Huyck, Timothy Todd, John J.
Duby, Robert K. Jamen, Jon Torres, Joseph E.
Egan, Dorothy T. Litterst, Robert Williams, Richard
Glocke, David Silver, Samuel Zenoble, Sarah
SCHEDULE D
NOTICES
If to Custodian: The Bank of New York
One Wall Street, 4th Floor
New York, NY 10286
Telephone: (212) 635-7947
Attention: Sherman Yu, Esq.
With a copy to the Fund Agent
If to Repo Custodian: The Bank of New York
One Wall Street, 4th Floor
New York, New York 10286
Telephone: (212) 635-4809
Attention: Ms. Kristin Smith
If to Seller: J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Telephone: (212) 483-2323
Attention: Middle Office Traders Support
If to any of the Funds: FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah R. Todd or
Mr. Samuel Silver
If to the Fund Agent: Fidelity Investments
[Name of Fund]
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 584-4071
Attention: Mr. Mark Mufler
277282.c1
Exhibit (g)(15)
SCHEDULE 1
The following lists the additional counterparties to the Repo
Custodian Agreement for Joint Trading Account between The Bank of New
York and the Fidelity Funds:
BZW Government Securities, Inc.
CS First Boston Corp.
Daiwa Securities America, Inc.
Deutsche Bank Securities Corp.
Donaldson, Lufkin & Jenerette Securities Corp.
Fuji Securities, Inc.
Goldman Sachs & Co
Morgan Stanley & Co., Inc.
NationsBanc Capital Markets
Nikko Securities Co. International, Inc.
Nomura Securities International, Inc.
Prudential Securities, Inc.
Salomon Brothers, Inc.
Sanwa BJK Securities Co., LP
SBC Capital Markets, Inc.
Smith Barney, Inc.
Exhibit (g)(16)
Form of
FIDELITY GROUP
REPO CUSTODIAN AGREEMENT
FOR JOINT TRADING ACCOUNT
AGREEMENT dated as of ________, among CHEMICAL BANK, a banking
corporation organized under the laws of the State of New York ("Repo
Custodian"), GREENWICH CAPITAL MARKETS, INC. ("Seller") and each of
the entities listed on Schedule A-1, A-2, A-3 and A-4 hereto acting on
behalf of itself or (i) in the case of a series company, on behalf of
one or more of its portfolios or series listed on Schedule A-1 or A-2
hereto, (ii) in the case of the accounts listed on Schedule A-3
hereto, acting through Fidelity Management & Research Company, and
(iii) in the case of the commingled or individual accounts listed on
Schedule A-4 hereto, acting through Fidelity Management Trust Company
(collectively, the "Funds" and each, a "Fund").
WITNESSETH
WHEREAS, each of the Funds has entered into a master repurchase
agreement dated as of _____________, (the "Master Agreement") with
Seller pursuant to which from time to time one or more of the Funds,
as buyers, and Seller, as seller, may enter into repurchase
transactions effected through one or more joint trading accounts
(collectively, the "Joint Trading Account") established and
administered by one or more custodians of the Funds identified on
Schedule C hereto (each a "Custodian"); and,
WHEREAS, in each such repurchase transaction Seller will sell to such
Funds certain Securities (as hereinafter defined) selected from
Eligible Securities (as hereinafter defined) held by Repo Custodian ,
subject to an agreement by Seller to repurchase such Securities; and
WHEREAS, Repo Custodian currently maintains a cash and securities
account (the "Seller Account") for Seller for the purpose of, among
other things, effecting repurchase transactions hereunder; and
WHEREAS, the Funds desire that the Repo Custodian serve as the
custodian for each of the Funds in connection with the repurchase
transactions effected hereunder, and that the Repo Custodian hold
cash, Cash Collateral (as hereinafter defined) and Securities for each
of the Funds for the purpose of effecting repurchase transactions
hereunder.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Definitions.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "Banking Day" shall mean any day on which the Funds, Seller
Custodian, Repo Custodian, and the Federal Reserve Banks where the
Custodian and the Repo Custodian are located, are each open for
business.
(b) "Cash Collateral" shall mean all cash, denominated in U.S.
Dollars, credited by Repo Custodian to a Transaction Account pursuant
to Paragraphs 3, 6, 8 or 9 of the Master Agreement.
(c) "Custodian" shall have the meaning set forth in the preamble of
this Agreement.
(d) "Eligible Securities" shall mean those securities which are
identified as permissible securities for a particular Transaction
Category.
(e) "FICASH I Transaction" and "FICASH III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is the Banking Day
next following the Sale Date and for which securities issued by the
government of the United States of America that are direct obligations
of the government of the United States of America shall constitute
Eligible Securities.
(f) "FICASH II Transaction" shall mean a repurchase transaction in
which the Repurchase Date is the Banking Day next following the Sale
Date and for which one or more of the following two categories of
securities, as specified by the Funds, shall constitute Eligible
Securities: (x) securities issued by the government of the United
States of America that are direct obligations of the government of the
United States of America, or (y) securities issued by or guaranteed as
to principal and interest by the government of the United States of
America, or by its agencies and/or instrumentalities, including, but
not limited to, the Federal Home Loan Bank, Federal Home Loan Mortgage
Corp., Government National Mortgage Association, Federal National
Mortgage Association, Federal Farm Credit Bank, Federal Intermediate
Credit Bank, Banks for Cooperatives, and Federal Land Banks.
(g) "FITERM I Transaction" and "FITERM III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is a date fixed by
agreement between Seller and the Participating Funds which is not the
Banking Day next following the Sale Date, or if applicable, the date
fixed upon exercise of an Unconditional Resale Right (as hereinafter
defined) by the Participating Funds and for which securities issued by
the government of the United States of America that are direct
obligations of the government of the United States of America shall
constitute Eligible Securities.
(h) "FITERM II Transaction" shall mean a repurchase transaction in
which the Repurchase Date is a date fixed by agreement between Seller
and the Participating Funds which is not the Banking Day next
following the Sale Date, or, if applicable, the date fixed upon
exercise of an Unconditional Resale Right (as hereinafter defined) by
the Participating Funds and for which one or more of the following two
categories of securities, as specified by the Funds, shall constitute
Eligible Securities: (x) securities issued by the government of the
United States of America that are direct obligations of the government
of the United States of America, or (y) securities issued by or
guaranteed as to principal and interest by the government of the
United States of America, or by its agencies and/or instrumentalities,
including, but not limited to, the Federal Home Loan Bank, Federal
Home Loan Mortgage Corp., Government National Mortgage Association,
Federal National Mortgage Association, Federal Farm Credit Bank,
Federal Intermediate Credit Bank, Banks for Cooperatives, and Federal
Land Banks.
(i) "Fund" shall have the meaning set forth in the preamble of this
Agreement.
(j) "Fund Agent" shall mean the agent for the Participating Funds
designated in Paragraph 18 of the Master Agreement.
(k) "Joint Trading Account" shall have the meaning set forth in the
preamble of this Agreement.
(l) "Margin Percentage" with respect to any repurchase transaction
shall be 102% or such other percentage as is agreed to by Seller and
the Participating Funds (except that in no event shall the Margin
Percentage be less than 100%).
(m) "Market Value" shall have the meaning set forth in Paragraph 4 of
the Master Agreement.
(n) "Master Agreement" shall have the meaning set forth in the
preamble of this Agreement.
(o) "1940 Act" shall mean have the meaning set forth in Paragraph
3(c) of this Agreement.
(p) "Partial Payment" shall have the meaning set forth in Section
4(g) of this Agreement.
(q) "Participating Funds" shall mean those Funds that are parties to
a particular repurchase transaction effected through the Joint Trading
Account.
(r) "Pricing Rate" shall mean the per annum percentage rate agreed to
by Seller and the Participating Funds for a particular repurchase
transaction.
(s) "Pricing Services" shall have the meaning set forth in Paragraph
7 of this Agreement.
(t) "Repo Custodian" shall have the meaning set forth in the preamble
of this Agreement.
(u) "Repurchase Date" shall mean the date fixed by agreement between
Seller and the Participating Funds on which the Seller is to
repurchase Securities and Cash Collateral, if any, from the
Participating Funds and the Participating Funds are to resell the
Securities and Cash Collateral, if any, including any date determined
by application of the provisions of Paragraphs 7(a) and 15 of the
Master Agreement.
(v) "Repurchase Price" for each repurchase transaction shall mean the
Sale Price, plus an incremental amount determined by applying the
Pricing Rate to the Sale Price, calculated on the basis of a 360-day
year and the number of actual days elapsed from (and including) the
Sale Date to (but excluding) the Repurchase Date.
(w) "Sale Date" shall mean the Banking Day on which Securities and
Cash Collateral, if any, are to be sold to the Participating Funds by
Seller pursuant to a repurchase transaction hereunder.
(x) "Sale Price" shall mean the price agreed upon by the
Participating Funds and Seller at which the Securities and Cash
Collateral, if any, are to be sold to the Participating Funds by
Seller.
(y) "Securities" shall mean all Eligible Securities delivered by
Seller or to be delivered by Seller to the Participating Funds
pursuant to a particular repurchase transaction and not yet
repurchased hereunder, together with all rights related thereto and
all proceeds thereof.
(z) "Securities System" shall have the meaning set forth in Paragraph
3(c) of this Agreement.
(aa) "Seller" shall have the meaning set forth in the preamble to
this Agreement.
(bb) "Seller Account" shall have the meaning set forth in the
preamble of this Agreement.
(cc) "Transaction Account" shall mean a cash account established and
maintained by Repo Custodian for the Funds to effect repurchase
transactions pursuant to the Master Agreement.
(dd) "Transaction Category" shall mean the particular type of
repurchase transaction effected hereunder, as determined with
reference to the term of the transaction and the categories of
Securities that constitute Eligible Securities therefor, which term
shall include FICASH I Transactions, FICASH II Transactions, FICASH
III Transactions, FITERM I Transactions, FITERM II Transactions,
FITERM III Transactions, and such other transaction categories as may
from time to time be designated by the Funds by notice to Seller,
Custodian and Repo Custodian.
(ee) "Unconditional Resale Right" shall have the meaning set forth
in Paragraph 7(b) of the Master Agreement.
(ff) "Valuation Day" shall mean any day on which Repo Custodian is
open for business.
2. Appointment of Repo Custodian. Upon the terms and conditions set
forth in this Agreement, Repo Custodian is hereby appointed by the
Funds to act as the custodian for the Participating Funds to hold
cash, Cash Collateral and Securities for the purpose of effecting
repurchase transactions for the Participating Funds through the Joint
Trading Account pursuant to the Master Agreement. Repo Custodian
hereby acknowledges the terms of the Master Agreement between the
Funds and Seller (attached as an Exhibit hereto), as amended from time
to time, and agrees to abide by the provisions thereof to the extent
such provisions relate to the responsibilities and operations of Repo
Custodian hereunder.
3. Maintenance of Transaction Accounts.
(a) Repo Custodian shall establish and maintain one or more
Transaction Accounts for the purpose of effecting repurchase
transactions hereunder for the Funds, in each case pursuant to the
Master Agreement. From time to time the Funds may cause Custodian, on
behalf of the Funds, to deposit Securities and cash with Repo
Custodian in the designated Transaction Account, in each case in
accordance with Paragraph 3 of the Master Agreement.
(b) Repo Custodian shall keep all Securities, cash and Cash
Collateral received for the Participating Funds segregated at all
times from those of any other person, firm or corporation in its
possession and shall identify all such Securities, cash and Cash
Collateral as subject to this Agreement and the Master Agreement.
Segregation may be accomplished by physical segregation with respect
to certificated securities held by the Repo Custodian and, in
addition, by appropriate identification on the books and records of
Repo Custodian in the case of all other Securities, cash and Cash
Collateral. Title to all Securities and Cash Collateral under a
repurchase transaction shall pass to the Participating Funds that are
parties to such repurchase transaction. All such Securities and Cash
Collateral shall be held by Repo Custodian for the Participating
Funds, and shall be subject at all times to the proper instructions of
the Participating Funds, or the Custodian on behalf of the
Participating Funds, with respect to the holding, transfer or
disposition of such Securities and Cash Collateral. Repo Custodian
shall include in its records for each Transaction Account all
instructions received by it which evidence an interest of the
Participating Funds in the Securities and Cash Collateral and shall
hold physically segregated any written agreement, receipt or other
writing received by it which evidences an interest of the
Participating Funds in the Securities and Cash Collateral.
(c) Any requirement to "deliver" or "transfer" cash or Cash
Collateral to the Participating Funds or to "credit" a Transaction
Account under this or any other paragraph of this Agreement shall be
made in immediately available funds. If Repo Custodian is required to
"deliver" or "transfer" Securities to the Participating Funds under
this or any other paragraph of this Agreement, Repo Custodian shall
take, or cause to be taken, the following actions to perfect the
Participating Funds' interest in such Securities as an outright
purchaser: (i) in the case of certificated securities and instruments
held by Seller, by physical delivery of the share certificates or
other instruments representing the Securities and by physical
segregation of such certificates or instruments from the Repo
Custodian's other assets in a manner indicating that the Securities
are being held for the Participating Funds (such securities and
instruments to be delivered in form suitable for transfer or
accompanied by duly executed instruments of transfer or assignment in
blank and accompanied by such other documentation as the Participating
Funds may request), (ii) in the case of Securities held in a customer
only account in a clearing agency or federal book-entry system
authorized for use by the Funds and meeting the requirements of Rule
17f-4 under the Investment Company Act of 1940, as amended (the "1940
Act") (such authorized agency or system being referred to herein as a
"Securities System"), by appropriate entry on the books and records of
Repo Custodian identifying the Securities as belonging to the
Participating Funds, or (iii) in the case of Securities held in Repo
Custodian's own account in a Securities System, by transfer to a
customer only account in the Securities System and by appropriate
entry on the books and records of Repo Custodian identifying such
Securities as belonging to the Participating Funds; provided, further,
that Repo Custodian shall confirm to the Participating Funds the
identity of the Securities transferred or delivered. Acceptance of a
"due bill", "trust receipt" or similar receipt or notification of
segregation issued by a third party with respect to Securities held by
such third party shall not constitute good delivery of Securities to
Repo Custodian for purposes of this Agreement or the Master Agreement
and shall expressly violate the terms of this Agreement and the Master
Agreement. The Funds shall identify by notice to Repo Custodian and
Seller those agencies or systems which have been approved by the Funds
for use under this Agreement and the Master Agreement. The Funds
hereby notify Repo Custodian and Seller that the following agencies
and systems have been approved by the Funds for use under this
Agreement and the Master Agreement, until such time as Repo Custodian
and Seller shall have been notified by the Funds to the contrary: (i)
Participants Trust Company; (ii) The Depository Trust Company; and
(iii) any book-entry system as provided in (A) Subpart O of Treasury
Circular No. 300, 31 CFR 306.115, (B) Subpart B of Treasury Circular
Public Debt Series No. 27-76, 31 CFR 350.2, or (C) the book-entry
regulations of federal agencies substantially in the form of 31 CFR
306.115.
4. Repurchase Transactions.
(a) Repo Custodian shall make all credits and debits to the
Transaction Account and effect the transfer of Securities to or from
the Participating Funds upon proper instructions received from the
Participating Funds, or the Custodian on behalf of the Participating
Funds, and shall make all credits and debits to the Seller Account and
effect the transfer of Securities to or from the Seller upon proper
instructions received from Seller. In the event that Repo Custodian
receives conflicting proper instructions from Seller and the
Participating Funds, or the Custodian on behalf of the Participating
Funds, Repo Custodian shall follow the Participating Funds' or the
Custodian's proper instructions. The Participating Funds shall give
Repo Custodian only such instructions as shall be permitted by the
Master Agreement. Notwithstanding the preceding sentence, the
Participating Funds, or the Custodian on behalf of the Participating
Funds, may from time to time instruct Repo Custodian to transfer cash
from the Transaction Account to Custodian so long as such transfer is
not in contravention of the Master Agreement.
(b) (i) Whenever on any Banking Day one or more Funds and Seller agree
to enter into a repurchase transaction, Seller and the Participating
Funds, or the Custodian on behalf of the Participating Funds, will
give Repo Custodian proper instructions by telephone or otherwise by
5:00 p.m. New York time on the Sale Date, specifying the Transaction
Category, Repurchase Date, Sale Price, Repurchase Price or the
applicable Pricing Rate and the Margin Percentage for each such
repurchase transaction.
(ii) In the case of repurchase transactions in which the Repurchase
Date is the Banking Day next following the Sale Date (x) the
Participating Funds may increase or decrease the Sale Price for any
such repurchase transaction by no more than 10% of the initial Sale
Price by causing to be delivered further proper instructions by
telephone or otherwise to Repo Custodian by 5:15 p.m. New York time
(or at such later time as may be agreed upon by the parties) on the
Sale Date and (y) Seller and the Participating Funds may by mutual
consent agree to increase or decrease the Sale Price by more than 10%
of the initial Sale Price by causing to be provided further proper
instructions to Repo Custodian by the close of business on the Sale
Date. In any event, Repo Custodian shall not be responsible for
determining whether any such increase or decrease of the Sale Price
exceeds the 10% limitation.
(c) Seller will take such actions as are necessary to ensure that on
the Sale Date the aggregate Market Value of all Securities held by
Repo Custodian for Seller and cash in the Seller Account equals or
exceeds the Margin Percentage of the Sale Price. Seller shall give
Repo Custodian proper instructions specifying with respect to each of
the Securities which is to be the subject of a repurchase transaction
(a) the name of the issuer and the title of the Securities, and (b)
the Market Value of such Securities. Such instructions shall
constitute Seller's instructions to Repo Custodian to transfer the
Securities to the Participating Funds and/or Cash Collateral from the
Seller Account to the Transaction Account.
(d) By 5:00 p.m. New York Time on the Sale Date, the Participating
Funds shall transfer to, or maintain on deposit with, Repo Custodian
in the Transaction Account immediately available funds in an amount
equal to the Sale Price with respect to a particular repurchase
transaction.
(e) Prior to the close of business on the Sale Date, Repo Custodian
shall transfer Securities from Seller to the Participating Funds
and/or cash held in the Seller Account to the Transaction Account and
shall transfer to the Seller Account immediately available funds from
the Transaction Account in accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be
transferred by Seller to the Participating Funds are Eligible
Securities. Any securities which are not Eligible Securities for a
particular repurchase transaction hereunder shall not be included in
the calculations set forth below and shall not be transferred to the
Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value
of the Securities and cash, if any, to be so transferred.
(iii) Repo Custodian shall notify Seller in the event that the
aggregate Market Value of Securities and cash, if any, applicable to
the repurchase transaction is less than the Margin Percentage of the
Sale Price and Seller shall transfer, by the close of business on the
Sale Date, to Repo Custodian additional Securities and/or cash in the
amount of such deficiency. If Seller does not, by the close of
business on the Sale Date, transfer additional Securities and/or cash,
the Market Value of which equals or exceeds such deficiency, Repo
Custodian may, at its option, without notice to Seller, advance the
amount of such deficiency to Seller in order to effectuate the
repurchase transaction. It is expressly agreed that Repo Custodian is
not obligated to make an advance to Seller to enable it to complete
any repurchase transaction.
(iv) Subject to the provisions of Subparagraph (v) below, Repo
Custodian shall cause the Securities applicable to the repurchase
transaction received from Seller to be transferred to the
Participating Funds and shall cause any cash received from Seller to
be transferred to the Transaction Account, against transfer of the
Sale Price from the Transaction Account to the Seller Account, such
transfers of Securities and/or cash and funds to be deemed to occur
simultaneously.
(v) Notwithstanding anything to the contrary, if, for any repurchase
transaction, the amount of immediately available funds in the
Transaction Account is less than the agreed upon Sale Price in
connection with the repurchase transaction immediately prior to
effectuating such repurchase transaction, or if the aggregate Market
Value of the Securities and cash, if any, applicable to such
repurchase transaction is less than the Sale Price multiplied by the
Margin Percentage immediately prior to effectuating such repurchase
transaction, Repo Custodian shall effect the repurchase transaction to
the best of its ability by transferring Securities from Seller to the
Participating Funds and/or cash from the Seller Account to the
Transaction Account with an aggregate Market Value equal to the lesser
of (x) the amount of immediately available funds in the Transaction
Account multiplied by the Margin Percentage and (y) the aggregate
Market Value of the Securities available for transfer from Seller to
the Participating Funds and cash, if any, in the Seller Account,
against the transfer of immediately available funds from the
Transaction Account to the Seller Account in an amount equal to the
aggregate Market Value of the Securities and/or cash to be transferred
divided by the Margin Percentage; provided, however, that in either
such event Repo Custodian shall have the right not to transfer to the
Participating Funds such Securities and not to transfer such cash, if
any, to the Transaction Account and not to transfer from the
designated Transaction Account such funds as Repo Custodian
determines, in its sole discretion, will not be the subject of a
repurchase transaction. The actions of Repo Custodian pursuant to
this subparagraph (e)(v) shall not affect the obligations and
liabilities of the parties to each other pursuant to the Master
Agreement with regard to such repurchase transaction.
(f) In the event that on a Banking Day Seller desires to substitute
Securities applicable to such repurchase transaction with Eligible
Securities and/or Cash Collateral (to the extent provided in the
Master Agreement), Repo Custodian shall perform such substitution in
accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be
transferred to the Participating Funds are Eligible Securities. Any
securities which are not eligible for repurchase transactions
hereunder shall not be included in the calculations set forth below
and shall not be transferred to the Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value
of the Eligible Securities and/or Cash Collateral to be transferred.
Repo Custodian shall not make any substitution if, at the time of
substitution, the aggregate Market Value of all Securities and any
Cash Collateral applicable to such repurchase transaction immediately
after such substitution would be less than the Margin Percentage of
the Repurchase Price (calculated as if the Repurchase Date were the
date of substitution).
(iii) Repo Custodian shall then deliver to the Seller, subject to the
qualifications set forth above, the Securities to be substituted
against the delivery by Repo Custodian of substitute Eligible
Securities to the Participating Funds and/or the crediting of the
Transaction Account with Cash Collateral.
(iv) In the event Seller has caused Repo Custodian to credit the
Transaction Account with Cash Collateral in lieu of substitute
Eligible Securities, and has failed to deliver Eligible Securities
against such Cash Collateral not later than the close of business on
such Banking Day in accordance with the terms of the Master Agreement,
Repo Custodian shall promptly, but in no event later than 10:00 a.m.
the following Banking Day, notify the Participating Funds and Seller
of such failure.
(g) With respect to each repurchase transaction, at 9:00 a.m. New
York time, or at such other time as specified in proper instructions
of the Participating Funds (or the Custodian on behalf of the
Participating Funds) on the Repurchase Date, Repo Custodian shall
debit the Seller Account and credit the Transaction Account in the
amount of the Repurchase Price and shall transfer Securities from the
Participating Funds to the Seller and Cash Collateral, if any, from
the Transaction Account to the Seller Account in accordance with the
following provisions:
(i) If the amount of available funds in the Seller Account equals or
exceeds the Repurchase Price, Repo Custodian shall debit the Seller
Account and credit the Transaction Account in the amount of the
Repurchase Price and shall transfer all Securities applicable to such
repurchase transaction from the Participating Funds to the Seller and
debit the Transaction Account and credit the Seller Account in the
amount of any Cash Collateral applicable to such repurchase
transaction.
(ii) If the amount of available funds in the Seller Account is less
than the Repurchase Price, then Repo Custodian shall notify the Seller
of the amount of the deficiency and Seller shall promptly cause such
amount to be transferred to the Seller Account. If Seller fails to
cause the transfer of the entire amount of the deficiency to the
Seller Account, then Repo Custodian may, at its option and without
notice to Seller, advance to Seller the amount of such remaining
deficiency. It is expressly agreed that Repo Custodian is not
obligated to make any advance to Seller. If, following such transfer
and/or advance, the amount of available funds in the Seller Account
equals or exceeds the Repurchase Price then Repo Custodian shall debit
the Seller Account and credit the Transaction Account in the amount of
the Repurchase Price and shall transfer from the Participating Funds
to the Seller all Securities applicable to such repurchase transaction
and debit the Transaction Account and credit the Seller Account in the
amount of any Cash Collateral applicable to such repurchase
transaction.
(iii) If the Seller fails to cause the transfer of the entire amount
of the deficiency, as required by (ii) above, and Repo Custodian fails
to advance to Seller an amount sufficient to eliminate the entire
deficiency, then Repo Custodian shall debit the Seller Account in the
amount of all immediately available funds designated by Seller as
applicable to the repurchase transaction and credit the Transaction
Account in such amount (such amount being referred to as the "Partial
Payment") and shall transfer Securities from the Participating Funds
to the Seller such that the aggregate Market Value of all remaining
Securities and Cash Collateral in the Transaction Account with respect
to such repurchase transaction shall at least equal the difference
between Margin Percentage of the Repurchase Price and the Partial
Payment.
5. Payments on Securities. Repo Custodian shall credit to the Seller
Account as soon as received, all principal, interest and other sums
paid by or on behalf of the issuer in respect of the Securities and
collected by Repo Custodian, except as otherwise provided in Paragraph
8 of the Master Agreement.
6. Daily Statement. On each Banking Day on which any Participating
Funds have an outstanding repurchase transaction, Repo Custodian shall
deliver by facsimile, or other electronic means acceptable to the
Participating Funds, the Custodian and the Repo Custodian, to
Custodian and to the Participating Funds a statement identifying the
Securities held by Repo Custodian with respect to such repurchase
transaction and the cash and Cash Collateral, if any, held by Repo
Custodian in the Transaction Account, including a statement of the
then current Market Value of such Securities and the amounts, if any,
credited to the Transaction Account as of the close of trading on the
previous Banking Day. Repo Custodian shall also deliver to Custodian
and the Participating Funds such additional statements as the Repo
Custodian and the Participating Funds may agree upon from time to
time.
7. Valuation.
(a) Repo Custodian shall confirm the Market Value of Securities and
the amount of Cash Collateral, if any (i) on the Sale Date prior to
transferring the Sale Price out of the Transaction Account to the
Seller Account against the receipt from Seller of the Securities and
Cash Collateral, if any, and (ii) on each Valuation Day on which such
repurchase transaction is outstanding. If on any Valuation Day the
aggregate Market Value of the Securities and Cash Collateral with
respect to any repurchase transaction is less than the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Valuation Day) for such transaction, Repo Custodian
shall promptly, but in any case no later than 10:00 a.m. the following
Valuation Day, notify Seller. If on any Valuation Day the aggregate
market value of the Securities and Cash Collateral with respect to any
repurchase transaction is less than the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such
Valuation Day) for such transaction, and Seller fails to deliver
additional Eligible Securities applicable to such repurchase
transaction or an additional amount of Cash Collateral by the close of
business on such Valuation Day such that the aggregate market value of
the Securities and Cash Collateral at least equals the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Valuation Day), Repo Custodian shall promptly, but in
any event no later than 10:00 a.m. the following Valuation Day, notify
the Participating Funds of such failure.
(b) Repo Custodian shall determine the bid side portion of the Market
Value of the Securities by reference to the independent pricing
services ("Pricing Services") set forth on Schedule B. It is
understood and agreed that Repo Custodian shall use the prices made
available by the Pricing Services at the close of business of the
preceding Valuation Day. In the event that Repo Custodian is unable
to obtain a valuation of any Securities from the Pricing Services,
Repo Custodian shall request a bid quotation from a broker's broker or
a broker dealer, set forth in Schedule B, other than Seller. In the
event Repo Custodian is unable to obtain a bid quotation for any
Securities from such a broker's broker or a broker dealer, Repo
Custodian (i) shall not include any such Securities in the
determination of whether the aggregate Market Value of the Securities
and any Cash Collateral equals at least the Margin Percentage of the
Repurchase Price and (ii) shall redeliver such Securities to Seller if
the Market Value of all other Securities and any Cash Collateral with
respect to such repurchase transaction equals at least the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase
Date were such Valuation Day). The Repo Custodian may rely on prices
quoted by Pricing Services, broker's brokers or broker dealers, except
Seller, as set forth in Schedule B.
(c) (i) If, on any Valuation Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase
transaction is less than the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Valuation Day)
applicable to such repurchase transaction, Repo Custodian shall
deliver to the Participating Funds an amount of additional Eligible
Securities applicable to such repurchase transaction and/or debit the
Seller Account and credit the Transaction Account with an additional
amount of Cash Collateral, such that the aggregate Market Value of all
Securities and any Cash Collateral with respect to such repurchase
transaction shall equal at least the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such
Valuation Day) applicable to such repurchase transaction.
(ii) If, on any Valuation Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase
transaction exceeds the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Valuation Day)
applicable to such repurchase transaction, Repo Custodian shall return
to the Seller all or a portion of such Securities or Cash Collateral,
if any; provided that the Market Value of the remaining Securities and
any Cash Collateral with respect to the repurchase transaction shall
be at least equal to the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Valuation Day)
applicable to such repurchase transaction. At any time and from time
to time with respect to any repurchase transaction, if authorized by
the Participating Funds, or the Custodian on behalf of the
Participating Funds, the Repo Custodian shall debit the Transaction
Account by an amount of Cash Collateral and credit the Seller Account
by the same amount of Cash Collateral against simultaneous delivery
from Seller to the Participating Funds of Eligible Securities
applicable to such repurchase transaction with a Market Value at least
equal to the amount of Cash Collateral credited and debited.
8. Authorized Persons. Schedule C hereto sets forth those persons
who are authorized to act for Repo Custodian, Custodian, Seller and
the Funds, respectively, under this Agreement.
9. Proper Instructions. Proper instructions shall mean a tested
telex, facsimile, a written request, direction, instruction or
certification signed or initialed by or on behalf of the party giving
the instructions by one or more authorized persons (as provided in
Paragraph 8); provided, however, that no instructions directing the
delivery of Securities or the payment of funds to any individual who
is an authorized signatory of Custodian or Repo Custodian shall be
signed by that individual. Telephonic, other oral or
electro-mechanical or electronic instructions (including the code
which may be assigned by Repo Custodian to Custodian from time to
time) given by one of the above authorized persons shall also be
considered proper instructions if the party receiving such
instructions reasonably believes them to have been given by an
authorized person with respect to the transaction involved. Oral
instructions will be confirmed by tested telex, facsimile or in
writing in the manner set forth above. The Funds and Seller authorize
Repo Custodian to tape record any and all telephonic or other oral
instructions given to Repo Custodian. Proper instructions may relate
to specific transactions or to types or classes of transactions, and
may be in the form of standing instructions.
10. Standard of Care.
(a) Repo Custodian shall be obligated to use reasonable care and
diligence in carrying out the provisions of this Agreement and the
Master Agreement and shall be liable to the Funds and/or Seller only
for direct damages resulting from the negligence or willful misconduct
of the Repo Custodian or its officers, employees or agents. The
parties hereby agree that Repo Custodian shall not be liable for
consequential, special or indirect damages, even if Repo Custodians
has been advised as to the possibility thereof. So long as and to the
extent that Repo Custodian exercises reasonable care and diligence and
acts without negligence, misfeasance or misconduct, Repo Custodian
shall not be liable to Seller or the Funds for (i) any action taken or
omitted in good faith in reliance upon proper instructions, (ii) any
action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be
genuine and to be signed by the proper party or parties, (iii) any
delay or failure to act as may be required under this Agreement or
under the Master Agreement when such delay or failure is due to any
act of God or war, (iv) the actions or omissions of a Securities
System, (v) the title, validity or genuineness of any security
received, delivered or held by it pursuant to this Agreement or the
Master Agreement, (vi) the legality of the purchase or sale of any
Securities by or to the Participating Funds or Seller or the propriety
of the amount for which the same are purchased or sold (except to the
extent of Repo Custodian's obligations hereunder to determine whether
securities are Eligible Securities and to calculate the Market Value
of Securities and any Cash Collateral), (vii) the due authority of any
person listed on Schedule C to act on behalf of Custodian, Seller or
the Funds, as the case may be, with respect to this Agreement or
(viii) the errors of the Pricing Services, broker's brokers or broker
dealers set forth in Schedule B.
(b) Repo Custodian shall not be liable to Seller or the Funds for, or
considered to be the custodian of, any Eligible Securities or any
money to be used in a repurchase transaction, whether or not such
money is represented by any check, draft, or other instrument for the
payment of money, until the Eligible Securities have been delivered in
accordance with Paragraph 3 or until Repo Custodian actually receives
and collects such money on behalf of Seller or the Funds directly or
by the final crediting of the Seller Account or a Transaction Account
through the Securities System, except that this Paragraph 10(b) shall
not be deemed to limit the liability of Repo Custodian to Seller or
the Funds if the non-delivery of such Eligible Securities or the
failure to receive and collect such money results from the breach by
Repo Custodian of its obligations under this Agreement or the Master
Agreement.
(c) Repo Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by
it are such as properly may be held by the Participating Funds;
provided that notwithstanding anything to the contrary herein, Repo
Custodian shall be obligated to act in accordance with the guidelines
and proper instructions of the Participating Funds, or the Custodian
on behalf of the Participating Funds, with respect to the types of
Eligible Securities and the issuers of such Eligible Securities that
may be used in specific repurchase transactions.
(d) Repo Custodian promptly shall notify the Fund Agent and the
Custodian if Securities held by Repo Custodian are in default or if
payment on any Securities has been refused after due demand and
presentation and Repo Custodian shall take action to effect collection
of any such amounts upon the proper instructions of the Participating
Funds, or the Custodian on behalf of the Participating Funds, and
assurances satisfactory to it that it will be reimbursed for its costs
and expenses in connection with any such action.
(e) Repo Custodian shall have no duties, other than such duties as
are necessary to effectuate repurchase transactions in accordance with
this Agreement and the Master Agreement within the standard of care
set forth in Paragraph 10(a) above and in a commercially reasonable
manner.
11. Representations and Additional Covenants of Repo Custodian.
(a) Repo Custodian represents and warrants that (i) it is duly
authorized to execute and deliver this Agreement and to perform its
obligations hereunder and has taken all necessary action to authorize
such execution, delivery and performance, (ii) the execution, delivery
and performance of this Agreement do not and will not violate any
ordinance, declaration of trust, partnership agreement, articles of
incorporation, charter, rule or statute applicable to it or any
agreement by which it is bound or by which any of its assets are
affected, (iii) the person executing this Agreement on its behalf is
duly and properly authorized to do so, (iv) it has (and will maintain)
a copy of this Agreement and evidence of its authorization in its
official books and records, and (v) this Agreement has been executed
by one of its duly authorized officers at the level of Vice President
or higher.
(b) Repo Custodian further represents and warrants that (i) it has
not pledged, encumbered, hypothecated, transferred, disposed of, or
otherwise granted, any third party an interest in any Securities, (ii)
it does not have any security interest, lien or right of setoff in the
Securities, and (iii) it has not received notification from any third
party, in its capacity as Repo Custodian, custodian bank or clearing
bank, of any lien, claim, charge or encumbrance with respect to any
Securities that are the subject of such repurchase transaction. Repo
Custodian agrees that (i) it will not pledge, encumber, hypothecate,
transfer, dispose of, or otherwise grant, any third party an interest
in any Securities, (ii) it will not acquire any security interest,
lien or right of setoff in the Securities, and (iii) it will promptly
notify the Fund Agent, if, during the term of any outstanding
repurchase transaction, it is notified by any third party, in its
capacity as Repo Custodian, custodian bank or clearing bank, of the
Participating Funds or Seller, of the existence of any lien, claim,
charge or encumbrance with respect to any Securities that are the
subject of such repurchase transaction.
12. Indemnification.
(a) Notwithstanding the Participating Fund's obligation to the Repo
Custodian under Paragraph 12(b) below, so long as and to the extent
that Repo Custodian is in the exercise of reasonable care and
diligence and acts without negligence, misfeasance or misconduct,
Seller will indemnify Repo Custodian and hold it harmless against any
and all losses, claims, damages, liabilities or actions to which it
may become subject, and reimburse it for any expenses (including
attorneys' fees and expenses) incurred by it in connection therewith,
insofar as such losses, claims, damages, liabilities or actions arise
out of or are based upon or in any way related to this Agreement, the
Master Agreement or any transactions contemplated hereby or thereby or
effected hereunder or thereunder. Without limiting the generality of
the foregoing indemnification, Repo Custodian shall be indemnified by
Seller for all costs and expenses, including attorneys' fees, for its
successful defense against claims that Repo Custodian breached its
standard of care and was negligent or engaged in misfeasance or
misconduct.
(b) So long as and to the extent that Repo Custodian is in the
exercise of reasonable care and diligence and acts without negligence,
misconduct or misfeasance, the Participating Funds will indemnify Repo
Custodian and hold it harmless against any and all losses, claims,
damages, liabilities or actions to which it may become subject, and
reimburse it for any expenses (including attorneys' fees and expenses)
incurred by it in connection therewith, insofar as such losses,
claims, damages, liabilities or actions result from the negligence,
misconduct or misfeasance of the Participating Funds under this
Agreement.
13. Rights and Remedies. The rights and remedies conferred upon the
parties hereto shall be cumulative, and the exercise or waiver of any
thereof shall not preclude or inhibit the exercise of any additional
rights and remedies.
14. Modification or Amendment. Except as otherwise provided in this
Paragraph 14, no modification, waiver or amendment of this Agreement
shall be binding unless in writing and executed by the parties hereto.
Schedule A, listing the Funds, may be amended from time to time to add
or delete Funds by the Funds (i) delivering an executed copy of an
addendum to Schedule A to Seller and Repo Custodian, and (ii)
amending Schedule A to the Master Agreement in accordance with the
provisions therein. The amendment of Schedule A as provided above
shall constitute appointment of Repo Custodian as a custodian for such
Fund. Schedule B may be amended from time to time by an instrument in
writing, or counterpart thereof, executed by Repo Custodian, Seller
and the Funds. Schedule C may be amended from time to time to change
an authorized person of: (i) the Funds, by written notice to Repo
Custodian and Seller by Ms. Sarah Zenoble or the Treasurer of the
Funds (or such persons who may be authorized from time to time in
writing by Ms. Zenoble or the President or Treasurer of Fidelity
Management and Research Company to trade on behalf of Fidelity's
taxable money market funds); (ii) Seller, by written notice to Repo
Custodian and the Funds by any Vice President of Seller; (iii) Repo
Custodian, by written notice to Seller, Custodian and the Funds by any
Vice President of Repo Custodian; and (iv) Custodian, by written
notice to Repo Custodian by any Vice President of Custodian. Schedule
D may be amended from time to time by any party hereto by delivery of
written notice to the other parties hereto. Repo Custodian shall
receive notice of any amendment to the Master Agreement at the address
set forth in Schedule D hereto; and, if such amendment would have a
material adverse effect on the rights of, or would materially increase
the obligations of Repo Custodian under this Agreement, any such
amendment shall also require the consent of Repo Custodian. Any such
amendment shall be deemed not to be material if Repo Custodian fails
to object in writing within 21 days after receipt of notice thereof.
No amendment to this Agreement shall affect the rights or obligations
of any Fund with respect to any outstanding repurchase transaction
entered into under this Agreement and the Master Agreement prior to
such amendment or with respect to any actions or omissions by any
party hereto prior to such amendment. In the event of conflict
between this Agreement and the Master Agreement, the Master Agreement
shall control.
15. Termination. This Agreement shall terminate forthwith upon
termination of the Master Agreement or may be terminated by any party
hereto on ten Valuation Days' written notice to the other parties;
provided, however, that any such termination shall not affect any
repurchase transaction then outstanding or any rights or obligations
under this Agreement or the Master Agreement with respect to any
actions or omissions of any party hereto prior to termination. In the
event of termination, Repo Custodian will deliver any Securities, Cash
Collateral or cash held by it or any agent to Custodian or to such
successor custodian or custodian or subcustodian as the Participating
Funds shall instruct.
16. Compensation. Seller agrees to pay Repo Custodian compensation
for the services to be rendered hereunder, based upon rates which
shall be agreed upon from time to time.
17. Notices. Except with respect to communications between Custodian
and the Funds which shall be governed by the custodian agreement or
subcustodian agreement between such parties, as the case may be, and
except as otherwise provided herein or as the parties to the Agreement
shall from time to time otherwise agree, all instructions, notices,
reports and other communications contemplated by this Agreement shall
be given to the party entitled to receive such notice at the telephone
number and address listed on Schedule D hereto.
18. Severability. If any provision of this Agreement is held to be
unenforceable as a matter of law, the other terms and provisions
hereof shall not be affected thereby and shall remain in full force
and effect.
19. Binding Nature. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their successors and
assignees; provided that, no party hereto may assign this Agreement or
any of the rights or obligations hereunder without the prior written
consent of the other parties.
20. Headings. Section headings are for reference purposes only and
shall not be construed as a part of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one
instrument.
22. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
23. Limitation of Liability. Repo Custodian and Seller are hereby
expressly put on notice of the limitation of liability set forth in
the Declarations of Trust and in the Certificates and Agreements of
Limited Partnership of the Funds and agree that the obligations
assumed by any Fund hereunder shall be limited in all cases to a Fund
and its assets or, in the case of a series Fund, to the assets of that
series only, and neither Seller, Repo Custodian nor their respective
agents or assigns shall seek satisfaction of any such obligation from
the officers, agents, employees, directors, trustees, shareholders or
partners of any such Fund or series.
24. Rights and Obligations of Each Fund. The rights and obligations
set forth in this Agreement with respect to each repurchase
transaction shall accrue only to the Participating Funds in accordance
with their respective interests therein. No other Fund shall receive
any rights or have any liabilities arising from any action or inaction
of any Participating Fund under this Agreement with respect to such
repurchase transaction.
25. General Provisions. This Agreement supersedes any other
custodian agreement by and among Seller, the Funds, and Repo Custodian
concerning repurchase transactions effected through the Joint Trading
Account. It is understood and agreed that time is of the essence with
respect to the performance of each party's respective obligations
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
[Signature Lines Omitted]
SCHEDULE B
PRICING SOURCES
PRICING SERVICES
U.S. Government Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller
and the Funds)
GNMA - The Bond Buyer
FHLMC - The Bond Buyer
All other U.S. Government
and Agency Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller
and the Funds)
BROKERS' BROKERS AND BROKER DEALERS
U.S. Government Securities - Any Primary Dealer
GNMA - Any Primary Broker-Dealer's bid rate for such security
FHLMC - Any Primary Broker-Dealer's bid rate for such security
All other U.S. Government and Agency Securities - Any Primary
Broker-Dealer's bid rate for such security
Prices shall be as of the business day immediately preceding the date
of determination or the last quote available. The pricing services,
Brokers' Brokers and Broker Dealers may be changed from time to time
by agreement of all the parties.
SCHEDULE C
AUTHORIZED PERSONS
Repo Custodian
Anthony Isola
Raymond Stancil
William Mosca
Leonardo Nichols
Alan Mann
Allen B. Clark
Custodian
Ken Rindos
Kurt Woetzel
Seller
Gary F. Holloway
Konrad R. Kruger
Stephen M. Peet
Raymond E. Humiston
P. Michael Florio
Ben Carpenter
Blake S. Drexler
Derick B. Burgher
Lyn Kratovil
The Funds
Leland Barron
Wickliffe Curtis
Dorothy Egan
David Glocke
Katharyn Harlow
Timothy Huyck
Jon Jamen
Robert Litterst
Sam Silver
Burnell Stehman
Jeffrey St. Peters
Deborah Todd
John Todd
Joseph Torres
Richard Williams
SCHEDULE D
NOTICES
If to Custodian: Morgan Guaranty Trust Co. of New York
15 Broad Street, 16th Floor
New York, New York 10015
Telephone: (212) 483-4150
Attention: Ms. Kimberly Smith
or
The Bank of New York
One Wall Street, 4th Floor
New York, NY 10286
Telephone: (312) 635-4808
Attention: Claire Meskovic
With a copy to the Fund Agent
If to Repo Custodian: Chemical Bank
4 New York Plaza
21st Floor
New York, NY 10004-2477
Telephone: (212) 623-6446
Attention: Anthony Isola
If to Seller: Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Telephone: (203) 625-7909
Attention: Peter Sanchez
If to any of the Funds: FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah R. Todd or
Mr. Samuel Silver
If to the Fund Agent: Fidelity Investments
[Name of Fund]
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 584-4071
Attention: Mr. Mark Mufler
277262.c1
Exhibit (g)(16)
SCHEDULE 1
The following lists the additional counterparties to the Repo
Custodian Agreement for Joint Trading Account between Chemical Bank
and the Fidelity Funds:
Chase Securities, Inc.
CS First Boston Corp.
Dresdner Securities (U.S.A.), Inc.
HSBC Securities, Inc.
Lehman Government Securities, Inc.
Merrill Lynch Government Securities, Inc.
Paine Webber, Inc.
Salomon Brothers, Inc.
UBS Securities, Inc.
Exhibit (g)(17)
Form of
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
Between
THE BANK OF NEW YORK
and
FIDELITY FUNDS
Dated as of: _________
Exhibit (g)(17)
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS Page
ARTICLE I - APPOINTMENT OF CUSTODIAN 2
ARTICLE II - POWERS AND DUTIES OF CUSTODIAN 2
Section 2.01. Establishment of Accounts 2
Section 2.02. Receipt of Funds 2
Section 2.03. Repurchase Transactions 2
Section 2.04. Other Transfers 4
Section 2.05. Custodian's Books and Records 5
Section 2.06. Reports by Independent Certified Public Accountants 5
Section 2.07. Securities System 6
Section 2.08. Collections 6
Section 2.09. Notices, Consents, Etc. 6
Section 2.10. Notice of Custodian's Inability to Perform 7
ARTICLE III - PROPER INSTRUCTIONS AND RELATED MATTERS 7
Section 3.01. Proper Instructions; Special Instruction 7
Section 3.02. Authorized Persons 8
Section 3.03. Investment Limitations 8
Section 3.04. Persons Having Access to Assets of the Funds 8
Section 3.05. Actions of Custodian Based on Proper Instructions and Special
Instructions 9
ARTICLE IV - STANDARD OF CARE; INDEMNIFICATION 9
Section 4.02. Liability of Custodian for Actions of Securities Systems 9
Section 4.03. Indemnification 9
Section 4.04. Funds, Right to Proceed 10
ARTICLE V - COMPENSATION 11
Section 5.01. Compensation 11
Section 5.02. Waiver of Right of Set-Off 11
ARTICLE VI - TERMINATION 11
Section 6.01. Events of Termination 11
Section 6.02. Successor Custodian; Payment of Compensation 11
ARTICLE VII - MISCELLANEOUS 12
Section 7.01. Representative Capacity and Binding Obligation 12
Section 7.02. Entire Agreement 12
Section 7.03. Amendments 12
Section 7.04. Interpretation 12
Section 7.05. Captions 13
Section 7.06. Governing Law 13
Section 7.07. Notice and Confirmations 13
Section 7.08. Assignment 14
Section 7.09. Counterparts 14
Section 7.10. Confidentiality; Survival of Obligations 14
</TABLE>
Exhibit (g)(17)
Form of
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
AGREEMENT dated as of ___________ by and between The Bank of New York
(hereinafter referred to as the "Custodian") and each of the entities
listed on Schedules A-1, A-2, A-3 and A-4 hereto, acting on behalf of
itself or, (i) in the case of a series company, on behalf of one or
more of its portfolios or series listed on Schedule A-1 or A-2 hereto,
(ii) in the case of the accounts listed on Schedule A-3 hereto, acting
through Fidelity Management & Research Company, and (iii) in the case
of the commingled or individual accounts listed on Schedule A-4
hereto, acting through Fidelity Management Trust Company
(collectively, the "Funds" and each, a "Fund").
W I T N E S S E T H
WHEREAS, each of the Funds desire to appoint the Custodian as its
custodian for the purpose of establishing and administering one or
more joint trading accounts or subaccounts thereof (individually, an
"Account" and collectively, the "Accounts") and holding cash and
securities for the Funds in connection with repurchase transactions
effected through the Accounts; and
WHEREAS, one or more of the Funds may, from time to time, enter into
one or more written repurchase agreements pursuant to which one or
more of the Funds agrees to purchase and resell, and the sellers named
in such agreements agree to sell and repurchase through the Accounts,
certain securities (collectively, the "Securities") (such repurchase
agreements being hereinafter referred to, collectively, as the
"Repurchase Agreements"); and
WHEREAS, each of the custodians identified in ScheduleB hereto (each,
a "Fund Custodian") serves as the primary custodian for one or more of
the Funds; and
WHEREAS, from time to time one or more of the Funds may arrange to
transfer cash or Securities from one or more Fund Custodians to the
Custodian or transfer cash or Securities from the Custodian to one or
more Fund Custodians, or in the case of Funds in which Custodian is
also Fund Custodian, such Fund may arrange for transfer of cash or
Securities between an Account and an account maintained by Custodian
in its capacity as Fund Custodian for such Fund, in each event in
connection with Repurchase Agreement transactions; and
WHEREAS, from time to time, such Funds may arrange to transfer cash
or securities from the Custodian to the seller in such Repurchase
Agreement transactions, or in the case in which Custodian is also the
clearing bank for such seller, such Funds may arrange for transfer of
cash or securities between an Account and an account maintained by
Custodian for such seller in its capacity as clearing bank, in each
event in connection with two-party Repurchase Agreement transactions;
and
WHEREAS, each of the custodians identified in Schedule C hereto
(each, a "Repo Custodian") serves as a third-party custodian of the
Funds for purposes of effecting third-party Repurchase Agreement
transactions; and
WHEREAS, from time to time one or more of the Funds may arrange to
transfer cash or Securities from the Custodian to one or more Repo
Custodians or transfer cash or Securities from one or more Repo
Custodians to the Custodian, or in the case in which Custodian is also
Repo Custodian, such Funds may arrange for transfer of cash or
securities between an Account and an account maintained for such Funds
in its capacity as Repo Custodian, in each event in connection with
third-party Repurchase Agreement transactions;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I - APPOINTMENT OF CUSTODIAN
Each of the Funds hereby employs and appoints the Custodian as its
custodian, subject to the terms and provisions of this Agreement.
ARTICLE II - POWERS AND DUTIES OF CUSTODIAN
As custodian, the Custodian shall have and perform the powers and
duties, and only such powers and duties, as are set forth in this
Agreement.
Section 2.01. Establishment of Accounts. The Custodian shall
establish one or more Accounts as segregated joint trading accounts
for the Funds through which the Funds shall, from time to time, effect
Repurchase Agreement transactions.
Section 2.02. Receipt of Funds. The Custodian shall, from time to
time, receive funds for or on behalf of the Funds and shall hold such
funds in safekeeping. Upon receipt of Proper Instructions, the
Custodian shall credit funds so received to one or more Accounts
designated in such Proper Instructions. Promptly after receipt of
such funds from the Fund Custodian or a Repo Custodian or promptly
following the transfer to an Account from any account maintained by
Custodian in its capacity as Fund Custodian, or as Repo Custodian, the
Custodian shall provide written confirmation of such receipt to the
Fund Custodian or Repo Custodian, when and as applicable, and of such
receipt or transfer to the Fund Agent designated in Section 7.07(b)
hereof (the "Fund Agent"). The Custodian shall designate on its books
and records the funds allocable to each Account and the identity of
each Fund participating in such Account.
Section 2.03. Repurchase Transactions. The Funds may, from time to
time, enter into Repurchase Agreement transactions. In connection
with each such Repurchase Agreement transaction, unless otherwise
specifically directed by Special Instructions, the Custodian shall
take the following actions:
(a) Purchase of Securities. Upon receipt of Proper Instructions, the
Custodian shall pay for and receive Securities and any cash
denominated in U.S. Dollars which is serving as collateral ("Cash
Collateral"), provided that payment therefor shall be made by the
Custodian only against prior or simultaneous receipt of the Securities
and any Cash Collateral in the manner prescribed in subsection 2.03(b)
below. Except as provided in Section2.04 hereof, in no event shall
the Custodian deliver funds from an Account for the purchase of
Securities and any Cash Collateral prior to receipt of the Securities
and any Cash Collateral by the Custodian or a Securities System (as
hereinafter defined). The Custodian is not under any obligation to
make credit available to the Funds to complete transactions hereunder.
Promptly after the transfer of funds and receipt of Securities and any
Cash Collateral, the Custodian shall provide a confirmation to the
Fund Agent, setting forth (i) the Securities and any Cash Collateral
which the Custodian has received pursuant to the Repurchase Agreement
transaction, (ii) the amount of funds transferred from the applicable
Account, and (iii) any security or transaction identification numbers
reasonably requested by the Fund Agent.
(b) Receipt and Holding of Securities. In connection with each
Repurchase Agreement transaction, the Custodian shall receive and hold
the Securities as follows: (i) in the case of certificated securities,
by physical receipt of the certificates or other instruments
representing such Securities and by physical segregation of such
certificates or instruments from other assets of the Custodian in a
manner indicating that such Securities belong to specified Funds; and
(ii) in the case of Securities held in book-entry form by a Securities
System (as hereinafter defined), by appropriate transfer and
registration of such Securities to a customer only account of the
Custodian on the book-entry records of the Securities System, and by
appropriate entry on the books and records of the Custodian
identifying such Securities as belonging to specified Funds.
(c) Sale of Securities. Upon receipt of Proper Instructions, the
Custodian shall make delivery of Securities and any Cash Collateral
held in or credited to an Account against prior or simultaneous
payment for such Securities in immediately available funds in the form
of: (i) cash, bank credit, or bank wire transfer received by the
Custodian; or (ii) credit to the customer only account of the
Custodian with a Securities System. Notwithstanding the foregoing,
the Custodian shall make delivery of Securities held in physical form
in accordance with "street delivery custom" to a broker or its
clearing agent, against delivery to the Custodian of a receipt for
such Securities; provided that the Custodian shall have taken all
actions possible to ensure prompt collection of the payment for, or
the return of such Securities by the broker or its clearing agent.
Promptly after the transfer of Securities and any Cash Collateral and
the receipt of funds, the Custodian shall provide a confirmation to
the Fund Agent, setting forth the amount of funds received by the
Custodian or a Securities System for credit to the applicable Account.
(d) Additional Functions. Upon receipt of Proper Instructions, the
Custodian shall take all such other actions as specified in such
Proper Instructions and as shall be reasonable or necessary with
respect to Repurchase Agreement transactions and the Securities and
funds transferred and received pursuant to such transactions,
including, without limitation, all such actions as shall be prescribed
in the event of a default under a Repurchase Agreement.
(e) Nondiscretionary Functions. The Custodian shall attend to all
non-discretionary details in connection with the purchase, sale,
transfer or other dealings with Securities or other assets of the
Funds held by the Custodian.
(f) In the event that the Custodian is directed by Proper
Instructions to make any payment or transfer of funds on behalf of a
Fund for which there would be, at the close of business on the date of
such payment or transfer, insufficient funds held by the Custodian on
behalf of such Fund, the Custodian may, in its discretion, provide an
overdraft ("Overdraft") to the Fund, in an amount sufficient to allow
the completion of such payment or transfer. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the Fund and the Custodian; and (b) shall accrue
interest form the date of the Overdraft to the date of payment in full
by the Fund at a rate agreed upon in writing, from time to time, by
the Custodian and the Fund. The Custodian and the Funds acknowledge
that the purpose of such Overdrafts is to temporarily finance the
purchase or sale of securities for prompt delivery in accordance with
the terms hereof, or to meet emergency expenses not reasonably
foreseeable by a particular Fund. The Funds hereby agree that the
Custodian shall have a continuing lien and security interest in and to
all Securities whose purchase is financed by Custodian and which are
in Custodian's possession or in the possession or control of any third
party acting on Custodian's behalf and the proceeds thereof. In this
regard, Custodian shall be entitled to all the rights and remedies of
a pledgee under common law and a secured party under the New York
Uniform Commercial Code and any other applicable laws or regulations
as then in effect.
Section 2.04. Other Transfers.
(a) In addition to transfers of funds and Securities referred to in
Section 2.03, the Custodian shall transfer funds and Securities held
in an Account: (a) upon receipt of Proper Instructions, to (i)any
Fund Custodian, or (ii)any other account maintained for any Fund by
the Custodian in its capacity as a Fund Custodian, (iii)any Repo
Custodian or (iv) any other account maintained for any Fund by the
Custodian in its capacity as a Repo Custodian; or (b) upon receipt of
Special Instructions, and subject to Section 3.04 hereof, to any other
person or entity designated in such Special Instructions.
(b) Determination of Fund Custodian Daily Net Amount. On each
banking day, based upon daily transaction information provided to the
Custodian by the Funds, Custodian shall determine: (i) the amount of
cash due to be transferred on such day by each Fund Custodian to the
Custodian in connection with all Repurchase Agreement transactions in
which the date fixed for the repurchase and resale of Securities is
the banking day next following the date on which the sale and purchase
of such Securities takes place (each, an "Overnight Repo Transaction")
to be effected through the Accounts in such day; and (ii) the amount
of cash due to be transferred on such day by Custodian to such Fund
Custodian in connection with all outstanding Overnight Repo
Transactions previously effected through the Accounts (the difference
between (i) and (ii) with respect to each Fund Custodian being
referred to as the "Fund Custodian Daily Net Amount"). On each
banking day, Custodian shall notify each Fund Custodian of the
foregoing determination and, unless otherwise directed in accordance
with Proper Instructions, Custodian shall (i) instruct such Fund
Custodian to transfer cash to the Custodian equal to the Fund
Custodian Daily Net Amount (if the Fund Custodian Daily Net Amount is
positive) or (ii) transfer to such Fund Custodian cash equal to the
Fund Custodian Daily Net Amount (if the Fund Custodian Daily Net
Amount is negative).
(c) Determination of Repo Custodian Daily Net Amount. On each
banking day, based upon daily transaction information provided to the
Custodian by the Funds and each Repo Custodian, Custodian shall
determine: (i) the amount of cash due to be transferred on such day
by each Repo Custodian on behalf of the Funds to all counterparties in
connection with all third-party Overnight Repo Transactions to be
effected through the Accounts on such day; and (ii) the amount of cash
due to be transferred on such day by each Repo Custodian on behalf of
all counterparties to the Funds in connection with all outstanding
third-party Overnight Repo Transactions previously effected through
the Accounts (the difference between (i) and (ii) with respect to each
Repo Custodian being referred to as the "Repo Custodian Daily Net
Amount"). On each banking day, Custodian shall notify the Funds of
the foregoing determinations and, unless otherwise directed in
accordance with Proper Instructions, Custodian shall (i) transfer to
each Repo Custodian cash equal to the Repo Custodian Daily Net Amount
(if the Repo Custodian Daily Net Amount is positive) or (ii) instruct
each Repo Custodian to transfer to the Custodian cash equal to the
Repo Custodian Daily Net Amount (if the Repo Custodian Daily Net
Amount is negative).
Section 2.05. Custodian's Books and Records. The Custodian shall
provide any assistance reasonably requested by the Funds in the
preparation of reports to shareholders of the Funds and others, audits
of accounts, and other ministerial matters of like nature. The
Custodian shall maintain complete and accurate records with respect to
cash and Securities held for the benefit of the Funds as required by
the rules and regulations of the Securities and Exchange Commission
applicable to investment companies registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"),
including: (a) journals or other records of original entry containing
a detailed and itemized daily record of all receipts and deliveries of
securities (including certificate and transaction identification
numbers, if any), and all receipts and disbursements of cash; (b)
ledgers or other records reflecting Securities in transfer, and
Securities in physical possession; and (c) cancelled checks and bank
records related thereto. The Custodian shall keep such other books
and records of the Funds relating to repurchase transactions effected
through the Accounts as the Funds shall reasonably request. Such
books and records maintained by the Custodian shall reflect at all
times the identity of each Fund participating in each Account and the
aggregate amount of the Securities and any Cash Collateral held by the
Custodian on behalf of the Funds in such Account pursuant to this
Agreement. All such books and records maintained by the Custodian
shall be maintained in a form acceptable to the Funds and in
compliance with the rules and regulations of the Securities and
Exchange Commission, including, but not limited to, books and records
required to be maintained by Section 31(a) of the Investment Company
Act and the rules from time to time adopted thereunder. All books and
records maintained by the Custodian relating to the Accounts shall at
all times be the property of the Funds and shall be available during
normal business hours for inspection and use by the Funds and their
agents, including, without limitation, their independent certified
public accountants. Notwithstanding the preceding sentence, the Funds
shall not take any actions or cause Custodian to take any actions
which would cause, either directly or indirectly, the Custodian to
violate any applicable laws, regulations, rules or orders.
Section 2.06. Reports by Independent Certified Public Accountants.
At the request of the Funds, the Custodian shall deliver to the Funds
such annual reports and other interim reports prepared by the
independent certified public accountants of the Custodian with respect
to the services provided by the Custodian under this Agreement,
including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding
Securities, including Securities deposited and/or maintained in a
Securities System. Such reports, which shall be of sufficient scope
and in sufficient detail as may reasonably be required by the Funds
and as may reasonably by obtained by the Custodian, shall provide
reasonable assurance to the Funds that the procedures employed by the
independent certified public accountants are reasonably designed to
detect any material inadequacies with respect to the matters discussed
in the report, shall state in detail the material inadequacies
disclosed by such examination, and, if no such inadequacies exist,
shall so state.
Section 2.07. Securities System. As used herein the term "Securities
System" shall mean each of the following: (a) the Depository Trust
Company; (b) the Participants Trust Company; (c) any book-entry system
as provided in (i) Subpart0 of Treasury Circular No. 300, 31CFR
306.115, (ii) SubpartB of Treasury Circular Public Debt Series No.
27-76, 31CFR 350.2, or (iii) the book-entry regulations of federal
agencies substantially in the form of 31CFR 306.115; or (d) any
domestic clearing agency registered with the Securities and Exchange
Commission under Section17A of the Securities Exchange Act of 1934, as
amended (or as may otherwise be authorized by the Securities and
Exchange Commission to serve in the capacity of depository or clearing
agent for the securities or other assets of investment companies)
which acts as a securities depository and the use of which has been
approved in Special Instructions. Use of a Securities System by the
Custodian shall be in accordance with applicable Federal Reserve Board
and Securities and Exchange Commission rules and regulations, if any,
and subject to the following provisions:
(A) The Custodian may deposit and/or maintain Securities held
hereunder in a Securities System, provided that such Securities are
represented in an account of the Custodian in the Securities System
which account shall not contain any assets of the Custodian other than
assets held as a fiduciary, custodian, or otherwise for customers.
(B) The Custodian shall, if requested by the Funds, provide the Funds
with all reports obtained by the Custodian with respect to the
Securities System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities
System.
(C) Upon receipt of Special Instructions, the Custodian shall
terminate the use hereunder of any Securities System (except for the
federal book-entry system) as promptly as practicable and shall take
all actions reasonably practicable to safeguard the Securities and
other assets of the Funds maintained with such Securities System.
Section 2.08. Collections. The Custodian shall (a) collect, receive
and deposit in the applicable Account all income and other payments
with respect to Securities held by the Custodian hereunder; (b)
endorse and deliver any instruments required to effect such
collection; and (c) execute ownership and other certificates and
affidavits for all federal, state and foreign tax purposes in
connection with receipt of income or other payments with respect to
Securities, or in connection with the transfer of Securities.
Section 2.09. Notices, Consents, Etc. The Custodian shall deliver to
the Funds, in the most expeditious manner practicable, all notices,
consents or announcements affecting or relating to Securities held by
the Custodian on behalf of the Funds that are received by the
Custodian, and, upon receipt of Proper Instructions, the Custodian
shall execute and deliver such consents or other authorizations as may
be required.
Section 2.10. Notice of Custodian's Inability to Perform. The
Custodian shall promptly notify the Funds in writing by facsimile
transmission or such other manner as the Funds may designate, if, for
any reason: (a) the Custodian determines that it is unable to perform
any of its duties or obligations hereunder or its duties or
obligations with respect to any repurchase transaction; or (b) the
Custodian reasonably foresees that it will be unable to perform any
such duties or obligations.
ARTICLE III - PROPER INSTRUCTIONS AND RELATED MATTERS
Section 3.01. Proper Instructions; Special Instruction.
(a) Proper Instructions. As used herein, the term "Proper
Instructions" shall mean: (i) a tested telex, a written (including,
without limitation, facsimile transmission) request, direction,
instruction or certification signed or initialed by one or more
Authorized Persons (as hereinafter defined); (ii) a telephonic or
other oral communication by one or more Authorized Persons; or (iii) a
communication effected directly between electromechanical or
electronic devices or systems (including, without limitation,
computers) by one or more Authorized Persons; provided, however, that
communications of the types described in clauses (ii) and (iii) above
purporting to be given by an Authorized Person shall be considered
Proper Instructions only if the Custodian reasonably believes such
communications to have been given by an Authorized Person with respect
to the transaction involved. Proper Instructions in the form of oral
communications shall be confirmed by the Funds by tested telex or in
writing in the manner set forth in clause(i) above, but the lack of
such confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructions prior to the
Custodian's receipt of such confirmation. Each of the Funds and the
Custodian is hereby authorized to record any and all telephonic or
other oral instructions communicated to the Custodian. Proper
Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing
instructions.
(b) Special Instructions. As used herein, the term "Special
Instructions" shall mean Proper Instructions countersigned or
confirmed in writing by, in the case of the entities listed in
Schedules A-1 or A-2 hereto, the Treasurer or any Assistant Treasurer
of the Funds or any other person designated in writing by the
Treasurer of the Funds, and in the case of each of the entities listed
on Schedules A-3 or A-4, by the officer who is a signatory to this
Agreement on behalf of such entity or any other person designated in
writing by such officer or an officer of such entity of higher
authority, which countersignature or written confirmation shall be (i)
included on the same instrument containing the Proper Instructions or
on a separate instrument relating thereto, and (ii) delivered by hand,
by facsimile transmission, or in such other manner as the parties
hereto may agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, telecopy or telex number
agreed upon from time to time by the Custodian and the Funds.
Section 3.02. Authorized Persons. Concurrently with the execution of
this Agreement and from time to time thereafter, as appropriate, the
Funds shall deliver to the Custodian, duly certified as appropriate by
the Treasurer or any Assistant Treasurer of the Funds or by a
Secretary or Assistant Secretary of the Funds, and in the case of each
of the entities listed on Schedules A-3 or A-4, by the officer who is
a signatory to this Agreement on behalf of such entity or any other
person designated in writing by such officer or an officer of higher
authority, a certificate setting forth (a) the names, signatures and
scope of authority of all persons authorized to give Proper
Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of the Funds (collectively, the
"Authorized Persons," and individually, an "Authorized Person"), and
(b) the names and signatures of those persons authorized to issue
Special Instructions. Such certificate may be accepted and relied
upon by the Custodian as conclusive evidence of the facts set forth
therein and shall be considered to be in full force and effect until
delivery to the Custodian of a similar certificate to the contrary.
Upon delivery of a certificate which deletes the name of a person
previously authorized to give Proper Instructions or to issue Special
Instructions, such person shall no longer be considered an Authorized
Person or authorized to issue Special Instructions, as applicable.
Section 3.03. Investment Limitations. In performing its duties
hereunder the Custodian may assume, unless and until it receives
special Instructions to the contrary (a "Contrary Notice"), that
Proper Instructions received by it are not in conflict with or in any
way contrary to any investment or other limitation applicable to any
of the Funds. The Custodian shall in no event be liable to the Funds
and shall be indemnified by the Funds for any loss, damage or expense
to the Custodian arising out of any violation of any investment or
other limitation to which any Fund is subject, except to the extent
that such loss, damage or expense: (i) relates to a violation of any
investment or other limitation of a Fund occurring after receipt by
the Custodian of a Contrary Notice; or (ii) arises from a breach of
this Agreement by the Custodian.
Section 3.04. Persons Having Access to Assets of the Funds. No
Authorized Person, Trustee, officer, employee or agent of the Funds
(other than the Custodian) shall have physical access to the assets of
the Funds held by the Custodian, or shall be authorized or permitted
to withdraw any such assets for delivery to an account of such person,
nor shall the Custodian deliver any such assets to any such person;
provided, however, that nothing in this Section 3.04 shall prohibit:
(a) any Authorized Person from giving Proper Instructions, or the
persons described in Section 3.01(b) from issuing Special
Instructions, so long as such action does not result in delivery of or
access to assets of the Funds prohibited by this Section 3.04; or (b)
the Funds' independent certified public accountants from examining or
reviewing the assets of the Funds held by the Custodian.
Section 3.05. Actions of Custodian Based on Proper Instructions and
Special Instructions. Subject to the provisions of Section 4.01
hereof, the Custodian shall not be responsible for the title, validity
or genuineness of any property, or evidence of title thereof, received
by it or delivered by it pursuant to this Agreement.
ARTICLE IV - STANDARD OF CARE; INDEMNIFICATION
Section 4.01. Standard of Care.
(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and
obligations under this Agreement, and shall be liable to the Funds for
all loss, damage and expense incurred or suffered by the Funds,
resulting from the failure of the Custodian to exercise such
reasonable care and diligence or from any other breach by the
Custodian of the terms of this Agreement.
(b) Acts of God, Etc. In no event shall the Custodian incur
liability hereunder if the Custodian is prevented, forbidden or
delayed from performing, or omits to perform, any act or thing which
this Agreement provides shall be performed or omitted to be performed
by reason of: (i) any provision of any present or future law or
regulation or order of the United States of America, or any state
thereof, or of any foreign country, or political subdivision thereof
or of any court of competent jurisdiction; or (ii) any act of God or
war; unless, in each case, such delay or nonperformance is caused by
(A) the negligence, misfeasance or misconduct of the Custodian, or (B)
a malfunction or failure of equipment maintained or operated by the
Custodian other than a malfunction or failure caused by events beyond
the Custodian's control and which could not reasonably be anticipated
and/or prevented by the Custodian.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to the Funds, the
Custodian shall use all commercially reasonable efforts and shall take
all reasonable steps under the circumstances to mitigate the effects
of such event and to avoid continuing harm to the Funds.
Section 4.02. Liability of Custodian for Actions of Securities
Systems. Notwithstanding the provisions of Section4.01 to the
contrary, the Custodian shall not be liable to the Funds for any loss,
damage or expense resulting from the use by the Custodian of a
Securities System, unless such loss, damage or expense is caused by,
or results from, negligence, misfeasance or misconduct of the
Custodian. In the case of loss, damage or expense resulting from use
of a Securities System by the Custodian, the Custodian shall take all
reasonable steps to enforce such rights as it may have against the
Securities System to protect the interest of the Funds.
Section 4.03. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, the Funds severally agree to indemnify and
hold harmless the Custodian from all claims and liabilities (including
reasonable attorneys' fees) incurred or assessed against the Custodian
for actions taken in reliance upon Proper Instructions or Special
Instructions; provided, however, that such indemnity shall not apply
to claims and liabilities occasioned by or resulting from the
negligence, misfeasance or misconduct of the Custodian, or any other
breach of this Agreement by the Custodian. In addition, the Funds
severally agree to indemnify the Custodian against any liability
incurred by the Custodian by reason of taxes assessed to the
Custodian, or other costs, liability or expenses incurred by the
Custodian, resulting directly or indirectly solely from the fact that
securities and other property of the Funds is registered in the name
of the Custodian; provided, however, in no event shall such
indemnification be applicable to income, franchise or similar taxes
which may be imposed or applied against the Custodian or charges
imposed by a Federal Reserve Bank with respect to intra-day overdrafts
unless separately agreed to by the Funds.
(b) Extent of Liability. Notwithstanding anything to the contrary
contained herein, with respect to the indemnification obligations of
the Funds provided in this Section4.03, each Fund shall be: (i)
severally, and not jointly and severally, liable with each of the
other Funds; and (ii) liable only for its pro rata share of such
liabilities, determined with reference to such Fund's proportionate
interest in the aggregate of assets held by the Custodian in the
Account with respect to which such liability relates at the time such
liability was incurred, as reflected on the books and records of the
Funds.
(c) Notice of Litigation, Right to Prosecute, Etc. The Custodian
shall promptly notify the Funds in writing of the commencement of any
litigation or proceeding brought against the Custodian in respect of
which indemnity may be sought against the Funds pursuant to this
Section4.03. The Funds shall be entitled to participate in any such
litigation or proceeding and, after written notice from the Funds to
the Custodian, the Funds may assume the defense of such litigation or
proceeding with counsel of their choice at their own expense. The
Custodian shall not consent to the entry of any judgment or enter into
any settlement in any such litigation or proceeding without providing
the Funds with adequate notice of any such settlement or judgment, and
without the Funds' prior written consent. The Custodian shall submit
written evidence to the Funds with respect to any cost or expense for
which it seeks indemnification in such form and detail as the Funds
may reasonably request.
Section 4.04. Funds, Right to Proceed. Notwithstanding anything to
the contrary contained herein, the Funds shall have, at their election
upon reasonable notice to the Custodian, the right to enforce, to the
extent permitted by any applicable agreement and applicable law, the
Custodian's rights against any Securities System or other person for
loss, damage or expense caused the Custodian or the Funds by such
Securities System or other person, and shall be entitled to enforce
the rights of the Custodian with respect to.any claim against such
Securities System or other person which the Custodian may have as a
consequence of any such loss, damage or expense if and to the extent
that the Custodian or any Fund has not been made whole for any such
loss, damage or expense.
ARTICLE V - COMPENSATION
Section 5.01. Compensation. The Custodian shall be compensated for
its services hereunder in an amount, and at such times, as may be
agreed upon, from time to time, by the Custodian and the Funds. Each
Fund shall be severally, and not jointly, liable with the other Funds
only for its pro rata share of such compensation, determined with
reference to such Fund's proportionate interest in each Repurchase
Agreement transaction to which such compensation relates.
Section 5.02. Waiver of Right of Set-Off. The Custodian hereby
waives and relinquishes all contractual and common law rights of
set-off to which it may now or hereafter be or become entitled with
respect to any obligations of the Funds to the Custodian arising under
this Agreement.
ARTICLE VI - TERMINATION
Section 6.01. Events of Termination. This Agreement shall continue
in full force and effect until the first to occur of: (a) termination
by the Custodian or the Funds by an instrument in writing delivered to
the other party, such termination to take effect not sooner than
ninety (90) days after the date of such delivery; or (b) termination
by the Funds by written notice delivered to the Custodian, based upon
the Funds' determination that there is a reasonable basis to conclude
that the Custodian is insolvent or that the financial condition of the
Custodian is deteriorating in any material respect, in which case
termination shall take effect upon the Custodians receipt of such
notice or at such later time as the Funds shall designate; provided,
however, that this Agreement may be terminated as to one or more Funds
(but less than all Funds) by delivery of an amended Schedule A-1, A-2,
A-3 or A-4 pursuant to Section7.03 hereof. The execution and delivery
of an amended Schedule A-1, A-2, A-3 or A-4 which deletes one or more
Funds shall constitute a termination of this Agreement only with
respect to such deleted Fund(s).
Section 6.02. Successor Custodian; Payment of Compensation. Each of
the Funds may identify a successor custodian to which the cash,
Securities and other assets of such Fund shall, upon termination of
this Agreement, be delivered; provided that in the case of the
termination of this Agreement with respect to any of the Funds, such
Fund or Funds shall direct the Custodian to transfer the assets of
such Fund or Funds held by the Custodian pursuant to Proper
Instructions. The Custodian agrees to cooperate with the Funds in the
execution of documents and performance or all other actions necessary
or desirable in order to substitute the successor custodian for the
Custodian under this Agreement. In the event of termination, each
Fund shall make payment of such Fund's applicable share of unpaid
compensation within a reasonable time following termination and
delivery of a statement to the Funds setting forth such fees. The
termination of this Agreement with respect to any of the Funds shall
be governed by the provisions of this ArticleVI as to notice, payments
and delivery of securities and other assets, and shall not affect the
obligations of the parties hereunder with respect to the other Funds
set forth in Schedule A-1, A-2, A-3 or A-4 as amended from time to
time.
ARTICLE VII - MISCELLANEOUS
Section 7.01. Representative Capacity and Binding Obligation. A COPY
OF THE DECLARATION OF TRUST OR OTHER ORGANIZATIONAL DOCUMENTS OF EACH
FUND IS ON FILE WITH THE SECRETARY OF THE STATE OF EACH FUND'S
FORMATION, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT
EXECUTED ON BEHALF OF THE TRUSTEES OF ANY FUND AS INDIVIDUALS, AND THE
OBLIGATIONS OF THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE
SHAREHOLDERS, TRUSTEES, DIRECTORS, PARTNERS, OFFICERS, EMPLOYEES OR
AGENTS OF ANY FUND INDIVIDUALLY, BUT ARE BINDING ONLY UPON THE ASSETS
AND PROPERTY OF THE FUNDS, AND IN THE CASE OF SERIES COMPANIES, SUCH
FUNDS' RESPECTIVE PORTFOLIOS OR SERIES.
THE CUSTODIAN AGREES THAT NO SHAREHOLDER, TRUSTEE, DIRECTOR, PARTNER,
OFFICER, EMPLOYEE OR AGENT OF ANY FUND MAY BE HELD PERSONALLY LIABLE
OR RESPONSIBLE FOR ANY OBLIGATIONS OF THE FUNDS ARISING OUT OF THIS
AGREEMENT. WITH RESPECT TO OBLIGATIONS OF EACH FUND ARISING OUT OF
THIS AGREEMENT, THE CUSTODIAN SHALL LOOK FOR PAYMENT OR SATISFACTION
OF ANY CLAIM SOLELY TO THE ASSETS AND PROPERTY OF THE FUND TO WHICH
SUCH OBLIGATION RELATES AS THOUGH EACH FUND HAD SEPARATELY CONTRACTED
WITH THE CUSTODIAN BY SEPARATE WRITTEN INSTRUMENT."
Section 7.02. Entire Agreement. This Agreement constitutes the
entire understanding and agreement of the parties hereto with respect
to the subject matter hereof.
Section 7.03. Amendments. No provision of this Agreement may be
amended except by a statement in writing signed by the party against
which enforcement of the amendment is sought; provided, however,
Schedule A-1, A-2, A-3 or A-4 listing the Funds which are parties
hereto, Schedule B listing the Fund Custodians and Schedule C listing
the Repo Custodians may be amended from time to time to add or delete
one or more Funds, Fund Custodians or Repo Custodians, as the case may
be, by the Funds' delivery of an amended Schedule A-1, A-2, A-3 or
A-4, Schedule B or Schedule C to the Custodian. The deletion of one
or more Funds from Schedule A-1, A-2, A-3 or A-4 shall have the effect
of terminating this Agreement as to such Fund(s), but shall not affect
this Agreement with respect to any other Fund.
Section 7.04. Interpretation. In connection with the operation of
this Agreement, the Custodian, and the Funds may agree in writing from
time to time on such provisions interpretative of or in addition to
the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No
interpretative or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Agreement.
Section 7.05. Captions. Headings contained in this Agreement, which
are included as convenient references only, shall have no bearing upon
the interpretation of the terms of the Agreement or the obligations of
the parties hereto.
Section 7.06. Governing Law. THE PROVISIONS OF THIS AGREEMENT SHALL
BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 7.07. Notice and Confirmations.
(a) Except as provided in Section 7.07(b) below and except in the
case of Proper Instructions or Special Instructions, notices and other
writings contemplated by this Agreement shall be delivered by hand or
by facsimile transmission (provided that in the case of delivery by
facsimile transmission, notice shall also be mailed postage prepaid)
to the parties at the following addresses:
(i) If to the Funds:
FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah Todd or
Mr. Samuel Silver
(ii) If to the Custodian:
The Bank of New York
One Wall Street
Fourth Floor
New York, NY 10286
Attn: Claire Meskovic
Telephone: (212) 635-4808
Telefax: (212) 635-4828
(b) The Custodian may provide the confirmations required by Sections
2.02 and 2.03 of this Agreement by making the information available in
the form of a communication directly between electromechanical or
electrical devices or systems (including, without limitation,
computers) (or in such other manner as the parties hereto may agree in
writing) to the following Fund Agent:
Fidelity Accounting and Custody
Domestic Securities Operations
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 506-4071
Attention: Mr. Mark Mufler
The address and telephone number of the Funds, the Fund Agent and the
Custodian and the identity of the Fund Agent specified in this Section
7.07 may be changed by written notice of the Funds to Custodian or
Custodian to the Funds, as the case may be. All written notices which
are required or provided to be given hereunder shall be effective upon
actual receipt by the entity to which such notice is given.
Section 7.08. Assignment. This Agreement shall be binding on and
shall inure to the benefit of the parties hereto and their respective
successors and assigns, provided that, no party hereto may assign this
Agreement or any of its rights or obligations hereunder without the
prior written consent of each of the other parties.
Section 7.09. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
This Agreement shall become effective when one or more counterparts
have been signed and delivered by each of the parties.
Section 7.10. Confidentiality; Survival of Obligations. The parties
hereto agree that they shall each shall treat confidentially the terms
and conditions of this Agreement and all information provided by each
party to the others regarding its business and operations. All
confidential information provided by a party hereto shall be used by
any other party hereto solely for the purpose of rendering services
pursuant to this Agreement and, except as may be required in carrying
out this Agreement, shall not be disclosed to any third party without
the prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when provided
or thereafter becomes publicly available other than through a breach
of this Agreement, or that is required to be disclosed by any bank
examiner of the Custodian, any auditor of the parties hereto or by
judicial or administrative process or otherwise by applicable law or
regulation. The provisions of this Section 7.10 and Sections3.03,
4.01, 4.02, 4.03, 4.04, 4.05, 7.01 and 7.06 shall survive any
termination of this Agreement, provided that in the event of
termination the Custodian agrees that it shall transfer and return
Securities and other assets held by the Custodian for the benefit of
the Funds as the Funds direct pursuant to Proper Instructions.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in its name and behalf on the day and year first above
written.
[Signature Lines Omitted]
SCHEDULES A-1, A-2, A-3 AND A-4
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT BETWEEN
THE BANK OF NEW YORK AND FIDELITY FUNDS DATED AS OF __________
The following is a list of the Funds to which this Agreement applies:
SCHEDULE B
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN THE BANK OF NEW YORK AND
FIDELITY FUNDS DATED AS OF MAY 11, 1995
The following is a list of the Fund Custodians of the Funds:
The Bank of New York
Morgan Guaranty Trust Company
Brown Brothers Harriman & Co.
First Union National Bank Charlotte
Chase Manhattan Bank, N.A.
State Street Bank and Trust Company
SCHEDULE C
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN THE BANK OF NEW YORK AND
FIDELITY FUNDS DATED AS OF MAY 11, 1995
The following is a list of Repo Custodians of the Funds:
The Bank of New York
Chemical Bank
Morgan Guaranty Trust Company
Exhibit (g)(17)
Form of
FIRST AMENDMENT TO
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN
THE BANK OF NEW YORK
AND
FIDELITY FUNDS
FIRST AMENDMENT TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT BETWEEN
THE BANK OF NEW YORK AND FIDELITY FUNDS, dated as of _______, by and
between THE BANK OF NEW YORK ("Custodian") and each of the entities
listed on SchedulesA-1, A-2, A-3 and A-4 hereto on behalf of itself
or, (i) in the case of a series company, on behalf of one or more of
its portfolios or series listed on SchedulesA-1 or A-2 hereto, (ii) in
the case of the accounts listed on Schedule A-3 hereto, acting through
Fidelity Management & Research Company, and (iii)in the case of the
commingled or individual accounts listed on Schedule A-4 hereto,
acting through Fidelity Management Trust Company (collectively, the
"Funds" and each, a "Fund").
WITNESSETH
WHEREAS, Custodian and certain of the Funds have entered into that
certain Joint Trading Account Custody Agreement between The Bank of
New York and Fidelity Funds, dated as of ______ (the "Agreement"),
pursuant to which the Funds have appointed the Custodian as its
custodian for the purpose of establishing and administering one or
more joint trading accounts or subaccounts thereof (individually, an
"Account" and collectively, the "Accounts") and holding cash and
securities for the Funds in connection with repurchase transactions
effected through the Accounts; and
WHEREAS, Seller and the Funds desire to amend the Agreement as set
forth below.
NOW, THEREFORE, in consideration of the premises and mutual promises
and covenants contained herein, the parties hereto agree as follows.
Unless otherwise defined herein or the context otherwise requires,
terms used in this Amendment, including the preamble and recitals,
have the meanings provided in the Agreement.
The Agreement is hereby amended by deleting Paragraph2.03(f) in its
entirety and substituting the following in lieu thereof:
Exhibit (g)(17)
"(f) Overdraft. In the event that the Custodian is directed by
Proper Instructions to make any payment or transfer of funds on behalf
of a Fund for which there would be, at the close of business on the
date of such payment or transfer, insufficient funds held by the
Custodian on behalf of such Fund, the Custodian may, in its
discretion, provide an overdraft ("Overdraft") to the Fund (such Fund
being referred to herein as an "Overdraft Fund"), in an amount
sufficient to allow the completion of such payment or transfer. Any
Overdraft provided hereunder: (a) shall be payable on the next
Business Day, unless otherwise agreed by the Overdraft Fund and the
Custodian; and (b) shall accrue interest from the date of the
Overdraft to the date of payment in full by the Overdraft Fund at a
rate agreed upon in writing, from time to time, by the Custodian and
the Overdraft Fund. The Custodian and the Funds acknowledge that the
purpose of such Overdrafts is to temporarily finance the purchase or
sale of securities for prompt delivery in accordance with the terms
hereof. The Custodian hereby agrees to notify each Overdraft Fund by
3:00 p.m., New York time, of the amount of any Overdraft. Provided
that Custodian has given the notice required by this subparagraph (f),
the Funds hereby agree that, as security for the Overdraft of an
Overdraft Fund, the Custodian shall have a continuing lien and
security interest in and to all interest of such Overdraft Fund in
Securities whose purchase is financed by Custodian and which are in
Custodian's possession or in the possession or control of any third
party acting on Custodian's behalf and the proceeds thereof. In this
regard, Custodian shall be entitled to all the rights and remedies of
a pledgee under common law and a secured party under the New York
Uniform Commercial Code and any other applicable laws or regulations
as then in effect."
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed and delivered under seal by their duly authorized officers.
BANK OF NEW YORK
[Signature Lines Omitted]
FIDELITY INVESTMENT COMPANIES LISTED
ON SCHEDULE A-1 HERETO AND ACCOUNTS
LISTED ON SCHEDULE A-3 HERETO
Dated:
[Signature Lines Omitted]
FIDELITY INVESTMENT COMPANIES LISTED
ON SCHEDULE A-2 HERETO
Dated:
[Signature Lines Omitted]
ACCOUNTS LISTED ON SCHEDULE A-4 HERETO
By: FIDELITY MANAGEMENT TRUST COMPANY
Dated:
[Signature Lines Omitted]
Exhibit (o)(2)
FORM OF
SCHEDULE I DATED FEBRUARY 26, 1999 TO MULTIPLE CLASS OF SHARES PLAN
FOR FIDELITY ADVISOR FUNDS DATED MARCH 19, 1998
<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 VIII
Overseas 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
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 VII
Natural Resources 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 Opportunities 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
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 I
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
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 I
Small 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
Strategic Opportunities Fund:
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
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 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
Advisor Series I
Dividend 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
Retirement 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
Asset Allocation 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
Diversified International 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
Europe 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
Advisor Series VIII
Japan 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
Latin America 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
Global Equity 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
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
Advisor Series II
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 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 II
Strategic 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
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
Advisor Series II
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
</TABLE>
______________________________________________________________
* A contingent deferred sales charge of 0.25% is accessed on certain
redemptions of Class A and Class T shares on which a finder's fee was
paid.
