FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND
A FUND OF
FIDELITY ADVISOR SERIES II
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
CLASS A, CLASS T, CLASS B, CLASS C, AND INSTITUTIONAL CLASS
1-800-522-7297
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Fidelity Advisor Intermediate Municipal Income
Fund (Intermediate Municipal) :
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Intermediate Municipal will be held at an office of
Fidelity Advisor Series II, 27 State Street, 10th Floor, Boston,
Massachusetts 02109 on April 19, 2000, at 11:15 a.m. Eastern time. The
purpose of the Meeting is to consider and act upon the following
proposal, and to transact such other business as may properly come
before the Meeting or any adjournments thereof.
(1) To approve an Agreement and Plan of Reorganization (the
Agreement) between Intermediate Municipal and Fidelity Advisor
Municipal Income Fund (Municipal Income) , another fund of the
trust . The Agreement provides for the transfer of all of the
assets of Intermediate Municipal to Municipal Income in exchange
solely for shares of beneficial interest in Class A, Class T, Class B,
Class C, and Institutional Class of Municipal Income and the
assumption by Municipal Income of Intermediate Municipal's
liabilities . Thereupon, Municipal Income's shares will be
distributed to shareholders of the corresponding class of
Intermediate Municipal in liquidation of Intermediate Municipal.
The Board of Trustees has fixed the close of business on February 23,
2000 as the record date for the determination of the shareholders of
Intermediate Municipal entitled to notice of, and to vote at, such
Meeting and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
February 23, 2000
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN
IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE
ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC Corp. John Smith, Treasurer
2) ABC Corp. John Smith, Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins, Trustee
2) ABC Trust Ann B. Collins, Trustee
3) Ann B. Collins, Trustee u/t/d Ann B. Collins, Trustee
12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND
A FUND OF
FIDELITY ADVISOR SERIES II
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-522-7297
PROXY STATEMENT AND PROSPECTUS
FEBRUARY 23, 2000
This Proxy Statement and Prospectus (Proxy Statement) is being
furnished to shareholders of Fidelity Advisor Intermediate Municipal
Income Fund (Intermediate Municipal), a fund of Fidelity Advisor
Series II (the trust), in connection with the solicitation of proxies
by the trust's Board of Trustees for use at the Special Meeting of
Shareholders of Intermediate Municipal and at any adjournments thereof
(the Meeting). The Meeting will be held on Wednesday, April 19, 2000,
at 11:15 a.m. Eastern time at 27 State Street, 10th Floor, Boston,
Massachusetts 02109, an office of the trust.
As more fully described in this Proxy Statement, the purpose of the
Meeting is to vote on a proposed reorganization (Reorganization).
Pursuant to an Agreement and Plan of Reorganization (the Agreement),
Intermediate Municipal would transfer all of its assets to Fidelity
Advisor Municipal Income Fund (Municipal Income), another fund of the
trust, in exchange solely for shares of beneficial interest of Class
A, Class T, Class B, Class C, and Institutional Class shares of
Municipal Income and the assumption by Municipal Income of
Intermediate Municipal's liabilities. The number of shares to be
issued in the proposed Reorganization will be based upon the relative
net asset values of the outstanding shares of Class A, Class T, Class
B, Class C, and Institutional Class of Intermediate Municipal and the
corresponding class of Municipal Income at the time of the exchange.
As provided in the Agreement, Intermediate Municipal will distribute
Class A, Class T, Class B, Class C, and Institutional Class shares of
Municipal Income to its shareholders of the corresponding class in
liquidation of Intermediate Municipal on May 25, 2000, or such other
date as the parties may agree (the Closing Date). Shareholders of
Class A, Class T, Class B, Class C, and Institutional Class of
Intermediate Municipal will receive shares of the corresponding class
of Municipal Income equal in value to the shares of Intermediate
Municipal they are surrendering, based upon the relative net asset
values of Class A (Intermediate Municipal) to Class A (Municipal
Income), Class T (Intermediate Municipal) to Class T (Municipal
Income), Class B (Intermediate Municipal) to Class B (Municipal
Income), Class C (Intermediate Municipal) to Class C (Municipal
Income), and Institutional Classs (Intermediate Municipal) to
Institutional Class (Municipal Income), respectively, as of the
Closing Date.
Municipal Income, a municipal bond fund, is a diversified fund of
Fidelity Advisor Series II, an open-end management investment company
organized as a Massachusetts business trust on April 23, 1986.
Municipal Income's investment objective is to seek to provide a high
current yield exempt from federal income tax. Municipal Income
normally invests at leasts 80% of its assets in municipal securities
whose interest is exempt from federal income tax.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Proxy Statement, which should be retained for future reference,
sets forth concisely the information about the Reorganization and
Municipal Income that a shareholder should know before voting on the
proposed Reorganization. The Statement of Additional Information dated
February 23, 2000 relating to this Proxy Statement has been filed with
the Securities and Exchange Commission (SEC) and is incorporated
herein by reference. This Proxy Statement is accompanied by the
applicable Prospectus dated December 29, 1999 , which
offers shares of Municipal Income. The Statement of Additional
Information for Class A, Class T, Class B, Class C, and Institutional
Class of Municipal Income dated December 29, 1999 and supplemented
January 4, 2000, is available upon request. Attachment 1 contains
excerpts from the Annual Reports of Class A, Class T, Class B, Class
C, and Institutional Class of Municipal Income, dated October 31,
1999. The financial statements and financial highlights for
Intermediate Municipal for the fiscal year ended October 31, 1999, and
report of the auditor are incorporated herein by reference. The
Prospectuses and Statement of Additional Information for Municipal
Income have been filed with the SEC and are incorporated herein by
reference. Prospectuses and Statement of Additional Information for
Intermediate Municipal, both dated February 14, 2000, have been filed
with the SEC. Copies of documents for Municipal Income may be obtained
without charge by contacting the trust at Client Services at
1-800-843-3001. Copies of documents for Intermediate Municipal are
available on the SEC's Internet Web site (http://www.sec.gov) or by
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009.
TABLE OF CONTENTS
Voting Information 1
Synopsis 5
Comparison of Other Policies of The Funds 18
Comparison of Principal Risk Factors 22
The Proposed Transaction 24
Additional Information About Municipal Income 30
Miscellaneous 35
Attachment 1. Excerpts from the Annual
Reports of Municipal Income Dated
October 31, 1999 36
Attachment 2. Intermediate Municipal -
Supplemental Information 41
Exhibit 1. Form of Agreement and Plan of
Reorganization between Fidelity Advisor
Intermediate Municipal Income Fund
and Fidelity Advisor Municipal Income Fund 70
PROXY STATEMENT AND PROSPECTUS
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND
A FUND OF
FIDELITY ADVISOR SERIES II
TO BE HELD ON APRIL 19, 2000
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-522-7297
VOTING INFORMATION
This Proxy Statement and Prospectus (Proxy Statement) is furnished in
connection with a solicitation of proxies made by, and on behalf of,
the Board of Trustees of Fidelity Advisor Series II (the trust) to be
used at the Special Meeting of Shareholders of Fidelity Advisor
Intermediate Municipal Income Fund (Intermediate Municipal) and at any
adjournments thereof (the Meeting), to be held on Wednesday, April 19,
2000 at 11:15 a.m. Eastern Time at 27 State Street, 10th Floor,
Boston, Massachusetts 02109, an office of the trust and Fidelity
Management & Research Company (FMR), the fund's investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation is made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about February 23,
2000. Supplementary solicitations may be made by mail, telephone,
telegraph, facsimile, electronic means or by personal interview by
representatives of the trust. In addition, D.F. King & Co., Inc.
and/or Management Information Services Corp. may be paid on a per-call
basis to solicit shareholders on behalf of the fund at an anticipated
cost of approximately $2,100. Intermediate Municipal may also arrange
to have votes recorded by telephone. D.F King & Co., Inc. may be paid
on a per-call basis for vote-by-phone solicitations on behalf of the
fund at an anticipated cost of approximately $1,950. If the fund
records votes by telephone, it will use procedures designed to
authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been
properly recorded. Proxies given by telephone may be revoked at any
time before they are voted in the same manner that proxies voted by
mail may be revoked.
The expenses in connection with preparing this Proxy Statement and
its enclosures and of all solicitations, including telephone voting,
will be paid by the fund, provided the expenses do not exceed the
fund's voluntary annual expense caps (excluding interest, taxes,
brokerage commissions, and extraordinary expenses), for Class A, Class
T, Class B, Class C, and Institutional Class of 0.85%, 0.90%, 1.60%,
1.70%, and 0.70%, respectively. Expenses exceeding each class's
voluntary expense cap will be paid by FMR. The fund will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of shares.
If the enclosed proxy card is executed and returned, it may
nevertheless be revoked at any time prior to its use by written
notification received by the trust, by the execution of a later-dated
proxy card, or by attending the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and which
are not revoked, will be voted at the Meeting. Shares represented by
such proxies will be voted in accordance with the instructions
thereon. If no specification is made on a proxy card, it will be voted
FOR the matters specified on the proxy card. Only proxies that are
voted will be counted toward establishing a quorum. Broker non-votes
are not considered voted for this purpose. Shareholders should note
that while votes to ABSTAIN will count toward establishing a quorum,
passage of any proposal being considered at the Meeting will occur
only if a sufficient number of votes are cast FOR the proposal.
Accordingly, votes to ABSTAIN and votes AGAINST will have the same
effect in determining whether the proposal is approved. With respect
to fund shares held in Fidelity individual retirement accounts
(including Traditional, Rollover, SEP, SAR-SEP, Roth and SIMPLE IRAs),
the IRA Custodian will vote those shares for which it has received
instructions from shareholders only in accordance with such
instructions. If Fidelity IRA shareholders do not vote their shares,
the IRA Custodian will vote their shares for them, in the same
proportion as other Fidelity IRA shareholders have voted, but only to
the extent necessary to reach quorum at the Meeting.
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
against the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement or on any other business properly presented at the
Meeting prior to such adjournment if sufficient votes have been
received and it is otherwise appropriate.
Shares of each class of Intermediate Municipal and Fidelity Advisor
Municipal Income Fund (Municipal Income) issued and outstanding as of
November 30, 1999 are listed below.
Intermediate Municipal
Class A 276,302
Class T 4,815,956
Class B 1,012,822
Class C 243,458
Institutional Class 585,458
Municipal Income
Class A 912,843
Class T 27,825,688
Class B 5,394,659
Class C 1,152,630
Institutional Class 295,847
Intermediate Municipal shareholders of record at the close of
business on February 23, 2000 will be entitled to vote at the Meeting.
Approval of the Reorganization will be determined by the shareholders
of each class of Intermediate Municipal voting in the aggregate rather
than by each class separately. Each such shareholder will be entitled
to one vote for each dollar of net asset value held on that date.
As of November 30, 1999, the Trustees, Members of the Advisory Board,
and officers of each fund owned, in the aggregate, less than 1% of
each fund's total outstanding shares. As of November 30, 1999, the
Trustees, Members of the Advisory Board, and officers of each fund
owned, in the aggregate, less than 1% of each class's total
outstanding shares. As of November 30, 1999, the following owned of
record or beneficially 5% or more of a class's outstanding
shares:
Fidelity Advisor Intermediate Municipal Income Fund: Class A:
PaineWebber, Inc., New York, NY (19.42%); BMA Financial Services,
Inc., Westwood, KS (17.36%); The Guardian, Phoenix, AZ (10.44%);
Southwest Securities, Dallas, TX (8.70%).
Fidelity Advisor Intermediate Municipal Income Fund: Class T:
SunAmerica, New York, NY (7.78%); Aetna Inc., Torrance, CA (5.93%);
Citigroup, Inc., New York, NY (5.56%).
Fidelity Advisor Intermediate Municipal Income Fund: Class B:
Merrill, Lynch, Pierce, Fenner and Smith, Jacksonville, FL, (13.33%);
Prudential, New York, NY (6.20%).
Fidelity Advisor Intermediate Municipal Income Fund: Class C:
Merrill, Lynch, Pierce, Fenner, and Smith, Jacksonville, FL (13.85%);
PaineWebber, Inc., New York, NY (10.07%); First Union Corp., Roanoke,
VA (9.54%); Allmerica Financial Corp., Worcester, MA (9.40%); Terra
Securities Corporation, Springfield, IL (7.20%); First Allied
Securities, San Diego, CA (6.43%); Investacorp, Inc., Amherst, NH
(5.61%).
Fidelity Advisor Intermediate Municipal Income Fund: Institutional
Class: Drovers & Mechanics Bank, York, PA (17.59%); South Holland
Bancorp, South Holland, IL (9.27%); Laird Norton Company, Seattle, WA
(9.15%); First National Bank of Springdale, Springdale, AR (8.95%);
Wells Fargo Bank, San Francisco, CA (8.10%); Citizen's National Bank
of Evansville, IN (6.30%).
Fidelity Advisor Municipal Income Fund: Class A: Raymond James
Financial Services, Inc., Saint Petersburg, FL (9.26%).
Fidelity Advisor Municipal Income Fund: Class T: Citigroup, Inc., New
York, NY (8.44%); A.G. Edwards & Sons Inc., Saint Louis, MO (6.50%).
Fidelity Advisor Municipal Income Fund: Class B: Merrill, Lynch,
Pierce, Fenner and Smith, Jacksonville, FL (9.76%).
Fidelity Advisor Municipal Income Fund: Class C: Merrill, Lynch,
Pierce, Fenner and Smith, Jacksonville, FL (18.75%); Citigroup, Inc.,
New York, NY (5.62%).
Fidelity Advisor Municipal Income Fund: Class Institutional Class:
Tompkins County Trust Company, Ithaca, NY (11.81%); Century Bank &
Trust, Rochester, PA (10.73%); Grand Premier Trust Services, Freeport,
IL (8.63%); Arvest Trust Company, Rogers, AR (6.77%); Invest Financial
Corporation, Indianapolis, IN (5.52%).
As of November 30, 1999, the following owned of record or
beneficially 5% or more of Fidelity Advisor Municipal Income Fund's
outstanding shares: Citigroup, Inc., New York, NY (6.78%).
To the knowledge of the trust, no other shareholder owned of record
or beneficially 5% or more of the outstanding shares of any class or
of either fund on that date. If the Reorganization became effective on
November 30, 1999, Citigroup, Inc. of New York, NY would have owned of
record or beneficially 5% or more of the outstanding classes of the
combined fund.
It is anticipated that the following shareholders will own of record
or beneficially 5% or more of the outstanding classes of Fidelity
Advisor Municipal Income Fund as a result of the Reorganization:
Fidelity Advisor Municipal Income Fund : Class A: Raymond
James Financial Services, Inc. , St. Petersburg, FL (7.33%).
Fidelity Advisor Municipal Income Fund : Class T: Citigroup,
Inc., New York, NY (7.34%); A.G. Edwards & Sons Inc. , St.
Louis, MO (5.66%).
Fidelity Advisor Municipal Income Fund : Class B: Merrill,
Lynch, Pierce, Fenner and Smith, Jacksonville, FL (10.26%).
Fidelity Advisor Municipal Income Fund : Class C: Merrill,
Lynch, Pierce, Fenner and Smith, Jacksonville, FL (17.99%).
Fidelity Advisor Municipal Income Fund : Institutional Class:
Drovers & Mechanic s Bank, York, PA (11.13%); South Holland
Bancorp, South Holland, IL (5.86%); Laird Norton Company, Seattle, WA
(5.79%); First National Bank of Springdale, Springdale, AR (5.66%);
Wells Fargo Bank, San Francisco, CA (5.12%).
VOTE REQUIRED: APPROVAL OF THE REORGANIZATION REQUIRES THE AFFIRMATIVE
VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" OF
INTERMEDIATE MUNICIPAL. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE
1940 ACT), THE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR
MORE OF THE VOTING SECURITIES PRESENT AT THE MEETING OR REPRESENTED BY
PROXY IF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING VOTING
SECURITIES ARE PRESENT OR REPRESENTED BY PROXY OR (B) MORE THAN 50% OF
THE OUTSTANDING VOTING SECURITIES. BROKER NON-VOTES ARE NOT CONSIDERED
"PRESENT" FOR THIS PURPOSE.
SYNOPSIS
The following is a summary of certain information contained elsewhere
in this Proxy Statement, in the Agreement, and in the Prospectuses of
Intermediate Municipal and Municipal Income. The Prospectuses of
Municipal Income are incorporated by this reference. Shareholders
should read the entire Proxy Statement and the applicable Prospectus
of Municipal Income carefully for more complete information.
The proposed reorganization (the Reorganization) would merge
Intermediate Municipal into Municipal Income, a municipal bond fund
also managed by FMR. If the Reorganization is approved, Intermediate
Municipal will cease to exist and current Class A, Class T, Class B,
Class C, and Institutional Class shareholders of the fund will become
shareholders of the corresponding class of Municipal Income instead.
Approval of the Reorganization will be determined solely by approval
of the shareholders of each class of Intermediate Municipal voting in
the aggregate rather than by vote of each class separately.
INVESTMENT OBJECTIVES AND POLICIES
Each fund is managed similarly, however, Intermediate Municipal has a
more conservative objective and a shorter maturity than Municipal
Income. Intermediate Municipal seeks the highest level of income
exempt from federal income taxes that can be obtained consistent with
the preservation of capital. Municipal Income seeks to provide a high
current yield exempt from federal income tax.
Each fund normally invests at least 80% of assets in municipal
securities whose interest is exempt from federal income tax. Each fund
may invest all of its assets in municipal securities whose interest is
subject to the federal alternative minimum tax.
Intermediate Municipal normally maintains a dollar-weighted average
maturity between three and 10 years and is managed to have similar
overall interest rate risk to the Lehman Brothers 1-17 Year Municipal
Bond Index. Municipal Income is managed to have overall interest rate
risk similar to the Lehman Brothers 3 Plus Year Municipal Bond Index.
As of October 31, 1999, the dollar-weighted average maturity for
Intermediate Municipal and Municipal Income was 7.2 years and 12.9
years, respectively.
EXPENSE AND SALES LOAD STRUCTURES
Intermediate Municipal and Municipal Income have similar expense
structures. Each fund pays a management fee. In addition, certain
classes of each fund pay distribution fees and each class of each fund
pays other expenses. The sum of the management fee, the distribution
fee (if applicable), and other expenses is a class's gross expenses.
FMR has voluntarily agreed to reimburse the gross expenses of each
class of each fund to the extent that they exceed a voluntary expense
cap applicable to that class. As of October 31, 1999, the gross
expenses of each class of Municipal Income were below the voluntary
expense cap. The funds also have different load and contingent
deferred sales charge (CDSC) structures.
The Reorganization would provide Intermediate Municipal shareholders
with a fund with lower total expenses for each class.
MANAGEMENT FEE
Each fund pays the same management fee. The management fee is the
same for all classes of shares of each fund.
DISTRIBUTION FEES
Each fund offers five classes of shares: Class A, Class T, Class B,
Class C, and Institutional Class.
Class A, Class T, Class B, Class C, and Institutional Class of each
fund have adopted a Distribution and Service Plan (the Plans) pursuant
to Rule 12b-1 of the Investment Company Act of 1940 (the 1940 Act).
Under the Plans, Class A, Class T, Class B, and Class C of each fund
are authorized to pay Fidelity Distributors Corporation (FDC) a
monthly distribution fee as compensation for its services and expenses
in connection with the distribution of Class A, Class T, Class B, and
Class C shares.
Class A of each fund may pay FDC a distribution fee at an annual rate
of 0.40% of its average net assets throughout the month, or such
lesser amount as the fund's Board of Trustees may determine from time
to time. Class A of both Intermediate Municipal and Municipal Income
currently pays a distribution fee of 0.15% of its average net assets
throughout the month.
Class T of each fund may pay FDC a distribution fee at an annual rate
of 0.40% of its average net assets throughout the month, or such
lesser amount as the fund's Board of Trustees may determine from time
to time. Class T of both Intermediate Municipal and Municipal Income
currently pays a distribution fee of 0.25% of its average net assets
throughout the month.
Class B of each fund may pay FDC a distribution fee at an annual rate
of 0.75% of its average net assets throughout the month, or such
lesser amount as the fund's Board of Trustees may determine from time
to time. Class B of both Intermediate Municipal and Municipal Income
currently pays a distribution fee at an annual rate of 0.65% of its
average net assets throughout the month.
Class C of each fund currently pays FDC a distribution fee at an
annual rate of 0.75% of its average net assets throughout the month.
In addition, Class B and Class C of each fund pay FDC a monthly
service fee at an annual rate of 0.25% of the respective class's
average net assets throughout the month for providing shareholder
support services.
Institutional Class of both Intermediate Municipal and Municipal
Income does not pay a distribution fee.
The Distribution and Service Plan of each class specifically
recognizes that FMR may make payments from its management fee revenue,
past profits, or other resources (not from a fund's or class's assets)
to compensate financial intermediaries (including 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.
TOTAL OPERATING EXPENSES AND EXPENSE REIMBURSEMENT
In addition to management fees and distribution fees, there are also
other operating expenses such as legal, audit, custodian, transfer
agency, dividend disbursing, and shareholder servicing expenses. Such
expenses are paid by each class of each fund.
FMR has voluntarily agreed to reimburse each class of each fund to
the extent that total operating expenses (excluding interest,
taxes, brokerage commissions, and extraordinary expenses), as a
percentage of their respective net assets, exceed a voluntary expense
cap. The table below shows each class's operating expenses as of
October 31, 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Intermediate Municipal Municipal Income Operating
Expense Caps Operating Expenses (before ExpensesA
reimbursement)
Class A 0.85% 1.00% 0.72%
Class T 0.90% 1.07% 0.81%
Class B 1.60% 1.71% 1.46%
Class C 1.70% 1.85% 1.56%
Institutional Class 0.70% 0.84% 0.60%
</TABLE>
A FMR has voluntarily agreed to reimburse Class A, Class T, Class
B, Class C, and Institutional Class of Municipal Income to the extent
that total operating expenses (excluding interest, taxes, brokerage
commissions, and extraordinary expenses), as a percentage of their
average net assets, exceed 0.90%, 1.00%, 1.65%, 1.75%, and 0.75%,
respectively. These arrangements can be discontinued by FMR at any
time.
As shown in the above table, the expenses paid by each class of
Municipal Income are lower than those paid by the corresponding class
of Intermediate Municipal.
SALES LOADS
Class A and Class T of each fund have a front-end sales load. Class B
and Class C of each fund have a CDSC. Institutional Class of each fund
has neither a front-end sales load nor a CDSC. Class A and Class T of
Intermediate Municipal have maximum sales loads of 3.75% and 2.75%,
respectively. Class A and Class T of Municipal Income have maximum
sales loads of 4.75% and 3.50%, respectively.
For both Intermediate Municipal and Municipal Income, 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
finder's fee at the rate of 0.25% of the purchase amount. Any
assets on which a finder's fee was paid will bear a CDSC if they do
not remain in Class A or Class T shares of Fidelity Advisor funds, or
Daily Money Class shares of Treasury Fund, Prime Fund, and Tax-Exempt
Fund, for a period of at least one uninterrupted year.
Class B and Class C shares of each fund may, upon redemption, be
assessed a CDSC. The CDSC for Class B shares of Intermediate Municipal
declines over three years from 3% to 0%. After a holding period of
four years, Class B shares of Intermediate Municipal will convert
automatically to Class A shares of Intermediate Municipal. The CDSC
for Class B shares of Municipal Income declines over six years from 5%
to 0%. After a holding period of seven years, Class B shares of
Municipal Income will convert automatically to Class A shares of
Municipal Income. Class C shares of each fund redeemed within one year
of purchase are assessed a CDSC of 1.00%.
Existing Class A, Class T, Class B, and Class C shares of
Intermediate Municipal will retain their CDSC schedule (including a
finder's fee CDSC) and conversion and holding periods after the
merger. Additional purchases of shares following the merger will be
subject to higher loads, CDSCs and longer conversion and holding
periods, as applicable.
THE PROPOSED REORGANIZATION
Shareholders of Intermediate Municipal will be asked at the Meeting
to vote upon and approve the Reorganization and the Agreement, which
provide for the acquisition by Municipal Income of all of the assets
of Intermediate Municipal in exchange solely for Class A, Class T,
Class B, Class C, and Institutional Class shares of Municipal Income
(Municipal Income Class Shares) and the assumption by Municipal Income
of the liabilities of Intermediate Municipal. Intermediate Municipal
will then distribute Municipal Income Class Shares to its shareholders
of the corresponding class, so that each shareholder will receive the
number of full and fractional Municipal Income Class Shares equal in
value to the net asset value of the shareholder's shares of the
corresponding class of Intermediate Municipal on the Closing Date
(defined below). The exchange of Intermediate Municipal's assets for
Municipal Income Class Shares will occur as of the close of business
of the New York Stock Exchange (NYSE) on May 25, 2000, or such other
time and date as the parties may agree (the Closing Date).
Intermediate Municipal will then be liquidated as soon as practicable
thereafter. Approval of the Reorganization will be determined solely
by approval of the shareholders of each class of Intermediate
Municipal voting in aggregate rather than by vote of each class
separately.
The funds have received an opinion of counsel that, except with
respect to Section 1256 contracts, the Reorganization will not result
in any gain or loss for federal income tax purposes either to
Intermediate Municipal, or Municipal Income or to the shareholders of
either fund. The rights and privileges of the former shareholders of
Intermediate Municipal will be effectively unchanged by the
Reorganization.
The Board of Trustees believes that the Reorganization would benefit
Intermediate Municipal's shareholders and recommends that shareholders
vote in favor of the Reorganization.
COMPARATIVE FEE TABLES
Each fund pays a management fee to FMR for managing its investments
and business affairs which is calculated and paid to FMR every month.
Each fund's management fee is calculated by adding a group fee rate to
an individual fund fee rate, dividing by twelve, and multiplying the
result by each fund's monthly 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.
In addition to the management fee payable by the funds, each class of
each fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and
financial reports. The expenses of each class of Municipal Income are
below current expense caps and are not being reimbursed. The expenses
of each class of Intermediate Municipal exceed the respective current
expense caps; therefore, FMR reimburses each class of the fund to the
extent its total operating expenses exceed its expense caps. As
indicated in the table below, Municipal Income's actual class expenses
are significantly lower than the corresponding class expenses of
Intermediate Municipal after reimbursement.
The following tables show (i) the shareholder transaction expenses
that each shareholder of each class of Intermediate Municipal and
Municipal Income currently incurs, and the shareholder expenses that
shareholders of each class of the combined fund will incur after
giving effect to the Reorganization, and (ii) the current fees and
expenses of Class A, Class T, Class B, Class C, and Institutional
Class of Intermediate Municipal and Municipal Income for the fiscal
year ended October 31, 1999, excluding the effect of FMR's
voluntary expense limitation for Class A, Class T, Class B, Class C,
and Institutional Class for Intermediate Municipal, and pro forma fees
for the combined fund and classes based on the same time period after
giving effect to the Reorganization.
If shareholders approve the Reorganization, the combined fund will
retain Municipal Income's expense structure, requiring payment by each
class of a management fee and other operating expenses for each class.
If the proposed Reorganization is not approved, Intermediate Municipal
will maintain its current fee structure , however, FMR may
discontinue the voluntary expense caps at any time . For more
information about the current fees for Intermediate Municipal, see
Attachment 2. For more information about the current fees for
Municipal Income, refer to its applicable Prospectus.
SHAREHOLDER TRANSACTION AND ANNUAL CLASS OPERATING EXPENSES
Shareholder transaction expenses are charges that shareholders may
pay when they buy, hold, or sell Class A, Class T, Class B, Class C,
and Institutional Class shares of a fund.
Annual class operating expenses are paid out of each class's assets.
Expenses are factored into each class's share price or dividends and
are not charged directly to shareholder accounts. The following
figures are based on historical expenses of each class as of October
31, 1999, and are calculated as a percentage of average net assets of
the applicable class of each fund. The figures for the combined fund
are estimated, based on historical expenses, adjusted to reflect
current fees, of each class of Intermediate Municipal and Municipal
Income as of October 31, 1999, and are calculated as a percentage of
average net assets of the applicable class of the combined fund. The
following figures for Intermediate Municipal do not reflect the effect
of any expense reimbursement on each class as of October 31, 1999.
CLASS A
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Maximum sales charge on 3.75%A 4.75%A 4.75%A
purchases (as a % of
offering price)
Maximum CDSC (as a % of the noneB noneB noneB
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on none none none
reinvested distributions
</TABLE>
A Lower front-end sales charge for Class A may be available with
purchase of $50,000 or more.
B A CDSC of 0.25% is assessed on certain redemptions of Class A shares
on which a finder's fee was paid.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Management fee 0.38% 0.38% 0.38%
Distribution and Service 0.15% 0.15% 0.15%
(12b-1) fee
Other expenses 0.47% 0.19% 0.19%
TOTAL CLASS OPERATING EXPENSES 1.00%A 0.72%B 0.72%B
</TABLE>
A Effective December 1, 1998, FMR has voluntarily agreed to reimburse
Class A of Intermediate Municipal to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 0.85%. This arrangement can be discontinued by FMR at any time.
B Effective August 30, 1996, FMR has voluntarily agreed to reimburse
Class A of Municipal Income to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 0.90%. This arrangement can be discontinued by FMR at any time.
CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Maximum sales charge on 2.75%A 3.50%A 3.50%A
purchases (as a % of
offering price)
Maximum CDSC (as a % of the noneB noneB noneB
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on none none none
reinvested distributions
</TABLE>
A Lower front-end sales charge for Class T may be available with
purchase of $50,000 or more.
B A CDSC of 0.25% is assessed on certain redemptions of Class T shares
on which a finder's fee was paid.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Management fee 0.38% 0.38% 0.38%
Distribution and Service 0.25% 0.25% 0.25%
(12b-1) fee
Other expenses 0.44% 0.18% 0.17%
TOTAL CLASS OPERATING EXPENSES 1.07%A 0.81%B 0.80%B
</TABLE>
A Effective May 29, 1998, FMR has voluntarily agreed to reimburse
Class T of Intermediate Municipal to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 0.90%. This arrangement can be discontinued by FMR at any time.
B Effective July 1, 1995, FMR has voluntarily agreed to reimburse
Class T of Municipal Income to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 1.00%. This arrangement can be discontinued by FMR at any time.
CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Maximum sales charge on none none none
purchases (as a % of
offering price)
Maximum CDSC (as a % of the 3.00%A 5.00%B 5.00%B
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on none none none
reinvested distributions
</TABLE>
A Declines over 3 years from 3.00% to 0%.
B Declines over 6 years from 5.00% to 0%.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Management fee 0.38% 0.38% 0.38%
Distribution and Service 0.90% 0.90% 0.90%
(12b-1) fee (including 0.25%
Service fee)
Other expenses 0.43% 0.18% 0.17%
TOTAL CLASS OPERATING EXPENSES 1.71%A 1.46%B 1.45%B
</TABLE>
A Effective December 1, 1998, FMR has voluntarily agreed to reimburse
Class B of Intermediate Municipal to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 1.60%. This arrangement can be discontinued by FMR at any time.
B Effective January 1, 1996, FMR has voluntarily agreed to reimburse
Class B of Municipal Income to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 1.65%. This arrangement can be discontinued by FMR at any time.
CLASS C
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Maximum sales charge on none none none
purchases (as a % of
offering price)
Maximum CDSC (as a % of the 1.00%A 1.00%A 1.00%A
lesser of original purchase
price or redemption proceeds)
Sales charge (load) on none none none
reinvested distributions
</TABLE>
A On Class C shares redeemed within one year of purchase.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Management fee 0.38% 0.38% 0.38%
Distribution and Service 1.00% 1.00% 1.00%
(12b-1) fee (including 0.25%
Service fee)
Other expenses 0.47% 0.18% 0.18%
TOTAL CLASS OPERATING EXPENSES 1.85%A 1.56%B 1.56%B
</TABLE>
A Effective December 1, 1998, FMR has voluntarily agreed to reimburse
Class C of Intermediate Municipal to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 1.70%. This arrangement can be discontinued by FMR at any time.
B Effective November 1, 1997, FMR has voluntarily agreed to reimburse
Class C of Municipal Income to the extent that total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses), as a percentage of its average net assets,
exceed 1.75%. This arrangement can be discontinued by FMR at any time.
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Intermediate Municipal Municipal Income Combined Fund
Sales charge (load) on none none none
purchases and reinvested
distributions
Deferred sales charge (load) none none none
on redemptions
Intermediate Municipal Municipal Income Combined Fund
Management fee 0.38% 0.38% 0.38%
Distribution and Service none none none
(12b-1) fee
Other expenses 0.46% 0.22% 0.21%
TOTAL CLASS OPERATING EXPENSES 0.84%A 0.60%B 0.59%B
</TABLE>
A Effective December 1, 1998, FMR has voluntarily agreed to reimburse
Institutional Class of Intermediate Municipal to the extent that total
operating expenses (excluding interest, taxes, brokerage commissions,
and extraordinary expenses), as a percentage of its average net
assets, exceed 0.70%. This arrangement can be discontinued by FMR at
any time.
B Effective July 1, 1995, FMR has voluntarily agreed to reimburse
Institutional Class of Municipal Income to the extent that total
operating expenses (excluding interest, taxes, brokerage commissions,
and extraordinary expenses), as a percentage of its average net
assets, exceed 0.75%. This arrangement can be discontinued by FMR at
any time.
EXAMPLES OF EFFECT OF FUND EXPENSES
The following table illustrates the expenses on a hypothetical
$10,000 investment in each class of each fund under the current and
pro forma (combined fund) expenses calculated at the rates stated
above, assuming a 5% annual return. Total expenses shown below include
shareholder transaction expenses, such as the current maximum
front-end sales charge or maximum CDSC, as applicable, on shares of
each class of each fund, and a class's annual operating expenses. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account at the end of each time
period indicated and if you leave your account open:
<TABLE>
<CAPTION>
After 1 Year After 3 Years After 5 Years
Account Open Account Closed Account Open Account Closed Account Open Account Closed
<S> <C> <C> <C> <C> <C> <C>
Intermediate Municipal: $ 473 $ 473 $ 681 $ 681 $ 907 $ 907
Class A
Class T $ 381 $ 381 $ 606 $ 606 $ 849 $ 849
Class B $ 174 $ 474A $ 539 $ 639A $ 846B $ 846B
Class C $ 188 $ 288A $ 582 $ 582 $ 1,001 $ 1,001
Institutional Class $ 86 $ 86 $ 268 $ 268 $ 466 $ 466
Municipal Income:
Class A $ 545 $ 545 $ 694 $ 694 $ 857 $ 857
Class T $ 430 $ 430 $ 600 $ 600 $ 784 $ 784
Class B $ 149 $ 649A $ 462 $ 762A $ 797 $ 997A
Class C $ 159 $ 259A $ 493 $ 493 $ 850 $ 850
Institutional Class $ 61 $ 61 $ 192 $ 192 $ 335 $ 335
Combined Fund
Class A $ 545 $ 545 $ 694 $ 694 $ 857 $ 857
Class T $ 429 $ 429 $ 597 $ 597 $ 779 $ 779
Class B $ 148 $ 648A $ 459 $ 759A $ 792 $ 992A
Class C $ 159 $ 259A $ 493 $ 493 $ 850 $ 850
Institutional Class $ 60 $ 60 $ 189 $ 189 $ 329 $ 329
</TABLE>
<TABLE>
<CAPTION>
After 10 Years
Account Open Account Closed
<S> <C> <C>
Intermediate Municipal: $ 1,554 $ 1,554
Class A
Class T $ 1,545 $ 1,545
Class B $ 1,500B $ 1,500B
Class C $ 2,169 $ 2,169
Institutional Class $ 1,037 $ 1,037
Municipal Income:
Class A $ 1,327 $ 1,327
Class T $ 1,317 $ 1,317
Class B $ 1,451C $ 1,451C
Class C $ 1,856 $ 1,856
Institutional Class $ 750 $ 750
Combined Fund
Class A $ 1,327 $ 1,327
Class T $ 1,305 $ 1,305
Class B $ 1,444C $ 1,444C
Class C $ 1,856 $ 1,856
Institutional Class $ 738 $ 738
</TABLE>
A Reflects deduction of applicable CDSC.
B Reflects conversion of Class B shares to Class A shares after a
maximum of four years.
C Reflects conversion of Class B shares to Class A shares after a
maximum of seven years.
These examples assume that all dividends and other distributions are
reinvested and that the percentage amounts listed under Shareholder
Transaction and Annual Class Operating Expenses remain the same in the
years shown. These examples illustrate the effect of expenses, but are
not meant to suggest actual or expected expenses, which may vary. The
assumed return of 5% is not a prediction of, and does not represent,
actual or expected performance of any class.
FORMS OF ORGANIZATION
Intermediate Municipal and Municipal Income are diversified funds of
Fidelity Advisor Series II, an open-end management investment company
organized as a Massachusetts business trust on April 23, 1986. The
trust is authorized to issue an unlimited number of shares of
beneficial interest. Because the funds are series of the same
Massachusetts trust, organized under the same Declaration of Trust,
the rights of the security holders of Intermediate Municipal under
state law and the governing documents are expected to remain unchanged
after the Reorganization. For more information regarding shareholder
rights, refer to the section of Municipal Income's Statement of
Additional Information (SAI) called "Description of the Trust."
INVESTMENT OBJECTIVES AND POLICIES
Each fund is managed similarly, however, Intermediate Municipal has a
more conservative investment objective than Municipal Income.
Intermediate Municipal seeks the highest level of income exempt from
federal income taxes that can be obtained consistent with the
preservation of capital. Municipal Income seeks to provide a high
current yield exempt from federal income tax.
Intermediate Municipal and Municipal Income have substantially
similar investment strategies. Each fund normally invests at least
80% of total assets in investment-grade municipal debt securities
(those of medium and high quality) whose interest is exempt from
federal income tax. However, each fund may invest all of its assets in
municipal securities whose interest is subject to the federal
alternative minimum tax. In addition, each fund potentially invests
more than 25% of its total assets in municipal securities that finance
similar projects, such as those relating to education, health care,
transportation and utilities. Each fund's assets are allocated among
different market sectors (for example, general obligation bonds of a
state or bonds financing a specific project) and different maturities,
depending on the relative value of each sector and maturity. In buying
and selling securities, each security's structural features and
current price compared to its estimated long-term value, any
short-term trading opportunities resulting from market inefficiencies,
and the credit quality of its issuer are analyzed. Each fund may use
different techniques, such as buying and selling futures contracts, to
increase or decrease each fund's exposure to factors that affect
security values. If a fund's strategies do not work as intended, that
fund may not achieve its objective.
The funds differ in their average maturities and their benchmark
indexes. Intermediate Municipal normally maintains a dollar-weighted
average maturity between three and 10 years and its benchmark index is
the Lehman Brothers 1-17 Year Municipal Bond Index, a market
value-weighted index of investment-grade municipal bonds with
maturities between one and 17 years. Municipal Income has no set
average maturity policy and its benchmark is the Lehman Brothers 3
Plus Year Municipal Bond Index, a market value-weighted index for
investment-grade municipal bonds with maturities of three years or
more. As of October 31, 1999, the dollar-weighted average maturities
of Intermediate Municipal and Municipal Income were 7.2 years and 12.9
years, respectively.
Each fund can currently invest all of its assets in municipal
securities whose interest is subject to the federal alternative
minimum tax. As of October 31, 1999, 12.14% of Intermediate
Municipal's and 18.03% of Municipal Income's exempt-interest dividends
were subject to the federal alternative minimum tax.
Certain policies of each fund are fundamental and may not be changed
without the approval of a vote of at least a majority of the
outstanding voting securities of the fund. As a matter of fundamental
policy, Intermediate Municipal seeks the highest level of income
exempt from federal income taxes that can be obtained consistent with
the preservation of capital. As a matter of fundamental policy,
Municipal Income seeks to provide a high current yield by investing in
a diversified portfolio of municipal obligations whose interest is not
included in gross income for purposes of calculating federal income
tax. In addition, as a matter of fundamental policy, each fund
normally invests at least 80% of its assets in securities whose
interest is exempt from federal income tax. There can be no assurance
that either fund will achieve its objective. With the exception of
fundamental policies, investment policies of the funds can be changed
without shareholder approval. The differences between the funds
discussed above, except as noted, could be changed without a vote of
shareholders.
PERFORMANCE COMPARISONS OF THE FUNDS
The following table compares the funds' annual total returns for the
periods indicated (excluding the effect of sales loads) for Class T of
each fund. Please note that total returns are based on past results
and are not an indication of future performance.
Annual Total Returns for
Class T (periods ended
December 31)*
1996 1997 1998 1999**
Intermediate Municipal 3.89% 7.80% 5.08% -1.50%
Municipal Income 2.95% 10.13% 6.22% -2.93%
* Excluding sales charges.
** Through October 31, 1999.
The following table compares the cumulative total returns for Class T
of Intermediate Municipal to those for Class T of Municipal Income for
the periods indicated (excluding the effect of sales loads). Please
note that total returns are based on past results and are not an
indication of future performance.
Cumulative Total Returns for
Class T (periods ended
October 31, 1999)*
1 year 3 years
Intermediate Municipal -1.11% 13.07%
Municipal Income -2.53% 14.78%
* Excluding sales charges.
If FMR had not reimbursed certain class expenses, the total returns
for Class T of Intermediate Municipal would have been lower.
The tables above show that Municipal Income has generally experienced
slightly higher returns than Intermediate Municipal in recent years,
although Municipal Income's longer maturity may also involve greater
volatility and interest rate risk. The differential in performance can
be attributed primarily to the funds' historical differences in
portfolio holdings resulting from differences in investment policies
regarding average maturity. See "Comparison of Principal Risk Factors"
for more information on average maturity.
The following graph shows the value of a hypothetical $10,000
investment in Class T of each fund made on January 1, 1996, assuming
all distributions are reinvested. The graph compares the cumulative
returns of Class T of each fund on a monthly basis from January 1,
1996 to October 31, 1999, and illustrates the relative volatility of
their performance over shorter periods of time.
FA Int Muni Inc FA Muni Inc
00289 00220
1995/12/29 10000.00 10000.00
1996/01/31 10066.72 10054.55
1996/02/29 10033.84 10038.97
1996/03/29 9935.09 9826.85
1996/04/30 9903.37 9787.6
1996/05/31 9902.3 9776.06
1996/06/28 9978.73 9889.94
1996/07/31 10056.59 9954.58
1996/08/30 10055.87 9976.25
1996/09/30 10143.46 10065.77
1996/10/31 10251.78 10184.19
1996/11/29 10418.57 10334.68
1996/12/31 10388.84 10294.95
1997/01/31 10407.82 10341.16
1997/02/28 10493.19 10442.33
1997/03/31 10369.08 10327.36
1997/04/30 10447.05 10414.05
1997/05/30 10567.33 10538.28
1997/06/30 10666.53 10670.21
1997/07/31 10931.3 10974.59
1997/08/29 10836.2 10883.54
1997/09/30 10957.02 11017.52
1997/10/31 11006.98 11089.82
1997/11/28 11065.45 11150.49
1997/12/31 11199.13 11338.21
1998/01/30 11290.84 11447.48
1998/02/27 11284.06 11460.09
1998/03/31 11291.69 11487.85
1998/04/30 11256.48 11429.27
1998/05/29 11392.46 11604.44
1998/06/30 11432 11647.07
1998/07/31 11452.1 11672.76
1998/08/31 11600.38 11849.16
1998/09/30 11726.17 11986.93
1998/10/30 11722.71 11993.78
1998/11/30 11750.33 12027.47
1998/12/31 11768.31 12043.21
1999/01/29 11908.24 12174.76
1999/02/26 11833.86 12099.49
1999/03/31 11841.89 12097.62
1999/04/30 11870.59 12122.77
1999/05/28 11809.58 12042.44
1999/06/30 11646.37 11852.16
1999/07/30 11686.18 11898.49
1999/08/31 11635.87 11806.49
1999/09/30 11664.21 11811.7
1999/10/29 11592.1 11689.9
For additional information regarding the performance of Intermediate
Municipal, see Attachment 2. For additional information regarding the
performance of Municipal Income, see its applicable Prospectus.
COMPARISON OF OTHER POLICIES OF THE FUNDS
DIVERSIFICATION. Each fund is a diversified fund. As a matter of
fundamental policy, with respect to 75% of each fund's total assets, a
fund may not invest more than 5% of its total assets in the securities
of a single issuer, and a fund may not hold more than 10% of the
outstanding voting securities of a single issuer. These limitations do
not apply to U.S. Government securities.
BORROWING. As a matter of fundamental policy, each fund may borrow
money for temporary or emergency purposes, but not in an amount
exceeding 33-1/3% of its total assets. For these purposes, each fund
may borrow money from banks or from other funds advised by FMR, or
through reverse repurchase agreements.
LENDING. Neither fund currently intends to lend assets other than
securities, except lending up to 15% of assets to a fund advised by
FMR or an affiliate or by acquiring loans, loan participations, or
other forms of direct debt instruments and, in connection therewith,
assuming any associated unfunded commitment of the sellers. As a
matter of fundamental policy, each fund may not lend more than 33-1/3%
of its total assets to other parties, but this limitation does not
apply to purchases of debt securities or to repurchase agreements.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets
according to the fund's investment strategy. Each fund also 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.
For more information about the risks and restrictions associated with
these policies for Intermediate Municipal, see Attachment 2. For more
information about the risks and restrictions associated with these
policies for Municipal Income, see its applicable Prospectus,
and for a more detailed discussion of Municipal Income's investments,
see the fund's SAI. Municipal Income's SAI is incorporated
herein by reference.
OPERATIONS OF MUNICIPAL INCOME FOLLOWING THE REORGANIZATION
FMR does not expect Municipal Income to revise its investment
policies as a result of the Reorganization. In addition, FMR does not
anticipate significant changes to the fund's management or to agents
that provide the fund with services. Specifically, the Trustees and
officers, the investment adviser, distributor, and other agents will
continue to serve Municipal Income in their current capacities.
Christine Thompson is the current Portfolio Manager of Municipal
Income.
All of the current investments of Intermediate Municipal are
permissible investments for Municipal Income. As explained above,
however, Intermediate Municipal maintains a shorter average maturity
than Municipal Income. If shareholders approve the Reorganization, FMR
may sell certain of Intermediate Municipal's securities and invest in
securities with longer maturities during the period between
shareholder approval and the Closing Date. As a result, the average
maturity of Intermediate Municipal may exceed its average maturity
policy of between three and 10 years during that period. Transaction
costs associated with portfolio adjustments to Intermediate Municipal
and Municipal Income that occur between shareholder approval and the
Closing Date will be borne by the fund that incurred them. Transaction
costs associated with such adjustments that occur after the Closing
Date will be borne by Municipal Income. The funds may recognize a
taxable gain or loss on the disposition of securities pursuant to
these portfolio adjustments.
PURCHASES AND REDEMPTIONS
Each fund is open for business each day the NYSE is open.
Except for the differences in sales charges across classes, the
purchase policies for Class A, Class T, Class B, Class C, and
Institutional Class of Intermediate Municipal and Municipal Income are
identical. The redemption policies for each class of both funds are
also identical, with the exception of the differences in CDSCs
across classes.
The price to buy one share of Class A or Class T of each fund is the
class's offering price or the class's net asset value (NAV), depending
on whether you pay a front-end sales charge. 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. 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 applicable fund. If you qualify for a front-end sales
charge waiver, your price will be Class A's or Class T's NAV.
The price to buy one share of Class B, Class C, or Institutional
Class is the class's NAV.
Shares are purchased at the next offering price or NAV, as
applicable, calculated after your investment is received in proper
form. A class's NAV is the value of a single share. Each class's NAV
is normally calculated each business day at 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
(the SEC).
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of a 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 information
furnished by a pricing service or market quotations. 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 market
on which the security is principally traded, that security may be
valued by another method that the Board of Trustees believes
accurately reflects fair value. A security's valuation may differ
depending on the method used for determining value.
The price to sell one share of each class of each fund is the class's
NAV, minus any applicable CDSC. Any applicable CDSC is calculated
based on the original redemption amount. Shares will be sold at the
next NAV, minus any applicable CDSC, calculated after your order is
received in proper form, normally calculated each business day at 4:00
p.m. Eastern time.
Shareholders of Class B of Intermediate Municipal may, upon
redemption, be assessed a CDSC which declines over 3 years from 3.00%
to 0%. Shareholders of Class B of Municipal Income may, upon
redemption, be assessed a CDSC which declines over 6 years from 5.00%
to 0%. Shareholders of Class C of both funds may, upon redemption, be
assessed a CDSC of 1.00% if they redeem within one year of the
purchase date. For Class A purchases of both funds in the amount of
$25 million or more or $1 million or more that qualify for a Class
A load waiver and Class T purchases of both funds in the amount of
$1 million or more, investment professionals will be compensated with
a finder's fee at the rate of 0.25% of the purchase amount. Any assets
on which a finder's fee was paid will bear a CDSC of 0.25% 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, and
Tax-Exempt Fund, for a period of at least one uninterrupted year.
It is the responsibility of your investment professional to transmit
your order to buy or sell shares to Fidelity before the close of
business on the day you place your order.
For each class of each fund, the minimum initial investment amount is
$2,500 and the minimum additional investment amount is $100. The
minimum investment and balance requirements for shareholders of
Intermediate Municipal will remain unchanged by the fund's
Reorganization.
On December 29, 1999, Class A, Class T, Class B, Class C, and
Institutional Class of Intermediate Municipal closed to all new
investments (except dividend reinvestments), pending the
Reorganization. Shareholders of each class of Intermediate Municipal
as of that date will no longer be able to purchase shares of each
class of the fund except through the reinvestment of dividends and
other distributions. Shareholders of each class of Intermediate
Municipal may redeem shares through the Closing Date of the fund's
Reorganization. If the Reorganization is approved, the purchase and
redemption policies of the combined fund will remain unchanged.
For additional information regarding purchases and redemptions for
Intermediate Municipal, see Attachment 2. For additional information
regarding purchases and redemption for Municipal Income, see its
applicable Prospectus.
EXCHANGES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
The exchange privilege currently offered by each corresponding class
of Intermediate Municipal and Municipal Income is the same and is not
expected to change after the Reorganization. Class A and Class T
shares of each fund may be exchanged 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 Class T shares of
Intermediate Municipal or Municipal Income were purchased through
certain investment professionals that have signed an agreement with
FDC, those shareholders also have the privilege of exchanging Class T
shares for shares of Fidelity Capital Appreciation Fund. Class B
shares of each fund may be exchanged for the same class of shares of
other Fidelity Advisor funds or Advisor B Class shares of Treasury
Fund. Class C shares of each fund may be exchanged for the same class
of shares of other Fidelity Advisor funds or Advisor C Class shares of
Treasury Fund. Institutional Class shares of each fund may be
exchanged for Institutional Class shares of other Fidelity Advisor
funds or for shares of Fidelity funds. Shareholders may be limited to
four exchanges per calendar year out of a fund. Neither fund currently
imposes a redemption fee. Shares that are exchanged retain the CDSC
schedule in effect when they were originally bought, as applicable.
For further information regarding exchanges for Intermediate
Municipal, see Attachment 2. For further information regarding
exchanges for Municipal Income, see its applicable P rospectus.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each fund earns interest, dividends, and other income from its
investments, and distributes substantially all of 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. Each fund declares income dividends daily
and pays them monthly. Each fund normally pays capital gain
distributions, if any, in December. On or before the Closing Date,
Intermediate Municipal may declare additional dividends or other
distributions in order to distribute substantially all of its
investment company taxable income and net realized capital gain.
Intermediate Municipal will be required to recognize gain or loss on
Section 1256 contracts held by the fund on the last day of its taxable
year which is October 31. If the Reorganization is approved, gains or
losses of Section 1256 contracts held on the Closing Date will be
recognized on the Closing Date.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
Each fund has received an opinion of its counsel, Kirkpatrick &
Lockhart LLP, that the Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the Code). Accordingly,
except with respect to Section 1256 contracts, no gain or loss will be
recognized by the funds or their shareholders as a result of the
Reorganization. Please see the section entitled "Federal Income Tax
Considerations" for more information.
As of October 31, 1999, Intermediate Municipal and Municipal Income
had net unrealized losses of approximately $846,000 and and
$5,007,000, respectively. During the period between shareholder
approval and the Closing Date, FMR may sell certain securities to make
portfolio adjustments in connection with the Reorganization. Selling
these securities may result in realization of capital gains by the
selling fund, which, when distributed, would be taxable to the selling
fund's shareholders.
As of October 31, 1999, Intermediate Municipal had no capital loss
carryforwards for federal income tax purposes. As of October 31, 1999,
Municipal Income had a capital loss carryforward for federal income
tax purposes of approximately $13,685,000. Under current federal tax
law, Municipal Income may be limited to using only a portion, if any,
of its capital loss carryforward or the capital loss carryforwards
transferred by Intermediate Municipal at the time of the
Reorganization ("capital loss carryforwards"). There is no assurance
that Municipal Income will be able to realize sufficient capital gains
to use the capital loss carryforwards before they expire. The capital
loss carryforward attributable to Municipal Income will expire between
October 31, 2003 and October 31, 2004.
COMPARISON OF PRINCIPAL RISK FACTORS
Many factors affect each fund's performance. Each fund's yield and
share price change daily based on changes in interest rates and market
conditions and in response to other economic, political or financial
developments. Each fund's reaction to these developments will be
affected by the types and maturities of securities in which the fund
invests, 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. When you sell your shares of each
fund, they could be worth more or less than what you paid for them.
The main difference in the level of risk between the funds is the
funds' interest rate risk. As noted above, Intermediate Municipal
maintains a shorter average maturity than Municipal Income. FMR
generally manages Intermediate Municipal so that it reacts to changes
in interest rates similarly to municipal bonds with maturities between
three and 10 years. Interest rate sensitivity refers to how much a
fund is affected by changes in interest rates. Generally, bond prices
go down when interest rates go up and vice versa. The effects of
interest rate sensitivity generally are more pronounced for
longer-term securities, and therefore generally more pronounced for
funds which invest in longer-term securities. Thus, Municipal Income
may have better performance than Intermediate Municipal during periods
of falling interest rates but may have worse performance during
periods of rising interest rates.
The following factors can significantly affect each fund's
performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
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 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.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. Lower-quality debt securities (those
of less than investment-grade quality) tend to be more sensitive to
these changes than higher-quality debt securities. Municipal
securities backed by current or anticipated revenues from a specific
project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If
the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest
from the security could become taxable and the security could decline
significantly in value.
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, and a fund could distribute income subject to federal
income tax.
THE PROPOSED TRANSACTION
TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN
INTERMEDIATE MUNICIPAL AND MUNICIPAL INCOME.
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction may be
consummated are set forth in the Agreement. Significant provisions of
the Agreement are summarized below; however, this summary is qualified
in its entirety by reference to the Agreement, a copy of which is
attached at Exhibit 1 to this Proxy Statement.
The Agreement contemplates (a) Municipal Income acquiring as of the
Closing Date all of the assets of Intermediate Municipal in exchange
solely for Municipal Income Class Shares in each case based on the net
asset value attributable to the corresponding class of Intermediate
Municipal and the assumption by Municipal Income of Intermediate
Municipal's liabilities; and (b) the distribution of Municipal Income
Class Shares to the shareholders of the corresponding class of
Intermediate Municipal as provided for in the Agreement.
The assets of Intermediate Municipal to be acquired by Municipal
Income include all cash, cash equivalents, securities, receivables
(including interest or dividends receivables), claims, choses in
action, and other property owned by Intermediate Municipal, and any
deferred or prepaid expenses shown as an asset on the books of
Intermediate Municipal on the Closing Date. Municipal Income will
assume from Intermediate Municipal all liabilities, debts,
obligations, and duties of Intermediate Municipal of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether
or not arising in the ordinary course of business, whether or not
determinable on the Closing Date, and whether or not specifically
referred to in the Agreement; provided, however, that Intermediate
Municipal will use its best efforts, to the extent practicable, to
discharge all of its known liabilities prior to the Closing Date,
other than liabilities incurred in the ordinary course of business.
Municipal Income also will deliver to Intermediate Municipal the
number of full and fractional Municipal Income Class Shares having a
net asset value equal to the value of the net assets of the
corresponding class of Intermediate Municipal less the liabilities of
Intermediate Municipal as of the Closing Date.
The value of Intermediate Municipal's assets to be acquired by
Municipal Income and the amount of its liabilities to be assumed by
Municipal Income will be determined as of the close of business of the
NYSE on the Closing Date, using the valuation procedures
described in Attachment 2. The net asset value per share of
Municipal Income Class Shares will be determined as of the same time
using the valuation procedures described in the then-current
Prospectuses and SAI of Municipal Income.
As of the Closing Date, Intermediate Municipal will distribute to its
shareholders of record the Class A, Class T, Class B, Class C, and
Institutional Class Shares of Municipal Income it received, so that
each shareholder of the corresponding class of Intermediate Municipal
will receive the number of full and fractional Class A, Class T, Class
B, Class C, and Institutional Class shares of Municipal Income equal
in value to the net asset value of shares of the corresponding class
of Intermediate Municipal held by such shareholder on the Closing
Date. Intermediate Municipal will be liquidated as soon as practicable
thereafter. Such distribution will be accomplished by opening accounts
on the books of Municipal Income in the names of the Intermediate
Municipal shareholders and by transferring thereto the Municipal
Income Class Shares. Shareholders of Class A, Class T, Class B, Class
C, and Institutional Class of Intermediate Municipal will receive
shares of the corresponding class of Municipal Income equal in value
to the shares of Intermediate Municipal they are surrendering, based
upon the relative net asset values of Class A (Intermediate Municipal)
to Class A (Municipal Income), Class T (Intermediate Municipal) to
Class T (Municipal Income), Class B (Intermediate Municipal) to Class
B (Municipal Income), Class C (Intermediate Municipal) to Class C
(Municipal Income), and Institutional Class (Intermediate Municipal)
to Institutional Class (Municipal Income), respectively, as of the
Closing Date. Each Intermediate Municipal shareholder's account shall
be credited with the respective number of full and fractional shares
(rounded to the third decimal place) of Municipal Income due that
shareholder. Municipal Income shall not issue certificates
representing its shares in connection with such exchange.
Accordingly, immediately after the Reorganization, each former
Intermediate Municipal Class A, Class T, Class B, Class C, and
Institutional Class shareholder will own shares of Class A, Class T,
Class B, Class C, and Institutional Class, respectively, of Municipal
Income equal to the net asset value of that shareholder's shares of
Class A, Class T, Class B, Class C, and Institutional Class of
Intermediate Municipal immediately prior to the Reorganization. The
net asset value per share of each class of Municipal Income will be
unchanged by the transaction. Thus, the Reorganization will not result
in a dilution of any shareholder interest.
Any transfer taxes payable upon issuance of Municipal Income Class
Shares in a name other than that of the registered holder of the
shares on the books of Intermediate Municipal as of that time shall be
paid by the person to whom such shares are to be issued as a condition
of such transfer. Any reporting responsibility of Intermediate
Municipal is and will continue to be its responsibility up to and
including the Closing Date and such later date on which Intermediate
Municipal is liquidated.
Pursuant to its management contract with FMR, Intermediate Municipal
will bear the cost of the Reorganization, including professional fees,
expenses associated with the filing of registration statements, and
the cost of soliciting proxies for the Meeting, which will consist
principally of printing and mailing prospectuses and proxy statements,
together with the cost of any supplementary solicitation, provided the
expenses do not exceed each class's voluntary expense cap. Expenses
exceeding each class's voluntary expense cap will be paid by FMR. In
addition, there may be some transaction costs associated with
portfolio adjustments to Intermediate Municipal and Municipal Income
due to the Reorganization prior to the Closing Date which will be
borne by Intermediate Municipal and Municipal Income, respectively.
Any transaction costs associated with portfolio adjustments to
Intermediate Municipal and Municipal Income due to the Reorganization
which occur after the Closing Date and any additional merger-related
costs attributable to Municipal Income which occur after the Closing
Date will be borne by Municipal Income. The funds may recognize a
taxable gain or loss on the disposition of securities pursuant to
these portfolio adjustments. See the section entitled "Federal Income
Tax Considerations."
The consummation of the Reorganization is subject to a number of
conditions set forth in the Agreement, some of which may be waived by
a fund. In addition, the Agreement may be amended in any mutually
agreeable manner, except that no amendment that may have a materially
adverse effect on the shareholders' interests may be made subsequent
to the Meeting.
REASONS FOR THE REORGANIZATION
The Board of Trustees (the Board) of the funds have determined that
the Reorganization is in the best interests of the shareholders of
both funds and that the Reorganization will not result in a dilution
of the interests of shareholders of either fund.
In considering the Reorganization, the Board considered a number of
factors, including the following:
(1) the compatibility of the funds' investment objectives and
policies;
(2) the historical performance of each class of the funds;
(3) the relative expense ratios of each class of the funds;
(4) the costs to be incurred by each fund as a result of the
Reorganization;
(5) the tax consequences of the Reorganization;
(6) the relative size of the funds;
(7) the consolidation of similar funds;
(8) the impact of changes to the Advisor Funds' offerings on the
funds and their shareholders; and
(9) the benefit to FMR and to the shareholders of the funds.
FMR recommended the Reorganization to the Board at a meeting of the
Board on October 14, 1999. In recommending the Reorganization, FMR
advised the Board that the funds have generally similar investment
policies and are generally managed similarly, except that Intermediate
Municipal has a shorter maturity and a more conservative investment
objective. FMR advised the Board that with its larger asset base,
Municipal Income has been able to achieve lower expenses in all
classes than Intermediate Municipal. FMR also advised the Board that
Municipal Income's longer maturity may involve greater volatility and
interest rate risk.
The Board considered that the proposed merger would provide
shareholders of Intermediate Municipal with a fund that has lower
annual expenses and slightly stronger historical performance on a
cumulative basis.
The Board also considered that former shareholders of Intermediate
Municipal will receive Municipal Income Class Shares equal to the
value of their shares in the corresponding class of Intermediate
Municipal. In addition, the Board considered that combining the funds
may result in lower gross expenses.
Finally, the Board considered the proposed Reorganization in the
context of the general goal of consolidating the Advisor municipal
bond fund product line. While the reduction of similar funds and funds
with lower assets would potentially benefit FMR, it should also
benefit shareholders by facilitating increased operational
efficiencies.
DESCRIPTION OF THE SECURITIES TO BE ISSUED
The trust is registered with the SEC as an open-end management
investment company. The trust's Trustees are authorized to issue an
unlimited number of shares of beneficial interest of separate series.
Municipal Income is one of nine funds of the trust. Each share of a
class of Municipal Income represents an equal proportionate interest
with each other share of that class of the fund, and each share of
that class of Municipal Income is entitled to equal voting, dividend,
liquidation, and redemption rights. Each shareholder of the fund is
entitled to one vote for each dollar value of net asset value of the
fund that the shareholder owns. Shares of Municipal Income have no
preemptive or conversion rights (other than shares of Class B of
Municipal Income that convert to shares of Class A of Municipal Income
after seven years). The voting and dividend rights, the right of
redemption, and the privilege of exchange for Intermediate Municipal
are described in Attachment 2, and for Municipal Income, in the fund's
Prospectuses. Shares are fully paid and nonassessable, except as set
forth in Municipal Income's SAI under the heading "Shareholder
Liability" and Attachment 2 under the heading "Shareholder Liability."
The trust does not hold annual meetings of shareholders. There will
normally be no meetings of shareholders for the purpose of electing
Trustees unless less than a majority of the Trustees holding office
have been elected by shareholders, at which time the Trustees then in
office will call a shareholder meeting for the election of Trustees.
Under the 1940 Act, shareholders of record of at least two-thirds of
the outstanding shares of an investment company may remove a Trustee
by votes cast in person or by proxy at a meeting called for that
purpose. The Trustees are required to call a meeting of shareholders
for the purpose of voting upon the question of removal of any Trustee
when requested in writing to do so by the shareholders of record
holding at least 10% of the trust's outstanding shares.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Intermediate Municipal's assets for Municipal Income
Class Shares and the assumption of the liabilities of Intermediate
Municipal by Municipal Income is intended to qualify for federal
income tax purposes as a tax-free reorganization under the Code. With
respect to the Reorganization, the participating funds have received
an opinion from Kirkpatrick & Lockhart LLP, counsel to Intermediate
Municipal and Municipal Income, substantially to the effect that:
(i) The acquisition by Municipal Income of all of the assets of
Intermediate Municipal solely in exchange for Municipal Income Class
Shares and the assumption by Municipal Income of Intermediate
Municipal's liabilities, followed by the distribution by Intermediate
Municipal of Municipal Income Class Shares to the shareholders of the
corresponding class of Intermediate Municipal pursuant to the
liquidation of Intermediate Municipal and constructively in exchange
for their Intermediate Municipal shares, will constitute a
reorganization within the meaning of section 368(a)(1)(C) of the Code,
and Intermediate Municipal and Municipal Income will each be "a party
to a reorganization" within the meaning of section 368(b) of the Code;
(ii) No gain or loss will be recognized by Intermediate Municipal
upon the transfer of all of its assets to Municipal Income in exchange
solely for Municipal Income Class Shares and Municipal Income's
assumption of Intermediate Municipal's liabilities, followed by
Intermediate Municipal's subsequent distribution of those shares to
shareholders of the corresponding class in liquidation of Intermediate
Municipal;
(iii) No gain or loss will be recognized by Municipal Income upon the
receipt of the assets of Intermediate Municipal in exchange solely for
Municipal Income Class Shares and its assumption of Intermediate
Municipal's liabilities;
(iv) The shareholders of each class of Intermediate Municipal will
recognize no gain or loss upon the exchange of their Intermediate
Municipal shares solely for Municipal Income Class Shares of the
corresponding class;
(v) The basis of Intermediate Municipal's assets in the hands of
Municipal Income will be the same as the basis of those assets in the
hands of Intermediate Municipal immediately prior to the
Reorganization, and the holding period of those assets in the hands of
Municipal Income will include the holding period of those assets in
the hands of Intermediate Municipal;
(vi) The basis of Intermediate Municipal shareholders in Municipal
Income Class Shares will be the same as their basis in Intermediate
Municipal shares of the corresponding class to be surrendered in
exchange therefor; and
(vii) The holding period of the Municipal Income Class Shares to be
received by the Intermediate Municipal shareholders will include the
period during which the Intermediate Municipal shares of the
corresponding class to be surrendered in exchange therefor were held,
provided such Intermediate Municipal shares were held as capital
assets by those shareholders on the date of the Reorganization.
Shareholders of Intermediate Municipal should consult their tax
advisers regarding the effect, if any, of the proposed Reorganization
in light of their individual circumstances. Because the foregoing
discussion only relates to the federal income tax consequences of the
Reorganization, those shareholders also should consult their tax
advisers as to state and local tax consequences, if any, of the
Reorganization.
CAPITALIZATION
The following table shows the capitalization of the funds as of
October 31, 1999 and on a pro forma combined basis (unaudited) as of
that date giving effect to the Reorganization.
<TABLE>
<CAPTION>
Net Assets Net Asset Value Per Share Shares Outstanding
<S> <C> <C> <C>
Intermediate Municipal: $ 2,572,343 $ 10.15 253,436
Class A
Class T $ 50,431,715 $ 10.15 4,968,378
Class B $ 10,387,389 $ 10.14 1,024,065
Class C $ 2,561,719 $ 10.15 252,268
Institutional Class $ 5,996,833 $ 10.15 590,849
Municipal Income $ 10,721,810 $ 11.69 917,460
Class A
Class T $ 329,926,390 $ 11.70 28,197,578
Class B $ 63,464,208 $ 11.67 5,438,241
Class C $ 13,071,301 $ 11.70 1,117,056
Institutional Class $ 3,430,780 $ 11.65 294,537
Pro Forma Combined Fund $ 13,294,153 $ 11.69 1,137,506
Class A
Class T $ 380,358,105 $ 11.70 32,507,981
Class B $ 73,851,597 $ 11.67 6,328,334
Class C $ 15,633,020 $ 11.70 1,336,006
Institutional Class $ 9,427,613 $ 11.65 809,287
</TABLE>
CONCLUSION
The Agreement and the transactions provided for therein were approved
by the Board at a meeting held on October 14, 1999. The Board of
Trustees of Fidelity Advisor Series II determined that the proposed
Reorganization is in the best interests of shareholders of each fund
and that the interests of existing shareholders of Intermediate
Municipal and Municipal Income would not be diluted as a result of the
Reorganization. In the event that the Reorganization is not
consummated, Intermediate Municipal will continue to engage in
business as a fund of a registered investment company and FMR and the
Board of Fidelity Advisor Series II will consider other proposals for
the reorganization or liquidation of the fund.
ADDITIONAL INFORMATION ABOUT MUNICIPAL INCOME
The applicable Prospectus for Municipal Income, dated December 29,
1999, is enclosed with this Proxy Statement. Municipal Income's
Prospectuses are incorporated herein by reference. The Prospectuses
contain additional information about the fund including its investment
objective and policies, investment adviser, advisory fees and
expenses, organization, and procedures for purchasing and redeeming
shares. The Prospectuses also contain Municipal Income's financial
highlights for the fiscal year ended October 31, 1999, as shown below:
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS - CLASS A
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.540 $ 12.150 $ 11.740 $ 11.630
period
Income from Investment
Operations
Net interest income .567 .571 .583 D .105 D, E
Net realized and unrealized (.850) .390 .445 .109
gain (loss)
Total from investment (.283) .961 1.028 .214
operations
Less Distributions
From net interest income (.567) (.571) (.616) E (.104)
In excess of net interest - - (.002) -
income
Total distributions (.567) (.571) (.618) (.104)
Net asset value, end of period $ 11.690 $ 12.540 $ 12.150 $ 11.740
TOTAL RETURN B, C (2.36)% 8.07% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,722 $ 6,721 $ 3,755 $ 202
(000 omitted)
Ratio of expenses to average .72% .90% G .90% G .90% A, G
net assets
Ratio of net interest income 4.62% 4.57% 4.87% 5.73% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996 .
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.560 $ 12.150 $ 11.760 $ 11.880 $ 11.220
of period
Income from Investment
Operations
Net interest income .555 .571 .597 B .677 B, C .700
Net realized and unrealized (.860) .410 .407 (.136) .660
gain (loss)
Total from investment (.305) .981 1.004 .541 1.360
operations
Less Distributions
From net interest income (.555) (.571) (.612) C (.661) (.700)
In excess of net interest - - (.002) - -
income
Total distributions (.555) (.571) (.614) (.661) (.700)
Net asset value, end of period $ 11.700 $ 12.560 $ 12.150 $ 11.760 $ 11.880
TOTAL RETURN A (2.53)% 8.15% 8.89% 4.68% 12.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 329,926 $ 380,325 $ 392,075 $ 480,432 $ 565,131
(000 omitted)
Ratio of expenses to average .81% .87% .89% .89% .91%
net assets
Ratio of net interest income 4.51% 4.62% 5.04% 5.74% 6.06%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.530 $ 12.130 $ 11.740 $ 11.860 $ 11.210
of period
Income from Investment
Operations
Net interest income .476 .491 .515 C .596 C, D .612
Net realized and unrealized (.860) .400 .416 (.136) .650
gain (loss)
Total from investment (.384) .891 .931 .460 1.262
operations
Less Distributions
From net interest income (.476) (.491) (.539) D (.580) (.612)
In excess of net interest - - (.002) - -
income
Total distributions (.476) (.491) (.541) (.580) (.612)
Net asset value, end of period $ 11.670 $ 12.530 $ 12.130 $ 11.740 $ 11.860
TOTAL RETURN A, B (3.16)% 7.47% 8.15% 3.98% 11.57%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 63,464 $ 55,032 $ 41,024 $ 39,389 $ 32,395
(000 omitted)
Ratio of expenses to average 1.46% 1.53% 1.56% 1.57% 1.86% E
net assets
Ratio of net interest income 3.88% 3.96% 4.35% 5.06% 5.18%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
FINANCIAL HIGHLIGHTS - CLASS C
YEARS ENDED OCTOBER 31, 1999 1998 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.560 $ 12.130
period
Income from Investment
Operations
Net interest income .465 .455
Net realized and unrealized (.860) .430
gain (loss)
Total from investment (.395) .885
operations
Less Distributions
From net interest income (.465) (.455)
Net asset value, end of period $ 11.700 $ 12.560
TOTAL RETURN B, C (3.24)% 7.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 13,071 $ 7,031
(000 omitted)
Ratio of expenses to average 1.56% 1.75% A, E
net assets
Ratio of net interest income 3.79% 3.60% A
to average net assets
Portfolio turnover rate 23% 36%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998 .
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31, 1999 1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.510 $ 12.120 $ 11.720 $ 11.880 $ 11.700
of period
Income from Investment
Operations
Net interest income .584 .592 .609 D .707 D, E .232
Net realized and unrealized (.860) .390 .464 (.197) .180
gain (loss)
Total from investment (.276) .982 1.073 .510 .412
operations
Less Distributions
From net interest income (.584) (.592) (.671) E (.670) (.232)
In excess of net interest - - (.002) - -
income
Total distributions (.584) (.592) (.673) (.670) (.232)
Net asset value, end of period $ 11.650 $ 12.510 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C (2.31)% 8.28% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,431 $ 3,741 $ 1,511 $ 927 $ 154
(000 omitted)
Ratio of expenses to average .60% .75% G .75% G .75% G .75% A, G
net assets
Ratio of net interest income 4.75% 4.75% 5.11% 5.88% 5.89% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
MISCELLANEOUS
LEGAL MATTERS. Certain legal matters in connection with the issuance
of Municipal Income Class A, Class T, Class B, Class C, and
Institutional Class shares have been passed upon by Kirkpatrick &
Lockhart LLP, counsel to the trust.
EXPERTS. The audited financial statements of Intermediate Municipal
and Municipal Income have been examined by PricewaterhouseCoopers LLP,
independent accountants, whose report thereon is included in the
Annual Report to Shareholders for the fiscal year ended October 31,
1999. The financial statements audited by PricewaterhouseCoopers LLP,
have been incorporated by reference in reliance on their reports given
on their authority as experts in auditing and accounting.
AVAILABLE INFORMATION. Fidelity Advisor Series II is subject to the
informational requirements of the Securities and Exchange Act of 1934
and the 1940 Act, and in accordance therewith files reports, proxy
material, and other information with the SEC. Such reports, proxy
material, and other information can be inspected and copied at the
Public Reference Room maintained by the SEC at 450 Fifth Street, N.W.,
Washington D.C. 20549 and 7 World Trade Center, New York, NY 10048.
Copies of such material can also be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington D.C. 20549, at
prescribed rates.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR
NOMINEES. Please advise Fidelity Advisor Series II, in care of Client
Services at 1-800-843-3001, whether other persons are beneficial
owners of shares for which proxies are being solicited and, if so, the
number of copies of the Proxy Statement you wish to receive in order
to supply copies to the beneficial owners of the respective shares.
ATTACHMENT 1
EXCERPTS FROM THE ANNUAL REPORTS OF FIDELITY ADVISOR
MUNICIPAL INCOME FUND
DATED OCTOBER 31, 1999
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
Fidelity Adv Municipal Income -2.36% 6.22% 7.20%
- - CL A
Fidelity Adv Municipal Income -6.99% 5.19% 6.68%
- - CL A (incl. 4.75% sales
charge)
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
AVERAGE ANNUAL TOTAL RETURNS take Class A shares' cumulative return
and show you what would have happened if Class A shares had performed
at a constant rate each year.
$10,000 OVER 10 YEARS
FA Municipal Income -CL A LB Municipal Bond
00257 LB015
1989/10/31 9525.00 10000.00
1989/11/30 9642.26 10175.00
1989/12/31 9733.93 10258.23
1990/01/31 9749.29 10209.71
1990/02/28 9819.16 10300.58
1990/03/31 9880.76 10303.67
1990/04/30 9790.39 10229.07
1990/05/31 9991.02 10452.37
1990/06/30 10108.74 10544.24
1990/07/31 10264.65 10699.25
1990/08/31 10195.39 10543.89
1990/09/30 10267.89 10549.90
1990/10/31 10408.86 10741.28
1990/11/30 10667.13 10957.28
1990/12/31 10735.18 11004.95
1991/01/31 10860.12 11152.64
1991/02/28 10943.62 11249.66
1991/03/31 11007.96 11253.71
1991/04/30 11187.20 11403.39
1991/05/31 11325.48 11504.76
1991/06/30 11351.84 11493.37
1991/07/31 11498.63 11633.36
1991/08/31 11602.47 11786.57
1991/09/30 11738.56 11940.04
1991/10/31 11868.63 12047.50
1991/11/30 11913.28 12081.11
1991/12/31 12042.85 12340.37
1992/01/31 12176.34 12368.51
1992/02/29 12242.49 12372.46
1992/03/31 12303.91 12377.04
1992/04/30 12414.96 12487.20
1992/05/31 12526.33 12634.17
1992/06/30 12698.09 12846.17
1992/07/31 13140.25 13231.30
1992/08/31 13038.49 13102.30
1992/09/30 13119.86 13187.98
1992/10/31 12961.53 13058.35
1992/11/30 13221.30 13292.22
1992/12/31 13380.71 13427.94
1993/01/31 13607.04 13584.10
1993/02/28 14087.51 14075.44
1993/03/31 13940.58 13926.66
1993/04/30 14088.41 14067.18
1993/05/31 14205.08 14146.24
1993/06/30 14432.83 14382.34
1993/07/31 14443.55 14401.18
1993/08/31 14815.55 14701.01
1993/09/30 15020.71 14868.46
1993/10/31 15028.77 14897.15
1993/11/30 14881.89 14765.91
1993/12/31 15225.54 15077.62
1994/01/31 15402.83 15249.80
1994/02/28 14995.73 14854.83
1994/03/31 14196.41 14249.95
1994/04/30 14290.61 14370.79
1994/05/31 14375.12 14495.38
1994/06/30 14322.20 14406.81
1994/07/31 14580.55 14670.89
1994/08/31 14603.45 14721.65
1994/09/30 14374.69 14505.54
1994/10/31 14122.70 14247.92
1994/11/30 13668.66 13990.32
1994/12/31 13999.94 14298.24
1995/01/31 14472.89 14706.89
1995/02/28 14862.84 15134.56
1995/03/31 14940.99 15308.46
1995/04/30 14990.10 15326.52
1995/05/31 15469.80 15815.59
1995/06/30 15348.45 15678.00
1995/07/31 15398.45 15826.63
1995/08/31 15554.23 16027.31
1995/09/30 15679.66 16128.76
1995/10/31 15888.38 16363.27
1995/11/30 16188.26 16634.74
1995/12/31 16331.19 16794.60
1996/01/31 16420.27 16921.40
1996/02/29 16394.84 16807.18
1996/03/31 16048.42 16592.38
1996/04/30 15984.31 16545.43
1996/05/31 15965.46 16538.81
1996/06/30 16151.45 16718.92
1996/07/31 16257.01 16871.06
1996/08/31 16292.40 16867.01
1996/09/30 16437.73 17103.15
1996/10/31 16599.97 17296.58
1996/11/30 16890.01 17613.11
1996/12/31 16827.29 17539.14
1997/01/31 16903.32 17572.28
1997/02/28 17054.66 17733.60
1997/03/31 16866.51 17497.21
1997/04/30 17008.53 17643.66
1997/05/31 17211.58 17909.02
1997/06/30 17427.39 18099.75
1997/07/31 17924.95 18601.12
1997/08/31 17761.26 18426.82
1997/09/30 17994.87 18645.55
1997/10/31 18097.79 18765.44
1997/11/30 18214.66 18875.78
1997/12/31 18508.35 19151.18
1998/01/31 18686.48 19348.82
1998/02/28 18692.48 19354.62
1998/03/31 18751.95 19371.66
1998/04/30 18655.47 19284.29
1998/05/31 18940.70 19589.56
1998/06/30 19009.91 19666.74
1998/07/31 19051.06 19716.11
1998/08/31 19338.44 20020.72
1998/09/30 19563.06 20270.18
1998/10/31 19558.88 20269.77
1998/11/30 19631.21 20340.92
1998/12/31 19658.83 20392.18
1999/01/31 19875.77 20634.64
1999/02/28 19754.51 20544.47
1999/03/31 19753.05 20573.03
1999/04/30 19795.75 20624.25
1999/05/31 19666.19 20504.84
1999/06/30 19357.01 20209.57
1999/07/31 19418.29 20283.13
1999/08/31 19269.45 20120.87
1999/09/30 19295.71 20129.12
1999/10/29 19098.05 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094513 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class A on
October 31, 1989, and the current 4.75% sales charge was paid. As the
chart shows, by October 31, 1999, the value of the investment would
have grown to $19,098 - a 90.98% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index
did over the same period. With dividends reinvested, the same $10,000
would have grown to $19,911 - a 99.11% increase.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
Fidelity Adv Municipal Income -2.53% 6.21% 7.20%
- - CL T
Fidelity Adv Municipal Income -5.95% 5.46% 6.82%
- - CL T (incl. 3.50% sales
charge)
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
AVERAGE ANNUAL TOTAL RETURNS take Class T shares' cumulative return
and show you what would have happened if Class T shares had performed
at a constant rate each year.
$10,000 OVER 10 YEARS
FA Municipal Income -CL T LB Municipal Bond
00169 LB015
1989/10/31 9650.00 10000.00
1989/11/30 9768.80 10175.00
1989/12/31 9861.67 10258.23
1990/01/31 9877.23 10209.71
1990/02/28 9948.02 10300.58
1990/03/31 10010.43 10303.67
1990/04/30 9918.87 10229.07
1990/05/31 10122.14 10452.37
1990/06/30 10241.40 10544.24
1990/07/31 10399.36 10699.25
1990/08/31 10329.19 10543.89
1990/09/30 10402.64 10549.90
1990/10/31 10545.46 10741.28
1990/11/30 10807.12 10957.28
1990/12/31 10876.06 11004.95
1991/01/31 11002.64 11152.64
1991/02/28 11087.24 11249.66
1991/03/31 11152.42 11253.71
1991/04/30 11334.01 11403.39
1991/05/31 11474.11 11504.76
1991/06/30 11500.82 11493.37
1991/07/31 11649.53 11633.36
1991/08/31 11754.73 11786.57
1991/09/30 11892.61 11940.04
1991/10/31 12024.39 12047.50
1991/11/30 12069.62 12081.11
1991/12/31 12200.89 12340.37
1992/01/31 12336.14 12368.51
1992/02/29 12403.16 12372.46
1992/03/31 12465.38 12377.04
1992/04/30 12577.88 12487.20
1992/05/31 12690.72 12634.17
1992/06/30 12864.73 12846.17
1992/07/31 13312.69 13231.30
1992/08/31 13209.60 13102.30
1992/09/30 13292.04 13187.98
1992/10/31 13131.63 13058.35
1992/11/30 13394.81 13292.22
1992/12/31 13556.31 13427.94
1993/01/31 13785.61 13584.10
1993/02/28 14272.39 14075.44
1993/03/31 14123.53 13926.66
1993/04/30 14273.30 14067.18
1993/05/31 14391.50 14146.24
1993/06/30 14622.24 14382.34
1993/07/31 14633.10 14401.18
1993/08/31 15009.98 14701.01
1993/09/30 15217.84 14868.46
1993/10/31 15226.00 14897.15
1993/11/30 15077.19 14765.91
1993/12/31 15425.35 15077.62
1994/01/31 15604.97 15249.80
1994/02/28 15192.53 14854.83
1994/03/31 14382.72 14249.95
1994/04/30 14478.15 14370.79
1994/05/31 14563.77 14495.38
1994/06/30 14510.15 14406.81
1994/07/31 14771.89 14670.89
1994/08/31 14795.10 14721.65
1994/09/30 14563.33 14505.54
1994/10/31 14308.04 14247.92
1994/11/30 13848.04 13990.32
1994/12/31 14183.66 14298.24
1995/01/31 14662.82 14706.89
1995/02/28 15057.90 15134.56
1995/03/31 15137.07 15308.46
1995/04/30 15186.82 15326.52
1995/05/31 15672.82 15815.59
1995/06/30 15549.87 15678.00
1995/07/31 15600.53 15826.63
1995/08/31 15758.35 16027.31
1995/09/30 15885.43 16128.76
1995/10/31 16096.89 16363.27
1995/11/30 16400.70 16634.74
1995/12/31 16545.51 16794.60
1996/01/31 16635.76 16921.40
1996/02/29 16610.00 16807.18
1996/03/31 16259.03 16592.38
1996/04/30 16194.08 16545.43
1996/05/31 16174.98 16538.81
1996/06/30 16363.41 16718.92
1996/07/31 16470.36 16871.06
1996/08/31 16506.21 16867.01
1996/09/30 16654.34 17103.15
1996/10/31 16850.26 17296.58
1996/11/30 17099.26 17613.11
1996/12/31 17033.52 17539.14
1997/01/31 17109.98 17572.28
1997/02/28 17277.37 17733.60
1997/03/31 17087.14 17497.21
1997/04/30 17230.58 17643.66
1997/05/31 17436.13 17909.02
1997/06/30 17654.41 18099.75
1997/07/31 18158.02 18601.12
1997/08/31 18007.37 18426.82
1997/09/30 18229.05 18645.55
1997/10/31 18348.67 18765.44
1997/11/30 18449.05 18875.78
1997/12/31 18759.65 19151.18
1998/01/31 18940.44 19348.82
1998/02/28 18961.30 19354.62
1998/03/31 19007.24 19371.66
1998/04/30 18910.32 19284.29
1998/05/31 19200.14 19589.56
1998/06/30 19270.68 19666.74
1998/07/31 19313.18 19716.11
1998/08/31 19605.05 20020.72
1998/09/30 19832.99 20270.18
1998/10/31 19844.33 20269.77
1998/11/30 19900.07 20340.92
1998/12/31 19926.10 20392.18
1999/01/31 20143.76 20634.64
1999/02/28 20019.22 20544.47
1999/03/31 20016.13 20573.03
1999/04/30 20057.74 20624.25
1999/05/31 19924.84 20504.84
1999/06/30 19610.01 20209.57
1999/07/31 19686.66 20283.13
1999/08/31 19534.44 20120.87
1999/09/30 19543.06 20129.12
1999/10/29 19341.54 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094545 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Class T on
October 31, 1989, and the current 3.50% sales charge was paid. As the
chart shows, by October 31, 1999, the value of the investment would
have grown to $19,342 - a 93.42% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index
did over the same period. With dividends reinvested, the same $10,000
would have grown to $19,911 - a 99.11% increase.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
Fidelity Adv Municipal Income -2.31% 6.36% 7.27%
- - Inst CL
LB Municipal Bond -1.77% 6.92% 7.13%
General Municipal Debt Funds -4.18% 5.87% 6.43%
Average
AVERAGE ANNUAL TOTAL RETURNS take Institutional Class shares'
cumulative return and show you what would have happened if
Institutional Class shares had performed at a constant rate each year.
$10,000 OVER 10 YEARS
FA Municipal Income -CL I LB Municipal Bond
00679 LB015
1989/10/31 10000.00 10000.00
1989/11/30 10123.11 10175.00
1989/12/31 10219.35 10258.23
1990/01/31 10235.47 10209.71
1990/02/28 10308.83 10300.58
1990/03/31 10373.50 10303.67
1990/04/30 10278.62 10229.07
1990/05/31 10489.26 10452.37
1990/06/30 10612.85 10544.24
1990/07/31 10776.54 10699.25
1990/08/31 10703.82 10543.89
1990/09/30 10779.93 10549.90
1990/10/31 10927.93 10741.28
1990/11/30 11199.08 10957.28
1990/12/31 11270.53 11004.95
1991/01/31 11401.70 11152.64
1991/02/28 11489.36 11249.66
1991/03/31 11556.91 11253.71
1991/04/30 11745.09 11403.39
1991/05/31 11890.27 11504.76
1991/06/30 11917.94 11493.37
1991/07/31 12072.05 11633.36
1991/08/31 12181.07 11786.57
1991/09/30 12323.95 11940.04
1991/10/31 12460.51 12047.50
1991/11/30 12507.38 12081.11
1991/12/31 12643.41 12340.37
1992/01/31 12783.56 12368.51
1992/02/29 12853.01 12372.46
1992/03/31 12917.49 12377.04
1992/04/30 13034.08 12487.20
1992/05/31 13151.00 12634.17
1992/06/30 13331.33 12846.17
1992/07/31 13795.53 13231.30
1992/08/31 13688.71 13102.30
1992/09/30 13774.13 13187.98
1992/10/31 13607.90 13058.35
1992/11/30 13880.63 13292.22
1992/12/31 14047.99 13427.94
1993/01/31 14285.60 13584.10
1993/02/28 14790.04 14075.44
1993/03/31 14635.78 13926.66
1993/04/30 14790.98 14067.18
1993/05/31 14913.47 14146.24
1993/06/30 15152.58 14382.34
1993/07/31 15163.83 14401.18
1993/08/31 15554.38 14701.01
1993/09/30 15769.78 14868.46
1993/10/31 15778.24 14897.15
1993/11/30 15624.03 14765.91
1993/12/31 15984.82 15077.62
1994/01/31 16170.95 15249.80
1994/02/28 15743.55 14854.83
1994/03/31 14904.37 14249.95
1994/04/30 15003.27 14370.79
1994/05/31 15091.99 14495.38
1994/06/30 15036.43 14406.81
1994/07/31 15307.66 14670.89
1994/08/31 15331.71 14721.65
1994/09/30 15091.53 14505.54
1994/10/31 14826.98 14247.92
1994/11/30 14350.30 13990.32
1994/12/31 14698.10 14298.24
1995/01/31 15194.64 14706.89
1995/02/28 15604.04 15134.56
1995/03/31 15686.08 15308.46
1995/04/30 15737.64 15326.52
1995/05/31 16241.26 15815.59
1995/06/30 16113.86 15678.00
1995/07/31 16169.29 15826.63
1995/08/31 16336.27 16027.31
1995/09/30 16499.20 16128.76
1995/10/31 16693.85 16363.27
1995/11/30 17024.88 16634.74
1995/12/31 17175.96 16794.60
1996/01/31 17270.83 16921.40
1996/02/29 17231.94 16807.18
1996/03/31 16882.51 16592.38
1996/04/30 16814.21 16545.43
1996/05/31 16753.01 16538.81
1996/06/30 16950.12 16718.92
1996/07/31 17062.62 16871.06
1996/08/31 17101.51 16867.01
1996/09/30 17256.28 17103.15
1996/10/31 17429.81 17296.58
1996/11/30 17768.23 17613.11
1996/12/31 17707.29 17539.14
1997/01/31 17764.39 17572.28
1997/02/28 17946.91 17733.60
1997/03/31 17758.06 17497.21
1997/04/30 17901.01 17643.66
1997/05/31 18123.66 17909.02
1997/06/30 18359.30 18099.75
1997/07/31 18890.63 18601.12
1997/08/31 18724.08 18426.82
1997/09/30 18961.09 18645.55
1997/10/31 19075.95 18765.44
1997/11/30 19202.93 18875.78
1997/12/31 19517.78 19151.18
1998/01/31 19710.75 19348.82
1998/02/28 19735.47 19354.62
1998/03/31 19769.01 19371.66
1998/04/30 19669.58 19284.29
1998/05/31 19973.88 19589.56
1998/06/30 20049.58 19666.74
1998/07/31 20095.74 19716.11
1998/08/31 20402.45 20020.72
1998/09/30 20659.14 20270.18
1998/10/31 20656.16 20269.77
1998/11/30 20718.50 20340.92
1998/12/31 20749.72 20392.18
1999/01/31 20981.34 20634.64
1999/02/28 20855.35 20544.47
1999/03/31 20856.37 20573.03
1999/04/30 20904.11 20624.25
1999/05/31 20769.09 20504.84
1999/06/30 20443.43 20209.57
1999/07/31 20510.64 20283.13
1999/08/31 20355.29 20120.87
1999/09/30 20385.45 20129.12
1999/10/29 20178.22 19910.92
IMATRL PRASUN SHR__CHT 19991031 19991115 094814 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Advisor Municipal Income Fund - Institutional
Class on October 31, 1989. As the chart shows, by October 31, 1999,
the value of the investment would have grown to $20,178 - a 101.78%
increase on the initial investment. For comparison, look at how the
Lehman Brothers Municipal Bond Index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $19,911 - a
99.11% increase.
(Photograph of Christine Thompson)
An interview with Christine Thompson, Portfolio Manager of Fidelity
Advisor Municipal Income Fund
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. For the 12-month period that ended October 31, 1999, the fund's
Class A, Class T, Class B and Class C shares had total returns
of-2.36%, -2.53%, -3.16% and -3.24%, respectively. To get a sense of
how the fund did relative to its competitors, the general municipal
debt funds average returned -4.18% for the same 12-month period,
according to Lipper Inc. Additionally, the Lehman Brothers Municipal
Bond Index, which tracks the types of securities in which the fund
invests, returned -1.77% for the same 12-month period.
A. For the 12-month period that ended October 31, 1999, the fund's
Institutional Class shares had a total return of -2.31%. To get a
sense of how the fund did relative to its competitors, the general
municipal debt funds average returned -4.18% for the same 12-month
period, according to Lipper Inc. Additionally, the Lehman Brothers
Municipal Bond Index, which tracks the types of securities in which
the fund invests, returned -1.77% for the same 12-month period.
Q. RISING INTEREST RATES MADE IT A FAIRLY DIFFICULT AND VOLATILE YEAR
FOR MUNICIPAL BONDS. WHY DID THE FUND OUTPERFORM ITS PEERS?
A. The fund's outperformance of its peers was in part due to duration
management. In keeping with Fidelity's investment approach, I managed
the fund's duration - a measure of its interest-rate sensitivity - to
be in line with the municipal market as a whole, as reflected by the
Lehman Brothers Municipal Bond Index. As a result, I don't lengthen or
shorten duration based on where I think interest rates will be at some
point down the road, because I don't believe that anyone can do so
with any accuracy over time. But other funds in the peer group do
actively manage duration and some increased their interest-rate
sensitivity, which likely caused their returns to suffer when interest
rates rose.
Q. WHICH BOND MATURITIES DID YOU FAVOR?
A. I emphasized intermediate-maturity bonds - those set to mature
within five to 15 years - which also was a plus for the fund's
performance. Although they were a disappointment early on, they
bounced back more recently. Initially, intermediates suffered
primarily from reduced demand and increased supply at the hands of
relatively heavy selling from some specific types of institutional
investors. In contrast, relatively strong demand from individual
investors helped to support the performance of shorter- and
longer-term bonds. Based on Fidelity's quantitative models,
intermediates offered the most attractive value for their given
interest-rate sensitivity and their total return potential. The fund's
focus on this maturity range worked in its favor during the past
several months because institutional investors came back into the
market with purchases of intermediate securities.
Q. THE FUND ALSO HAD A RELATIVELY LARGE EXPOSURE TO "PREMIUM" BONDS.
WHAT ARE PREMIUMS AND WHY WERE THEY ATTRACTIVE?
A. Premium coupon bonds pay interest rates above prevailing market
rates and trade at prices above face - or par - value. One appealing
aspect of premiums was that they were insulated from unfavorable tax
treatment that negatively affected the prices of lower coupon bonds as
interest rates rose.
Q. WHERE DID YOU FIND ATTRACTIVE OPPORTUNITIES?
A. I found some attractive opportunities in the education sector and
bought bonds backed by colleges and universities. Education bonds
offer diversification from the economically sensitive areas of the
market - such as general obligation bonds. In addition, demographic
trends support a growing number of students seeking to obtain advanced
degrees over the next several years. I also found opportunities in the
health care and utilities sectors, both of which are undergoing a wave
of consolidation. I looked for bonds I felt could benefit from
consolidation, either by being acquired or affiliating with a stronger
entity, through the restructuring of debt.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET AND THE FUND?
A. At the end of the period, municipals were priced attractively
compared to their Treasury counterparts. To the extent that investors
realize and act on that relative cheapness, municipals could gain
ground on Treasuries. Of course, the major determinant of the bond
market's performance will be the direction of interest rates, which I
don't spend time trying to forecast. Rather, I look for attractively
priced bonds that I believe will outperform, no matter where interest
rates end up.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH OCTOBER 31, 1999. THE MANAGER'S VIEWS ARE SUBJECT
TO CHANGE AT ANY TIME BASED ON MARKET OR OTHER CONDITIONS.
ATTACHMENT 2
INTERMEDIATE MUNICIPAL - SUPPLEMENTAL INFORMATION
This Attachment contains supplemental information about Fidelity
Advisor Intermediate Municipal Income Fund (the fund or Intermediate
Municipal), including policies, investment adviser, advisory fees and
expenses, organization, and procedures for purchasing and redeeming
shares.
PERFORMANCE
The following information illustrates the changes in Intermediate
Municipal's performance from year to year and compares Class T's and
Institutional Class's performance to the performance of a market index
and an average of the performance of similar funds over various
periods of time. The fund also compares its performance to the
performance of an additional index over various periods of time. Data
for the additional index is available only from June 30, 1993 to the
present. Returns are based on past results and are not an indication
of future performance.
The following information illustrates the changes in Intermediate
Municipal's performance from year to year and compares Class T's and
Institutional Class's performance to the performance of a market index
and an average of the performance of similar funds over various
periods of time. The fund also compares its performance to the
performance of an additional index over various periods of time. Data
for the additional index is available only from June 30, 1993 to the
present. Returns are based on past results and are not an indication
of future performance.
YEAR-BY-YEAR RETURNS
The returns in the chart for Class T shares do not include the effect
of Class T's front-end sales charge. If the effect of the sales charge
were reflected, returns for Class T shares would be lower than those
shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS T
Calendar Years 1993 1994 1995 1996 1997 1998
9.43% -5.68% 14.20% 3.89% 7.80% 5.08%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: 9.43
Row: 6, Col: 1, Value: -5.68
Row: 7, Col: 1, Value: 14.2
Row: 8, Col: 1, Value: 3.89
Row: 9, Col: 1, Value: 7.8
Row: 10, Col: 1, Value: 5.08
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS T OF ADVISOR
INTERMEDIATE MUNICIPAL INCOME, THE HIGHEST RETURN FOR A QUARTER WAS
6.27% (QUARTER ENDING MARCH 31, 1995) AND THE LOWEST RETURN FOR A
QUARTER WAS -5.44% (QUARTER ENDING MARCH 31, 1994).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR CLASS T OF
ADVISOR INTERMEDIATE MUNICIPAL INCOME WAS -0.88%.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INSTITUTIONAL CLASS
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
7.79% 6.37% 9.64% 7.28% 9.94% -5.43% 14.37% 4.15% 8.07% 5.29%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 7.79
Row: 2, Col: 1, Value: 6.37
Row: 3, Col: 1, Value: 9.639999999999999
Row: 4, Col: 1, Value: 7.28
Row: 5, Col: 1, Value: 9.94
Row: 6, Col: 1, Value: -5.430000000000001
Row: 7, Col: 1, Value: 14.37
Row: 8, Col: 1, Value: 4.15
Row: 9, Col: 1, Value: 8.07
Row: 10, Col: 1, Value: 5.29
DURING THE PERIODS SHOWN IN THE CHART FOR INSTITUTIONAL CLASS OF
ADVISOR INTERMEDIATE MUNICIPAL INCOME, THE HIGHEST RETURN FOR A
QUARTER WAS 6.22% (QUARTER ENDING MARCH 31, 1995) AND THE LOWEST
RETURN FOR A QUARTER WAS -5.46% (QUARTER ENDING MARCH 31, 1994).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR INSTITUTIONAL
CLASS OF ADVISOR INTERMEDIATE MUNICIPAL INCOME WAS -0.74%.
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).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the periods ended Past 1 year Past 5 years Past 10 years/Life of Class
December 31, 1998
Advisor Intermediate 1.18% n/a 5.31%A
Municipal Income - Class A
Advisor Intermediate 2.19% 4.27% 5.12%B
Municipal Income - Class T
Advisor Intermediate 1.35% n/a 5.81%C, E
Municipal Income - Class B
Advisor Intermediate 3.32% n/a 5.32%D
Municipal Income - Class C
Advisor Intermediate 5.29% 5.09% 6.63%
Municipal Income -
Institutional Class
Lehman Brothers Municipal 6.48% 6.22% 8.22%
Bond Index
Lehman Brothers 1-17 Year 6.28% 5.92% n/a
Municipal Bond Index
Lipper Intermediate Municipal 5.35 % 5.17% 6.88%
Debt Funds Average
</TABLE>
A FROM SEPTEMBER 3, 1996.
B FROM SEPTEMBER 10, 1992.
C FROM JUNE 30, 1994.
D FROM NOVEMBER 3, 1997.
E RETURNS REFLECT THE CONVERSION OF CLASS B SHARES TO CLASS A
SHARES AFTER A MAXIMUM OF FOUR YEARS.
If Fidelity Management & Research Company (FMR) had not reimbursed
certain class expenses during these periods, the returns for Class A,
Class T, Class B, Class C, and Institutional Class would have been
lower.
The Lehman Brothers 1-17 Year Municipal Bond Index is a market
value-weighted index of investment-grade municipal bond with
maturities between one and 17 years.
The Lehman Brothers Municipal Bond Index is a market value-weighted
index of investment-grade municipal bonds with maturities of one year
or more.
Lipper Intermediate Municipal Debt Funds Average reflects the
performance (excluding sales charges) of mutual funds with similar
objectives.
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, Class C, and
Institutional Class shares of the fund through an investment
professional. When you invest through an investment professional, the
procedures for buying, selling, and exchanging Class A, Class T, Class
B, Class C, and Institutional Class shares of the fund and the account
features and policies may differ. Additional fees may also apply to
your investment in Class A, Class T, Class B, Class C, and
Institutional Class shares of the fund, including a transaction fee if
you buy or sell Class A, Class T, Class B, Class C, and 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
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
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 the 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 the 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.
Short-term or excessive trading into and out of the fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, the 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
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity funds, and accounts under common
ownership or control.
The fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
Institutional Class shares are offered only 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 (as defined in the Employee Retirement Income Security
Act), 403(b) programs and plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) must have at least $50 million in plan assets;
2. Registered investment adviser managed account programs, provided
the registered investment adviser 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,
accounts other than an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly a Keogh/H.R. 10 plan) 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;
5. Fidelity Trustees and employees; and
6. Insurance company programs for employee benefit plans, 403(b)
programs or plans covering sole-proprietors (formerly Keogh/H.R. 10
plans) 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 programs for employee benefit plans, 403(b) programs
and plans covering sole-proprietors (formerly Keogh/H.R. 10 plans)
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 programs for employee benefit
plans, 403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans), Fidelity may waive the requirement that $1
million be invested in the Institutional Class of the Advisor funds.
MINIMUMS
TO OPEN AN ACCOUNT $2,500
Through regular investment plansA $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
A 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.
The fund may waive or lower purchase minimums.
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.
KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
(small solid 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," above.
TO ADD TO AN ACCOUNT
(small solid 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," above.
MAIL FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770002 CINCINNATI, (small solid bullet) Complete
OH 45277-0081 and sign the application.
Make your 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
(small solid 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.
(small solid 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
(small solid bullet) Bring
your application and check
to your investment
professional.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to your
investment professional.
WIRE TO OPEN AN ACCOUNT
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information,"
above, to set up your
account and to arrange a
wire transaction.
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid 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
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Advisor Systematic
Investment Program.
(small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program (for Class
A, Class T, Class B, and
Class C) to exchange from
certain Fidelity money
market funds or a Fidelity
Advisor fund.
SELLING SHARES
If appropriate to protect shareholders, the fund may impose a
redemption fee (trading fee) on redemptions from the fund.
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 15 or 30 days, depending on the type of account;
(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
the 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 property rather than in cash if FMR determines it is in the best
interests of the 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.
To sell shares issued with certificates, call Fidelity for
instructions. The fund no longer issues share certificates.
KEY INFORMATION
PHONE (small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information,"
above, to initiate a wire
transaction or to request a
check for your redemption.
(small solid 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," above.
MAIL Fidelity Investments INDIVIDUAL, JOINT TENANT,
P.O. Box 770002 Cincinnati, SOLE PROPRIETORSHIP, UGMA,
OH 45277-0081 UTMA
(small solid bullet) 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.
TRUST
(small solid 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
(small solid 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.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Call
your investment professional
or call Fidelity at the
appropriate number found in
"General Information,"
above, for instructions.
IN PERSON INDIVIDUAL, JOINT TENANT,
SOLE PROPRIETORSHIP, UGMA,
UTMA
(small solid 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.
TRUST
(small solid 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
(small solid 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.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
AUTOMATICALLY (small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program to exchange
to the same class of another
Fidelity Advisor fund or to
certain Fidelity funds (for
Class A, Class T, Class B,
and Class T only).
(small solid bullet) Use
Fidelity Advisor Systematic
Withdrawal Program to set up
periodic redemptions from
your Class A, Class T, Class
B, Class C, and
Institutional Class account.
EXCHANGING SHARES
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) The 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. Accounts under common
ownership or control will be counted together for purposes of the four
exchange limit.
(small solid bullet) The 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 fund 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 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
fund.
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>
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<S> <C> <C> <C>
FIDELITY ADVISOR SYSTEMATIC
INVESTMENT PROGRAM TO MOVE
MONEY FROM YOUR BANK ACCOUNT
TO THE FUND.
MINIMUM MINIMUM FREQUENCY PROCEDURES
INITIAL ADDITIONAL Monthly, bimonthly, (small solid bullet) To set
$100 $100 quarterly, or semi-annually up for a new account,
complete the appropriate
section on the application.
(small solid bullet) To set
up for existing accounts,
call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information," above, for an
application.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information,"
above. 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 THE FUND.
MINIMUM MINIMUM PROCEDURES
INITIAL ADDITIONAL (small solid bullet) To set
Not Not up for a new or existing
Applicable Applicable account, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information,"
above, for the appropriate
enrollment form.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information," above.
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 THE FUND OR FROM CLASS
A, CLASS T, CLASS B OR CLASS
C OF THE FUND TO THE SAME
CLASS OF ANOTHER FIDELITY
ADVISOR FUND.
MINIMUM FREQUENCY PROCEDURES
$100 Monthly, quarterly, (small solid bullet) To set
semi-annually, or annually up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information," above, after
both accounts are opened.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information,"
above. Call at least 2
business days prior to your
next scheduled exchange date.
(small solid bullet) The
account from which the
exchanges are to be
processed must have a
minimum balance of $10,000.
The account into which the
exchange is being processed
must have a minimum balance
of $1,000.
</TABLE>
FIDELITY ADVISOR SYSTEMATIC
WITHDRAWAL PROGRAM TO SET UP
PERIODIC REDEMPTIONS FROM
YOUR CLASS A, CLASS T, CLASS
B, CLASS C, OR INSTITUTIONAL
CLASS ACCOUNT TO YOU OR TO
YOUR BANK CHECKING ACCOUNT.
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MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Class A, Class T, and (small solid bullet) Accounts
Institutional Class: with a value of $10,000 or
Monthly, quarterly, or more in Class A, Class T,
semi-annually Class B, Class C, or
Class B and Class C: Monthly Institutional Class shares
or quarterly are eligible for this program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information," above, for
instructions.
(small solid bullet) To make
changes, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information,"
above. Call at least 10
business days prior to your
next scheduled withdrawal
date.
(small solid bullet)
Aggregate redemptions per
12-month period from your
Class B or Class C account
may not exceed 10% of the
account value and are not
subject to a CDSC; and you
may set your withdrawal
amount as a percentage of
the value of your account or
a fixed dollar amount.
(small solid 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 fund.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account.
(small solid bullet) Call your investment professional or call
Fidelity at the appropriate number found in "General Information,"
above, before your first use to verify that this feature is set up on
your account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid 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," above.
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
the fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
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 the 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 CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
EARNING DIVIDENDS
Shares purchased by an automated purchase order begin to earn
dividends on the day your payment is received. Shares purchased by all
other purchase orders begin to earn dividends on the first business
day following the day your payment is received.
Shares 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 gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gain distributions will be
paid in cash.
4. DIRECTED DIVIDENDS 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 gain distributions 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, 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 the fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS. The fund seeks to earn income and pay
dividends exempt from federal income tax.
Income exempt from federal income tax may be subject to state or
local tax. A portion of the dividends you receive may be subject to
federal and state income taxes and also may be subject to the federal
alternative minimum tax. You may also receive taxable distributions
attributable to the fund's sale of municipal bonds.
For federal tax purposes, the fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income. The fund's
distributions of long-term capital gains are taxable to you generally
as capital gains.
If the fund's distributions exceed its income and capital gains
realized in any year, 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 the 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 potentially taxable distribution.
Any taxable distributions you receive from the 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 the fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND MANAGEMENT
FMR is the fund's manager. Its address is 82 Devonshire Street,
Boston, MA 02109.
As of March 25, 1999, FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the fund's
investments and handling its business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.
FIMM is an affiliate of FMR. As of March 29, 1999, FIMM had
approximately $159.8 billion in discretionary assets under management.
Norm Lind is vice president and manager of Intermediate Municipal,
which he has managed since January 1998. He also manages several other
Fidelity funds. Since joining Fidelity in 1986, Mr. Lind has worked as
an analyst and manager.
The fund's management 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 0.37%, and it drops
as total assets under management increase.
For October 1999, the group fee rate was 0.1289%. The individual fund
fee rate is 0.25%.
The total management fee for the fiscal year ended October 31, 1999
was 0.38% of the fund's average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse a 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 discontinued by FMR at any time, can decrease a class's
expenses and boost its performance.
From time to time a manager, analyst, or other Fidelity employee may
express views regarding a particular company, security, industry, or
market sector. The views expressed by any such person are the views of
only that individual as of the time expressed and do not necessarily
represent the views of Fidelity or any other person in the Fidelity
organization. Any such views are subject to change at any time based
upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
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.
FUND DISTRIBUTION
The fund is composed of multiple classes of shares. All classes of
the 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 Class A, Class
T, Class B, and Class C 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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 3.75% 3.91% 3.00%
$50,000 to $99,999 3.00% 3.10% 2.25%
$100,000 to $249,999 2.25% 2.30% 1.75%
$250,000 to $499,999 1.75% 1.78% 1.50%
$500,000 to $999,999 1.50% 1.52% 1.25%
$1,000,000 to $24,999,999 0.50% 0.50% 0.50%
$25,000,000 or more None* None* *
</TABLE>
* SEE "FINDER'S FEE" SECTION BELOW.
SALES CHARGES AND CONCESSIONS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 2.75% 2.83% 2.25%
$50,000 to $99,999 2.25% 2.30% 2.00%
$100,000 to $249,999 1.75% 1.78% 1.50%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
* 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.
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:
From Date of Purchase Contingent Deferred Sales
Charge
Less than 1 year 3%
1 year to less than 2 years 2%
2 years to less than 3 years 1%
3 years to less than 4 years A 0%
A AFTER A MAXIMUM OF FOUR YEARS, CLASS B SHARES WILL CONVERT
AUTOMATICALLY TO CLASS A SHARES OF THE 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
2.00% of your purchase of Class B shares. For purchases of Class B
shares through reinvested dividends or capital gain 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, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 plan) or through
reinvested dividends or capital gain 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 gain
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 (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program with at
least $25 million or more in plan assets;
2. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an insurance company separate account used to fund
annuity contracts;
3. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
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 (except SIMPLE IRA, SEP, and SARSEP
plans and plans covering self-employed individuals and their employees
(formerly Keogh/H.R. 10 plans)) and 403(b) programs that participate
in the Advisor Retirement Connection do not qualify for this waiver;
4. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an investment professional sponsored program that
requires the participating employee benefit plan to invest initially
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 (except SIMPLE IRA, SEP, and SARSEP plans and plans covering
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans)), 403(b) programs 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 (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do
not qualify for this waiver;
7. Purchased by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP, and
SARSEP plans and plans covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do not
qualify for this waiver;
8. Purchased with proceeds from the sale of front-end load shares of a
non-Advisor mutual fund for an account participating in the FundSelect
by Nationwide program;
9. 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 member of the
immediate family of a bank trust officer, a registered representative
or other employee of investment professionals having agreements with
FDC, is a spouse of one of those individuals, an account for which one
of those individuals is acting as custodian for a minor child, and a
trust account that is registered for the sole benefit of a minor child
of one of those individuals; or
10. Purchased by the Fidelity Investments Charitable Gift Fund.
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 (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) or 403(b) programs;
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 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. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program;
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,
403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) that are invested in Fidelity Advisor or Fidelity
funds, or (ii) an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 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, but excluding the
Fidelity Investments Charitable Gift Fund) investing $100,000 or more.
A member of the immediate family of a bank trust officer, a registered
representative or other employee of investment professionals having
agreements with FDC, is a spouse of one of those individuals, an
account for which one of those individuals is acting as custodian for
a minor child, and a trust account that is registered for the sole
benefit of a minor child of one of those individuals;
11. Purchased by a bank trust officer, registered representative, or
other employee (or a member of one of their immediate families) of
investment professionals having agreements with FDC;
12. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined
for purposes of Section 501(c)(3) of the Internal Revenue Code);
13. Purchased with distributions of income, principal, and capital
gains from Fidelity Defined Trusts; or
14. Purchased by the Fidelity Investments Charitable Gift Fund.
The Class B or Class C CDSC will not apply to the redemption of
shares:
1. For disability or death, provided that the shares are sold within
one year following the death or the initial determination of
disability;
2. That are permitted without penalty at age 70 1/2 pursuant to the
Internal Revenue Code from retirement plans or accounts (other than of
shares purchased on or after February 11, 1999 for Traditional IRAs,
Roth IRAs and Rollover IRAs);
3. For disability, payment of death benefits, or minimum required
distributions starting at age 701/2 from Traditional IRAs, Roth IRAs
and Rollover IRAs purchased on or after February 11, 1999;
4. Through the Fidelity Advisor Systematic Withdrawal Program; or
5. (Applicable to Class C only) From an employee benefit plan, 403(b)
program or plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan).
To qualify for a Class A or Class T front-end sales charge reduction
or waiver, 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.
Except as provided below, any assets on which a finder's fee has been
paid will bear a CDSC (Class A or Class T CDSC) if they do not remain
in Class A or Class T shares of the Fidelity Advisor funds, or Daily
Money Class shares of Treasury Fund, Prime Fund or Tax-Exempt Fund,
for a period of at least one uninterrupted year. The Class A or Class
T CDSC will be 0.25% of the lesser of the cost of the Class A or Class
T shares 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 gain
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.
The Class A or Class T CDSC will not apply to the redemption of
shares:
1. Held by insurance company separate accounts;
2. For plan loans or distributions or exchanges to non-Advisor fund
investment options from employee benefit plans (except shares of
SIMPLE IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)
purchased on or after February 11, 1999) and 403(b) programs; or
3. For disability, payment of death benefits, or minimum required
distributions starting at age 701/2 from Traditional IRAs, Roth IRAs,
SIMPLE IRAs, SEPs, SARSEPs and plans covering a sole-proprietor or
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans).
To qualify for a Class A or Class T finder's fee or CDSC waiver, you
must notify Fidelity in advance of your purchase or redemption,
respectively. 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% finder's fee with respect to
shares held by an insurance company separate account must provide
Fidelity access to records detailing purchases at the client
level.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class
A, Class T, Class B or Class C shares of the 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 the 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.
To qualify for the reinstatement privilege, you must notify Fidelity
in writing in advance of your reinvestment.
CONVERSION FEATURE. After a maximum of four 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 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.
DISTRIBUTION AND SERVICE PLANS. 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.
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.
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,
403(b) program or plan covering a sole-proprietor (formerly Keogh/H.R.
10 plan) or through reinvestment of dividends or capital gain
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 the assets of Class A, Class T,
Class B, and Class C 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 Distribution and Service 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 the fund has
authorized such payments for Class A, Class T, Class B, and Class C.
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 the 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 the fund's Prospectus and in the related
Statement of Additional Information. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or FDC.
SHAREHOLDER LIABILITY. 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 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 further provides
that shareholders of a fund shall not have a claim on or right to any
assets belonging to any other fund.
The Declaration of Trust provides for indemnification out of the
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. The Declaration of
Trust also provides that the fund shall, upon request, assume the
defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote. Claims asserted against one class of shares may subject
holders of another class of shares to certain liabilities.
FINANCIAL HIGHLIGHTS
Intermediate Municipal's financial highlights for the fiscal year
ended October 31, 1999, are shown below:
FINANCIAL HIGHLIGHTS - CLASS A
Years ended October 31, 1999 1998 H 1997 G 1996 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.600 $ 10.410 $ 10.160
period
Income from Investment
Operations
Net interest income .431 .411 .459 .113
Net realized and unrealized (.540) .200 .191 .250
gain (loss)
Total from investment (.109) .611 .650 .363
operations
Less Distributions
From net interest income (.431) (.411) (.459) (.113)
From net realized gain (.080) (.030) (.001) -
Total distributions (.511) (.441) (.460) (.113)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.600 $ 10.410
TOTAL RETURN B, C (1.07)% 5.89% 6.42% 3.59%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,572 $ 1,082 $ 442 $ 103
(000 omitted)
Ratio of expenses to average .85% E .90% A, E .90% E .90% A, E
net assets
Ratio of net interest income 4.17% 4.19% A 4.37% 4.60% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO NOVEMBER 30, 1996 .
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G YEAR ENDED NOVEMBER 30 .
H ELEVEN MONTHS ENDED OCTOBER 31 .
FINANCIAL HIGHLIGHTS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 F 1997 G 1996 G 1995 G 1994 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 10.460
period
Income from Investment
Operations
Net interest income .427 .407 .449 .461 .451 .455
Net realized and (.540) .210 .181 .030 .980 (1.040)
unrealized gain (loss)
Total from investment (.113) .617 .630 .491 1.431 (.585)
operations
Less Distributions
From net interest income (.427) (.407) (.449) (.461) (.451) (.455)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.507) (.437) (.450) (.461) (.451) (.475)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN B, C (1.11)% 5.94% 6.21% 4.89% 15.49% (5.78)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 50,432 $ 60,070 $ 48,830 $ 56,729 $ 62,852 $ 57,382
(000 omitted)
Ratio of expenses to average .90% D .95% A, D 1.00% D 1.00% D .94% D .90% D
net assets
Ratio of net interest income 4.12% 4.15% A 4.32% 4.42% 4.56% 4.49%
to average net assets
Portfolio turnover rate 19% 26% A, E 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
F ELEVEN MONTHS ENDED OCTOBER 31 .
G YEAR ENDED NOVEMBER 30 .
FINANCIAL HIGHLIGHTS - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400 $ 9.890
period
Income from Investment
Operations
Net interest income .353 .339 .382 .394 .373 .155
Net realized and unrealized (.540) .200 .181 .030 .980 (.490)
gain (loss)
Total from investment (.187) .539 .563 .424 1.353 (.335)
operations
Less Distributions
From net interest income (.353) (.339) (.382) (.394) (.373) (.155)
From net realized gain (.080) (.030) (.001) - - -
Total distributions (.433) (.369) (.383) (.394) (.373) (.155)
Net asset value, end of period $ 10.140 $ 10.760 $ 10.590 $ 10.410 $ 10.380 $ 9.400
TOTAL RETURN B, C (1.81)% 5.17% 5.54% 4.21% 14.60% (3.44)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,387 $ 11,134 $ 7,917 $ 7,445 $ 6,226 $ 1,682
(000 omitted)
Ratio of expenses to average 1.60% E 1.65% A, E 1.65% E 1.66% E 1.68% E 1.65% A, E
net assets
Ratio of net interest income 3.43% 3.45% A 3.67% 3.76% 3.71% 3.74% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD JUNE 30, 1994 (COMMENCEMENT OF SALE OF CLASS B
SHARES) TO NOVEMBER 30, 1994.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31 .
H YEAR ENDED NOVEMBER 30 .
FINANCIAL HIGHLIGHTS - CLASS C
Years ended October 31, 1999 1998 G 1997 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.550
period
Income from Investment
Operations
Net interest income .342 .328 .027
Net realized and unrealized (.540) .210 .040
gain (loss)
Total from investment (.198) .538 .067
operations
Less Distributions
From net interest income (.342) (.328) (.027)
From net realized gain (.080) (.030) -
Total distributions (.422) (.358) (.027)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590
TOTAL RETURN B, C (1.91)% 5.16% .63%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,562 $ 1,137 $ 13
(000 omitted)
Ratio of expenses to average 1.70% E 1.75% A, E 1.75% A, E
net assets
Ratio of net interest income 3.34% 3.29% A 3.33% A
to average net assets
Portfolio turnover rate 19% 26% A, F 18%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO NOVEMBER 30, 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31 .
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 G 1997 H 1996 H 1995 H 1994 H
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410 $ 10.460
period
Income from Investment
Operations
Net interest income .448 .427 .475 .487 .477 .481
Net realized and unrealized (.540) .210 .181 .050 .950 (1.030)
gain (loss)
Total from investment (.092) .637 .656 .537 1.427 (.549)
operations
Less Distributions
From net interest income (.448) (.427) (.475) (.487) (.477) (.481)
From net realized gain (.080) (.030) (.001) - - -
In excess of net realized - - - - - (.020)
gain
Total distributions (.528) (.457) (.476) (.487) (.477) (.501)
Net asset value, end of period $ 10.150 $ 10.770 $ 10.590 $ 10.410 $ 10.360 $ 9.410
TOTAL RETURN B, C (.92)% 6.14% 6.48% 5.36% 15.44% (5.43)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 5,997 $ 6,328 $ 6,098 $ 6,455 $ 11,085 $ 11,702
(000 omitted)
Ratio of expenses to average .70% D .75% A, D .75% D .75% D .70% D .65% D
net assets
Ratio of expenses to average .70% .75% A .75% .74% E .70% .65%
net assets after expense
reductions
Ratio of net interest income 4.32% 4.36% A 4.57% 4.68% 4.96% 4.75%
to average net assets
Portfolio turnover rate 19% 26% A, F 18% 35% 53% 53%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGER.
G ELEVEN MONTHS ENDED OCTOBER 31 .
H YEAR ENDED NOVEMBER 30 .
EXHIBIT 1
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as
of February 23, 2000, by and between Fidelity Advisor Intermediate
Municipal Income Fund (Intermediate Municipal) and Fidelity Advisor
Municipal Income Fund (Municipal Income), funds of Fidelity Advisor
Series II (the trust). The trust is a duly organized business trust
under the laws of the Commonwealth of Massachusetts with its principal
place of business at 82 Devonshire Street, Boston, Massachusetts
02109. Municipal Income and Intermediate Municipal may be referred to
herein collectively as the Funds or each individually as the Fund.
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended (the Code). The
reorganization will comprise: (a) the transfer of all of the assets of
Intermediate Municipal to Municipal Income solely in exchange for
shares of beneficial interest in Class A, Class T, Class B, Class C,
and Institutional Class of Municipal Income (the Municipal Income
Class Shares) in each case based upon the net asset value attributable
to the corresponding class of Intermediate Municipal and the
assumption by Municipal Income of Intermediate Municipal's
liabilities; and (b) the constructive distribution of such shares by
Intermediate Municipal to its shareholders of the corresponding class
in complete liquidation and termination of Intermediate Municipal in
exchange for all of Intermediate Municipal's outstanding shares.
Intermediate Municipal shall receive shares of Class A, Class T, Class
B, Class C, and Institutional Class of Municipal Income having a net
asset value equal to the value of the net assets of Class A, Class T,
Class B, Class C, and Institutional Class of Intermediate Municipal,
respectively, on the Closing Date (as defined in Section 6), which
shares Intermediate Municipal shall then distribute to its
shareholders of the corresponding class. Shareholders of Class A,
Class T, Class B, Class C, and Institutional Class of Intermediate
Municipal will receive shares of the corresponding class of Municipal
Income equal in value to the shares of Intermediate Municipal they are
surrendering, based upon the relative net asset values of Class A
(Intermediate Municipal) to Class A (Municipal Income), Class T
(Intermediate Municipal) to Class T (Municipal Income), Class B
(Intermediate Municipal) to Class B (Municipal Income), Class C
(Intermediate Municipal) to Class C (Municipal Income), and
Institutional Class (Intermediate Municipal) to Institutional Class
(Municipal Income), respectively, as of the Closing Date. The
foregoing transactions are referred to herein as the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF INTERMEDIATE MUNICIPAL.
Intermediate Municipal represents and warrants to and agrees with
Municipal Income that:
(a) Intermediate Municipal is a series of Fidelity Advisor Series II,
a business trust duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Massachusetts, and has
the power to own all of its properties and assets and to carry out its
obligations under this Agreement. It has all necessary federal, state,
and local authorizations to carry on its business as now being
conducted and to carry out this Agreement;
(b) Fidelity Advisor Series II is an open-end, management investment
company duly registered under the Investment Company Act of 1940, as
amended (the 1940 Act), and such registration is in full force and
effect;
(c) The Prospectuses and Statement of Additional Information of
Intermediate Municipal, (dated February 14, 2000 ), previously
furnished to Municipal Income, did not and do not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Intermediate Municipal, threatened
against Intermediate Municipal which assert liability on the part of
Intermediate Municipal. Intermediate Municipal knows of no facts which
might form the basis for the institution of such proceedings;
(e) Intermediate Municipal is not in, and the execution, delivery,
and performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws,
or, to the knowledge of Intermediate Municipal, of any agreement,
indenture, instrument, contract, lease, or other undertaking to which
Intermediate Municipal is a party or by which Intermediate Municipal
is bound or result in the acceleration of any obligation or the
imposition of any penalty under any agreement, judgment or decree to
which Intermediate Municipal is a party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of
Operations, the Statement of Changes in Net Assets, Financial
Highlights (of each class), and the Schedule of Investments (including
market values) of Intermediate Municipal at October 31, 1999, have
been audited by PricewaterhouseCoopers LLP, independent accountants,
and have been furnished to Municipal Income. Said Statement of Assets
and Liabilities and Schedule of Investments fairly present the Fund's
financial position as of such date and said Statement of Operations,
Statement of Changes in Net Assets, and Financial Highlights (of each
class) fairly reflect its results of operations, changes in financial
position, and financial highlights for the periods covered thereby in
conformity with generally accepted accounting principles consistently
applied;
(g) Intermediate Municipal has no known liabilities of a material
nature, contingent or otherwise, other than those shown as belonging
to it on its statement of assets and liabilities as of October 31,
1999 and those incurred in the ordinary course of Intermediate
Municipal's business as an investment company since October 31, 1999;
(h) The registration statement (Registration Statement) filed with
the Securities and Exchange Commission (Commission) by Fidelity
Advisor Series II on Form N-14 relating to the shares of Municipal
Income issuable hereunder and the proxy statement of Intermediate
Municipal included therein (Proxy Statement), on the effective date of
the Registration Statement and insofar as they relate to Intermediate
Municipal (i) comply in all material respects with the provisions of
the Securities Act of 1933, as amended (the 1933 Act), the Securities
Exchange Act of 1934, as amended (the 1934 Act), and the 1940 Act, and
the rules and regulations thereunder, and (ii) do not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and at the time of the shareholders' meeting
referred to in Section 7 and on the Closing Date, the prospectus filed
under the 1940 Act on February 14, 2000 (the Prospectus)
(excerpts of which are included in Attachment 2 to the Proxy
Statement), insofar as it relates to Intermediate Municipal, does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(i) All material contracts and commitments of Intermediate Municipal
(other than this Agreement) will be terminated without liability to
Intermediate Municipal prior to the Closing Date (other than those
made in connection with redemptions of Class A, Class T, Class B,
Class C, and Institutional Class shares and the purchase and sale of
portfolio securities made in the ordinary course of business);
(j) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by
Intermediate Municipal of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933 Act, the
1934 Act, the 1940 Act, and state securities or blue sky laws (which
term as used herein shall include the District of Columbia and Puerto
Rico);
(k) Intermediate Municipal has filed or will file all federal and
state tax returns which, to the knowledge of Intermediate Municipal's
officers, are required to be filed by Intermediate Municipal and has
paid or will pay all federal and state taxes shown to be due on said
returns or provision shall have been made for the payment thereof,
and, to the best of Intermediate Municipal's knowledge, no such return
is currently under audit and no assessment has been asserted with
respect to such returns;
(l) Intermediate Municipal has met the requirements of Subchapter M
of the Code for qualification and treatment as a regulated investment
company for all prior taxable years and intends to meet such
requirements for its current taxable year ending on the Closing Date;
(m) All of the issued and outstanding Class A, Class T, Class B,
Class C, and Institutional Class shares of Intermediate Municipal are,
and at the Closing Date will be, duly and validly issued and
outstanding and fully paid and nonassessable as a matter of
Massachusetts law (except as disclosed in the Fund's Statement of
Additional Information), and have been offered for sale and in
conformity with all applicable federal securities laws. All of the
issued and outstanding Class A, Class T, Class B, Class C, and
Institutional Class shares of Intermediate Municipal will, at the
Closing Date, be held by the persons and in the amounts set forth in
the list of shareholders of each class submitted to Municipal Income
in accordance with this Agreement;
(n) As of both the Valuation Time (as defined in Section 4) and the
Closing Date, Intermediate Municipal will have the full right, power,
and authority to sell, assign, transfer, and deliver its portfolio
securities and any other assets of Intermediate Municipal to be
transferred to Municipal Income pursuant to this Agreement. As of the
Closing Date, subject only to the delivery of Intermediate Municipal's
portfolio securities and any such other assets as contemplated by this
Agreement, Municipal Income will acquire Intermediate Municipal's
portfolio securities and any such other assets subject to no
encumbrances, liens, or security interests (except for those that may
arise in the ordinary course and are disclosed to Municipal Income)
and without any restrictions upon the transfer thereof; and
(o) The execution, performance, and delivery of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of Intermediate Municipal, and this
Agreement constitutes a valid and binding obligation of Intermediate
Municipal enforceable in accordance with its terms, subject to
shareholder approval.
2. REPRESENTATIONS AND WARRANTIES OF MUNICIPAL INCOME.
Municipal Income represents and warrants to and agrees with
Intermediate Municipal that:
(a) Municipal Income is a series of Fidelity Advisor Series II, a
business trust duly organized, validly existing, and in good standing
under the laws of the Commonwealth of Massachusetts, and has the power
to own all of its properties and assets and to carry out its
obligations under this Agreement. It has all necessary federal, state,
and local authorizations to carry on its business as now being
conducted and to carry out this Agreement;
(b) Fidelity Advisor Series II is an open-end, management investment
company duly registered under the 1940 Act, and such registration is
in full force and effect;
(c) The Prospectuses and Statement of Additional Information of
Municipal Income (dated December 29, 1999), previously furnished to
Intermediate Municipal did not and do not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading;
(d) There are no material legal, administrative, or other proceedings
pending or, to the knowledge of Municipal Income, threatened against
Municipal Income which assert liability on the part of Municipal
Income. Municipal Income knows of no facts which might form the basis
for the institution of such proceedings;
(e) Municipal Income is not in, and the execution, delivery, and
performance of this Agreement will not result in, violation of any
provision of its Amended and Restated Declaration of Trust or By-laws,
or, to the knowledge of Municipal Income, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Municipal
Income is a party or by which Municipal Income is bound or result in
the acceleration of any obligation or the imposition of any penalty
under any agreement, judgment, or decree to which Municipal Income is
a party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of
Operations, the Statement of Changes in Net Assets, Financial
Highlights (of each class), and the Schedule of Investments (including
market values) of Municipal Income at October 31, 1999, have been
audited by PricewaterhouseCoopers, independent accountants, and have
been furnished to Intermediate Municipal. Said Statement of Assets and
Liabilities and Schedule of Investments fairly present its financial
position as of such date and said Statement of Operations, Statement
of Changes in Net Assets, and Financial Highlights (of each class)
fairly reflect its results of operations, changes in financial
position, and financial highlights for the periods covered thereby in
conformity with generally accepted accounting principles consistently
applied;
(g) Municipal Income has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of October 31, 1999 and
those incurred in the ordinary course of Municipal Income's business
as an investment company since October 31, 1999;
(h) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by Municipal
Income of the transactions contemplated by this Agreement, except such
as have been obtained under the 1933 Act, the 1934 Act, the 1940 Act,
and state securities or blue sky laws (which term as used herein shall
include the District of Columbia and Puerto Rico);
(i) Municipal Income has filed or will file all federal and state tax
returns which, to the knowledge of Municipal Income's officers, are
required to be filed by Municipal Income and has paid or will pay all
federal and state taxes shown to be due on said returns or provision
shall have been made for the payment thereof, and, to the best of
Municipal Income's knowledge, no such return is currently under audit
and no assessment has been asserted with respect to such returns;
(j) Municipal Income has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment company
for all prior taxable years and intends to meet such requirements for
its current taxable year ending on October 31, 2000;
(k) As of the Closing Date, the Municipal Income Class Shares of
beneficial interest of Municipal Income to be issued to Intermediate
Municipal will have been duly authorized and, when issued and
delivered pursuant to this Agreement, will be legally and validly
issued and will be fully paid and nonassessable (except as disclosed
in the Fund's Statement of Additional Information) by Municipal
Income, and no shareholder of any class of Municipal Income will have
any preemptive right of subscription or purchase in respect thereof;
(l) The execution, performance, and delivery of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of Municipal Income, and this Agreement
constitutes a valid and binding obligation of Municipal Income
enforceable in accordance with its terms, subject to approval by the
shareholders of Intermediate Municipal;
(m) The Registration Statement and the Proxy Statement, on the
effective date of the Registration Statement and insofar as they
relate to Municipal Income, (i) will comply in all material respects
with the provisions of the 1933 Act, the 1934 Act, and the 1940 Act,
and the rules and regulations thereunder, and (ii) will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and at the time of the shareholders' meeting
referred to in Section 7 and on the Closing Date, the
Prospectus es , as amended or supplemented, insofar as it relates
to Municipal Income, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(n) The issuance of the Municipal Income Class Shares pursuant to
this Agreement will be in compliance with all applicable federal
securities laws; and
(o) All of the issued and outstanding shares of beneficial interest
of Municipal Income have been offered for sale and sold in conformity
with the federal securities laws.
3. REORGANIZATION.
(a) Subject to the requisite approval of the shareholders of
Intermediate Municipal and to the other terms and conditions contained
herein, Intermediate Municipal agrees to assign, sell, convey,
transfer, and deliver to Municipal Income as of the Closing Date all
of the assets of Intermediate Municipal of every kind and nature
existing on the Closing Date. Municipal Income agrees in exchange
therefor: (i) to assume all of Intermediate Municipal's liabilities
existing on or after the Closing Date, whether or not determinable on
the Closing Date, and (ii) to issue and deliver to Intermediate
Municipal the number of full and fractional Municipal Income Class
Shares having a net asset value equal to the value of the net assets
of the corresponding class of Intermediate Municipal transferred
hereunder, less the value of the liabilities of Intermediate
Municipal, determined as provided for under Section 4.
(b) The assets of Intermediate Municipal to be acquired by Municipal
Income shall include, without limitation, all cash, cash equivalents,
securities, receivables (including interest or dividends receivables),
claims, choses in action, and other property owned by Intermediate
Municipal, and any deferred or prepaid expenses shown as an asset on
the books of Intermediate Municipal on the Closing Date. Intermediate
Municipal will pay or cause to be paid to Municipal Income any
dividend or interest payments received by it on or after the Closing
Date with respect to the assets transferred to Municipal Income
hereunder, and Municipal Income will retain any dividend or interest
payments received by it after the Valuation Time with respect to the
assets transferred hereunder without regard to the payment date
thereof.
(c) The liabilities of Intermediate Municipal to be assumed by
Municipal Income shall include (except as otherwise provided for
herein) all of Intermediate Municipal's liabilities, debts,
obligations, and duties, of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the
ordinary course of business, whether or not determinable on the
Closing Date, and whether or not specifically referred to in this
Agreement. Notwithstanding the foregoing, Intermediate Municipal
agrees to use its best efforts to discharge all of its known
liabilities prior to the Closing Date, other than liabilities incurred
in the ordinary course of business.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable, Intermediate Municipal will constructively
distribute to its shareholders of record, determined as of the
Valuation Time on the Closing Date, the Class A, Class T, Class B,
Class C, and Institutional Class shares in exchange for such
shareholders' shares of beneficial interest in the corresponding class
of Intermediate Municipal and Intermediate Municipal will be
liquidated in accordance with Intermediate Municipal's Amended and
Restated Declaration of Trust. Shareholders of Class A, Class T, Class
B, Class C, and Institutional Class of Intermediate Municipal will
receive shares of the corresponding class of Municipal Income equal in
value to the shares of Intermediate Municipal they are surrendering,
based upon the relative net asset values of Class A (Intermediate
Municipal) to Class A (Municipal Income), Class T (Intermediate
Municipal) to Class T (Municipal Income), Class B (Intermediate
Municipal) to Class B (Municipal Income), Class C (Intermediate
Municipal) to Class C (Municipal Income), and Institutional Class
(Intermediate Municipal) to Institutional Class (Municipal Income),
respectively, as of the Closing Date. Such distribution shall be
accomplished by the Funds' transfer agent opening accounts on
Municipal Income's share transfer books in the names of the
Intermediate Municipal shareholders and transferring the Municipal
Income Class Shares shares thereto. Each Intermediate Municipal
shareholder's account shall be credited with the respective number of
full and fractional (rounded to the third decimal place) Municipal
Income Class Shares due that shareholder. All outstanding Intermediate
Municipal shares, including any represented by certificates, shall
simultaneously be canceled on Intermediate Municipal's share transfer
records. Municipal Income shall not issue certificates representing
the Municipal Income Class Shares in connection with the
Reorganization.
(e) Any reporting responsibility of Intermediate Municipal is and
shall remain its responsibility up to and including the date on which
it is terminated.
(f) Any transfer taxes payable upon issuance of the Municipal Income
Class Shares in a name other than that of the registered holder on
Intermediate Municipal's books of the Intermediate Municipal shares
constructively exchanged for the Municipal Income Class Shares shall
be paid by the person to whom such Municipal Income Class Shares are
to be issued, as a condition of such transfer.
4. VALUATION.
(a) The Valuation Time shall be as of the close of business of the
New York Stock Exchange on the Closing Date, or such other date as may
be mutually agreed upon in writing by the parties hereto (the
Valuation Time).
(b) As of the Closing Date, Municipal Income will deliver to
Intermediate Municipal the number of Municipal Income Class Shares
having a net asset value equal to the value of the net assets
attributable to the corresponding class of Intermediate Municipal
transferred hereunder less the liabilities of Intermediate Municipal,
determined as provided in this Section 4.
(c) The net asset value per share of each class of the Municipal
Income Class Shares to be delivered to Intermediate Municipal, the
value of the assets of Intermediate Municipal transferred hereunder,
the value of the liabilities of Intermediate Municipal to be assumed
hereunder, and the net asset value per share of each class of
Intermediate Municipal to be transferred hereunder shall in each case
be determined as of the Valuation Time.
(d) The net asset value per share of each class of the Municipal
Income Class Shares shall be computed in the manner set forth in the
then-current Prospectus and Statement of Additional Information of
each class of Municipal Income, and the value of the assets and
liabilities of Intermediate Municipal shall be computed in the manner
set forth in the then-current Prospectus and Statement of Additional
Information of each class of Intermediate Municipal.
(e) All computations pursuant to this Section shall be made by or
under the direction of Fidelity Service Company, Inc., a wholly-owned
subsidiary of FMR Corp., in accordance with its regular practice as
pricing agent for Intermediate Municipal and Municipal Income.
5. FEES; EXPENSES.
(a) Intermediate Municipal shall be responsible for all expenses,
fees and other charges in connection with the transactions
contemplated by this Agreement, provided that they do not exceed each
class's expense caps, as applicable. Expenses exceeding each class's
expense cap will be paid by FMR (but not including costs incurred in
connection with the purchase or sale of portfolio securities).
(b) Each of Municipal Income and Intermediate Municipal represents
that there is no person who has dealt with it who by reason of such
dealings is entitled to any broker's or finder's or other similar fee
or commission arising out of the transactions contemplated by this
Agreement.
6. CLOSING DATE.
(a) The Reorganization, together with related acts necessary to
consummate the same (the Closing), unless otherwise provided herein,
shall occur at the principal office of the Trust, 82 Devonshire
Street, Boston, Massachusetts, as of the Valuation Time on May 25,
2000, or at some other time, date, and place agreed to by Intermediate
Municipal and Municipal Income (the Closing Date).
(b) In the event that on the Closing Date: (i) any of the markets for
securities held by the Funds is closed to trading, or (ii) trading
thereon is restricted, or (iii) trading or the reporting of trading on
said market or elsewhere is disrupted, all so that accurate appraisal
of the total net asset value of each class of Intermediate Municipal
and the net asset value per share of each class of Municipal Income is
impracticable, the Valuation Time and the Closing Date shall be
postponed until the first business day after the day when such trading
shall have been fully resumed and such reporting shall have been
restored, or such other date as the parties may agree.
7. SHAREHOLDER MEETING AND TERMINATION OF INTERMEDIATE MUNICIPAL.
(a) Intermediate Municipal agrees to call a meeting of its
shareholders after the effective date of the Registration Statement,
to consider transferring its assets to Municipal Income as herein
provided, adopting this Agreement, and authorizing the liquidation of
Intermediate Municipal.
(b) Intermediate Municipal agrees that as soon as reasonably
practicable after distribution of the Municipal Income Class Shares,
Intermediate Municipal shall be terminated as a series of Fidelity
Advisor Series II pursuant to its Amended and Restated Declaration of
Trust, any further actions shall be taken in connection therewith as
required by applicable law, and on and after the Closing Date
Intermediate Municipal shall not conduct any business except in
connection with its liquidation and termination.
8. CONDITIONS TO OBLIGATIONS OF MUNICIPAL INCOME.
(a) That Intermediate Municipal furnishes to Municipal Income a
statement, dated as of the Closing Date, signed by an officer of
Fidelity Advisor Series II, certifying that as of the Valuation Time
and the Closing Date all representations and warranties of
Intermediate Municipal made in this Agreement are true and correct in
all material respects and that Intermediate Municipal has complied
with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to such dates;
(b) That Intermediate Municipal furnishes Municipal Income with
copies of the resolutions, certified by an officer of Fidelity Advisor
Series II, evidencing the adoption of this Agreement and the approval
of the transactions contemplated herein by the requisite vote of the
holders of the outstanding shares of beneficial interest of
Intermediate Municipal;
(c) That, on or prior to the Closing Date, Intermediate Municipal
will declare one or more dividends or distributions which, together
with all previous such dividends or distributions attributable to its
current taxable year, shall have the effect of distributing to the
shareholders of Intermediate Municipal substantially all of
Intermediate Municipal's investment company taxable income and all of
its net realized capital gain, if any, as of the Closing Date;
(d) That Intermediate Municipal shall deliver to Municipal Income at
the Closing a statement of its assets and liabilities, together with a
list of its portfolio securities showing each such security's adjusted
tax basis and holding period by lot, with values determined as
provided in Section 4 of this Agreement, all as of the Valuation Time,
certified on Intermediate Municipal's behalf by its Treasurer or
Assistant Treasurer;
(e) That Intermediate Municipal's custodian shall deliver to
Municipal Income a certificate identifying the assets of Intermediate
Municipal held by such custodian as of the Valuation Time on the
Closing Date and stating that as of the Valuation Time: (i) the assets
held by the custodian will be transferred to Municipal Income; (ii)
Intermediate Municipal's assets have been duly endorsed in proper form
for transfer in such condition as to constitute good delivery thereof;
and (iii) to the best of the custodian's knowledge, all necessary
taxes in conjunction with the delivery of the assets, including all
applicable federal and state stock transfer stamps, if any, have been
paid or provision for payment has been made;
(f) That Intermediate Municipal's transfer agent shall deliver to
Municipal Income at the Closing a certificate setting forth the number
of shares of each class of Intermediate Municipal outstanding as of
the Valuation Time and the name and address of each holder of record
of any such shares and the number of shares held of record by each
such shareholder;
(g) That Intermediate Municipal calls a meeting of its shareholders
to be held after the effective date of the Registration Statement, to
consider transferring its assets to Municipal Income as herein
provided, adopting this Agreement, and authorizing the liquidation and
termination of Intermediate Municipal;
(h) That Intermediate Municipal delivers to Municipal Income a
certificate of an officer of Fidelity Advisor Series II, dated as of
the Closing Date, that there has been no material adverse change in
Intermediate Municipal's financial position since October 31, 1999,
other than changes in the market value of its portfolio securities, or
changes due to net redemptions of its shares, dividends paid, or
losses from operations; and
(i) That all of the issued and outstanding shares of beneficial
interest of Intermediate Municipal shall have been offered for sale
and sold in conformity with all applicable state securities laws and,
to the extent that any audit of the records of Intermediate Municipal
or its transfer agent by Municipal Income or its agents shall have
revealed otherwise, Intermediate Municipal shall have taken all
actions that in the opinion of Municipal Income are necessary to
remedy any prior failure on the part of Intermediate Municipal to have
offered for sale and sold such shares in conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF INTERMEDIATE MUNICIPAL.
(a) That Municipal Income shall have executed and delivered to
Intermediate Municipal an Assumption of Liabilities, certified by an
officer of Fidelity Advisor Series II, dated as of the Closing Date
pursuant to which Municipal Income will assume all of the liabilities
of Intermediate Municipal existing at the Valuation Time in connection
with the transactions contemplated by this Agreement;
(b) That Municipal Income furnishes to Intermediate Municipal a
statement, dated as of the Closing Date, signed by an officer of
Fidelity Advisor Series II, certifying that as of the Valuation Time
and the Closing Date all representations and warranties of Municipal
Income made in this Agreement are true and correct in all material
respects, and Municipal Income has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such dates; and
(c) That Intermediate Municipal shall have received an opinion of
Kirkpatrick & Lockhart LLP, counsel to Intermediate Municipal and
Municipal Income, to the effect that the Municipal Income Class Shares
are duly authorized and upon delivery to Intermediate Municipal as
provided in this Agreement will be validly issued and will be fully
paid and nonassessable by Municipal Income (except as disclosed in
Municipal Income's Statement of Additional Information) and no
shareholder of Municipal Income has any preemptive right of
subscription or purchase in respect thereof.
10. CONDITIONS TO OBLIGATIONS OF MUNICIPAL INCOME AND INTERMEDIATE
MUNICIPAL.
(a) That this Agreement shall have been adopted and the transactions
contemplated herein shall have been approved by the requisite vote of
the holders of the outstanding shares of beneficial interest of
Intermediate Municipal;
(b) That all consents of other parties and all other consents,
orders, and permits of federal, state, and local regulatory
authorities (including those of the Commission and of state Blue Sky
and securities authorities, which term as used herein shall include
the District of Columbia and Puerto Rico, and including "no action"
positions of such federal or state authorities) deemed necessary by
Municipal Income or Intermediate Municipal to permit consummation, in
all material respects, of the transactions contemplated hereby shall
have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect
on the assets or properties of Municipal Income or Intermediate
Municipal, provided that either party hereto may for itself waive any
of such conditions;
(c) That all proceedings taken by either Fund in connection with the
transactions contemplated by this Agreement and all documents
incidental thereto shall be satisfactory in form and substance to it
and its counsel, Kirkpatrick & Lockhart LLP;
(d) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement;
(e) That the Registration Statement shall have become effective under
the 1933 Act, and no stop order suspending such effectiveness shall
have been instituted or, to the knowledge of Municipal Income and
Intermediate Municipal, threatened by the Commission; and
(f) That Municipal Income and Intermediate Municipal shall have
received an opinion of Kirkpatrick & Lockhart LLP satisfactory to
Municipal Income and Intermediate Municipal that for federal income
tax purposes:
(i) The Reorganization will be a reorganization under section
368(a)(1)(C) of the Code, and Intermediate Municipal and Municipal
Income will each be parties to the Reorganization under section 368(b)
of the Code;
(ii) No gain or loss will be recognized by Intermediate Municipal
upon the transfer of all of its assets to Municipal Income in exchange
solely for the Municipal Income Class Shares and the assumption of
Intermediate Municipal's liabilities followed by the distribution of
those Municipal Income Class Shares to the shareholders of the
corresponding class of Intermediate Municipal in liquidation of
Intermediate Municipal;
(iii) No gain or loss will be recognized by Municipal Income on the
receipt of Intermediate Municipal's assets in exchange solely for the
Municipal Income Class Shares and the assumption of Intermediate
Municipal's liabilities;
(iv) The basis of Intermediate Municipal's assets in the hands of
Municipal Income will be the same as the basis of such assets in
Intermediate Municipal's hands immediately prior to the
Reorganization;
(v) Municipal Income's holding period in the assets to be received
from Intermediate Municipal will include Intermediate Municipal's
holding period in such assets;
(vi) An Intermediate Municipal shareholder will recognize no gain or
loss on the exchange of each class of his or her shares of beneficial
interest in Intermediate Municipal for the Municipal Income Class
Shares of the corresponding class in the Reorganization;
(vii) An Intermediate Municipal shareholder's basis in the Municipal
Income Class Shares to be received by him or her will be the same as
his or her basis in the Intermediate Municipal shares of the
corresponding class exchanged therefor; and
(viii) An Intermediate Municipal shareholder's holding period for
his or her Municipal Income Class Shares will include the holding
period of Intermediate Municipal shares of the corresponding class
exchanged, provided that those Intermediate Municipal shares were held
as capital assets on the date of the Reorganization.
Notwithstanding anything herein to the contrary, neither Intermediate
Municipal nor Municipal Income may waive the conditions set forth in
this subsection 10(f).
11. COVENANTS OF MUNICIPAL INCOME AND INTERMEDIATE MUNICIPAL.
(a) Municipal Income and Intermediate Municipal each covenants to
operate its respective business in the ordinary course between the
date hereof and the Closing Date, it being understood that such
ordinary course of business will include the payment of customary
dividends and distributions;
(b) Intermediate Municipal covenants that it is not acquiring the
Municipal Income Class Shares for the purpose of making any
distribution other than in accordance with the terms of this
Agreement;
(c) Intermediate Municipal covenants that it will assist Municipal
Income in obtaining such information as Municipal Income reasonably
requests concerning the beneficial ownership of Intermediate
Municipal's shares; and
(d) Intermediate Municipal covenants that its liquidation and
termination will be effected in the manner provided in its Amended and
Restated Declaration of Trust in accordance with applicable law and
after the Closing Date, Intermediate Municipal will not conduct any
business except in connection with its liquidation and termination.
12. TERMINATION; WAIVER.
Municipal Income and Intermediate Municipal may terminate this
Agreement by mutual agreement. In addition, either Municipal Income or
Intermediate Municipal may at its option terminate this Agreement at
or prior to the Closing Date because:
(i) of a material breach by the other of any representation,
warranty, or agreement contained herein to be performed at or prior to
the Closing Date; or
(ii) a condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
In the event of any such termination, there shall be no liability for
damages on the part of Intermediate Municipal or Municipal Income, or
their respective Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES.
(a) This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter
hereof, constitutes the only understanding with respect to such
subject matter, may not be changed except by a letter of agreement
signed by each party hereto and shall be construed in accordance with
and governed by the laws of the Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the respective
President, any Vice President, or Treasurer of Municipal Income or
Intermediate Municipal; provided, however, that following the
shareholders' meeting called by Intermediate Municipal pursuant to
Section 7 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of Municipal Income
Class Shares to be paid to shareholders of each class of Intermediate
Municipal under this Agreement to the detriment of such shareholders
without their further approval.
(c) Either Fund may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on
the interests of such Fund's shareholders.
The representations, warranties, and covenants contained in the
Agreement, or in any document delivered pursuant hereto or in
connection herewith, shall survive the consummation of the
transactions contemplated hereunder.
14. DECLARATIONS OF TRUST.
A copy of each Fund's Declaration of Trust, as restated and amended,
is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of each Fund as trustees and not
individually and that the obligations of each Fund under this
instrument are not binding upon any of such Fund's Trustees, officers,
or shareholders individually but are binding only upon the assets and
property of such Fund. Each Fund agrees that its obligations hereunder
apply only to such Fund and not to its shareholders individually or to
the Trustees of such Fund.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer of any rights or obligations hereunder shall be made by
any party without the written consent of the other parties. Nothing
herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation other than the
parties hereto and their respective successors and assigns any rights
or remedies under or by reason of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by an appropriate officer.
[SIGNATURE LINES OMITTED]
CUSIP#315917807/FUND#262
CUSIP#315917609/FUND#689
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1.734717.100 CUSIP#315917401/FUND#289
IMPORTANT PROXY MATERIALS
PLEASE CAST YOUR VOTE NOW!
Dear Shareholder:
I am writing to ask you for your vote on an important proposal to
merge Fidelity Advisor Intermediate Municipal Income Fund into
Fidelity Advisor Municipal Income Fund. A shareholder meeting is
scheduled for April 19, 2000. Votes received in time to be counted at
the meeting will decide whether the merger takes place. This package
contains information about the proposal and includes all the materials
you will need to vote by mail.
The fund's Board of Trustees has reviewed the proposed merger and has
recommended that the proposed merger be presented to shareholders.
The Trustees, most of whom are not affiliated with Fidelity, are
responsible for protecting your interests as a shareholder. The
Trustees have determined that the proposed merger is in shareholders'
best interest. However, the final decision is up to you.
The proposed merger would give shareholders of Fidelity Advisor
Intermediate Municipal Income Fund the opportunity to participate in a
larger fund with generally similar investment policies. The combined
fund would also have lower expenses. As you know, in anticipation of
the proposed merger, Fidelity Advisor Intermediate Municipal Income
Fund was closed to new investments at the close of business on
December 29, 1999. We have attached a Q&A to assist you in
understanding the proposal. The enclosed proxy statement includes a
detailed description of the proposed merger.
Please read the enclosed materials and promptly cast your vote on the
proxy card. You are entitled to one vote for each dollar of net asset
value you own of the fund on the record date, which is February 23,
2000. Your vote is extremely important, no matter how large or small
your holdings may be.
VOTING BY MAIL IS QUICK AND EASY. EVERYTHING YOU NEED IS ENCLOSED.
To cast your vote, simply complete the proxy card enclosed in this
package. Be sure to sign the card before mailing it in the
postage-paid envelope provided.
If you have any questions before you vote, please call us at
1-800-522-7297. We will be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative for your
fund.
Sincerely,
Edward C. Johnson 3d
Chairman and Chief Executive Officer
Important information to help you understand and vote on the proposal
Please read the full text of the enclosed proxy statement. Below is a
brief overview of the proposal to be voted upon. Your vote is
important. We appreciate you placing your trust in Fidelity and look
forward to helping you achieve your financial goals.
WHAT PROPOSAL AM I BEING ASKED TO VOTE ON?
You are being asked to approve a merger of Fidelity Advisor
Intermediate Municipal Income Fund into Fidelity Advisor Municipal
Income Fund.
WHAT IS THE REASON FOR AND ADVANTAGES OF THIS MERGER?
The proposed merger would combine a small fund into a larger fund and
provide shareholders of Advisor Intermediate Municipal Income Fund
with a fund that has lower annual expenses. The proposed merger is
part of a wider strategy by Fidelity to consolidate the municipal bond
fund product line and increase operational efficiencies.
ARE THE FUNDS MANAGED SIMILARLY?
Both funds are managed similarly, except that Advisor Intermediate
Municipal Income Fund has a more conservative investment objective and
shorter maturity than Advisor Municipal Income Fund. Advisor
Intermediate Municipal Fund seeks the highest level of income exempt
from federal income taxes that can be obtained consistent with the
preservation of capital. Advisor Municipal Income Fund seeks to
provide a high current yield exempt from federal income tax. Each
fund normally invests at least 80% of assets in municipal securities
whose interest is exempt from federal income tax.
HOW DO THE EXPENSE AND LOAD STRUCTURES OF THE FUNDS COMPARE?
Fidelity Advisor Intermediate Municipal Income Fund and Fidelity
Advisor Municipal Income Fund have similar expense structures in that
each fund pays a management fee and other expenses. Each fund offers
five classes of shares and certain classes of each fund pay
distribution fees. The sum of the management fee, the distribution
fee (if applicable), and other expenses is a class's total expenses.
As of October 31, 1999, the total expenses of each class of Fidelity
Advisor Municipal Income Fund were below the total expenses of each
class of Fidelity Advisor Intermediate Municipal Income Fund.
Therefore, the reorganization would provide Fidelity Advisor
Intermediate Municipal Income shareholders with a fund with lower
total expenses for each class.
Fidelity Advisor Intermediate Municipal Income Fund generally has
lower loads and contingent deferred sales charges than Fidelity
Advisor Municipal Income Fund. The higher loads and contingent
deferred sales charges of Fidelity Advisor Municipal Income Fund will
affect additional investments made after the merger.
IS THE MERGER A TAXABLE EVENT FOR FEDERAL INCOME TAX PURPOSES?
Typically, the exchange of shares in a merger is not a taxable event
(i.e., no gain or loss is recognized for federal income tax purposes)
to the fund's shareholders.
WHAT WILL BE THE NAME OF THE COMBINED FUND AFTER THE MERGER IS
COMPLETED?
If shareholders of Fidelity Advisor Intermediate Municipal Income Fund
approve the merger of their fund into Fidelity Advisor Municipal
Income Fund, the combined fund's name will remain Fidelity Advisor
Municipal Income Fund.
WHAT WILL BE THE SIZE OF FIDELITY ADVISOR MUNICIPAL INCOME FUND AFTER
THE MERGER?
If the proposal is approved, the combined fund is anticipated to have
over $475 million in assets, based on current asset levels.
HOW WILL YOU DETERMINE THE NUMBER OF SHARES OF FIDELITY ADVISOR
MUNICIPAL INCOME FUND THAT I WILL RECEIVE?
Shareholders will receive the number of full and fractional shares of
the corresponding class of Fidelity Advisor Municipal Income Fund that
is equal in value to the net asset value of their shares of Fidelity
Advisor Intermediate Municipal Income Fund as determined on the
Closing Date of the merger. The anticipated Closing Date is May 25,
2000.
WHAT IF THERE ARE NOT ENOUGH VOTES TO REACH QUORUM BY THE SCHEDULED
SHAREHOLDER MEETING DATE?
In that case, Fidelity, or D.F. King & Co., Inc. or Management
Information Services Corp., proxy solicitation firms, may contact you
by mail or telephone. Therefore, we encourage shareholders to vote as
soon as they review the enclosed proxy materials to avoid additional
mailings or telephone calls.
If there are not sufficient votes to approve the proposal by the time
of the shareholder meeting (April 19, 2000), the meeting may be
adjourned to permit further solicitation of proxy votes.
HAS THE FUND'S BOARD OF TRUSTEES APPROVED THE PROPOSAL?
Yes. The Board of Trustees has unanimously approved the proposal and
recommends that you vote to approve it.
HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each dollar of net
asset value you own of Fidelity Advisor Intermediate Municipal Income
Fund on the record date. The record date is February 23, 2000.
HOW DO I VOTE MY SHARES?
You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage paid envelope. If you
need any assistance, or have any questions regarding the proposal or
how to vote your shares, please call Fidelity at 800-522-7297.
HOW DO I SIGN THE PROXY CARD?
INDIVIDUAL ACCOUNTS: Shareholders should sign exactly as their names
appear on the account registration shown on the proxy card.
JOINT ACCOUNTS: Either owner may sign, but the name of the person
signing should conform exactly to a name shown in the registration.
ALL OTHER ACCOUNTS: The person signing must indicate his or her
capacity. For example, a trustee for a trust should sign, "Ann B.
Collins, Trustee."
PROTOTYPE FOR STANDARD MERGER PROXY CARD
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- ----------------------------------------------------------------------
FIDELITY ADVISOR SERIES II:
FIDELITY ADVISOR INTERMEDIATE MUNICIPAL INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric Roiter, and Gerald C. McDonough, or any one
or more of them, attorneys, with full power of substitution, to vote
all shares of Fidelity Advisor Series II: Fidelity Advisor
Intermediate Municipal Income Fund, which the undersigned is entitled
to vote at the Special Meeting of Shareholders of the fund to be held
at an office of the trust at 27 State Street, 10th Floor, Boston, MA
02109, on April 19, 2000, at 11:15 a.m. Eastern time and at any
adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one
votes and acts, then by that one. This Proxy shall be voted on the
proposals described in the Proxy Statement as specified on the reverse
side. Receipt of the Notice of the Meeting and the accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this
Proxy. When signing in a fiduciary capacity, such as
executor, administrator, trustee, attorney, guardian,
etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person
indicating the person's title.
Date
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
CUSIP # 315917807/fund #262
CUSIP # 315917401/fund #289
CUSIP # 315917609/fund #689
CUSIP # 315917872/fund #525
CUSIP # 315917302/fund #089
Please refer to the Proxy Statement discussion of this matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSAL.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- ----------------------------------------------------------------------
______________________________________________________________________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1. To approve an Agreement and FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
Plan of Reorganization
between Fidelity Advisor
Intermediate Municipal
Income Fund and Fidelity
Advisor Municipal Income Fund.
</TABLE>
MET-PXC-0200 CUSIP # 315917807/fund #262
CUSIP # 315917401/fund #289
CUSIP # 315917609/fund #689
CUSIP # 315917872/fund #525
CUSIP # 315917302/fund #089
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(registered trademark) ADVISOR
MUNICIPAL INCOME
FUND
CLASS A
(Fund 257, CUSIP 315916833)
CLASS T
(Fund 169, CUSIP 315916205)
CLASS B
(Fund 669, CUSIP 315916304)
CLASS C
(Fund 490, CUSIP 315916791)
PROSPECTUS
DECEMBER 29, 1999
(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY 60 INVESTMENT SUMMARY
60 PERFORMANCE
62 FEE TABLE
FUND BASICS 63 INVESTMENT DETAILS
64 VALUING SHARES
SHAREHOLDER INFORMATION 64 BUYING AND SELLING SHARES
71 EXCHANGING SHARES
72 ACCOUNT FEATURES AND POLICIES
76 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
76 TAX CONSEQUENCES
FUND SERVICES 77 FUND MANAGEMENT
77 FUND DISTRIBUTION
APPENDIX 82 FINANCIAL HIGHLIGHTS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Normally investing in investment-grade municipal
debt securities (those of medium and high quality).
(small solid bullet) Normally investing at least 80% of assets in
municipal securities whose interest is exempt from federal income tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers 3 Plus Year Municipal Bond
Index.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features and
current pricing, trading opportunities, and the credit quality of its
issuer to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(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 from
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.
PERFORMANCE
The following information illustrates the changes in the fund's
performance from year to year as represented by the performance of
Class T, and compares each class's 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.
YEAR-BY-YEAR RETURNS
The returns in the chart do not include the effect of Class T's
front-end sales charge. If the effect of the sales charge were
reflected, returns would be lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
CLASS T
Calendar Years 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
13.09% 10.29% 12.18% 11.11% 13.79% -8.05% 16.65% 2.95% 10.13% 6.22%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 13.09
Row: 2, Col: 1, Value: 10.29
Row: 3, Col: 1, Value: 12.18
Row: 4, Col: 1, Value: 11.11
Row: 5, Col: 1, Value: 13.79
Row: 6, Col: 1, Value: -8.050000000000001
Row: 7, Col: 1, Value: 16.65
Row: 8, Col: 1, Value: 2.95
Row: 9, Col: 1, Value: 10.13
Row: 10, Col: 1, Value: 6.22
DURING THE PERIODS SHOWN IN THE CHART FOR CLASS T OF ADVISOR MUNICIPAL
INCOME, THE HIGHEST RETURN FOR A QUARTER WAS 6.72% (QUARTER ENDING
MARCH 31, 1995) AND THE LOWEST RETURN FOR A QUARTER WAS -6.76%
(QUARTER ENDING MARCH 31, 1994).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR CLASS T OF
ADVISOR MUNICIPAL INCOME WAS -1.92%.
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).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the periods ended Past 1 year Past 5 years Past 10 years/Life of class
December 31, 1998
Advisor Municipal Income - 1.17% n/a 6.14%A
Class A
Advisor Municipal Income - 2.50% 4.51% 8.23%
Class T
Advisor Municipal Income - 0.55% n/a 6.13%B
Class B
Advisor Municipal Income - 4.30% n/a 6.63%C
Class C
Lehman Brothers Municipal 6.48% 6.22% 8.22%
Bond Index
Lipper General Municipal Debt 5.32% 5.43% 7.68%
Funds Average
</TABLE>
A FROM SEPTEMBER 3, 1996.
B FROM JUNE 30, 1994.
C FROM NOVEMBER 3, 1997.
If FMR had not reimbursed certain class expenses during these periods,
Class A's, Class T's, Class B's, and Class C's returns would have been
lower.
The Lehman Brothers Municipal Bond Index is a market value-weighted
index of investment-grade municipal bonds with maturities of one year
or more.
Lipper General Municipal Debt 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 the fund. The annual class operating expenses provided below
for each class are based on historical expenses.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
Class A Class T Class B Class C
Maximum sales charge (load) 4.75%A 3.50%B None None
on purchases (as a % of
offering price)
Maximum CDSC (as a % of the NoneC NoneC 5.00%D 1.00%E
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
Management fee 0.38% 0.38% 0.38% 0.38%
Distribution and Service 0.15% 0.25% 0.90% 1.00%
(12b-1) fee (including 0.25%
Service fee only for Class
B and Class C)
Other expenses 0.19% 0.18% 0.18% 0.18%
Total annual class operating 0.72% 0.81% 1.46% 1.56%
expensesA
A FMR HAS VOLUNTARILY AGREED TO REIMBURSE CLASS A, CLASS T, CLASS B,
AND CLASS C OF THE FUND 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 Date Class T Effective Date Class B Effective Date Class C Effective Date
Advisor Municipal Income 0.90% 8/30/96 1.00% 7/1/95 1.65% 1/1/96 1.75% 11/1/97
</TABLE>
THESE ARRANGEMENTS CAN BE DISCONTINUED BY FMR AT ANY TIME.
This EXAMPLE helps you compare the cost of investing in the fund 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>
Class A Class T Class B Class C
Account open Account closed Account open Account closed Account open Account closed Account open
1 year $ 545 $ 545 $ 430 $ 430 $ 149 $ 649 $ 159
3 years $ 694 $ 694 $ 600 $ 600 $ 462 $ 762 $ 493
5 years $ 857 $ 857 $ 784 $ 784 $ 797 $ 997 $ 850
10 years $ 1,327 $ 1,327 $ 1,317 $ 1,317 $ 1,451A $ 1,451A $ 1,856
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Account closed
1 year $ 259
3 years $ 493
5 years $ 850
10 years $ 1,856
</TABLE>
A REFLECTS CONVERSION TO CLASS A SHARES AFTER A MAXIMUM OF SEVEN
YEARS.
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets in investment-grade municipal
debt securities (those of medium and high quality).
FMR normally invests at least 80% of the fund's assets in municipal
securities whose interest is exempt from federal income tax. Although
FMR does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal income tax, FMR may
invest all of the fund's assets in municipal securities whose interest
is subject to the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation, and utilities.
FMR uses the Lehman Brothers 3 Plus Year Municipal Bond Index as a
guide in structuring the fund and selecting its investments. FMR
manages the fund to have similar overall interest rate risk to the
index. As of October 31, 1999, the dollar-weighted average maturity of
the fund and the index was approximately 12.9 and 14.6 years,
respectively.
FMR allocates the fund's assets among different market sectors (for
example, general obligation bonds of a state or bonds financing a
specific project) and different maturities based on its view of the
relative value of each sector and maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features and current price compared to its
estimated long-term value, any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.
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
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. Municipal debt
securities include general obligation bonds of municipalities, local
or state governments, project or revenue-specific bonds, or
pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees, or insurance.
PRINCIPAL INVESTMENT RISKS
Many factors affect the fund's performance. The fund's yield and share
price change daily based on changes in interest rates and market
conditions and in response to other economic, political, or financial
developments. The fund's reaction to these developments will be
affected by the types and maturities of securities in which the fund
invests, 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. When you sell your shares of the
fund, they could be worth more or less than what you paid for them.
The following factors can significantly affect the fund's performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation, and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
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 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.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. Lower-quality debt securities (those
of less than investment-grade quality) tend to be more sensitive to
these changes than higher-quality debt securities. Municipal
securities backed by current or anticipated revenues from a specific
project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If
the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest
from the security could become taxable and the security could decline
significantly in value.
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 the fund's
performance, and the fund could distribute income subject to federal
income tax.
FUNDAMENTAL INVESTMENT POLICIES
The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
VALUING SHARES
The 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 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). The fund's
assets are valued as of this time for the purpose of computing each
class's NAV.
To the extent that the 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 the fund's assets may not occur on days when the
fund is open for business.
The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations. 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 market
on which the security is principally traded, that security may be
valued by another method that the Board of Trustees believes
accurately reflects fair value. A security's valuation may differ
depending on the method used for determining value.
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
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 fund through an investment professional. When you invest through
an investment professional, the procedures for buying, selling, and
exchanging Class A, Class T, Class B, and Class C shares of the 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 the fund, including a transaction fee if you buy or sell
Class A, Class T, Class B, and Class C 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
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 4.75% of
the offering price. Class T has a maximum front-end sales charge of
3.50% of the offering price.
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 the fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, the 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
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity funds, and accounts under common
ownership or control.
The 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 the 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 the 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
Through regular investment plansA $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
A 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.
The fund may waive or lower purchase minimums.
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 (AS DEFINED IN THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT), 403(B) PROGRAM OR PLAN COVERING A
SOLE-PROPRIETOR (FORMERLY KEOGH/H.R. 10 PLAN).
KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
(small solid 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
(small solid 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 FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770002 CINCINNATI, (small solid bullet) Complete
OH 45277-0081 and sign the application.
Make your 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
(small solid 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.
(small solid 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
(small solid bullet) Bring
your application and check
to your investment
professional.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to your
investment professional.
WIRE TO OPEN AN ACCOUNT
(small solid 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.
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid 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
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Advisor Systematic
Investment Program.
(small solid 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 Class A, Class T, Class B, or Class C
is the class's NAV, minus any applicable CDSC.
If appropriate to protect shareholders, the fund may impose a
redemption fee (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 15 or 30 days, depending on the type of account;
(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
the 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 property rather than in cash if FMR determines it is in the best
interests of the 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.
To sell shares issued with certificates, call Fidelity for
instructions. The fund no longer issues share certificates.
KEY INFORMATION
PHONE (small solid 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.
(small solid 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 FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 770002 CINCINNATI, SOLE PROPRIETORSHIP, UGMA,
OH 45277-0081 UTMA
(small solid bullet) 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.
TRUST
(small solid 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
(small solid 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.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid 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
(small solid 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.
TRUST
(small solid 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
(small solid 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.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
AUTOMATICALLY (small solid bullet) Use
Fidelity Advisor Systematic
Exchange Program to exchange
to the same class of another
Fidelity Advisor fund or to
certain Fidelity funds.
(small solid 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 the 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 the 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 the 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 the 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) The 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. Accounts under common
ownership or control will be counted together for purposes of the four
exchange limit.
(small solid bullet) The 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 fund may terminate or modify the exchange privilege 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
fund.
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, (small solid bullet) To set
$100 $100 quarterly, or semi-annually up for a new account,
complete the appropriate
section on the application.
(small solid 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.
(small solid 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 (small solid bullet) To set
Not Not up for a new or existing
Applicable Applicable account, call your
investment professional or
call Fidelity at the
appropriate number found in
"General Information" for
the appropriate enrollment
form.
(small solid 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, (small solid bullet) To set
semi-annually, or annually up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" after both
accounts are opened.
(small solid 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.
(small solid bullet) The
account from which the
exchanges are to be
processed must have a
minimum balance of $10,000.
The account into which the
exchange is being processed
must have a minimum balance
of $1,000.
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MINIMUM MAXIMUM FREQUENCY PROCEDURES
$100 $50,000 Class A and Class T: Monthly, (small solid bullet) Accounts
quarterly, or semi-annually with a value of $10,000 or
Class B and Class C: Monthly more in Class A, Class T,
or quarterly Class B, or Class C shares
are eligible for this program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for instructions.
(small solid 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.
(small solid bullet)
Aggregate redemptions per
12-month period from your
Class B or Class C account
may not exceed 10% of the
account value and are not
subject to a CDSC; and you
may set your withdrawal
amount as a percentage of
the value of your account or
a fixed dollar amount.
(small solid 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 fund.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account.
(small solid 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.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid 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
the fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
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 the 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 CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The fund earns interest, dividends, and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. The fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gain distributions.
The fund normally declares dividends daily and pays them monthly. The
fund normally pays capital gain distributions in December.
EARNING DIVIDENDS
Shares purchased by an automated purchase order begin to earn
dividends on the day your payment is received.
Shares purchased by all other purchase orders begin to earn dividends
on the first business day following the day your payment is received.
Shares 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:
5. REINVESTMENT OPTION. Your dividends and capital gain distributions
will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your
application, you will be assigned this option.
6. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund. Your dividends will be paid in cash.
7. CASH OPTION. Your dividends and capital gain distributions will be
paid in cash.
8. 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 gain distributions
will be 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 the fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS. The fund seeks to earn income and pay
dividends exempt from federal income tax.
Income exempt from federal income tax may be subject to state or local
tax. A portion of the dividends you receive may be subject to federal
and state income taxes and also may be subject to the federal
alternative minimum tax. You may also receive taxable distributions
attributable to the fund's sale of municipal bonds.
For federal tax purposes, the fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income, while the 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, all or a portion of those distributions may be treated as
a return of capital to shareholders for tax purposes. A return of
capital generally will 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 potentially taxable distribution.
Any taxable distributions you receive from the 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 the fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Advisor Municipal Income is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.
FMR is the fund's manager.
As of March 25, 1999, FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.
FIMM is an affiliate of FMR. As of March 29, 1999, FIMM had
approximately $159.8 billion in discretionary assets under management.
The 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 the 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 the fund.
Christine Thompson is vice president and manager of Advisor Municipal
Income, which she has managed since July 1998. She also manages other
Fidelity funds. Since joining Fidelity in 1985, Ms. Thompson has
worked as a senior analyst and portfolio manager.
From time to time a manager, analyst, or other Fidelity employee may
express views regarding a particular company, security, industry, or
market sector. The views expressed by any such person are the views of
only that individual as of the time expressed and do not necessarily
represent the views of Fidelity or any other person in the Fidelity
organization. Any such views are subject to change at any time based
upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
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.
The fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. 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.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For October 1999, the group fee rate was 0.1289%. The individual fund
fee rate is 0.25%.
The total management fee for the fiscal year ended October 31, 1999,
was 0.38% of the fund's average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse a 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 discontinued by FMR at any time, can decrease a class's
expenses and boost its performance.
FUND DISTRIBUTION
The fund is composed of multiple classes of shares. All classes of the
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 Class A, Class T,
Class B, or Class C 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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 4.75% 4.99% 4.25%
$50,000 to $99,999 4.50% 4.71% 4.00%
$100,000 to $249,999 3.50% 3.63% 3.00%
$250,000 to $499,999 2.50% 2.56% 2.25%
$500,000 to $999,999 2.00% 2.04% 1.75%
$1,000,000 to $24,999,999 0.50% 0.50% 0.50%
$25,000,000 or more None* None* *
</TABLE>
* SEE "FINDER'S FEE" SECTION ON PAGE 129.
SALES CHARGES AND CONCESSIONS - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
As a % of offering price As an approximate % of net Investment professional
amount invested concession as % of offering
price
Up to $49,999 3.50% 3.63% 3.00%
$50,000 to $99,999 3.00% 3.09% 2.50%
$100,000 to $249,999 2.50% 2.56% 2.00%
$250,000 to $499,999 1.50% 1.52% 1.25%
$500,000 to $999,999 1.00% 1.01% 0.75%
$1,000,000 or more None* None* *
</TABLE>
* SEE "FINDER'S FEE" SECTION ON PAGE 129.
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 contingent deferred
sales charge (CDSC) based on the following schedule:
From Date of Purchase Contingent Deferred Sales
Charge
Less than 1 year 5%
1 year to less than 2 years 4%
2 years to less than 3 years 3%
3 years to less than 4 years 3%
4 years to less than 5 years 2%
5 years to less than 6 years 1%
6 years to less than 7 yearsA 0%
A AFTER A MAXIMUM OF 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 gain 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, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 plan) or through
reinvested dividends or capital gain 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 gain
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 (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program with at
least $25 million or more in plan assets;
2. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an insurance company separate account used to fund
annuity contracts;
3. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
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 (except SIMPLE IRA, SEP, and SARSEP
plans and plans covering self-employed individuals and their employees
(formerly Keogh/H.R. 10 plans)) and 403(b) programs that participate
in the Advisor Retirement Connection do not qualify for this waiver;
4. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self- employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program
investing through an investment professional sponsored program that
requires the participating employee benefit plan to invest initially
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 (except SIMPLE IRA, SEP, and SARSEP plans and plans covering
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans)), 403(b) programs 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 (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do
not qualify for this waiver;
7. Purchased by a registered investment adviser that is not part of an
organization primarily engaged in the brokerage business for an
account that is managed on a discretionary basis and is charged an
asset-based fee. Employee benefit plans (except SIMPLE IRA, SEP, and
SARSEP plans and plans covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) and 403(b) programs do not
qualify for this waiver;
8. Purchased with proceeds from the sale of front-end load shares of a
non-Advisor mutual fund for an account participating in the FundSelect
by Nationwide program;
9. 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 member of the
immediate family of a bank trust officer, a registered representative
or other employee of investment professionals having agreements with
FDC, is a spouse of one of those individuals, an account for which one
of those individuals is acting as custodian for a minor child, and a
trust account that is registered for the sole benefit of a minor child
of one of those individuals; or
10. Purchased by the Fidelity Investments Charitable Gift Fund.
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 (except SIMPLE IRA, SEP,
and SARSEP plans and plans covering self-employed individuals and
their employees (formerly Keogh/H.R. 10 plans)) or 403(b) programs;
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 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. Purchased for an employee benefit plan (except a SIMPLE IRA, SEP,
or SARSEP plan or a plan covering self-employed individuals and their
employees (formerly Keogh/H.R. 10 plans)) or a 403(b) program;
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,
403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) that are invested in Fidelity Advisor or Fidelity
funds, or (ii) an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly Keogh/H.R. 10 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, but excluding the
Fidelity Investments Charitable Gift Fund) 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. A member of the
immediate family of a bank trust officer, a registered representative
or other employee of investment professionals having agreements with
FDC, is a spouse of one of those individuals, an account for which one
of those individuals is acting as custodian for a minor child, and a
trust account that is registered for the sole benefit of a minor child
of one of those individuals;
12. Purchased for a charitable remainder trust or life income pool
established for the benefit of a charitable organization (as defined
for purposes of Section 501(c)(3) of the Internal Revenue Code);
13. Purchased with distributions of income, principal, and capital
gains from Fidelity Defined Trusts; or
14. Purchased by the Fidelity Investments Charitable Gift Fund.
The Class B or Class C CDSC will not apply to the redemption of
shares:
1. For disability or death, provided that the shares are sold within
one year following the death or the initial determination of
disability;
2. That are permitted without penalty at age 70 1/2 pursuant to the
Internal Revenue Code from retirement plans or accounts (other than of
shares purchased on or after February 11, 1999 for Traditional IRAs,
Roth IRAs and Rollover IRAs);
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs
and Rollover IRAs purchased on or after February 11, 1999;
4. Through the Fidelity Advisor Systematic Withdrawal Program; or
5. (Applicable to Class C only) From an employee benefit plan, 403(b)
program or plan covering a sole-proprietor (formerly Keogh/H.R. 10
plan).
To qualify for a Class A or Class T front-end sales charge reduction
or waiver, 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 gain 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.
The Class A or Class T CDSC will not apply to the redemption of
shares:
1. Held by insurance company separate accounts;
2. For plan loans or distributions or exchanges to non-Advisor fund
investment options from employee benefit plans (except shares of
SIMPLE IRA, SEP, and SARSEP plans and plans covering self-employed
individuals and their employees (formerly Keogh/H.R. 10 plans)
purchased on or after February 11, 1999) and 403(b) programs; or
3. For disability, payment of death benefits, or minimum required
distributions starting at age 70 1/2 from Traditional IRAs, Roth IRAs,
SIMPLE IRAs, SEPs, SARSEPs and plans covering a sole-proprietor or
self-employed individuals and their employees (formerly Keogh/H.R. 10
plans).
To qualify for a Class A or Class T finder's fee or CDSC waiver, you
must notify Fidelity in advance of your purchase or redemption,
respectively.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class A,
Class T, Class B, or Class C shares of the 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 the 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.
To qualify for the reinstatement privilege, you must notify Fidelity
in writing in advance of your reinvestment.
CONVERSION FEATURE. After a maximum of seven years from the initial
date of purchase, Class B shares and any capital appreciation
associated with those shares, convert automatically to Class A shares
of the 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 the 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 the 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 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 the 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 the 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 the 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
the 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 T of the 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 the 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 the 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 the 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 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
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 the Class B plan, Class B 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 the 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 the 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 the 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 the Class C plan, Class C 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,
403(b) program or plan covering a sole-proprietor (formerly Keogh/H.R.
10 plan) or through reinvestment of dividends or capital gain
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 the fund has authorized such payments for Class A, Class
T, Class B, and Class C.
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 the 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 fund or FDC. This prospectus and
the related SAI do not constitute an offer by the fund or by FDC to
sell shares of the fund to or to buy shares of the fund from any
person to whom it is unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand
each class's financial history for the past 5 years or, if shorter,
the period of the class's operations. Certain information reflects
financial results for a single class share. The total returns in the
table represent the rate that an investor would have earned (or lost)
on an investment in the class (assuming reinvestment of all dividends
and distributions). This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the fund's financial highlights and financial statements,
are included in the fund's annual report. A free copy of the annual
report is available upon request.
ADVISOR MUNICIPAL INCOME FUND - CLASS A
Years ended October 31, 1999 1998 1997 1996 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.540 $ 12.150 $ 11.740 $ 11.630
period
Income from Investment
Operations
Net interest income .567 .571 .583 D .105 D, E
Net realized and unrealized (.850) .390 .445 .109
gain (loss)
Total from investment (.283) .961 1.028 .214
operations
Less Distributions
From net interest income (.567) (.571) (.616) E (.104)
In excess of net interest - - (.002) -
income
Total distributions (.567) (.571) (.618) (.104)
Net asset value, end of period $ 11.690 $ 12.540 $ 12.150 $ 11.740
TOTAL RETURN B, C (2.36)% 8.07% 9.02% 1.84%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 10,722 $ 6,721 $ 3,755 $ 202
(000 omitted)
Ratio of expenses to average .72% .90% G .90% G .90% A, G
net assets
Ratio of net interest income 4.62% 4.57% 4.87% 5.73% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD SEPTEMBER 3, 1996 (COMMENCEMENT OF SALE OF CLASS A
SHARES) TO OCTOBER 31, 1996.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
ADVISOR MUNICIPAL INCOME FUND - CLASS T
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.560 $ 12.150 $ 11.760 $ 11.880 $ 11.220
period
Income from Investment
Operations
Net interest income .555 .571 .597 B .677 B, C .700
Net realized and unrealized (.860) .410 .407 (.136) .660
gain (loss)
Total from investment (.305) .981 1.004 .541 1.360
operations
Less Distributions
From net interest income (.555) (.571) (.612) C (.661) (.700)
In excess of net interest - - (.002) - -
income
Total distributions (.555) (.571) (.614) (.661) (.700)
Net asset value, end of period $ 11.700 $ 12.560 $ 12.150 $ 11.760 $ 11.880
TOTAL RETURN A (2.53)% 8.15% 8.89% 4.68% 12.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 329,926 $ 380,325 $ 392,075 $ 480,432 $ 565,131
(000 omitted)
Ratio of expenses to average .81% .87% .89% .89% .91%
net assets
Ratio of net interest income 4.51% 4.62% 5.04% 5.74% 6.06%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE.
B NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
ADVISOR MUNICIPAL INCOME FUND - CLASS B
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.530 $ 12.130 $ 11.740 $ 11.860 $ 11.210
period
Income from Investment
Operations
Net interest income .476 .491 .515 C .596 C, D .612
Net realized and unrealized (.860) .400 .416 (.136) .650
gain (loss)
Total from investment (.384) .891 .931 .460 1.262
operations
Less Distributions
From net interest income (.476) (.491) (.539) D (.580) (.612)
In excess of net interest - - (.002) - -
income
Total distributions (.476) (.491) (.541) (.580) (.612)
Net asset value, end of period $ 11.670 $ 12.530 $ 12.130 $ 11.740 $ 11.860
TOTAL RETURN A, B (3.16)% 7.47% 8.15% 3.98% 11.57%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 63,464 $ 55,032 $ 41,024 $ 39,389 $ 32,395
(000 omitted)
Ratio of expenses to average 1.46% 1.53% 1.56% 1.57% 1.86% E
net assets
Ratio of net interest income 3.88% 3.96% 4.35% 5.06% 5.18%
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
D NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
ADVISOR MUNICIPAL INCOME FUND - CLASS C
Years ended October 31, 1999 1998 D
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.560 $ 12.130
period
Income from Investment
Operations
Net interest income .465 .455
Net realized and unrealized (.860) .430
gain (loss)
Total from investment (.395) .885
operations
Less Distributions
From net interest income (.465) (.455)
Net asset value, end of period $ 11.700 $ 12.560
TOTAL RETURN B, C (3.24)% 7.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 13,071 $ 7,031
(000 omitted)
Ratio of expenses to average 1.56% 1.75% A, E
net assets
Ratio of net interest income 3.79% 3.60% A
to average net assets
Portfolio turnover rate 23% 36%
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF SALE OF CLASS C
SHARES) TO OCTOBER 31, 1998.
E FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
You can obtain additional information about the fund. The fund's SAI
includes more detailed information about the fund and its investments.
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). The fund's annual and semi-annual reports include a
discussion of the fund's holdings and recent market conditions and the
fund's investment strategies that affected performance.
For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175.
The SAI, the fund's 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 fund, including the fund's 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 811-4707
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity
Investments, and Directed Dividends are registered trademarks of FMR
Corp.
The third party marks appearing above are the marks of their
respective owners.
1.728703.100 HIM-pro-1299
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(registered trademark) ADVISOR
MUNICIPAL INCOME
FUND
INSTITUTIONAL CLASS
(Fund 679, CUSIP 315916882)
PROSPECTUS
DECEMBER 29, 1999
(FIDELITY_LOGO_GRAPHIC)(REGISTERED TRADEMARK)
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
FUND SUMMARY 2 INVESTMENT SUMMARY
2 PERFORMANCE
3 FEE TABLE
FUND BASICS 4 INVESTMENT DETAILS
5 VALUING SHARES
SHAREHOLDER INFORMATION 5 BUYING AND SELLING SHARES
12 EXCHANGING SHARES
12 ACCOUNT FEATURES AND POLICIES
14 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
14 TAX CONSEQUENCES
FUND SERVICES 15 FUND MANAGEMENT
15 FUND DISTRIBUTION
APPENDIX 15 FINANCIAL HIGHLIGHTS
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Normally investing in investment-grade municipal
debt securities (those of medium and high quality).
(small solid bullet) Normally investing at least 80% of assets in
municipal securities whose interest is exempt from federal income tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar types of projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers 3 Plus Year Municipal Bond
Index.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features and
current pricing, trading opportunities, and the credit quality of its
issuer to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(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 from
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.
PERFORMANCE
The following information illustrates the changes in the fund's
performance from year to year and compares Institutional Class's
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.
YEAR-BY-YEAR RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADVISOR MUNICIPAL INCOME -
INSTITUTIONAL CLASS
Calendar Years 1996 1997 1998
3.09% 10.22% 6.31%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: nil
Row: 7, Col: 1, Value: nil
Row: 8, Col: 1, Value: 3.09
Row: 9, Col: 1, Value: 10.22
Row: 10, Col: 1, Value: 6.31
DURING THE PERIODS SHOWN IN THE CHART FOR INSTITUTIONAL CLASS OF
ADVISOR MUNICIPAL INCOME, THE HIGHEST RETURN FOR A QUARTER WAS 3.39%
(QUARTER ENDING JUNE 30, 1997) AND THE LOWEST RETURN FOR A QUARTER WAS
- -1.71% (QUARTER ENDING MARCH 31, 1996).
THE YEAR-TO-DATE RETURN AS OF SEPTEMBER 30, 1999 FOR INSTITUTIONAL
CLASS OF ADVISOR MUNICIPAL INCOME WAS -1.76%.
AVERAGE ANNUAL RETURNS
For the periods ended Past 1 year Life of classA
December 31, 1998
Advisor Municipal Income - 6.31% 7.48%
Institutional Class
Lehman Brothers Municipal 6.48% 7.36%
Bond Index
Lipper General Municipal Debt 5.32% n/a
Funds Average
A FROM JULY 3, 1995.
If FMR had not reimbursed certain class expenses during these periods,
Institutional Class's returns would have been lower.
The Lehman Brothers Municipal Bond Index is a market value-weighted
index of investment-grade municipal bonds with maturities of one year
or more.
Lipper General Municipal Debt 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 the fund.
The annual class operating expenses provided below for Institutional
Class are based on historical expenses.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
Institutional Class
Sales charge (load) on None
purchases and reinvested
distributions
Deferred sales charge (load) None
on redemptions
ANNUAL CLASS OPERATING EXPENSES (PAID FROM CLASS ASSETS)
Institutional Class
Management fee 0.38%
Distribution and Service None
(12b-1) fee
Other expenses 0.22%
Total annual class operating 0.60%
expensesA
A EFFECTIVE JULY 1, 1995, FMR HAS VOLUNTARILY AGREED TO REIMBURSE
INSTITUTIONAL CLASS OF THE FUND TO THE EXTENT THAT TOTAL OPERATING
EXPENSES (EXCLUDING INTEREST, TAXES, BROKERAGE COMMISSIONS, AND
EXTRAORDINARY EXPENSES), AS A PERCENTAGE OF ITS AVERAGE NET ASSETS,
EXCEED 0.75%. THIS ARRANGEMENT CAN BE DISCONTINUED BY FMR AT ANY TIME.
This EXAMPLE helps you compare the cost of investing in the fund 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:
Institutional Class
1 year $ 61
3 years $ 192
5 years $ 335
10 years $ 750
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets in investment-grade municipal
debt securities (those of medium and high quality).
FMR normally invests at least 80% of the fund's assets in municipal
securities whose interest is exempt from federal income tax. Although
FMR does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal income tax, FMR may
invest all of the fund's assets in municipal securities whose interest
is subject to the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation, and utilities.
FMR uses the Lehman Brothers 3 Plus Year Municipal Bond Index as a
guide in structuring the fund and selecting its investments. FMR
manages the fund to have similar overall interest rate risk to the
index. As of October 31, 1999, the dollar-weighted average maturity of
the fund and the index was approximately 12.9 and 14.6 years,
respectively.
FMR allocates the fund's assets among different market sectors (for
example, general obligation bonds of a state or bonds financing a
specific project) and different maturities based on its view of the
relative value of each sector and maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features and current price compared to its
estimated long-term value, any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.
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
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. Municipal debt
securities include general obligation bonds of municipalities, local
or state governments, project or revenue-specific bonds, or
pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees, or insurance.
PRINCIPAL INVESTMENT RISKS
Many factors affect the fund's performance. The fund's yield and share
price change daily based on changes in interest rates and market
conditions and in response to other economic, political, or financial
developments. The fund's reaction to these developments will be
affected by the types and maturities of securities in which the fund
invests, 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. When you sell your shares of the
fund, they could be worth more or less than what you paid for them.
The following factors can significantly affect the fund's performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation, and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
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 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.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. Lower-quality debt securities (those
of less than investment-grade quality) tend to be more sensitive to
these changes than higher-quality debt securities. Municipal
securities backed by current or anticipated revenues from a specific
project or specific assets can be negatively affected by the
discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If
the Internal Revenue Service determines an issuer of a municipal
security has not complied with applicable tax requirements, interest
from the security could become taxable and the security could decline
significantly in value.
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 the fund's
performance, and the fund could distribute income subject to federal
income tax.
FUNDAMENTAL INVESTMENT POLICIES
The policy discussed below is fundamental, that is, subject to change
only by shareholder approval.
ADVISOR MUNICIPAL INCOME FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests at least 80% of its
assets in municipal obligations whose interest is free from federal
income tax.
VALUING SHARES
The 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 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). The fund's assets are valued as of this time for the purpose of
computing Institutional Class's NAV.
To the extent that the 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 the fund's assets may not occur on days when the
fund is open for business.
The fund's assets are valued primarily on the basis of information
furnished by a pricing service or market quotations. 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 market
on which the security is principally traded, that security may be
valued by another method that the Board of Trustees believes
accurately reflects fair value. A security's valuation may differ
depending on the method used for determining value.
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
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 fund through an
investment professional. When you invest through an investment
professional, the procedures for buying, selling, and exchanging
Institutional Class shares of the fund and the account features and
policies may differ. Additional fees may also apply to your investment
in Institutional Class shares of the 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
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 (as defined in the Employee Retirement Income Security
Act), 403(b) programs and plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans) must have at least $50 million in plan assets;
2. Registered investment adviser managed account programs, provided
the registered investment adviser 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,
accounts other than an employee benefit plan, 403(b) program or plan
covering a sole-proprietor (formerly a Keogh/H.R. 10 plan) 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;
5. Fidelity Trustees and employees; and
6. Insurance company programs for employee benefit plans, 403(b)
programs or plans covering sole-proprietors (formerly Keogh/H.R. 10
plans) 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 programs for employee benefit plans, 403(b) programs
and plans covering sole-proprietors (formerly Keogh/H.R. 10 plans)
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 programs for employee benefit
plans, 403(b) programs or plans covering sole-proprietors (formerly
Keogh/H.R. 10 plans), Fidelity may waive the requirement that $1
million be invested in the Institutional Class of the Advisor funds.
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 the fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, the 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
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity funds, and accounts under common
ownership or control.
The 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 the 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 the 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
Through regular investment plansA $100
TO ADD TO AN ACCOUNT $100
MINIMUM BALANCE $1,000
A 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.
The fund may waive or lower purchase minimums.
KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
(small solid 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
(small solid 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 FIDELITY INVESTMENTS TO OPEN AN ACCOUNT
P.O. BOX 770002 CINCINNATI, (small solid bullet) Complete
OH 45277-0081 and sign the application.
Make your 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
(small solid 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.
(small solid 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
(small solid bullet) Bring
your application and check
to your investment
professional.
TO ADD TO AN ACCOUNT
(small solid bullet) Bring
your check to your
investment professional.
WIRE TO OPEN AN ACCOUNT
(small solid 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.
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid 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
(small solid bullet) Wire to:
Bankers Trust Company, Bank
Routing # 021001033, Account
# 00159759.
(small solid bullet) Specify
the complete name of the
fund, note the applicable
class, and include your fund
account number and your name.
AUTOMATICALLY TO OPEN AN ACCOUNT
(small solid bullet) Not
available.
TO ADD TO AN ACCOUNT
(small solid bullet) Use
Fidelity Advisor Systematic
Investment Program.
SELLING SHARES
The price to sell one share of Institutional Class is the class's NAV.
If appropriate to protect shareholders, the fund may impose a
redemption fee (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 15 or 30 days, depending on the type of account;
(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
the 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 property rather than in cash if FMR determines it is in the best
interests of the 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.
To sell shares issued with certificates, call Fidelity for
instructions. The fund no longer issues share certificates.
KEY INFORMATION
PHONE (small solid 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.
(small solid 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 FIDELITY INVESTMENTS INDIVIDUAL, JOINT TENANT,
P.O. BOX 770002 CINCINNATI, SOLE PROPRIETORSHIP, UGMA,
OH 45277-0081 UTMA
(small solid bullet) 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.
TRUST
(small solid 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
(small solid 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.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid 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
(small solid 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.
TRUST
(small solid 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
(small solid 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.
(small solid bullet) Include
a corporate resolution with
corporate seal or a
signature guarantee.
EXECUTOR, ADMINISTRATOR,
CONSERVATOR, GUARDIAN
(small solid bullet) Visit
your investment professional
for instructions.
AUTOMATICALLY (small solid bullet) 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) The 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. Accounts under common
ownership or control will be counted together for purposes of the four
exchange limit.
(small solid bullet) The 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 fund may terminate or modify the exchange privilege in the future.
Other funds may have different exchange restrictions, and may impose
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
fund.
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, (small solid bullet) To set
$100 $100 quarterly, or semi-annually up for a new account,
complete the appropriate
section on the application.
(small solid 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.
(small solid 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 (small solid bullet) Accounts
semi-annually with a value of $10,000 or
more in Institutional Class
shares are eligible for this
program.
(small solid bullet) To set
up, call your investment
professional or call
Fidelity at the appropriate
number found in "General
Information" for instructions.
(small solid 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 fund.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account.
(small solid 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.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid 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
the fund. Call Fidelity at 1-888-622-3175 if you need additional
copies of financial reports or prospectuses.
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 the 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 CERTAIN SERVICES, such as providing
historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The fund earns interest, dividends, and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. The fund also realizes capital gains from
its investments, and distributes these gains (less any losses) to
shareholders as capital gain distributions.
The fund normally declares dividends daily and pays them monthly. The
fund normally pays capital gain distributions in December.
EARNING DIVIDENDS
Shares purchased by an automated purchase order begin to earn
dividends on the day your payment is received.
Shares purchased by all other purchase orders begin to earn dividends
on the first business day following the day your payment is received.
Shares 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 gain 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 gain 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 gain distributions will be
paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in Institutional Class shares of
another identically registered Fidelity Advisor fund or shares of
identically registered Fidelity funds. Your capital gain 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 the fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS. The fund seeks to earn income and pay
dividends exempt from federal income tax.
Income exempt from federal income tax may be subject to state or local
tax. A portion of the dividends you receive may be subject to federal
and state income taxes and also may be subject to the federal
alternative minimum tax. You may also receive taxable distributions
attributable to the fund's sale of municipal bonds.
For federal tax purposes, the fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ordinary income, while the 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, all or a portion of those distributions may be treated as
a return of capital to shareholders for tax purposes. A return of
capital generally will 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 potentially taxable distribution.
Any taxable distributions you receive from the 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 the fund generally is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Advisor Municipal Income is a mutual fund, an investment that pools
shareholders' money and invests it toward a specified goal.
FMR is the fund's manager.
As of March 25, 1999, FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the fund's investments
and handling its business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for the fund. FIMM is primarily
responsible for choosing investments for the fund.
FIMM is an affiliate of FMR. As of March 29, 1999, FIMM had
approximately $159.8 billion in discretionary assets under management.
The 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 the 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 the fund.
Christine Thompson is vice president and manager of Advisor Municipal
Income, which she has managed since July 1998. She also manages other
Fidelity funds. Since joining Fidelity in 1985, Ms. Thompson has
worked as a senior analyst and portfolio manager.
From time to time a manager, analyst, or other Fidelity employee may
express views regarding a particular company, security, industry, or
market sector. The views expressed by any such person are the views of
only that individual as of the time expressed and do not necessarily
represent the views of Fidelity or any other person in the Fidelity
organization. Any such views are subject to change at any time based
upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for a Fidelity
fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
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.
The fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month. 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.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For October 1999, the group fee rate was 0.1289%. The individual fund
fee rate is 0.25%.
The total management fee for the fiscal year ended October 31, 1999,
was 0.38% of the fund's average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse a 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 discontinued by FMR at any time, can decrease a class's
expenses and boost its performance.
FUND DISTRIBUTION
The fund is composed of multiple classes of shares. All classes of the
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 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 the 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
statement of additional information (SAI), in connection with the
offer contained in this prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or FDC. This prospectus and the related SAI do
not constitute an offer by the fund or by FDC to sell shares of the
fund to or to buy shares of the fund from any person to whom it is
unlawful to make such offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand
Institutional Class's financial history for the period of the class's
operations. Certain information reflects financial results for a
single class share. The total returns in the table represent the rate
that an investor would have earned (or lost) on an investment in the
class (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with the fund's financial
highlights and financial statements, are included in the fund's annual
report. A free copy of the annual report is available upon request.
SELECTED PER-SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Years ended October 31, 1999 1998 1997 1996 1995 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.510 $ 12.120 $ 11.720 $ 11.880 $ 11.700
period
Income from Investment
Operations
Net interest income .584 .592 .609 D .707 D, E .232
Net realized and unrealized (.860) .390 .464 (.197) .180
gain (loss)
Total from investment (.276) .982 1.073 .510 .412
operations
Less Distributions
From net interest income (.584) (.592) (.671) E (.670) (.232)
In excess of net interest - - (.002) - -
income
Total distributions (.584) (.592) (.673) (.670) (.232)
Net asset value, end of period $ 11.650 $ 12.510 $ 12.120 $ 11.720 $ 11.880
TOTAL RETURN B, C (2.31)% 8.28% 9.44% 4.41% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,431 $ 3,741 $ 1,511 $ 927 $ 154
(000 omitted)
Ratio of expenses to average .60% .75% G .75% G .75% G .75% A, G
net assets
Ratio of net interest income 4.75% 4.75% 5.11% 5.88% 5.89% A
to average net assets
Portfolio turnover rate 23% 36% 36% 49% 37%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D NET INTEREST INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT RECEIVED
FROM AN ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL
CLASS SHARES) TO OCTOBER 31, 1995.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
You can obtain additional information about the fund. The fund's SAI
includes more detailed information about the fund and its investments.
The SAI is incorporated herein by reference (legally forms a part of
the prospectus). The fund's annual and semi-annual reports include a
discussion of the fund's holdings and recent market conditions and the
fund's investment strategies that affected performance.
For a free copy of any of these documents or to request other
information or ask questions about the fund, call Fidelity at
1-888-622-3175.
The SAI, the fund's 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 fund, including the fund's 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, 811-4707
Fidelity, Fidelity Investments & (Pyramid) Design, Fidelity
Investments, and Directed Dividends are registered trademarks of FMR
Corp.
The third party marks appearing above are the marks of their
respective owners.
1.728704.100 HIMI-pro-1299
