FIDELITY ADVISOR FUNDS
INSTITUTIONAL CLASS
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy of
the each fund's most recent financial report and portfolio listing, or a
copy of the Statement of Additional Information (SAI) dated February 28,
1997. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is available along with other related materials on the SEC's
Internet Web site (http://www.sec.gov). The SAI is incorporated herein by
reference (legally forms a part of the prospectus). For a free copy of
either document, contact Fidelity Distributors Corporation (FDC), 82
Devonshire Street, Boston, MA 02109, or your investment professional.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
HIGH YIELD, STRATEGIC INCOME, AND HIGH INCOME MUNICIPAL MAY EACH INVEST
WITHOUT LIMITATION IN LOWER-QUALITY DEBT SECURITIES, SOMETIMES CALLED "JUNK
BONDS." INVESTORS SHOULD CONSIDER THAT THESE SECURITIES CARRY GREATER
RISKS, SUCH AS THE RISK OF DEFAULT, THAN OTHER DEBT SECURITIES. REFER TO
"INVESTMENT PRINCIPLES AND RISKS" ON PAGE FOR FURTHER INFORMATION.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
ACOMI-pro-0297
GROWTH FUNDS:
Fidelity Advisor TechnoQuantTM Growth Fund
Fidelity Advisor Mid Cap Fund
Fidelity Advisor Equity Growth Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Large Cap Fund
GROWTH AND INCOME FUNDS:
Fidelity Advisor Growth & Income Fund
Fidelity Advisor Equity Income Fund
Fidelity Advisor Balanced Fund (formerly Advisor
Income & Growth Fund)
TAXABLE INCOME FUNDS:
Fidelity Advisor High Yield Fund
Fidelity Advisor Strategic Income Fund
Fidelity Advisor Mortgage Securities Fund
Fidelity Advisor Government Investment Fund
Fidelity Advisor Intermediate Bond Fund
Fidelity Advisor Short Fixed-Income Fund
MUNICIPAL FUNDS:
Fidelity Advisor High Income Municipal Fund
Fidelity Advisor Municipal Bond Fund
Fidelity Advisor Intermediate Municipal Income Fund
Fidelity Advisor Short-Intermediate Municipal Income Fund
STATE MUNICIPAL FUNDS:
Fidelity Advisor California Municipal Income Fund
Fidelity Advisor New York Municipal Income Fund
PROSPECTUS
FEBRUARY 28, 1997(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Institutional Class's yearly operating
expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's financial
data.
PERFORMANCE How each fund has done over time.
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's overall
approach to investing.
BREAKDOWN OF EXPENSES How operating costs are
calculated and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your
account,
including tax-sheltered retirement plans.
HOW TO BUY SHARES Opening an account and making
additional investments.
HOW TO SELL SHARES Taking money out and closing your
account.
INVESTOR SERVICES Services to help you manage your
account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations and the
timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
APPENDIX A
APPENDIX B
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Institutional Class shares are offered to accounts managed (i) by a bank
trust department and other trust institutions, (ii) by a broker-dealer and
(iii) by a registered investment advisor (RIA) on a discretionary basis
(collectively, eligible intermediaries).
Institutional Class shares are available through eligible intermediaries
that have signed a participation agreement with FDC. The participation
agreement specifies certain aggregate asset minimums and asset
qualifications, trading guidelines, marketing restrictions, and program
requirements. In addition, Institutional Class shares are available through
certain eligible intermediaries that meet qualifications established by FDC
but have not signed a participation agreement.
Investors (including employee benefit plans) and intermediaries (other than
eligible intermediaries) that established Institutional Class accounts
prior to June 30, 1995, may continue to purchase Institutional Class
shares.
TechnoQuantTM Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
Balanced, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal, Municipal
Bond, and Intermediate Municipal Income are diversified funds.
Strategic Income, Short-Intermediate Municipal Income, California Municipal
Income, and New York Municipal Income are non-diversified funds.
Non-diversified funds may invest a greater portion of their assets in
securities of individual issuers than diversified funds. As a result,
changes in the market value of a single issuer could cause greater
fluctuations in share value than would occur in a more diversified fund.
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, and Balanced are
designed for investors who are willing to ride out stock market
fluctuations in pursuit of potentially high long-term returns. TechnoQuant
Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, and Large Cap are designed for investors who want to be
invested in the stock market for its long-term growth potential. These
funds invest for growth and do not pursue income. Growth & Income, Equity
Income, and Balanced are designed for those investors who seek a
combination of growth and income from equity and some bond investments.
TechnoQuant Growth is designed to provide an alternative to more
traditional styles of investing for growth-oriented investors. The fund
utilizes computer-aided quantitative analysis emphasizing technical
factors, such as historical price and volume relationships.
High Yield and Strategic Income are designed for investors who want high
current income with some potential for capital growth from a portfolio of
debt instruments with a focus on lower-quality debt securities and
income-producing equity securities. These funds may be appropriate for
long-term, aggressive investors who understand the potential risks and
rewards of investing in lower-quality debt securities, including defaulted
securities.
Mortgage Securities is designed for investors who seek high current income
from a portfolio of mortgage-related securities of all types.
Government Investment is designed for investors who seek high current
income from a portfolio of U.S. Government securities in a manner
consistent with preserving principal.
Intermediate Bond and Short Fixed-Income are designed for investors who
seek high current income from a portfolio of investment-grade debt
securities consistent with capital preservation.
High Income Municipal, Municipal Bond, Intermediate Municipal Income, and
Short-Intermediate Municipal Income are designed for investors in higher
tax brackets who seek high current income that is free from federal income
tax. Municipal Bond, Intermediate Municipal Income, and Short-Intermediate
Municipal Income also invest consistent with consideration of capital
preservation. High Income Municipal focuses on lower-quality debt
securities and may be appropriate for long-term, aggressive investors who
understand the potential risks and rewards of investing in lower-quality
debt securities, including defaulted securities.
California Municipal Income is designed for investors in higher tax
brackets who seek high current income that is free from federal and
California personal income taxes. New York Municipal Income is designed for
investors in higher tax brackets who seek high current income that is free
from federal and New York State and City personal income taxes.
The value of each fund's investments and, as applicable, the income they
generate, will vary from day to day, and generally reflect changes in
market conditions, interest rates and other company, political, and
economic news. In the short term, stock prices can fluctuate dramatically
in response to these factors. The securities of small, less well-known
companies may be more volatile than those of larger companies. Bond values
fluctuate based on changes in interest rates and the credit quality of the
issuer, and may be subject to prepayment risk, which can limit their price
appreciation potential in periods of declining interest rates. Over time,
however, stocks, although more volatile, have shown greater growth
potential than other types of securities. Investments in foreign securities
may involve risks in addition to those of U.S. investments, including
increased political and economic risk, as well as exposure to currency
fluctuations.
In addition, Strategic Income may also be appropriate for investors who
want to pursue their investment goals in markets outside of the United
States. By including international investments in your portfolio, you can
achieve additional diversification and participate in growth opportunities
around the world.
Each fund is not in itself a balanced investment plan. You should consider
your investment objective and tolerance for risk when making an investment
decision. When you sell your fund shares, they may be worth more or less
than what you paid for them.
Each fund is composed of multiple classes of shares. All classes of a fund
have a common investment objective and investment portfolio. Class A and
Class T shares have a front-end sales charge and pay a distribution fee.
Class T shares may be subject to a contingent deferred sales charge (CDSC).
Class B shares do not have a front-end sales charge, but do have a CDSC,
and pay a distribution fee and a shareholder service fee. Because
Institutional Class shares have no sales charge, and do not pay a
distribution fee or a shareholder service fee, Institutional Class shares
are expected to have a higher total return than Class A, Class T, or Class
B shares.
You may obtain more information about Class A, Class T, and Class B shares,
which are not offered through this prospectus, by calling 1-800-843-3001 or
from your investment professional.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy or
sell Institutional Class shares of a fund. In addition, you may be charged
an annual maintenance fee if your account balance falls below $2,500. See
"Transaction Details", page , for an explanation of how and when these
charges apply.
Maximum sales charge on purchases and reinvested distributions None
Maximum deferred sales charge None
Redemption fee None
Exchange fee None
Annual account maintenance fee (for accounts under $2,500) $12.0
0
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each fund
pays a management fee to Fidelity Management & Research Company (FMR) that,
for Growth Opportunities and Strategic Opportunities, varies based on
performance. Each fund also incurs other expenses for services such as
maintaining shareholder records and furnishing shareholder statements and
financial reports.
Institutional Class's expenses are factored into its share price or
dividends and are not charged directly to shareholder accounts (see
"Breakdown of Expenses" on page ).
The table beginning on page 5 shows figures based on estimated or
historical expenses of the Institutional Class of each fund, adjusted to
reflect current fees, of certain funds and are calculated as a percentage
of average net assets of the Institutional Class of each fund.
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Institutional Class shares, assuming a 5% annual return and
full redemption at the end of each time period:
EQUITY FUNDS
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TECHNOQUANT GROWTH Management fee 0.60% After 1 $ 12
[A] year
12b-1 fee (Distribution None After 3 $ 37
fee) years
Other expenses 0.56%[A]
Total operating expenses 1.16%
MID CAP Management fee 0.60% After 1 $ 15
year
12b-1 fee (Distribution None After 3 $ 47
fee) years
Other expenses (after 0.90%
reimbursement)
Total operating expenses 1.50%
EQUITY GROWTH Management fee 0.61% After 1 $ 8
(after fee reduction)[B] year
12b-1 fee (Distribution None After 3 $ 25
fee) years
Other expenses 0.18% After 5 $ 44
years
Total operating expenses 0.79% After 10 $ 98
years
GROWTH OPPORTUNITIES Management fee 0.61% After 1 $ 9
year
12b-1 fee (Distribution None After 3 $ 27
fee) years
Other expenses 0.24% After 5 $ 47
years
Total operating expenses 0.85% After 10 $ 10
years 5
STRATEGIC OPPORTUNITIES Management fee 0.48% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 25
fee) years
Other expenses 0.30% After 5 $ 43
years
Total operating expenses 0.78% After 10 $ 97
years
LARGE CAP Management fee 0.60% After 1 $ 15
year
12b-1 fee (Distribution None After 3 $ 47
fee) years
Other expenses (after 0.90%
reimbursement)
Total operating expenses 1.50%
GROWTH & INCOME Management fee 0.50% After 1 $ 9
[A] year
12b-1 fee (Distribution None After 3 $ 29
fee) years
Other expenses 0.41%[A
]
Total operating expenses 0.91%
EQUITY INCOME Management fee 0.50% After 1 $ 7
year
12b-1 fee (Distribution None After 3 $ 23
fee) years
Other expenses 0.21% After 5 $ 40
years
Total operating expenses 0.71% After 10 $ 88
years
BALANCED Management fee (after 0.45% After 1 $ 10
fee reduction)[C] year
12b-1 fee (Distribution None After 3 $ 32
fee) years
Other expenses 0.56% After 5 $ 56
years
Total operating expenses 1.01% After 10 $ 12
years 4
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
[B] EFFECTIVE AUGUST 1, 1994, FMR VOLUNTARILY AGREED TO IMPLEMENT A
MANAGEMENT FEE REDUCTION. THE INDIVIDUAL FUND FEE RATE WAS REDUCED FROM
0.33% TO 0.30%. IF THIS AGREEMENT WAS NOT IN EFFECT, THE MANAGEMENT FEE
WOULD BE 0.64% AND TOTAL OPERATING EXPENSES WOULD BE 0.82%.
[C] EFFECTIVE AUGUST 1, 1996, FMR VOLUNTARILY AGREED TO IMPLEMENT A
MANAGEMENT FEE REDUCTION. THE INDIVIDUAL FUND FEE RATE WAS REDUCED FROM
0.20% TO 0.15%. IF THIS AGREEMENT WAS NOT IN EFFECT, THE MANAGEMENT FEE
WOULD BE 0.50% AND TOTAL OPERATING EXPENSES WOULD BE 1.06%.
TAXABLE INCOME FUNDS
Operating Expenses Examples
HIGH YIELD Management fee 0.60% After 1 $ 11
year
12b-1 fee (Distribution None After 3 $ 35
fee) years
Other expenses 0.50% After 5 $ 61
years
Total operating expenses 1.10% After 10 $ 13
years 4
STRATEGIC INCOME Management fee 0.59% After 1 $ 11
year
12b-1 fee (Distribution None After 3 $ 35
fee) years
Other expenses (after 0.51% After 5 $ 61
reimbursement) years
Total operating expenses 1.10% After 10 $ 13
years 4
MORTGAGE SECURITIES Management fee 0.45% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 24
fee) years
Other expenses [A] 0.30%
Total operating expenses 0.75%
GOVERNMENT INVESTMENT Management fee 0.45% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 24
fee) years
Other expenses (after 0.30% After 5 $ 42
reimbursement) years
Total operating expenses 0.75% After 10 $ 93
years
INTERMEDIATE BOND Management fee 0.45% After 1 $ 7
year
12b-1 fee (Distribution None After 3 $ 21
fee) years
Other expenses 0.21% After 5 $ 37
years
Total operating expenses 0.66% After 10 $ 82
years
SHORT FIXED-INCOME Management fee 0.45% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 26
fee) years
Other expenses (after 0.35% After 5 $ 44
reimbursement) years
Total operating expenses 0.80% After 10 $ 99
years
MUNICIPAL FUNDS
Operating Expenses Examples
HIGH INCOME MUNICIPAL Management fee 0.40% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 24
fee) years
Other expenses (after 0.35% After 5 $ 42
reimbursement) years
Total operating expenses 0.75% After 10 $ 93
years
MUNICIPAL BOND Management fee 0.40% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 24
fee) years
Other expenses (after 0.35% After 5 $ 42
reimbursement) [A] years
Total operating expenses 0.75% After 10 $ 93
years
[A] BASED ON ESTIMATED EXPENSES FOR FIRST YEAR.
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INTERMEDIATE MUNICIPAL INCOME Management fee 0.40% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 24
fee) years
Other expenses (after 0.35% After 5 $ 42
reimbursement) years
Total operating expenses 0.75% After 10 $ 93
years
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHORT-INTERMEDIATE MUNICIPAL INCOME Management fee 0.40% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 24
fee) years
Other expenses (after 0.35% After 5 $ 42
reimbursement) years
Total operating expenses 0.75% After 10 $ 93
years
</TABLE>
STATE MUNICIPAL FUNDS
Operating Expenses Examples
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CALIFORNIA MUNICIPAL INCOME Management fee 0.40%[ After 1 $ 8
A] year
12b-1 fee (Distribution None After 3 $ 24
fee) years
Other expenses (after 0.35%[A
reimbursement) ]
Total operating expenses 0.75%
NEW YORK MUNICIPAL INCOME Management fee 0.40% After 1 $ 8
year
12b-1 fee (Distribution None After 3 $ 24
fee) years
Other expenses (after 0.35% After 5 $ 42
reimbursement) years
Total operating expenses 0.75% After 10 $ 93
years
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR.
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
A portion of the brokerage commissions that certain of the funds pay is
used to reduce fund expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances is used to reduce custodian and transfer
agent expenses. Including these reductions, total operating expenses
presented in the preceding table below would have been:
Institutional
Class
Equity Growth 0.77%
Growth Opportunities 0.84%
Strategic Opportunities 0.76%
Large Cap 1.48%
Equity Income 0.70%
Balanced 0.98%
High Yield 1.05%
Intermediate Municipal Income 0.74%
California Municipal Income 0.72%
Short-Intermediate Municipal Income 0.74%
New York Municipal Income 0.68%
FMR has voluntarily agreed to reimburse the Institutional Class of certain
funds to the extent that total operating expenses as a percentage of their
respective average net assets exceed the following rates:
Effective
Date
TechnoQuant Growth 1.50 12/31/9
% 6
Mid Cap 1.50 2/20/96
%
Equity Growth 1.50 1/1/97
%
Strategic Opportunities 1.50 3/1/97
%
Growth Opportunities 1.50 3/1/97
%
Large Cap 1.50 2/20/96
%
Growth & Income 1.25 12/31/9
% 6
Equity Income 1.25 3/1/97
%
Balanced 1.25 10/30/9
% 5
High Yield 1.10 7/1/95
%
Strategic Income 1.10 7/1/95
%
Mortgage Securities 0.75 3/1/97
%
Government Investment 0.75 7/1/95
%
Intermediate Bond 0.75 7/1/95
%
Short-Fixed Income 0.75 8/30/96
%
High Income Municipal 0.75 7/1/95
%
Municipal Bond 0.75 7/1/96
%
Intermediate Municipal Income 0.75 7/1/95
%
Short-Intermediate Municipal Income 0.75 7/1/95
%
California Municipal Income 0.75 8/1/95
%
New York Municipal Income 0.75 8/1/95
%
If these agreements were not in effect, other expenses and total operating
expenses of the Institutional Class of each fund, as a percentage of
average net assets, would have been the following amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Other Expenses Total Operating
Expenses
Mid Cap 2.64 3.24
% %
Large Cap 1.94 2.54
% %
Strategic Income 0.96 1.55
% %
Mortgage Securities 4.12 4.57
% %
Government 0.38 0.83
Investment % %
Short Fixed-Income 0.55 1.00
% %
High Income 3.86 4.26
Municipal % %
Municipal Bond[A] 1.14 1.54
% %
Intermediate 0.44 0.84
Municipal Income % %
Short-Intermediate 13.15 13.55
Municipal Income % %
California Municipal 0.45 0.85
Income[A] % %
New York Municipal 3.43 3.83
Income % %
</TABLE>
[A] BASED ON ESTIMATED EXPENSES FOR THE FIRST YEAR
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, and extraordinary expenses.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements have been audited by Coopers and Lybrand L.L.P., independent
accountants. The funds' financial highlights, financial statements and
reports of the auditors are included in each fund's Annual Report, and are
incorporated by reference into (are legally a part of) the funds' SAI.
Contact FDC or your investment professional for a free copy of an Annual
Report or the SAI. Institutional Class of Technoquant Growth and Growth and
Income commenced on December 31, 1996. Institutional Class of Mortgage
Securities is expected to commence operations on or about February 28,
1997.
MID CAP FUND
1.Selected Per-Share Data and RatiosE
2.Period ended November 30 1996D
3.Net asset value, beginning of period $ 10.00
4.Income from Investment Operations
5. Net investment income (loss) (.02)
6. Net realized and unrealized gain (loss) 8 1.72
7. Total from investment operations 8 1.70
8.Net asset value, end of period $ 11.70
9.Total returnB,C 17.00%
10.Net assets, end of period (000 omitted) $ 3,600
11.Ratio of expenses to average net assets 1.50%A,
F
12.Ratio of net investment income (loss) to average net assets (.27)%A
13.Portfolio turnover 101%A
14.Average commission rateG $ .0382
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURN FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER
30, 1996.
E NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G A FUND IS REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM
PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED
IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES
MAY DIFFER.
EQUITY GROWTH FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
15.Selected Per-Share Data and Ratios
16.Years ended
November 30 1996 1995 1994G 1993 1992 1991 1990 1989 1988 1987
17.Net asset value,
beginning of period $ 40.39 $ 28.90 $ 29.74 $ 26.37 $ 24.28 $ 15.55 $ 17.32 $ 12.02 $ 9.92 $ 13.18
18.Income from Investment Operations
19. Net investment
income .45D .28 .30 .19D .17 .04 .01 .06 .28F .00D
20. Net realized and
unrealized gain (loss) 8 7.00 8 11.69 8 .42 8 3.78 8 4.55 8 8.69 8 .34 8 5.50 8 2.59 8 (2.03)
21. Total from investment
operations 8 7.45 8 11.97 8 .72 8 3.97 8 4.72 8 8.73 8 .35 8 5.56 8 2.87 8 (2.03)
22.Less Distributions
23. From net investment
income (.21)H (.27) (.11) (.10) (.03) -- (.08) (.26) (.01) (.01)
24. From net realized
gain 8 (2.11)H 8 (.16) 8 (1.45) 8 (.50) 8 (2.60) 8 -- 8 (2.04) 8 -- 8 (.76) 8 (1.22)
25. In excess of net realized
gain -- (.05) -- -- -- -- -- -- -- --
26. Total
distributions 8 (2.32) 8 (.48) 8 (1.56) 8 (.60) 8 (2.63) 8 -- 8 (2.12) 8 (.26) 8 (.77) 8 (1.23)
27.Net asset value,
end of period $ 45.52 $ 40.39 $ 28.90 $ 29.74 $ 26.37 $ 24.28 $ 15.55 $ 17.32 $ 12.02 $ 9.92
28.Total returnC 19.68% 42.15% 2.46% 15.36% 21.14% 56.14% 2.75% 47.18% 29.77% (17.12)
%
29.Net assets, end of period
(000 omitted) $ 1,323,5 $ 791,07 $ 410,45 $ 296,46 $ 179,32 $ 68,766 $ 27,473 $ 24,523 $ 20,182 $ 43,537
26 4 0 6 5
30.Ratio of expenses to average
net assets .79% .83% .86% .95% .98% 1.13% 1.74% 1.60% 1.47% 1.11%
31.Ratio of expenses to average
net assets .77%I .83% .84%I .94%I .98% 1.13% 1.74% 1.60% 1.47% 1.11%
after expense reductions
32.Ratio of net investment
income to 1.11% .92% 1.00% .66% .73% .25% .07% .38% 1.20% .00%
average net assets
33.Portfolio turnover 76% 97% 137% 160% 240% 254% 262% 269% 331% 226%
34.Average commission
rateJ $ .0414
</TABLE>
GROWTH OPPORTUNITIES
35.Selected Per-Share Data and Ratios
<TABLE>
<CAPTION>
<S> <C> <C>
36.Years ended October 31 1996 1995E
37.Net asset value, beginning of period $ 30.97 $ 29.04
38.Income from Investment Operations
39. Net investment income .77D .12
40. Net realized and unrealized gain (loss) 8 4.74 8 1.81
41. Total from investment operations 8 5.51 8 1.93
42.Less Distributions
43. From net investment income (.61) --
44. From net realized gain 8 (.40) 8 --
45. Total distributions 8 (1.01) 8 --
46.Net asset value, end of period $ 35.47 $ 30.97
47.Total returnB,C 18.25% 6.65%
48.Net assets, end of period (000 omitted) $ 250,283 $ 71,952
49.Ratio of expenses to average net assets .85% .82%A
50.Ratio of expenses to average net assets after expense reductions .84%I .81%A,I
51.Ratio of net investment income to average net assets 2.38% 2.33%A
52.Portfolio turnover 33% 39%
53.Average commission rateJ $ .0401
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN .
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
F DURING THE PERIOD, A SIGNIFICANT SHAREHOLDER REDEMPTION CAUSED AN
UNUSUALLY HIGH LEVEL OF INVESTMENT INCOME PER SHARE.
G EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
H THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES.
I FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
J FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
STRATEGIC OPPORTUNITIES
<TABLE>
<CAPTION>
<S> <C> <C>
54.Selected Per-Share Data and Ratios
55.Years ended December 31 1996 1995F
56.Net asset value, beginning of period $ 24.80 $ 22.35
57.Income from Investment Operations
58. Net investment income .29D .55
59. Net realized and unrealized gain (loss) 8 .17 8 3.00
60. Total from investment operations 8 .46 8 3.55
61.Less Distributions
62. From net investment income (.34) (.55)
63. From net realized gain 8 (2.35) 8 (.55)
64. Total distributions 8 (2.69) 8 (1.10)
65.Net asset value, end of period $ 22.57 $ 24.80
66.Total returnB,C 1.99% 15.96%
67.Net assets, end of period (000 omitted) $ 41,832 $ 20,429
68.Ratio of expenses to average net assets .78% .97%A
69.Ratio of expenses to average net assets after expense reductions .76%H .96%A,H
70.Ratio of net investment income to average net assets 1.21% 2.55%A
71.Portfolio turnover 151% 142%
72.Average commission rateI $ .0409
LARGE CAP
73.Selected Per-Share Data and RatiosD
74.Period ended November 30 1996E
75.Net asset value, beginning of period $ 10.00
76.Income from Investment Operations
77. Net investment income .03
78. Net realized and unrealized gain (loss) 8 1.83
79. Total from investment operations 8 1.86
80.Less Distributions 8 --
81.Net asset value, end of period $ 11.86
82.Total returnB,C 18.60%
83.Net assets, end of period (000 omitted) $ 9,144
84.Ratio of expenses to average net assets 1.50%A,
G
85.Ratio of expenses to average net assets after expense reductions 1.48%A,
H
86.Ratio of net investment income to average net assets .38%A
87.Portfolio turnover 59%A
88.Average commission rateI $ .0306
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E FOR THE PERIOD FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER
30, 1996.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO DECEMBER 31, 1995.
G FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
H FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
I FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
EQUITY INCOME
89.Selected Per-Share Data and Ratios
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90.Years ended
November 30 1996 1995 1994H 1993 1992 1991 1990 1989 1988 1987
91.Net asset value,
beginning of period $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08 $ 9.52 $ 12.27 $ 11.10 $ 10.93 $ 13.54
92.Income from Investment Operations
93. Net investment
income .42G .45 .41G .39 .49 .63D .69 .75 .75 .76
94. Net realized and unrealized
gain (loss) 8 3.37 8 4.28 8 1.05 8 2.02 8 1.79 8 1.52 8 (2.42) 8 1.17 8 1.81 8 (1.53)
95. Total from investment
operations 8 3.79 8 4.73 8 1.46 8 2.41 8 2.28 8 2.15 8 (1.73) 8 1.92 8 2.56 8 (.77)
96.Less Distributions
97. From net investment
income (.42) (.43) (.32) (.36) (.48) (.59) (.72) (.75) (.74) (.70)
98. From net realized
gain 8 (.46) 8 (.28) 8 -- 8 -- 8 -- 8 -- 8 (.30) 8 -- 8 (1.65) 8 (1.14)
99. Total
distributions 8 (.88) 8 (.71) 8 (.32) 8 (.36) 8 (.48) 8 (.59) 8 (1.02) 8 (.75) 8 (2.39) 8 (1.84)
100.Net asset value,
end of period $ 23.00 $ 20.09 $ 16.07 $ 14.93 $ 12.88 $ 11.08 $ 9.52 $ 12.27 $ 11.10 $ 10.93
101.Total returnC 19.54% 30.43% 9.82% 18.90% 20.91% 22.97% (14.90) 17.58% 26.99% (7.28)%
%
102.Net assets, end of period
(000 omitted) $ 343,867 $ 297,45 $ 197,53 $ 191,13 $ 139,39 $ 168,59 $ 253,04 $ 463,69 $ 436,75 $ 443,60
3 3 8 1 0 9 6 3 3
103.Ratio of expenses
to average net .71% .74% .73% .80% .71%I .67%I .61%I .55%I .55%I .54%I
assets
104.Ratio of expenses to
average net .70%J .73%J .71%J .79%J .71% .67% .61% .55% .55% .54%
assets after expense reductions
105.Ratio of net investment
income to 2.02% 2.52% 2.62% 3.00% 3.77% 5.66% 6.11% 6.09% 6.86% 5.58%
average net assets
106.Portfolio
turnover 78% 80% 140% 120% 51% 91% 103% 93% 78% 137%
107.Average commission rateE $ .0424
</TABLE>
BALANCED FUND
108.Selected Per-Share Data and Ratios
<TABLE>
<CAPTION>
<S> <C> <C>
109.Years ended October 31 1996 1995F
110.Net asset value, beginning of period $ 15.40 $ 15.23
111.Income from Investment Operations
112. Net investment income .54G .25
113. Net realized and unrealized gain (loss) 8 .87 8 .09
114. Total from investment operations 8 1.41 8 .34
115.Less Distributions
116. From net investment income (.67) (.17)
117. From net realized gain 8 (.03) 8 --
118. Total distributions 8 (.70) 8 (.17)
119.Net asset value, end of period $ 16.11 $ 15.40
120.Total returnB,C 9.41% 2.22%
121.Net assets, end of period (000 omitted) $ 21,819 $ 993
122.Ratio of expenses to average net assets 1.06% .92%A,J
123.Ratio of expenses to average net assets after expense reductions 1.03%I .91%A,I
124.Ratio of net investment income to average net assets 3.54% 4.54%A
125.Portfolio turnover 223% 297%
126.Average commission rateE $ .0106
</TABLE>
A ANNUALIZED
B THE 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 INCLUDES $.04 PER SHARE FROM FOREIGN TAXES RECOVERED.
E FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
F FOR THE PERIOD JULY 3, 1995 (COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS
SHARES) TO OCTOBER 31, 1995.
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
H EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
I FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATION WOULD HAVE
BEEN HIGHER.
J FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
<S> <C> <C>
127.Selected Per-Share Data and RatiosE
128.Years ended October 31 1996 1995B
129.Net asset value, beginning of period $ 11.760 $ 11.560
130.Income from Investment Operations
131. Net investment income 1.070 .390
132. Net realized and unrealized gain (loss) 8 .368 8 .193
133. Total from investment operations 8 1.438 8 .583
134.Less Distributions
135. From net investment income 8 (1.078) 8 (.383)
136.Net asset value, end of period $ 12.120 $ 11.760
137.Total returnC 12.81% 5.07%
138.Net assets, end of period (000 omitted) $ 37,632 $ 126
139.Ratio of expenses to average net assets 1.10% .70%A
140.Ratio of expenses to average net assets after expense reductions 1.05%F .70%A
141.Ratio of net investment income to average net assets 9.26% 8.77%A
142.Portfolio turnover 121% 112%
143.Average commission rateG $ .0388
</TABLE>
STRATEGIC INCOME
<TABLE>
<CAPTION>
<S> <C> <C>
144.Selected Per-Share Data and Ratios
145.Years ended December 31 1996 1995B
146.Net asset value, beginning of period $ 11.030 $ 10.890
147.Income from Investment Operations
148. Net investment income .826E .456
149. Net realized and unrealized gain (loss) 8 .548 8 .340
150. Total from investment operations 8 1.374 8 .796
151.Less Distributions
152. From net investment income (.804) (.426)
153. From net realized gain 8 (.300) 8 (.230)
154. Total distributions 8 (1.104) 8 (.656)
155.Net asset value, end of period $ 11.300 $ 11.030
156.Total returnC 13.04% 7.47%
157.Net assets, end of period (000 omitted) $ 6,107 $ 107
158.Ratio of expenses to average net assets 1.10%D 1.10%A,
D
159.Ratio of net investment income to average net assets 7.47% 7.53%A
160.Portfolio turnover 119% 193%
A ANNUALIZED
B COMMENCEMENT OF SALE OF HIGH YIELD & STRATEGIC INCOME INSTITUTIONAL CLASS
SHARES JULY 3, 1995.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
D FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
GOVERNMENT INVESTMENT
161.Selected Per-Share Data and Ratios
162.Years ended October 31 1996 1995B
163.Net asset value, beginning of period $ 9.670 $ 9.560
164.Income from Investment Operations
165. Net investment income .604E .197
166. Net realized and unrealized gain (loss) 8 (.180) 8 .108
167. Total from investment operations 8 .424 8 .305
168.Less Distributions
169. From net investment income 8 (.614) 8 (.195)
170.Net asset value, end of period $ 9.480 $ 9.670
171.Total returnC 4.58% 3.23%
172.Net assets, end of period (000 omitted) $ 27,660 $ 14,588
173.Ratio of expenses to average net assets .75%D .75%A,D
174.Ratio of net investment income to average net assets 6.43% 6.48%A
175.Portfolio turnover 153% 261%
</TABLE>
A ANNUALIZED
B COMMENCEMENT OF SALE OF INSTITUTIONAL CLASS SHARES JULY 3, 1995.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
D FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
INTERMEDIATE BOND
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
176.Selected Per-Share Data and Ratios
177.Years ended
November 30 1996 1995 1994D 1993 1992 1991 1990 1989 1988 1987
178.Net asset value,
beginning of period $ 10.770 $ 10.270 $ 11.160 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180 $ 10.250 $ 11.240
179.Income from Investment Operations
180. Net investment
income .705F .671 .602 .832 .840 .884 .901 .937 .944 .953
181. Net realized and unrealized
gain (loss) 8 (.151) 8 .499 8 (.833) 8 .531 8 .102 8 .411 8 (.270) 8 .230 8 (.070) 8 (.770)
182. Total from investment
operations 8 .554 8 1.170 8 (.231) 8 1.363 8 .942 8 1.295 8 .631 8 1.167 8 .874 8 .183
183.Less Distributions
184. From net investment
income (.704) (.670) (.597) (.843) (.852) (.885) (.901) (.937) (.944) (.953)
185. From net realized
gain 8 -- 8 -- 8 -- 8 -- 8 -- 8 -- 8 -- 8 -- 8 -- 8 (.220)
186. From return of
capital 8 -- 8 -- 8 (.062) 8 -- 8 -- 8 -- 8 -- 8 -- 8 -- 8 --
187. Total
distributions 8 (.704) 8 (.670) 8 (.659) 8 (.843) 8 (.852) 8 (.885) 8 (.901) 8 (.937) 8 (.944) 8 (1.173)
188.Net asset value,
end of period $ 10.620 $ 10.770 $ 10.270 $ 11.160 $ 10.640 $ 10.550 $ 10.140 $ 10.410 $ 10.180 $ 10.250
189.Total returnC 5.40% 11.73% (2.10)% 13.17% 9.21% 13.35% 6.46% 12.03% 8.81% 1.78%
190.Net assets, end of period
(000 omitted) $ 211,866 $ 208,86 $ 172,12 $ 183,79 $ 160,15 $ 327,75 $ 356,56 $ 426,83 $ 418,92 $ 407,22
1 2 0 6 6 4 2 9 8
191.Ratio of expenses to average
net assets .66% .67%E .61% .64% .57% .57% .58% .54% .54% .53%
192.Ratio of net investment
income to 6.69% 6.47% 6.45% 7.41% 7.96% 8.59% 8.90% 9.16% 9.16% 9.03%
average net assets
193.Portfolio
turnover 200% 189% 68% 59% 7% 60% 59% 87% 48% 92%
SHORT FIXED-INCOME
194.Selected Per-Share Data and Ratios
195.Years ended October 31 1996 1995B
196.Net asset value, beginning of period $ 9.470 $ 9.450
197.Income from Investment Operations
198. Net investment income .598F .137
199. Net realized and unrealized gain (loss) 8 (.098) 8 .067G
200. Total from investment operations 8 .500 8 .204
201.Less Distributions
202. From net investment income 8 (.600) 8 (.136)
203. Return of capital 8 -- 8 (.048)
204. Total distributions 8 (.600) 8 (.184)
205.Net asset value, end of period $ 9.370 $ 9.470
206.Total returnC 5.45% 2.18%
207.Net assets, end of period (000 omitted) $ 9,200 $ 9,827
208.Ratio of expenses to average net assets .80%E .85%A,E
209.Ratio of net investment income to average net assets 6.37% 6.10%A
210.Portfolio turnover 124% 179%
</TABLE>
A ANNUALIZED
B COMMENCEMENT OF SALE OF SHORT FIXED-INCOME INSTITUTIONAL CLASS SHARES
JULY 3, 1995.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
D EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
E FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
F NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
HIGH INCOME MUNICIPAL
211.Selected Per-Share Data and Ratios
212.Years ended October 31 1996 1995B
213.Net asset value, beginning of period $ 11.880 $ 11.700
214.Income from Investment Operations
215. Net interest income .707E .232
216. Net realized and unrealized gain (loss) 8 (.197) 8 .180
217. Total from investment operations 8 .510 8 .412
218.Less Distributions
219. From net interest income 8 (.670) 8 (.232)
220.Net asset value, end of period $ 11.720 $ 11.880
221.Total returnC 4.41% 3.55%
222.Net assets, end of period (000 omitted) $ 927 $ 154
223.Ratio of expenses to average net assets .75%D .75%A,D
224.Ratio of net interest income to average net assets 5.88% 5.89%A
225.Portfolio turnover 49% 37%
MUNICIPAL BOND
226.Selected Per-Share Data and Ratios
227.Year ended December 31 1996F
228.Net asset value, beginning of period $ 7.990
229.Income from Investment Operations
230. Net interest income .196
231. Net realized and unrealized gain (loss) 8 .200G
232. Total from investment operations 8 .396
233.Less Distributions
234. From net interest income 8 (.196)
235.Net asset value, end of period $ 8.190
236.Total returnC 5.00%
237.Net assets, end of period (000 omitted) $ 846
238.Ratio of expenses to average net assets .75%A,D
239.Ratio of net interest income to average net assets 4.88%A
240.Portfolio turnover 35%
A ANNUALIZED.
B COMMENCEMENT OF SALE OF HIGH INCOME MUNICIPAL INSTITUTIONAL CLASS SHARES
JULY 3, 1995.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
D FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
F COMMENCEMENT OF SALE OF MUNICIPAL BOND PORTFOLIO INSTITUTIONAL CLASS
SHARES JULY 1, 1996.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
INTERMEDIATE MUNICIPAL INCOME
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
241.Selected Per-Share Data and Ratios
242.Years ended
November 30 1996 1995 1994G 1993 1992 1991 1990 1989 1988 1987
243.Net asset value, beginning
of period $ 10.360 $ 9.410 $ 10.460 $ 11.080 $ 10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380 $ 10.990
244.Income from Investment Operations
245. Net interest
income .487 .477 .481 .536 .666 .682 .689 .674 .650 .641
246. Net realized and unrealized
gain (loss) 8 .050F 8 .950 8 (1.030) 8 .260 8 .280 8 .160 8 .030 8 .090 8 .140 8 (.540)
247. Total from investment
operations 8 .537 8 1.427 8 (.549) 8 .796 8 .946 8 .842 8 .719 8 .764 8 .790 8 .101
248.Less Distributions
249. From net interest
income (.487) (.477) (.481) (.536) (.666) (.682) (.689) (.674) (.650) (.641)
250. From net realized
gain 8 -- 8 -- 8 -- 8 (.880) 8 -- 8 -- 8 -- 8 -- 8 -- 8 (.070)
251. In excess of net
realized gain 8 -- 8 -- 8 (.020) 8 -- 8 -- 8 -- 8 -- 8 -- 8 -- 8 --
252. Total
distributions 8 (.487) 8 (.477) 8 (.501) 8 (1.416) 8 (.666) 8 (.682) 8 (.689) 8 (.674) 8 (.650) 8 (.711)
253.Net asset value,
end of period $ 10.410 $ 10.360 $ 9.410 $ 10.460 $ 11.080 $ 10.800 $ 10.640 $ 10.610 $ 10.520 $ 10.380
254.Total returnC 5.36% 15.44% (5.43)% 8.01% 9.01% 8.15% 7.04% 7.50% 7.77% .97%
255.Net assets, end of period
(000 omitted) $ 6,455 $ 11,085 $ 11,702 $ 15,076 $ 28,428 $ 100,29 $ 111,506 $ 121,41 $ 132,44 $ 162,85
4 8 3 7
256.Ratio of expenses
to average net .75%D .70%D .65%D .65%D .66%D .61% .62% .65% .63% .59%
assets
257.Ratio of expenses
to average net .74%E .70% .65% .65% .66% .61% .62% .65% .63% .59%
assets after expense reductions
258.Ratio of net interest
income to average 4.68% 4.96% 4.75% 5.01% 6.05% 6.40% 6.53% 6.45% 6.20% 6.01%
net assets
259.Portfolio
turnover 35% 53% 53% 46% 36% 20% 32% 31% 24% 43%
</TABLE>
SHORT-INTERMEDIATE MUNICIPAL INCOME
<TABLE>
<CAPTION>
<S> <C> <C>
260.Selected Per-Share Data and Ratios
261.Years ended November 30 1996 1995B
262.Net asset value, beginning of period $ 10.230 $ 10.070
263.Income from Investment Operations
264. Net interest income .407 .178
265. Net realized and unrealized gain (loss) 8 .010 8 .160
266. Total from investment operations 8 .417 8 .338
267.Less Distributions
268. From net interest income (.407) (.178)
269. From net realized gain 8 (.030) 8 --
270. Total distributions 8 (.437) 8 (.178)
271.Net asset value, end of period $ 10.210 $ 10.230
272.Total returnC 4.19% 3.37%
273.Net assets, end of period (000 omitted) $ 487 $ 134
274.Ratio of expenses to average net assets .75%D .75%A,D
275.Ratio of expenses to average net assets after expense reductions .74%E .75%A
276.Ratio of net interest income to average net assets 4.03% 4.18%A
277.Portfolio turnover 62% 80%
</TABLE>
A ANNUALIZED
B COMMENCEMENT OF SALE OF SHARES JULY 3, 1995.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN AND FOR PERIODS OF LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
D FMR VOLUNTARILY 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 AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
G EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
CALIFORNIA MUNICIPAL INCOME
<TABLE>
<CAPTION>
<S> <C>
278.Selected Per-Share Data and Ratios
279.Period ended October 31 1996B
280.Net asset value, beginning of period $ 10.000
281.Income from Investment Operations
282. Net interest income .307
283. Net realized and unrealized gain (loss) 8 (.090)G
284. Total from investment operations 8 .217
285.Less Distributions
286. From net interest income 8 (.307)
287.Net asset value, end of period $ 9.910
288.Total returnD 2.27%
289.Net assets, end of period (000 omitted) $ 1,841
290.Ratio of expenses to average net assets .75%A,F
291.Ratio of expenses to average net assets after expense reductions .72%A,E
292.Ratio of net interest income to average net assets 4.51%A
293.Portfolio turnover 21%A
</TABLE>
NEW YORK MUNICIPAL INCOME
<TABLE>
<CAPTION>
<S> <C> <C>
294.Selected Per-Share Data and Ratios
295.Years ended October 31 1996 1995C
296.Net asset value, beginning of period $ 10.400 $ 10.000
297.Income from Investment Operations
298. Net interest income .468 .095
299. Net realized and unrealized gain (loss) 8 .070 8 .400
300. Total from investment operations 8 .538 8 .495
301.Less Distributions
302. From net interest income (.468) (.095)
303.Net asset value, end of period $ 10.470 $ 10.400
304.Total returnD 5.28% 4.96%
305.Net assets, end of period (000 omitted) $ 718 $ 683
306.Ratio of expenses to average net assets .75%F .75%A,F
307.Ratio of expenses to average net assets after expense reductions .68%E .75%A
308.Ratio of net interest income to average net assets 4.53% 4.75%A
309.Portfolio turnover 17% 0%
</TABLE>
A ANNUALIZED
B FEBRUARY 20, 1996 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1996.
C AUGUST 21, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1995.
D TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE CLASS' EXPENSES.
F FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET LOSS ON INVESTMENTS FOR THE PERIOD DUE TO THE TIMING OF SALES
AND REPURCHASES OF CLASS SHARES IN RELATION TO FLUCTUATING MARKET VALUES OF
THE INVESTMENTS OF THE FUND.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN and/or YIELD.
For Growth Opportunities, Balanced, High Yield, Government Investment,
Short Fixed-Income, High Income Municipal, California Municipal Income, and
New York Municipal Income, the fiscal year runs from November 1 to October
31. For TechnoQuant Growth, Mid Cap, Equity Growth, Large Cap, Growth &
Income, Equity Income, Intermediate Bond, Intermediate Municipal Income,
and Short-Intermediate Municipal Income, the fiscal year runs from December
1 to November 30. For Strategic Opportunities, Strategic Income, and
Municipal Bond, the fiscal year runs from January 1 to December 31. For
Mortgage Securities, the fiscal year runs from August 1 to July 31. The
tables below show the Institutional Class's performance over past fiscal
years. Performance history will be available for TechnoQuant Growth and
Growth & Income after the funds have been in operation for six months. For
additional charts presenting the Institutional Class's calendar year
performance, see Appendix B, beginning on page .
GROWTH FUNDS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Return* Cumulative Total Return*
Past 1 year Past 5 years 10 Years/Life Past 1 year Past 5 years 10 Years/Life
of fund+ of fund+
MID CAP[B] n/a n/a n/a n/a n/a 17.00%
EQUITY GROWTH [B] 19.68% 19.49% 19.99% 19.68% 143.58% 518.61%
GROWTH OPPORTUNITIES [A] 18.25% 17.86% 20.75% 18.25% 127.41% 441.98%
STRATEGIC OPPORTUNITIES [C] 1.99% 12.27% 11.96% 1.99% 78.38% 209.44%
LARGE CAP[B] n/a n/a n/a n/a n/a 18.60%
EQUITY INCOME [B] 19.54% 19.74% 13.56% 19.54% 146.15% 256.62%
BALANCED [A] 9.41% 8.85% 11.42% 9.41% 52.79% 189.47%
</TABLE>
TAXABLE INCOME FUNDS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Return* Cumulative Total Return*
Past 1 year Past 5 years 10 Years/Life Past 1 year Past 5 years 10 Years/Life
of fund+ of fund+
HIGH YIELD [A] 12.81% 14.26% 13.68% 12.81% 94.76% 252.76%
STRATEGIC INCOME [C] 13.04% n/a 16.20% 13.04% n/a 38.58%
MORTGAGE SECURITIES [D] 6.72% 7.80% 8.30% 6.72% 45.56% 122.02%
GOVERNMENT INVESTMENT [A] 4.58% 6.82% 7.08% 4.58% 39.09% 95.84%
INTERMEDIATE BOND [B] 5.40% 7.34% 7.87% 5.40% 42.50% 113.33%
SHORT FIXED-INCOME [A] 5.45% 5.92% 7.15% 5.45% 33.30% 87.94%
</TABLE>
MUNICIPAL FUNDS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Return* Cumulative Total Return*
Past 1 year Past 5 years 10 Years/Life Past 1 year Past 5 years 10 Years/Life
of fund+ of fund+
HIGH INCOME MUNICIPAL [A] 4.41% 6.94% 9.11% 4.41% 39.86% 121.73%
MUNICIPAL BOND[C] 4.02% 6.75% 7.23% 4.02% 38.65% 100.94%
INTERMEDIATE MUNICIPAL INCOME [B] 5.36% 6.25% 7.22% 5.36% 35.42% 83.39%
SHORT-INTERMEDIATE MUNICIPAL INCOME [B} 4.19% n/a 5.02% 4.19% n/a 14.22%
</TABLE>
STATE MUNICIPAL FUNDS - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Average Annual Total Return* Cumulative Total Return
Past 1 year Past 5 years 10 Years/Life Past 1 year Past 5 years 10 Years/Life
of fund+ of fund+
CALIFORNIA MUNICIPAL INCOME[A] n/a n/a n/a n/a n/a 2.27%
NEW YORK MUNICIPAL INCOME [A] 5.28% n/a 8.68% 5.28% n/a 10.51%
</TABLE>
A PERIOD ENDED OCTOBER 31, 1996
B PERIOD ENDED NOVEMBER 30, 1996
C PERIOD ENDED DECEMBER 31, 1996
D PERIOD ENDED JULY 31, 1996
+ LIFE OF FUND FIGURES ARE FROM COMMENCEMENT OF OPERATIONS (NOVEMBER 18,
1987 FOR GROWTH OPPORTUNITIES; JANUARY 6, 1987 FOR BALANCED; JANUARY 5,
1987 FOR HIGH YIELD; OCTOBER 31, 1994 FOR STRATEGIC INCOME; JANUARY 7, 1987
FOR GOVERNMENT INVESTMENT; SEPTEMBER 16, 1987 FOR SHORT-FIXED INCOME AND
HIGH INCOME MUNICIPAL; MARCH 16, 1994 FOR SHORT-INTERMEDIATE MUNICIPAL
INCOME; AUGUST 21, 1995 FOR NEW YORK MUNICIPAL INCOME; AND FEBRUARY 20,
1996 FOR MID CAP, LARGE CAP, AND CALIFORNIA MUNICIPAL INCOME) THROUGH THE
ANNUAL PERIODS ENDED 1996.
* INITIAL OFFERING OF INSTITUTIONAL CLASS SHARES FOR GROWTH OPPORTUNITIES,
BALANCED, HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, SHORT
FIXED-INCOME, HIGH INCOME MUNICIPAL, AND SHORT-INTERMEDIATE MUNICIPAL
INCOME TOOK PLACE ON JULY 3, 1995 AND DO NOT BEAR A SALES LOAD OR 12B-1
FEE. RETURNS PRIOR TO JULY 3, 1995 ARE THOSE OF CLASS T SHARES, THE
ORIGINAL CLASS OF THESE FUNDS AND INCLUDE A CLASS T 12B-1 FEE (AT A THEN
CURRENTLY APPLICABLE RATE OF 0.65% FOR GROWTH OPPORTUNITIES AND BALANCED;
0.25% FOR HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, AND HIGH
INCOME MUNICIPAL, AND 0.15% FOR SHORT FIXED-INCOME AND SHORT-INTERMEDIATE
MUNICIPAL INCOME). INITIAL OFFERING OF INSTITUTIONAL CLASS SHARES FOR
STRATEGIC OPPORTUNITIES TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS
SHARES DO NOT BEAR A SALES LOAD OR 12B-1 FEE. RETURNS PRIOR TO JULY 3,
1995, ARE THOSE OF CLASS T SHARES AND INCLUDE A THEN CURRENTLY APPLICABLE
CLASS T 12B-1 FEE OF 0.65%. INITIAL OFFERING OF INSTITUTIONAL CLASS SHARES
FOR MUNICIPAL BOND TOOK PLACE ON JULY 1, 1996. INSTITUTIONAL CLASS SHARES
DO NOT BEAR A SALES LOAD OR 12B-1 FEE. RETURNS PRIOR TO JULY 1, 1996 ARE
THOSE OF INITIAL CLASS, THE ORIGINAL CLASS OF THE FUND WHICH DOES NOT BEAR
A 12B-1 FEE. INITIAL OFFERING OF INSTITUTIONAL CLASS SHARES FOR MORTGAGE
SECURITIES IS EXPECTED TO TAKE PLACE ON OR ABOUT FEBRUARY 28, 1997. RETURNS
PRIOR TO THAT DATE ARE THOSE OF INITIAL CLASS, THE ORIGINAL CLASS OF THE
FUND WHICH DOES NOT BEAR A 12B-1 FEE, INSTITUTIONAL CLASS SHARES DO NOT
BEAR A SALES LOAD OR 12B-1 FEE.
If FMR had not reimbursed certain class expenses during these periods,
total returns would have been lower.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given period,
assuming reinvestment of any dividends and capital gains. A CUMULATIVE
TOTAL RETURN reflects actual performance over a stated period of time. An
AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period. Average annual total
returns smooth out variations in performance; they are not the same as
actual year-by-year results.
Average annual total returns covering periods of less than one year assume
that performance will remain constant for the rest of the year.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
This difference may be significant for funds whose investments are
denominated in foreign securities.
In calculating yield, a fund may from time to time use a security's coupon
rate instead of its yield to maturity in order to reflect the risk premium
on that security. This practice will have the effect of reducing a fund's
yield.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before
taxes to equal a tax-free yield.
THE COMPETITIVE FUNDS AVERAGE is each fund's applicable Lipper Funds
Average, which reflects the performance of mutual funds with similar
objectives. These averages, published by Lipper Analytical Services, Inc.,
exclude the effect of sales charges.
STANDARD & POOR'S 500 INDEX (S&P 500) is a widely recognized, unmanaged
index of common stocks.
MERRILL LYNCH HIGH YIELD MASTER INDEX is a market capitalization weighted
index of all domestic and yankee high-yield bonds. Issues included in the
index have maturities of at least one year and have a credit rating lower
than BBB-/Baa3, but are not in default.
LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX is a market value
weighted performance benchmark for government and corporate fixed-rate debt
issues with maturities between one and three years.
SALOMON BROTHERS MORTGAGE INDEX is a market capitalization weighted index
of 15- and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA), Federal National Mortgage
Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC), and
FNMA and FHLMC balloon mortgages with fixed-rate coupons.
SALOMON BROTHERS TREASURY/AGENCY INDEX is a market capitalization weighted
index of U.S. Treasury and U.S. government agency securities with
fixed-rate coupons and weighted average lives of at least one year.
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is a market
value weighted performance benchmark for government and corporate
fixed-rate debt issues with maturities between one and 10 years.
Unlike Institutional Class's returns, the total returns of each comparative
index do not include the effect of any brokerage commissions, transaction
fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
The Institutional Class of each equity fund may quote its adjusted net
asset value including all distributions paid. This value may be averaged
over specified periods and may be used to calculate a class's moving
average.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, please contact your investment
professional, or call 1-800-843-3001.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. TechnoQuant Growth, Equity Growth,
Mid Cap, Large Cap, and Growth & Income are diversified funds of Fidelity
Advisor Series I, a Massachusetts business trust organized on June 24,
1983. Growth Opportunities, Balanced, High Yield, Government Investment and
Short Fixed-Income are diversified funds of Fidelity Advisor Series II, a
Massachusetts business trust organized on April 24, 1986. Equity Income is
a diversified fund of Fidelity Advisor Series III, a Massachusetts business
trust organized on May 17, 1982. Intermediate Bond is a diversified fund of
Fidelity Advisor Series IV, a Massachusetts business trust organized on May
6, 1983. High Income Municipal is a diversified fund and California
Municipal Income and New York Municipal Income are non-diversified funds of
Fidelity Advisor Series V, a Massachusetts business trust organized on
April 24, 1986. Intermediate Municipal Income is a diversified fund and
Short-Intermediate Municipal Income is a non-diversified fund of Fidelity
Advisor Series VI, a Massachusetts business trust organized on June 1,
1983. Strategic Income is a non-diversified fund and Strategic
Opportunities is a diversified fund of Fidelity Advisor Series VIII, a
Massachusetts business trust organized on September 23, 1983. Mortgage
Securities is a diversified fund of Fidelity Income Fund, a Massachusetts
business trust organized on August 7, 1984. Municipal Bond is a diversified
fund of Fidelity Municipal Trust, a Massachusetts business trust organized
on June 22, 1984. Each trust is an open-end management investment company.
There is a remote possibility that one fund might become liable for a
misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. For shareholders
of TechnoQuant Growth, Mid Cap, Equity Growth, Strategic Opportunities,
Large Cap, Growth & Income, and Strategic Income, you are entitled to one
vote for each share you own. For shareholders of Growth Opportunities,
Equity Income, Balanced, High Yield, Mortgage Securities, Government
Investment, Intermediate Bond, Short Fixed-Income, High Income Municipal,
Municipal Bond, Intermediate Municipal Income, Short-Intermediate Municipal
Income, California Municipal Income, and New York Municipal Income, the
number of votes you are entitled to is based upon the dollar value of your
investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which chooses each fund's investments and
handles its business affairs. FMR chooses investments with the assistance
of foreign affiliates for all funds except, Government Investment, High
Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and New
York Municipal Income.
(small solid bullet) Fidelity Management & Research (U.K.) Inc. (FMR U.K.),
in London, England, serves as a sub-adviser for TechnoQuant Growth, Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities, Large
Cap, Growth & Income, Equity Income, Balanced, High Yield, Strategic
Income, Mortgage Securities, Intermediate Bond, and Short Fixed-Income.
(small solid bullet) Fidelity Management & Research Far East Inc. (FMR Far
East), in Tokyo, Japan, serves as a sub-adviser for TechnoQuant Growth, Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities, Large
Cap, Growth & Income, Equity Income, Balanced, High Yield, Strategic
Income, Mortgage Securities, Intermediate Bond, and Short Fixed-Income.
(small solid bullet) Fidelity International Investment Advisors (FIIA), in
Pembroke, Bermuda, serves as a sub-adviser for Strategic Income.
(small solid bullet) Fidelity International Investment Advisors (U.K.)
Limited (FIIAL U.K.), in Kent, England, serves as a sub-adviser for
Strategic Income.
(small solid bullet) Fidelity Investment Japan Ltd. (FIJ), in Tokyo, Japan
serves as a sub-adviser for Strategic Income.
As of December 31, 1996, FMR advised funds having approximately 29 million
shareholder accounts with a total value of more than $432 billion.
John Carlson is Vice President and manager of Advisor Strategic Income,
which he has managed since August 1995. He also manages several other
Fidelity funds. Prior to joining Fidelity in 1995, Mr. Carlson was
Executive Director of emerging markets at Lehman Brothers International
from 1992 through 1995.
Robert Chow is manager of Advisor Equity Income, which he has managed since
March 1996. Previously, he managed other Fidelity funds. Since joining
Fidelity in 1989, Mr. Chow has worked as an analyst, portfolio assistant
and manager.
Katherine Collins is manager of Advisor Mid Cap, which she has managed
since January 1997. She also manages another Fidelity fund. Since joining
Fidelity in 1990, Ms. Collins has worked as an analyst and manager.
Bettina Doulton is Vice President and lead manager of Advisor Balanced,
which she has managed since March 1996. She also manages other Fidelity
funds. Since joining Fidelity in 1986, Ms. Doulton has worked as a research
assistant, analyst and manager.
Andrew Dudley is manager of Advisor Short-Fixed Income, which he has
managed since February 1997. Mr. Dudley joined Fidelity as a manager in
1996. Previously, he was a portfolio manager with Putnam Investments from
1991 to 1996.
Margaret Eagle is Vice President and manager of Advisor High Yield, which
she has managed since inception and manager of Advisor Strategic Income
Fund's high yield investments, which she has managed since January 1996. In
addition, she is a Senior Vice President of Fidelity Trust Company. Ms.
Eagle joined Fidelity in 1980.
George Fischer is manager of Advisor Municipal Bond, which he has managed
since October 1995. He also manages several other Fidelity funds. Since
joining Fidelity in 1989, Mr. Fischer has worked as an analyst and manager.
Kevin Grant is Vice President and manager of Advisor Mortgage Securities
Fund, Advisor Intermediate Bond and Advisor Balanced Fund's fixed-income
investments, which he has managed since July, 1993, October 1995, and March
1996, respectively. He manages other Fidelity funds. Prior to joining
Fidelity in 1993, Mr. Grant was a vice president and chief mortgage
strategist at Morgan Stanley for three years.
Curt Hollingsworth is Vice President and manager of Advisor Government
Investment and Advisor Strategic Income Fund's domestic investment-grade
and U.S. government investments, all of which he has managed since February
1997. He also manages other Fidelity funds. Since joining Fidelity in 1983,
Mr. Hollingsworth has worked as a fixed-income trader and portfolio
manager.
Jonathan Kelly is manager of Advisor Strategic Income Fund's foreign bond
investments in developed markets, which he has managed since January 1996.
Previously, he managed other Fidelity funds. Since joining Fidelity in
1991, Mr. Kelly has worked as a foreign bond analyst and manager.
Tim Krochuk is manager of Advisor TechnoQuant Growth, which he has managed
since inception. He also manages another Fidelity fund. Previously, he was
a quantitative analyst. Mr. Krochuk joined Fidelity as a research associate
in 1992, after receiving a bachelor of arts degree in economics/pre-med.
from Harvard University.
Harris Leviton is Vice President and manager of Advisor Strategic
Opportunities, which he has managed since March 1996. Previously, he
managed other Fidelity funds. Since joining Fidelity in 1986, he has worked
as an analyst and manager.
Norm Lind is Vice President and manager of Advisor New York Municipal
Income and Advisor Short-Intermediate Municipal Income, which he has
managed since August 1995 and October 1995, respectively. He also manages
other Fidelity funds. Since joining Fidelity in 1986, Mr. Lind has worked
as an analyst and manager.
David Murphy is Vice President and manager of Advisor Intermediate
Municipal Income, which he has managed since March 1995. He also manages
several other Fidelity funds. Mr. Murphy joined Fidelity as a portfolio
manager in 1989.
Tanya Roy is manager of Advisor High Income Municipal, which she has
managed since August 1995. She also manages other Fidelity funds. Since
joining Fidelity in 1989, Ms. Roy has worked as an analyst and manager.
Jonathan Short is manager of Advisor California Municipal Income, which he
has managed since inception. He also manages several other Fidelity funds.
Since joining Fidelity in 1990, Mr. Short has worked as an analyst and
manager.
Thomas Silvia is co-manager of Mortgage Securities, which he has managed
since February 1997. Mr. Silvia joined Fidelity as a senior mortgage trader
in 1993.
Thomas Sprague is manager of Advisor Large Cap, which he has managed since
March 1996. He also manages another Fidelity fund. Since joining Fidelity
in 1989, he has worked as an analyst and manager.
Beth Terrana is Vice President and manager of Advisor Growth & Income,
which she has managed since inception. She also manages other Fidelity
funds. Since joining Fidelity in 1983, Ms. Terrana has worked as an
analyst, portfolio assistant and manager.
Jennifer Uhrig is Vice President and manager of Advisor Equity Growth,
which she has managed since January 1997. She also manages another Fidelity
fund. Since joining Fidelity in 1987, Ms. Uhrig has worked as an analyst
and manager.
George Vanderheiden is Vice President and manager of Advisor Growth
Opportunities, which he has managed since November 1987. He also manages
several other Fidelity funds. Mr. Vanderheiden joined Fidelity in 1971.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services. Fidelity
Investments Institutional Operations Company Inc. (FIIOC) performs certain
transfer agent servicing functions for the Institutional Class of each
fund.
FMR Corp. is the ultimate parent company of FMR, FMR U.K., and FMR Far
East. Members of the Edward C. Johnson 3d family are the predominant owners
of a class of shares of common stock representing approximately 49% of the
voting power of FMR Corp. Under the Investment Company Act of 1940 (the
1940 Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
Fidelity International Limited (FIL), is the parent company of FIIA, FIJ,
and FIIAL U.K. The Johnson family group also owns, directly or indirectly,
more than 25% of the voting common stock of FIL.
UMB Bank, n.a. (UMB) is the transfer agent for High Income Municipal,
Intermediate Municipal Income, Municipal Bond, Short-Intermediate Municipal
Income, California Municipal Income, and New York Municipal Income,
although it employs FIIOC to perform these functions for the Institutional
Class of each fund. UMB is located at 1010 Grand Avenue, Kansas City,
Missouri 64106.
A broker-dealer may use a portion of the commissions paid by a fund to
reduce custodian or transfer agent fees for that fund. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
a fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The value of each fund's domestic and foreign investments varies in
response to many factors. Stock values fluctuate in response to the
activities of individual companies and general market and economic
conditions. Bond values fluctuate based on changes in interest rates,
market conditions, other economic and political news, and on their quality
and maturity. In general, bond prices rise when interest rates fall, and
fall when interest rates rise. This effect is usually more pronounced for
longer-term securities. Lower-quality securities offer higher yields, but
also carry more risk.
Funds which invest in foreign securities have increased economic and
political risks as they are exposed to events and factors in the various
world markets. This is especially true for funds that invest in emerging
markets. Also, because many of the funds' investments are denominated in
foreign currencies, changes in the value of foreign currencies can
significantly affect a fund's share price. FMR may use a variety of
investment techniques to either increase or decrease a fund's investment
exposure to any currency.
The total return from a bond includes both income and price gains or
losses. In selecting investments for a bond fund, FMR considers a bond's
expected income together with its potential for price gains or losses.
While income is generally the most important component of bond returns over
time, a bond fund's emphasis on income does not mean the fund invests only
in the highest-yielding bonds available, or that it can avoid losses of
principal.
FMR generally focuses on assembling a portfolio of bonds that it believes
will provide the best balance between risk and return within the range of
eligible investments for the fund. FMR's evaluation of a potential
investment includes an analysis of the credit quality of the issuer, its
structural features, its current price compared to FMR's estimate of its
long-term value, and any short-term trading opportunities resulting from
market inefficiencies.
FMR may use various investment techniques to hedge a portion of the funds'
risks, but there is no guarantee that these strategies will work as FMR
intends. It is important to note that neither the funds nor their yields
are guaranteed by the U.S. Government. When you sell your shares, they may
be worth more or less than what you paid for them.
TECHNOQUANT GROWTH FUND seeks growth of capital by investing mainly in
common stocks. However, the fund has the flexibility to invest in other
types of equity securities and debt securities as well. The fund's security
selection process utilizes computer-aided, quantitative analysis. FMR's
computer models use many types of data, but emphasize technical factors
such as historical price and volume relationships. Fundamental criteria,
such as earnings estimates, and dividend yield may also be considered.
FMR's emphasis on technical analysis can result in the fund holding
different types of stocks at different times. For example, the fund may
also hold stocks of companies with large or small market capitalization or
high or low price/earnings ratios. The fund's focus may change rapidly
based on FMR's analysis of the most current information. At times, the fund
may be concentrated in a small number of market sectors or securities.
MID CAP FUND seeks long-term growth of capital by investing primarily in
equity securities of companies with medium market capitalizations. FMR
normally invests at least 65% of the fund's total assets in these
securities. The fund has the flexibility, however, to invest the balance in
other market capitalizations and security types.
Medium market capitalization companies are those whose market
capitalization falls within the capitalization range of the S&P MidCap 400
at the time of the fund's investment. The S&P MidCap 400 Index is an
unmanaged index of medium-capitalization stocks. Companies whose
capitalization falls outside this range after purchase continue to be
considered medium-capitalized for purposes of the 65% policy. As of
December 31, 1996, the S&P MidCap 400 included companies with
capitalizations of between $192 million and $6.5 billion.
Investing in medium capitalization stocks may involve greater risk than
investing in large capitalization stocks, since they can be subject to more
abrupt or erratic movements. However, they tend to involve less risk than
stocks of small capitalization companies.
EQUITY GROWTH FUND seeks capital appreciation by investing primarily in
common and preferred stock and securities convertible into the common stock
of companies with above-average growth characteristics. FMR normally
invests at least 65% of the fund's total assets in common and preferred
stock. The fund looks for domestic and foreign companies with above-average
growth characteristics compared to the average of the companies included in
the S&P 500. The S&P 500 is a registered trademark of Standard & Poor's.
Growth may be measured by factors such as earnings or gross sales.
Companies with strong growth potential often have new products,
technologies, distribution channels, or other opportunities. As a general
rule, these companies may include smaller, less well-known companies, and
companies whose stocks have higher than average price/earnings (P/E)
ratios. The market prices of these stocks may be particularly sensitive to
economic, market, or company news. FMR may also pursue growth in larger or
revitalized companies or companies that hold a strong position in the
market. These growth characteristics may be found in mature or declining
industries.
GROWTH OPPORTUNITIES FUND seeks capital growth by investing primarily in
common stocks and securities convertible into common stocks. FMR normally
invests at least 65% of the fund's total assets in securities of companies
that FMR believes have long-term growth potential. Although the fund
invests primarily in common stock and securities convertible into common
stock, it has the ability to purchase other securities, such as preferred
stock and bonds, that may produce capital growth. The fund may invest in
foreign securities without limitation.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a "special
situation." FMR normally invests at least 65% of the fund's total assets in
these securities. The term "special situation" refers to FMR's
identification of an unusual, and possibly non-repetitive, development
taking place in a company or a group of companies in an industry.
A special situation may involve one or more of the following
characteristics:
(small solid bullet) A technological advance or discovery, the offering of
a new or unique product or service, or changes in consumer demand or
consumption forecasts.
(small solid bullet) Changes in the competitive outlook or growth potential
of an industry or a company within an industry, including changes in the
scope or nature of foreign competition or the development of an emerging
industry.
(small solid bullet) New or changed management, or material changes in
management policies or corporate structure.
(small solid bullet) Significant economic or political occurrences abroad,
including changes in foreign or domestic import and tax laws or other
regulations.
(small solid bullet) Other events, including natural disasters, favorable
litigation settlements, or a major change in demographic patterns.
"Special situations" often involve breaks with past experience. They can be
relatively aggressive investments. In seeking capital appreciation, the
fund also may invest in securities of companies not involving a special
situation, but which are companies with valuable fixed assets and whose
securities are believed by FMR to be undervalued in relation to the
companies' assets, earnings, or growth potential. FMR intends to invest
primarily in common stocks and securities that are convertible into common
stocks; however, it also may invest in debt securities of all types and
quality if FMR believes that investing in these securities will result in
capital appreciation. The fund may invest up to 30% of its assets in
foreign investments.
LARGE CAP FUND seeks long-term growth of capital by investing primarily in
equity securities of companies with large market capitalizations. FMR
normally invests at least 65% of the fund's total assets in these
securities. The fund has the flexibility, however, to invest the balance in
other market capitalizations and security types.
FMR defines large market capitalization companies as those with market
capitalizations of $1 billion or more at the time of the fund's investment.
Companies whose capitalization falls below this level after purchase
continue to be considered large-capitalized for purposes of the 65% policy.
Companies with large market capitalizations typically have a large number
of publicly held shares and a high trading volume, resulting in a high
degree of liquidity. These tend to be quality companies with strong
management organizations. However, large capitalization companies may have
less growth potential than smaller companies and may be able to react less
quickly to changes in the marketplace.
GROWTH & INCOME FUND seeks high total return through a combination of
current income and capital appreciation. The fund invests mainly in equity
securities. The fund expects to invest the majority of its assets in
domestic and foreign equity securities, with a focus on those that pay
current dividends and show potential earnings growth. However, the fund may
buy debt securities as well as equity securities that are not currently
paying dividends, but offer prospects for capital appreciation or future
income.
EQUITY INCOME FUND seeks a yield which exceeds the composite dividend yield
of securities comprising the S&P 500. In addition, consistent with the
primary objective of obtaining income, the fund will consider the potential
for achieving capital appreciation. Under normal conditions, FMR normally
invests at least 65% of the fund's total assets in income-producing equity
securities. For purposes of this policy, equity securities are defined as
common and preferred stocks. The balance of the fund's assets will tend to
be invested in debt securities, a high percentage of which are expected to
be convertible into common stocks.
The fund seeks to achieve a yield that beats that of the S&P 500. The fund
does not intend to invest in securities of issuers without proven earnings
and/or credit histories. Because the fund invests for income, as well as
capital appreciation, investors should not expect capital appreciation
comparable with funds which seek only capital appreciation. The yield on
the fund's assets generally will increase or decrease from year to year in
accordance with market conditions and in relation to the changes in yields
of the stocks included in the S&P 500.
BALANCED FUND seeks both income and growth of capital by investing in a
diversified portfolio of equity and fixed-income securities with income,
growth of income, and capital appreciation potential. FMR manages the fund
to maintain a balance between stocks and bonds. When FMR's outlook is
neutral, it will invest approximately 60% of the fund's assets in stocks
and other equity securities and the remainder in bonds and other
fixed-income securities. FMR may vary from this target if it believes
stocks or bonds offer more favorable opportunities, but will always invest
at least 25% of the fund's total assets in fixed-income senior securities
(including debt securities and preferred stock).
The fund may buy securities that are not currently paying income but offer
prospects for future income. The fund may invest in securities of foreign
issuers. In selecting investments for the fund, FMR will consider such
factors as the issuer's financial strength, its outlook for increased
dividend or interest payments, and the potential for capital gains.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible securities and
preferred stocks. FMR normally invests at least 65% of the fund's total
assets in these securities.
The fund may also invest in securities issued or guaranteed by the U.S.
Government, any state or any of their respective subdivisions, agencies or
instrumentalities, and securities of foreign issuers, including securities
of foreign governments. The fund may invest up to 35% of its total assets
in equity securities, including common stocks, warrants, and rights.
STRATEGIC INCOME FUND seeks a high level of current income by investing
primarily in debt securities. The fund may also seek capital appreciation.
The fund invests primarily in fixed-income securities, allocated among four
general investment categories: high yield securities, U.S. Government and
investment grade securities, emerging market securities, and foreign
developed market securities. The fund's neutral mix, or the benchmark for
its combination of investments in each category over time, is approximately
40% high yield, 30% U.S. Government and investment-grade, 15% emerging
markets and 15% foreign developed markets.
FMR regularly reviews the fund's allocation and makes changes gradually
over time to favor investments that it believes provide the most favorable
outlook for achieving the fund's objective. In normal market environments,
FMR expects the fund's asset allocation to approximate the neutral mix
within a range of plus or minus 10% of assets per category. There are no
absolute limits on the percent of assets invested in each category,
however, and FMR reserves the right to change the neutral mix from time to
time.
The HIGH YIELD category includes high-yielding, lower-quality debt
securities consisting mainly of U.S. securities of a quality grade lower
than BBB. The U.S. GOVERNMENT AND INVESTMENT-GRADE category includes
mortgage securities, U.S. Government securities, government agency
securities and other U.S. dollar-denominated securities of investment-grade
quality. The EMERGING MARKET category includes corporate and governmental
debt securities of issuers located in emerging markets. The FOREIGN
DEVELOPED MARKET category includes corporate and governmental debt
securities of issuers located in developed foreign markets. These
investment categories are only general guidelines, and FMR may use its
judgment as to which category an investment falls within. The fund may also
make investments that do not fall within these categories.
By allocating its investments across different types of fixed-income
securities, the fund attempts to moderate the significant risks of each
investment category through diversification. Diversification, when
successful, can mean higher returns with decreased volatility. However,
each of the fund's four investment categories may experience periods of
volatile returns, and it is possible for all investment categories to
decline at the same time.
MORTGAGE SECURITIES FUND seeks high current income, consistent with prudent
investment risk, by investing primarily in mortgage-related securities.
When consistent with its goal, the fund may also consider the potential for
capital gain. FMR normally invests at least 65% of the fund's total assets
in mortgage-related securities. The fund may also invest in U.S. Government
securities and instruments related to U.S. Government securities.
Instruments related to U.S. Government securities may include futures or
options on U.S. Government securities or interests in U.S. Government
securities that have been repackaged by dealers or other third parties.
Although the fund can invest in securities of any maturity, FMR seeks to
manage the fund so that it generally reacts to changes in interest rates
similarly to government bonds with maturities between two and 10 years.
However, the reaction of mortgage securities to changes in interest rates
can be difficult to predict since mortgage securities are subject to
prepayment of principal and can be structured in a complex manner. As of
July 31, 1996, the fund's dollar-weighted average maturity was
approximately 6.8 years.
GOVERNMENT INVESTMENT FUND seeks high current income by investing in U.S.
Government securities and instruments related to U.S. Government securities
under normal conditions. FMR normally invests the fund's assets only in
U.S. Government securities, repurchase agreements, and other instruments
related to U.S. government securities. Under normal conditions, FMR invests
at least 65% of the fund's total assets in U.S. Government securities and
repurchase agreements for U.S. Government securities. Other instruments may
include futures or options on U.S. government securities or interests in
U.S. Government securities that have been repackaged by dealers or other
third parties.
Although the fund can invest in securities of any maturity, FMR seeks to
manage the fund so that it generally reacts to changes in interest rates
similarly to government bonds with maturities between five and 12 years. As
of October 31, 1996, the fund's dollar-weighted average maturity was
approximately 8.5 years.
INTERMEDIATE BOND FUND seeks high current income by investing in U.S.
dollar-denominated investment-grade debt securities under normal
conditions. When consistent with its primary objective, the fund may also
seek capital appreciation. Although the fund can invest in securities of
any maturity, the fund normally maintains a dollar-weighted average
maturity between three and 10 years.
In determining a security's maturity for purposes of calculating the fund's
average maturity, an estimate of the average time for its principal to be
paid may be used. This can be substantially shorter than its stated final
maturity. As of November 30, 1996, the fund's dollar-weighted average
maturity was approximately 5.7 years.
SHORT FIXED-INCOME FUND seeks high current income, consistent with the
preservation of capital, by investing in U.S. dollar-denominated
investment-grade debt securities under normal conditions. Where appropriate
the fund will take advantage of opportunities to realize capital
appreciation. FMR normally invests at least 65% of the fund's total assets
in fixed-income securities of all types which may include convertible and
zero coupon securities.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of three years or less under
normal conditions. In determining a security's maturity for purposes of
calculating the fund's average maturity, an estimate of the average time
for its principal to be paid may be used. This can be substantially shorter
than its stated final maturity. As of October 31, 1996, the fund's
dollar-weighted average maturity was approximately 2.2 years.
HIGH INCOME MUNICIPAL FUND seeks high current income that is free from
federal income tax by investing in municipal securities of any quality
under normal conditions. Since the fund can emphasize lower-quality
securities, FMR's research and analysis is an integral part of choosing the
fund's investments. FMR normally invests so that at least 80% of the fund's
assets are invested in municipal securities whose interest is free from
federal income tax. In addition, FMR may invest all of the fund's assets in
municipal securities issued to finance private activities. The interest
from these securities is a tax preference item for the purposes of the
federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks to
manage the fund so that it generally reacts to changes in interest rates
similarly to municipal bonds of comparable quality with maturities between
12 and 20 years. As of October 31, 1996, the fund's dollar-weighted average
maturity was approximately 16.4 years.
MUNICIPAL BOND FUND seeks a high level of current income that is free from
federal income tax, consistent with preservation of capital, by investing
in investment-grade municipal securities under normal conditions. FMR
normally invests so that at least 80% of the fund's assets are invested in
municipal securities whose interest is free from federal income tax. In
addition, FMR may invest all of the fund's assets in municipal securities
issued to finance private activities. The interest from these securities is
a tax preference item for the purposes of the federal alternative minimum
tax.
Although the fund can invest in securities of any maturity, FMR seeks to
manage the fund so that it generally reacts to changes in interest rates
similarly to municipal bonds with maturities between eight and 18 years. As
of December 31, 1996, the fund's dollar-weighted average maturity was
approximately 12.4 years.
INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income, that is free
from federal income tax, consistent with preservation of capital, by
investing in investment-grade municipal securities under normal conditions.
FMR normally invests so that at least 80% of the fund's assets are invested
in municipal securities whose interest is free from federal income tax. In
addition, FMR may invest all of the fund's assets in municipal securities
issued to finance private activities. The interest from these securities is
a tax preference item for the purposes of the federal alternative minimum
tax.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of between three and 10 years
under normal conditions. FMR seeks to manage the fund so that it generally
reacts to changes in interest rates similarly to municipal bonds with
maturities between seven and 10 years. As of November 30, 1996, the fund's
dollar-weighted average maturity was approximately 8.6 years.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks high current income that is
free from federal income tax, consistent with preservation of capital, by
investing in investment-grade municipal securities under normal conditions.
FMR normally invests so that at least 80% of the fund's assets are invested
in municipal securities whose interest is free from federal income tax. In
addition, FMR may invest all of the fund's assets in municipal securities
issued to finance private activities. The interest from these securities is
a tax preference item for the purposes of the federal alternative minimum
tax.
Although the fund can invest in securities of any maturity, the fund
maintains a dollar-weighted average maturity of between two and five years
under normal conditions. As of November 30, 1996, the fund's
dollar-weighted average maturity was approximately 3.4 years.
CALIFORNIA MUNICIPAL INCOME FUND seeks high current income that is free
from federal income tax and California state personal income tax by
investing in investment-grade municipal securities under normal conditions.
FMR normally invests so that at least 80% of the fund's assets are invested
in securities whose interest is free from federal and California income
taxes. In addition, FMR may invest all of the fund's assets in municipal
securities issued to finance private activities. The interest from these
securities is a tax preference item for the purposes of the federal
alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks to
manage the fund so that it generally reacts to changes in interest rates
similarly to municipal bonds with maturities between eight and 18 years. As
of October 31, 1996, the fund's dollar-weighted average maturity was
approximately 14.4 years.
The performance of California Municipal Income is affected by the economic
and political conditions within the state of California. California
suffered a severe economic recession between 1990- 1993, which resulted in
broad-based revenue shortfalls for the State and many local governments.
California's fiscal condition has improved as its economy has been in a
sustained recovery since 1994. During the recession, the State
substantially reduced local assistance, and further reductions could
adversely affect the financial condition of cities, counties and other
government agencies facing constraints in their own revenue collections.
California's long-term credit rating stabilized after having been reduced
in the past several years. California voters in the past have passed
amendments to the California Constitution and other measures that limit the
taxing and spending authority of California governmental entities, and
future voter initiatives could result in adverse consequences affecting
California municipal bonds.
NEW YORK MUNICIPAL INCOME FUND seeks high current income that is free from
federal income tax and New York State and City personal income taxes by
investing in investment-grade municipal securities under normal conditions.
FMR normally invests so that at least 80% of the fund's assets are invested
in securities whose interest is free from federal and New York State and
City personal income taxes. In addition, FMR may invest all of the fund's
assets in municipal securities issued to finance private activities. The
interest from these securities is a tax preference item for the purposes of
the federal alternative minimum tax.
Although the fund can invest in securities of any maturity, FMR seeks to
manage the fund so that it generally reacts to changes in interest rates
similarly to municipal bonds with maturities between eight and 18 years. As
of October 31, 1996, the fund's dollar-weighted average maturity was
approximately 13.3 years.
The performance of New York Municipal Income is affected by the economic
and political conditions within the state of New York. Both New York City
and State have recently experienced significant financial difficulty, and
both the City's and the State's credit ratings are among the lowest in the
country.
TEMPORARY DEFENSIVE POLICIES. FMR normally invests each fund's assets
according to its investment strategy.
Each of TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities,
Strategic Opportunities, Large Cap, Growth & Income, Equity Income,
Balanced, High Yield and Strategic Income reserves the right to invest
without limitation in preferred stocks and investment-grade debt
instruments for temporary, defensive purposes.
Each of Mortgage Securities, Government Investment, Intermediate Bond, and
Short Fixed-Income reserves the right to invest without limitation in
investment-grade money market or short-term debt instruments for temporary,
defensive purposes.
Each of High Income Municipal, Municipal Bond, Intermediate Municipal
Income, and Short-Intermediate Municipal Income do not expect to invest in
federally taxable obligations. California Municipal Income and New York
Municipal Income do not expect to invest in federally or state taxable
obligations. Each of High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California Municipal
Income, and New York Municipal Income, reserves the right to invest without
limitation in short-term instruments, to hold a substantial amount of
uninvested cash, or to invest more than normally permitted in taxable
obligations for temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Fund holdings and recent investment strategies are detailed in each fund's
financial reports, which are sent to shareholders twice a year. For a free
SAI or financial report, call your investment professional.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. Although equity securities
have a history of long-term growth in value, their prices fluctuate based
on changes in a company's financial condition and on overall market and
economic conditions. Smaller companies are especially sensitive to these
factors.
RESTRICTIONS: With respect to 75% of its total assets, each of TechnoQuant
Growth, Mid Cap, Growth Opportunities, Large Cap, Growth & Income, Equity
Income, Balanced, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal, Municipal
Bond, and Intermediate Municipal Income may not purchase more than 10% of
the outstanding voting securities of a single issuer. For TechnoQuant
Growth and Growth & Income, this limitation does not apply to securities of
other investment companies.
With respect to 100% of its total assets, each of Equity Growth and
Strategic Opportunities may not purchase more than 10% of the outstanding
voting securities of a single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer generally pays the investor a
fixed, variable, or floating rate of interest, and must repay the amount
borrowed at maturity. Other debt securities, such as zero coupon bonds, do
not pay interest, but are sold at a discount from their face values.
Debt securities, loans, and other direct debt have varying levels of
sensitivity to changes in interest rates and varying degrees of quality.
Longer-term bonds and zero coupon bonds are generally more sensitive to
interest rate changes than short-term bonds.
Taxable lower-quality debt securities (sometimes called "junk bonds"), and
tax-exempt lower-quality debt securities (sometimes called "municipal junk
bonds") are considered to have speculative characteristics and involve
greater risk of default or price changes due to changes in the issuer's
creditworthiness, or they may already be in default. The market prices of
these securities may fluctuate more than higher-quality securities and may
decline significantly in periods of general economic difficulty.
The table on the following page provides a summary of ratings assigned to
debt holdings (not including money market instruments)
in the funds' portfolios. These figures are dollar-weighted averages of
month-end portfolio holdings during the fiscal year ended 1996, and are
presented as a percentage of total security investments. These percentages
are historical and do not necessarily indicate a fund's current or future
debt holdings.
RESTRICTIONS: For all of TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth & Income, Equity
Income, Balanced, High Yield and Strategic Income purchase of a debt
security is consistent with a fund's debt quality policy if it is rated at
or above the stated level by Moody's Investors Service (Moody's) or rated
in the equivalent categories by Standard & Poor's (S&P), or is unrated but
judged to be of equivalent quality by FMR.
FISCAL YEAR ENDED 1996 DEBT HOLDINGS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid Equ Grow Strat Lar Grow Equit Strate High
ity th egic ge th & y Bala High gic Income
S&P RATING Cap Gro Oppor Oppor Cap Inc Incom nced Yield Income Municipal
INVESTMENT GRADE wth tunit tunit ome e
ies ies
Highest quality AAA
High quality AA -- -- 15.44% 6.43% -- -- 2.80% 31.90% -- 40.55% 27.16%
Upper-medium grade A
Medium grade BBB -- -- -- -- -- -- -- 3.26% 0.30% 0.57% 22.24%
LOWER QUALITY
Moderately
speculative BB -- -- -- -- -- -- 0.45% 0.56% 11.90% 8.33% 9.89%
Speculative B 0.06% -- -- -- -- -- 0.06% 1.96% 47.80% 27.31% 0.53%
Highly speculative CCC -- -- -- -- -- -- 0.25% 5.40% 2.20% --
Poor quality CC -- -- -- -- -- -- -- -- -- -- --
Lowest quality,
no interest C
In default,
in arrears D -- -- -- -- -- -- -- -- 0.10% -- 0.38%
Mid Equ Grow Strat Lar Grow Equit Strate High
ity th egic ge th & y Bala High gic Income
MOODY'S RATING Cap Gro Oppor Oppor Cap Inc Incom nced Yield Income Municipal
INVESTMENT GRADE wth tunit tunit ome e
ies ies
Highest quality Aaa
High quality Aa -- -- 15.44% 6.43% -- -- 2.80% 33.87% -- 39.06% 26.58%
Upper-medium grade A
Medium grade Baa -- -- -- -- -- -- 0.02% 2.29% 0.10% 0.18% 22.72%
LOWER QUALITY
Moderately
speculative Ba -- -- -- -- -- -- 0.25% 0.94% 8.60% 7.21% 9.19%
Speculative B -- -- -- 0.21% -- -- 0.26% 2.29% 48.90% 27.31% 0.18%
Highly speculative Caa -- -- -- -- -- -- -- 0.12% 9.70% 3.23% 0.60%
Poor quality Ca -- -- -- -- -- -- -- -- 0.03% 0.02% --
Lowest quality,
no interest C -- -- -- -- -- -- -- -- -- -- --
In default,
in arrears --- -- -- -- -- -- -- -- -- -- -- --
</TABLE>
EACH FUND DOES NOT NECESSARILY RELY ON THE RATINGS OF MOODY'S OR S&P TO
DETERMINE COMPLIANCE WITH ITS DEBT QUALITY POLICY.
REFER TO THE APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.
SECURITIES NOT RATED BY MOODY'S AND S&P AMOUNTED TO 0.76% FOR BALANCED,
1.02% FOR STRATEGIC OPPORTUNITIES, AND
7.68% FOR HIGH YIELD, 8.98% FOR STRATEGIC INCOME, AND 27.02% FOR HIGH
INCOME MUNICIPAL. THESE PERCENTAGES MAY
INCLUDE SECURITIES RATED BY OTHER NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATIONS, AS WELL AS UNRATED SECURITIES. FMR
HAS DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER QUALITY ACCOUNT FOR
0.76% FOR BALANCED, 1.02% FOR STRATEGIC
OPPORTUNITIES, 7.68% FOR HIGH YIELD, 8.97% FOR STRATEGIC INCOME, AND 24.84%
FOR HIGH INCOME MUNICIPAL. FOR FOREIGN
GOVERNMENT OBLIGATIONS NOT INDIVIDUALLY RATED BY A NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATION, FMR ASSIGNS A RATING
BASED ON THE RATING OF THE SOVEREIGN CREDIT OF THE ISSUING GOVERNMENT.
Each of Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, Large Cap, Growth & Income, Equity Income, and Balanced
currently intends to limit its investments in lower than Baa-quality debt
securities to less than 35% of its assets.
TechnoQuant Growth currently intends to limit its investments in lower than
Baa- quality debt securities to 5% of its assets.
Municipal Bond invests only in investment-grade securities. A security is
considered to be investment-grade if it is judged by FMR to be of
equivalent quality to securities rated Baa or BBB or higher by Moody's or
S&P, respectively. However, the fund will limit its investments in medium
quality securities, as judged by FMR, to one-third of its total assets;
will not purchase securities rated below Baa or BBB by Moody's or S&P,
respectively; and will not invest more than 20% of its total assets in
securities not rated by Moody's and S&P.
Each of Mortgage Securities, Short Fixed-Income, Intermediate Municipal
Income, Short-Intermediate Municipal Income, California Municipal Income,
and New York Municipal Income normally invests in investment-grade
securities, but reserves the right to invest up to 5% of its assets in
below investment-grade securities. A security is considered to be
investment-grade if it is rated investment-grade by Moody's, S&P, Duff &
Phelps Credit Rating Co. (Duff & Phelps), or Fitch Investors Service, L.P.
(Fitch), or is unrated but judged by FMR to be of equivalent quality.
Intermediate Bond invests only in investment-grade securities, and will
limit its investments in medium quality securities to 5% of its assets. A
security is considered to be investment-grade or medium quality if it is
rated investment-grade or medium quality, respectively, by Moody's, S&P,
Duff & Phelps, or Fitch, or is unrated but judged by FMR to be of
equivalent quality.
High Income Municipal does not currently intend to invest more than 10% of
its total assets in bonds that are in default.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. Government. Not all U.S. Government securities are backed by the full
faith and credit of the United States. For example, U.S. Government
securities such as those issued by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. Other U.S. Government
securities such as those issued by the Federal Farm Credit Banks Funding
Corporation are supported only by the credit of the entity that issued
them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. They may be issued in
anticipation of future revenues, and may be backed by the full taxing power
of a municipality, the revenues from a specific project, or the credit of a
private organization. The value of some or all municipal securities may be
affected by uncertainties in the municipal market related to legislation or
litigation involving the taxation of municipal securities or the rights of
municipal securities holders. A fund may own a municipal security directly
or through a participation interest.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms of credit
and liquidity enhancement, including letters of credit, guarantees, puts
and demand features, and insurance, provided by foreign or domestic
entities such as banks and other financial institutions. These arrangements
expose a fund to the credit risk of the entity providing the credit or
liquidity support. Changes in the credit quality of the provider could
affect the value of the security and the fund's share price.
STATE MUNICIPAL SECURITIES include municipal obligations issued by the
state of California or New York or their respective counties,
municipalities, authorities, or other subdivisions. The ability of issuers
to repay their debt can be affected by many factors that impact the
economic vitality of either the state or a region within the state.
Other state municipal securities include obligations of U.S. territories
and possessions such as Guam, the Virgin Islands, Puerto Rico, and their
political subdivisions and public corporations. The economy of Puerto Rico
is closely linked to the U.S. economy and will be affected by the strength
of the U.S. dollar, interest rates, the price stability of oil imports, and
the continued existence of favorable tax incentives.
OTHER INSTRUMENTS may include securities of closed-end investment
companies.
EXPOSURE TO FOREIGN MARKETS. Foreign securities, foreign currencies, and
securities issued by U.S. entities with substantial foreign operations may
involve additional risks and considerations. These include risks relating
to political or economic conditions in foreign countries, fluctuations in
foreign currencies, withholding or other taxes, operational risks,
increased regulatory burdens, and the potentially less stringent investor
protection and disclosure standards of foreign markets. Additionally,
governmental issuers of foreign debt securities may be unwilling to pay
interest and repay principal when due, and may require that the conditions
for payment be renegotiated. All of these factors can make foreign
investments, especially those in developing countries, more volatile than
U.S. investments.
ASSET-BACKED SECURITIES include interests in pools of the following:
purchase contracts, financing leases, or sales agreements entered into by
municipalities; lower-rated debt securities; or consumer loans. The value
of these securities may be significantly affected by changes in interest
rates, the market's perception of issuers, and the creditworthiness of the
parties involved. Certain asset-backed securities rely on continued
payments by a municipality, and may also be subject to prepayment risk.
MORTGAGE SECURITIES are interests in pools of commercial or residential
mortgages, and may include complex instruments such as collateralized
mortgage obligations and stripped mortgage-backed securities. Mortgage
securities may be issued by agencies or instrumentalities of the U.S.
government or by private entities.
The price of a mortgage security may be significantly affected by changes
in interest rates. Some mortgage securities may have a structure that makes
their reaction to interest rates and other factors difficult to predict,
making their price highly volatile. Also, mortgage securities, especially
stripped mortgage-backed securities, are subject to prepayment risk.
Securities subject to prepayment risk generally offer less potential for
gains during a declining interest rate environment, and similar or greater
potential for loss in a rising interest rate environment.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. Inverse floaters have interest rates that move in the
opposite direction from a benchmark, making the security's market value
more volatile.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. The risks associated with stripped securities are similar to
those of other debt securities, although stripped securities may be more
volatile, and the value of certain types of stripped securities may move in
the same direction as interest rates. U.S. Treasury securities that have
been stripped by a Federal Reserve Bank are obligations issued by the U.S.
Treasury.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or another party. In exchange for this benefit, a fund may accept a
lower interest rate. Demand features and standby commitments are types of
put features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
REAL ESTATE-RELATED INSTRUMENTS include real estate investment trusts,
commercial and residential mortgage-backed securities, and real estate
financings. Real estate-related instruments are sensitive to factors such
as changes in real estate values and property taxes, interest rates, cash
flow of underlying real estate assets, overbuilding, and the management
skill and creditworthiness of the issuer. Real estate-related instruments
may also be affected by tax and regulatory requirements, such as those
relating to the environment.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, purchasing
indexed securities, and selling securities short.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of a fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for a fund, or there may be a requirement
that the fund supply additional cash to a borrower on demand.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS: Each fund (except High Yield and Strategic Income) may not
purchase a security if, as a result, more than 10% of its assets would be
invested in illiquid securities.
High Yield and Strategic Income may not purchase a security if, as a
result, more than 15% of its assets would be invested in illiquid
securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading practices
in which payment and delivery for the securities take place at a future
date. The market value of a security could change during this period.
CASH MANAGEMENT. A fund may invest in money market securities, in
repurchase agreements, and in a money market fund available only to funds
and accounts managed by FMR or its affiliates, whose goal is to seek a high
level of current income (exempt from federal income tax in the case of a
municipal money market fund) while maintaining a stable $1.00 share price.
A major change in interest rates or a default on the money market fund's
investments could cause its share price to change.
RESTRICTIONS: California Municipal Income and New York Municipal Income do
not currently intend to invest in a money market fund. High Income
Municipal, Municipal Bond, Intermediate Municipal Income, and
Short-Intermediate Municipal Income, California Municipal Income, New York
Municipal Income, do not currently intend to invest in repurchase
agreements. Equity Growth and Strategic Opportunities will not invest in a
money market fund.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
changes in the market value of a single issuer or industry.
RESTRICTIONS: With respect to 100% of its total assets each of Equity
Growth and Strategic Opportunities may not purchase a security if, as a
result, more than 5% would be invested in the securities of any one issuer.
This limitation does not apply to U.S. Government securities.
With respect to 75% of its total assets, each of TechnoQuant Growth, Mid
Cap, Growth Opportunities, Large Cap, Growth & Income, Equity Income,
Balanced, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal, Municipal
Bond and Intermediate Municipal Income may not purchase a security if, as a
result, more than 5% would be invested in the securities of any one issuer.
This limitation does not apply to U.S. Government securities or, for
TechnoQuant Growth and Growth & Income, to securities of other investment
companies.
Strategic Income, Short-Intermediate Municipal Income, California Municipal
Income, and New York Municipal Income are considered non-diversified.
Generally, to meet federal tax requirements at the close of each quarter,
each fund does not invest more than 25% of its total assets in any one
issuer and, with respect to 50% of total assets, does not invest more than
5% of its total assets in any one issuer. These limitations do not apply to
U.S. Government securities or to securities of other investment companies.
A fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government securities.
Each of High Income Municipal, Municipal Bond, Intermediate Municipal
Income, Short-Intermediate Municipal Income, California Municipal Income,
and New York Municipal Income may invest more than 25% of its total assets
in tax-free securities that finance similar types of projects.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If a fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
LENDING securities to broker-dealers and institutions, including Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, is a means of earning
income. This practice could result in a loss or a delay in recovering a
fund's securities. A fund may also lend money to other funds advised by
FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets; however, Government Investment, High Income Municipal,
Municipal Bond, Intermediate Municipal Income, Short-Intermediate Municipal
Income, California Municipal Income, and New York Municipal Income do not
currently intend to make loans.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
TECHNOQUANT GROWTH FUND seeks capital growth.
MID CAP FUND seeks long-term growth of capital.
EQUITY GROWTH FUND seeks to achieve capital appreciation by investing
primarily in common and preferred stock and securities convertible into the
common stock of companies with above-average growth characteristics. Under
normal conditions, the fund will invest at least 65% of its assets in
common and preferred stock.
GROWTH OPPORTUNITIES FUND seeks to provide capital growth by investing
primarily in common stocks and securities convertible into common stocks.
STRATEGIC OPPORTUNITIES FUND seeks capital appreciation by investing
primarily in securities of companies believed by FMR to involve a "special
situation." Under normal conditions, the fund will invest at least 65% of
its total assets in companies involving a special situation. FMR intends to
invest primarily in common stocks and securities that are convertible into
common stocks; however, it also may invest in debt securities of all types
and quality if FMR believes that investing in these securities will result
in capital appreciation. The fund may invest up to 30% of its assets in
foreign investments.
LARGE CAP FUND seeks long-term growth of capital.
GROWTH & INCOME FUND seeks high total return through a combination of
current income and capital appreciation.
EQUITY INCOME FUND seeks a yield from dividend and interest income which
exceeds the composite dividend yield on securities comprising the S&P 500.
In addition, consistent with the primary objective of obtaining dividend
and interest income, the fund will consider the potential for achieving
capital appreciation.
BALANCED FUND seeks both income and growth of capital by investing in a
diversified portfolio of equity and fixed-income securities with income,
growth of income, and capital appreciation potential.
HIGH YIELD FUND seeks a combination of a high level of income and the
potential for capital gains by investing in a diversified portfolio
consisting primarily of high-yielding, fixed-income and zero coupon
securities, such as bonds, debentures and notes, convertible securities and
preferred stocks.
STRATEGIC INCOME FUND seeks a high level of current income by investing
primarily in debt securities. The fund may also seek capital appreciation.
MORTGAGE SECURITIES FUND seeks a high level of current income, consistent
with prudent investment risk, by investing primarily in mortgage-related
securities. In seeking current income, the fund may also consider the
potential for capital gain.
GOVERNMENT INVESTMENT FUND seeks a high level of current income by
investing primarily in obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
INTERMEDIATE BOND FUND seeks to provide a high rate of income through
investment primarily in investment-grade fixed-income obligations.
SHORT FIXED-INCOME FUND seeks to obtain a high level of current income,
consistent with the preservation of capital, by investing primarily in a
broad range of investment-grade fixed-income securities. Where appropriate
the fund will take advantage of opportunities to realize capital
appreciation.
HIGH INCOME MUNICIPAL FUND seeks to provide a high current yield by
investing in a diversified portfolio of municipal obligations whose
interest is not included in gross income for purposes of calculating
federal income tax. The fund normally invests at least 80% of its net
assets in municipal obligations whose interest is free from federal income
tax.
MUNICIPAL BOND FUND seeks to provide as high a level of interest income
exempt from federal income tax as is consistent with preservation of
capital.
The fund invests in a diversified portfolio of municipal bonds. The fund
will invest primarily in municipal bonds judged by FMR to be of high-grade
or upper-medium-grade quality, although it may invest up to one-third of
its total assets in bonds judged to be of medium-grade quality if they are
suitable for achieving its investment objective. The fund's standards for
high-grade, upper-medium-grade, and medium-grade obligations are
essentially the same as Moody's and S&P's four highest categories of Baa or
BBB and above. The fund will not invest in any bond rated lower than Baa by
Moody's or BBB by S&P, but may invest up to 20% of its total assets in
bonds not rated by either of these rating services if FMR judges them to
meet the fund's quality standards. The fund will normally invest at least
80% of its assets in municipal securities whose interest is exempt from
federal income tax.
INTERMEDIATE MUNICIPAL INCOME FUND seeks the highest level of income exempt
from federal income taxes that can be obtained consistent with the
preservation of capital. The fund normally invests at least 80% of its net
assets in securities whose interest is free from federal income tax.
SHORT-INTERMEDIATE MUNICIPAL INCOME FUND seeks as high a level of current
income, exempt from federal income tax, as is consistent with preservation
of capital. The fund normally invests at least 80% of its net assets in
municipal obligations whose interest is free from federal income tax.
CALIFORNIA MUNICIPAL INCOME FUND seeks a high level of current income free
from federal income tax and California state personal income tax by
investing primarily in municipal securities. The fund normally invests at
least 80% of its net assets in securities whose interest is free from
federal and California income taxes.
NEW YORK MUNICIPAL INCOME FUND seeks a high level of current income free
from federal income tax and New York State and City personal income taxes
by investing primarily in municipal securities. The fund normally invests
at least 80% of its net assets in securities whose interest is free from
federal and New York State and City personal income taxes.
With respect to 75% of its total assets each of TechnoQuant Growth, Mid
Cap, Growth Opportunities, Large Cap, Growth & Income, Equity Income,
Balanced, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal, Municipal
Bond, and Intermediate Municipal Income may not purchase a security if, as
a result, more than 5% would be invested in the securities of any one
issuer. With respect to 100% of its total assets, each of Equity Growth and
Strategic Opportunities may not purchase a security if, as a result, more
than 5% would be invested in the securities of any one issuer. These
limitations do not apply to U.S. Government securities or, for TechnoQuant
Growth and Growth & Income, to securities of other investment companies.
With respect to 75% of its total assets, each of TechnoQuant Growth, Mid
Cap, Growth Opportunities, Large Cap, Growth & Income, Equity Income,
Balanced, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal, Municipal
Bond and Intermediate Municipal Income may not purchase more than 10% of
the outstanding voting securities of a single issuer. With respect to 100%
of its total assets, each of Equity Growth and Strategic Opportunities may
not purchase more than 10% of the outstanding voting securities of a single
issuer. These limitations do not apply to U.S. Government securities or,
for TechnoQuant Growth and Growth & Income, to securities of other
investment companies.
Each fund may not invest more than 25% of its total assets in any one
industry. This limitation does not apply to U.S. Government securities.
Each fund may borrow only for temporary or emergency purposes, but not in
an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of each fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in that
class's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services for certain of the funds. Each fund also
pays OTHER EXPENSES, which are explained on page .
FMR may, from time to time, agree to reimburse a fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Equity Income
pays FMR a monthly management fee at an annual rate of 0.50% of its average
net assets. The fee for TechnoQuant Growth, Mid Cap, Equity Growth, Large
Cap, Growth & Income, Balanced, High Yield, Strategic Income, Mortgage
Securities, Government Investment, Intermediate Bond, Short Fixed-Income,
High Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and New
York Municipal Income is calculated by adding a group fee rate to an
individual fee rate, and multiplying the result by the fund's average net
assets. The fees for Growth Opportunities and Strategic Opportunities are
determined by taking a basic fee and then applying a performance
adjustment. The performance adjustment either increases or decreases the
management fee, depending on how well each fund has performed relative to
the S&P 500.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. For TechnoQuant Growth, Mid Cap, Equity Growth,
Growth Opportunities, Strategic Opportunities, Large Cap, Growth & Income
and Balanced, this rate cannot rise above 0.52%, and it drops as total
assets under management increase. For High Yield, Strategic Income,
Mortgage Securities, Government Investment, Intermediate Bond, Short
Fixed-Income, High Income Municipal, Municipal Bond, Intermediate Municipal
Income, Short-Intermediate Municipal Income, California Municipal Income,
and New York Municipal Income, this rate cannot rise above 0.37%, and it
drops as total assets under management increase. The basic fee rate is
calculated monthly by adding a group fee rate to an individual fund fee
rate, and multiplying the result by each fund's average net assets.
The performance adjustment rate is calculated monthly by comparing the
performance of Growth Opportunities and Strategic Opportunities to that of
the S&P 500 over the most recent 36-month period. The difference is
translated into a dollar amount that is added to or subtracted from the
basic fee. The maximum annualized performance adjustment rate is " 0.20%.
Investment performance will be measured separately for each class of shares
offered by Growth Opportunities and Strategic Opportunities and the least
of the results obtained will be used in calculating the performance
adjustment.
The following table states the management fee for each fund for its most
recent fiscal year end.
Group Individual Total
Fee Rate Fund Fee Manageme
Rate nt Fee
TechnoQuant Growth [A] 0.30% 0.30% 0.60%
Mid Cap 0.30% 0.30% 0.60%
Equity Growth 0.30% 0.30% 0.61%
[B]
Growth Opportunities [C] 0.30% 0.30% 0.61%
Strategic Opportunities [C] 0.30% 0.30% 0.48%
Large Cap 0.30% 0.30% 0.60%
Growth & Income [A] 0.30% 0.20% 0.50%
Equity Income n/a n/a 0.50%
Balanced 0.30% 0.15%[D 0.50%
]
High Yield 0.14% 0.45% 0.60%
Strategic Income 0.14% 0.45% 0.59%
Mortgage Securities 0.15% 0.30% 0.45%
Government Investment 0.14% 0.30% 0.45%
Intermediate Bond 0.14% 0.30% 0.45%
Short Fixed-Income 0.14% 0.30% 0.45%
High Income Municipal Fund 0.14% 0.25% 0.40%
Municipal Bond Fund 0.14% 0.25% 0.40%
Intermediate Municipal Income 0.14% 0.25% 0.40%
Short-Intermediate Municipal Income 0.14% 0.25% 0.40%
California Municipal Income[A] 0.14% 0.25% 0.40%
New York Municipal Income 0.14% 0.25% 0.40%
[A] ESTIMATED
[B] EFFECTIVE AUGUST 1, 1994, FMR VOLUNTARILY AGREED TO REDUCE THE FUND'S
INDIVIDUAL FUND FEE RATE FROM 0.33% TO 0.30%. IF THIS REDUCTION WAS NOT IN
EFFECT, THE TOTAL FEE WOULD HAVE BEEN 0.64%.
[C] THE BASIC FEE RATE FOR THE FISCAL YEAR ENDED 1996 WAS 0.61% FOR GROWTH
OPPORTUNITIES AND 0.61% FOR STRATEGIC OPPORTUNITIES.
[D] EFFECTIVE AUGUST 1, 1996, FMR VOLUNTARILY AGREED TO REDUCE THE FUND'S
INDIVIDUAL FUND FEE RATE FROM 0.20% TO 0.15%. IF THIS REDUCTION WAS NOT IN
EFFECT, THE TOTAL FEE WOULD HAVE BEEN 0.55%.
FMR HAS SUB-ADVISORY AGREEMENTS with four affiliates: FMR U.K., FMR Far
East, FIJ, and FIIA. FIIA in turn has a sub-advisory agreement with FIIAL
U.K. These sub-advisers are compensated for providing FMR with investment
research and advice on issuers based outside the United States. FMR pays
FMR U.K. and FMR Far East fees equal to 110% and 105%, respectively, of the
costs of providing these services. FMR pays FIJ and FIIA a fee equal to 30%
of its management fee rate associated with investments for which the
sub-adviser provided investment advice.
The sub-advisers may also provide investment management services. In
return, FMR pays FMR U.K., FMR Far East, FIJ, and FIIA a fee equal to 50%
of its management fee rate with respect to a fund's investments that the
sub-adviser manages on a discretionary basis. FIIA pays FIIAL U.K. a fee
equal to 110% of the cost of providing these services.
For the fiscal year ended 1996, FMR, on behalf of each fund with
sub-advisory agreements paid FMR U.K., FMR Far East, FIJ and FIIA fees
equal to less than 0.01%, of each fund's average net assets.
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for the Institutional Class of TechnoQuant Growth, Mid
Cap, Equity Growth, Growth Opportunities, Strategic Opportunities, Large
Cap, Growth & Income, Equity Income, Balanced, High Yield, Strategic
Income, Government Investment, Mortgage Securities, Intermediate Bond, and
Short Fixed-Income (the Taxable Funds). Fidelity Service Company, Inc.
(FSC) calculates the NAV and dividends for the Institutional Class of the
Taxable Funds, and maintains the general accounting records and administers
the securities lending program for the Taxable Funds.
For the fiscal year ended 1996, transfer agent and pricing and bookkeeping
fees paid (as a percentage of average net assets) amounted to the
following. The amounts disclosed are before reimbursements, if any.
Each Fund
Institutiona to FSC
l Class to
FIIOC
Mid Cap 0.16% 0.05%
Equity Growth 0.14% 0.02%
Growth Opportunities 0.14% 0.01%
Strategic Opportunities 0.16% 0.05%
Large Cap 0.16% 0.22%
Equity Income 0.14% 0.04%
Balanced 0.15% 0.02%
High Yield 0.16% 0.04%
Strategic Income 0.17% 0.06%
Mortgage Securities * 0.04%
Government Investment 0.16% 0.04%
Intermediate Bond 0.14% 0.04%
Short Fixed-Income 0.15% 0.04%
* CLASS IS EXPECTED TO COMMENCE OPERATIONS IN FEBRUARY 1997.
UMB is the transfer agent for High Income Municipal, Municipal Bond,
Intermediate Municipal Income, Short-Intermediate Municipal Income,
California Municipal Income and New York Municipal Income (the Municipal
Funds). UMB has entered into a sub-arrangement with FIIOC. FIIOC performs
transfer agency, dividend disbursing and shareholder services for the
Institutional Class of High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California Municipal
Income, and New York Municipal Income (the Municipal Funds). UMB has also
entered into a sub-arrangement with FSC. FSC calculates the NAV and
dividends for the Institutional Class of the Municipal Funds, and maintains
the general accounting records for each of the Municipal Funds. All of the
fees are paid to FIIOC and FSC by UMB, which is reimbursed by the
Institutional Class or the fund, as appropriate, for such payments.
For the fiscal year ended 1996, transfer agent and pricing and bookkeeping
fees paid (as a percentage of average net assets) amounted to the
following. The amounts disclosed are before reimbursements, if any.
UMB to UMB to
FIIOC on FSC on
behalf of behalf of
Institutiona each fund
l Class
High Income Municipal 0.20% 0.04%
Municipal Bond 0.31% 0.03%
Intermediate Municipal Income 0.17% 0.08%
Short-Intermediate Municipal Income 0.33% 0.20%
California Municipal Income 0.13% 0.18%
New York Municipal Income 0.10% 0.10%
The Institutional Class of each fund has adopted a DISTRIBUTION AND SERVICE
PLAN. Each plan recognizes that FMR may use its management fee revenues, as
well as its past profits or its resources from any other source, to pay FDC
for expenses incurred in connection with the distribution of Institutional
Class shares. FMR directly, or through FDC, may make payments to third
parties, such as banks or broker-dealers, that engage in the sale of, or
provide shareholder support services for, Institutional Class shares. The
Board of Trustees of each fund has authorized such payments.
Each fund also pays other expenses, such as legal, audit, and custodian
fees; in some instances, proxy solicitation costs; and the compensation of
trustees who are not affiliated with Fidelity. A broker-dealer may use a
portion of the commissions paid by a fund to reduce that fund's custodian
or transfer agent fees.
The portfolio turnover rate for TechnoQuant Growth is projected to exceed
200% for its first fiscal period ending November 30, 1997. The portfolio
turnover rate for Growth & Income is not expected to exceed 200% for its
first fiscal period ending November 30, 1997.
The portfolio turnover rate for the fiscal year ended 1996 was 101% for Mid
Cap, 76% for Equity Growth, 33% for Growth Opportunities, 151% for
Strategic Opportunities, 59% for Large Cap, 78% for Equity Income, 223% for
Balanced, 121% for High Yield, 119% for Strategic Income, 221% for Mortgage
Securities, 153% for Government Investment, 200% for Intermediate Bond,
124% for Short Fixed-Income, 49% for High Income Municipal, 35% for
Municipal Bond, 35% for Intermediate Municipal Income, 62% for
Short-Intermediate Municipal Income, 21% for California Municipal Income,
and 17% for New York Municipal Income. These rates vary from year to year.
High turnover rates increase transaction costs and may increase taxable
capital gains. FMR considers these effects when evaluating the anticipated
benefits of short-term investing.
YOUR ACCOUNT
TYPES OF ACCOUNTS
When you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of fund
shares. Read your investment professional's program materials in
conjunction with this prospectus for additional service features or fees
that may apply. Certain features of the funds, such as minimum initial or
subsequent investment amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed on the right.
The account guidelines that follow may not apply to certain funds or to
certain retirement accounts. For instance, municipal funds are not
available for purchase in retirement accounts. If you are investing through
a retirement account or if your employer offers a fund through a retirement
program, you may be subject to additional fees. For more information,
please refer to your program materials, contact your employer, or call your
retirement benefits number or your investment professional directly, as
appropriate.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT (THE FOLLOWING OPTIONS ARE AVAILABLE ONLY FOR
TAXABLE FUNDS)
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age under 701/2 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 401(K) PLANS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
(solid bullet) MONEY PURCHASE/PROFIT SHARING PLANS (KEOGH PLANS) are
tax-deferred pension accounts designated for employees of unincorporated
businesses or for persons who are self-employed.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA). Contact your investment
professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Contact your investment professional.
HOW TO BUY SHARES
INSTITUTIONAL CLASS'S SHARE PRICE, called NAV, is calculated every business
day. Institutional Class shares are sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted. NAV is normally calculated at 4:00 p.m. Eastern
time.
It is the responsibility of your investment professional to transmit your
order to buy shares to the transfer agent before the close of business on
the day you place your order.
The transfer agent must receive payment within three business days after an
order for shares is placed; otherwise your purchase order may be canceled
and you could be held liable for resulting fees and/or losses.
Share certificates are not available for Institutional Class shares.
IF YOU ARE NEW TO THE FIDELITY ADVISOR FUNDS, complete and sign an account
application and mail it along with your check. You may also open your
account by wire as described below. If there is no account application
accompanying this prospectus, call your investment professional or
1-800-843-3001.
If you are investing through a tax-sheltered retirement plan, such as an
IRA, for the first time, you will need a special application. Contact your
investment professional for more information and a retirement account
application.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY ADVISOR FUND, you can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place an order and wire money into your account,
(small solid bullet) Open your account by exchanging from the same class of
another Fidelity Advisor fund or from another Fidelity fund, or
(small solid bullet) Contact your investment professional.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and Keogh accounts $500
Through regular investment plans** $1,000*
TO ADD TO AN ACCOUNT $250*
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and Keogh accounts $100
Through regular investment plans $100*
MINIMUM BALANCE $1,000**
For Fidelity Advisor IRA, Rollover IRA, SEP-IRA and Keogh accounts NONE
* INVESTMENT MINIMUMS AND MINIMUM ACCOUNT BALANCES ARE ALSO WAIVED FOR
INVESTMENTS IN CERTAIN RETIREMENT ACCOUNTS FUNDED THROUGH SALARY REDUCTION,
OR ACCOUNTS FUNDED WITH THE PROCEEDS OF DISTRIBUTIONS FROM SUCH FIDELITY
RETIREMENT ACCOUNTS.
** AN ACCOUNT MAY BE OPENED WITH A MINIMUM OF $1,000 PROVIDED THAT A
REGULAR PAYMENT PLAN IS ESTABLISHED AT THE TIME THE ACCOUNT IS OPENED. FOR
MORE INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE REFER TO "INVESTOR
SERVICES", ON PAGE .
For further information on opening an account, please consult your
investment professional or refer to the account application.
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE (small solid bullet) Exchange from the same class of another (small solid bullet) Exchange from the same class
of another
1-800-843-3001
OR YOUR Fidelity Advisor fund or from another Fidelity Advisor fund or from another
INVESTMENT
PROFESSIONAL Fidelity fund account with the same Fidelity fund account with the same
registration, including name, address, and registration, including name, address, and
taxpayer ID number. taxpayer ID number.
Mail
(mail_graphic) (small solid bullet) Complete and sign the account application. (small solid bullet) Make your check payable to the
complete
Make your check payable to the complete name of the fund of your choice and note
name of the fund of your choice and note the applicable class. Indicate your fund
the applicable class. Mail to the address account number on your check and mail to
indicated on the application. the address printed on your account
statement.
(small solid bullet) Exchange by mail: call
1-800-843-3001 or
your investment professional for instructions.
In Person
(hand_graphic) (small solid bullet) Bring your account application and check to (small solid bullet) Bring your check to your
investment
your investment professional. professional.
Wire
(wire_graphic) (small solid bullet) Call 1-800-843-3001 to set up your account (small solid bullet) Not available for retirement
accounts.
and to arrange a wire transaction. Not (small solid bullet) Wire to:
available for retirement accounts. Banker's Trust Co.
(small solid bullet) Wire to: Routing # 021001033
Banker's Trust Co. Fidelity DART Depository
Routing # 021001033 Account # 00159759
Fidelity DART Depository FBO: (account name)
Account #00159759 (account number)
FBO: (account name)
Specify the complete name of the fund of
your choice, note the applicable class and
Specify the complete name of the fund of include your account number and your
your choice, note the applicable class and name.
include your new account number and your
name.
Automatically
(automatic_
graphic) (small solid bullet) Not available. (small solid bullet) Use Fidelity Advisor
Systematic
Investment Program. Sign up for this
service when opening your account, or
call your investment professional to begin
the program.
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted. NAV is
normally calculated at 4:00 p.m. Eastern time.
It is the responsibility of your investment professional to transmit your
order to sell shares to the transfer agent before the close of business on
the day you place your order.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY ADVISOR RETIREMENT ACCOUNT, your request must
be made in writing, except for exchanges to shares of the same class of
another Fidelity Advisor fund or shares of other Fidelity funds, which can
be requested by phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR ACCOUNT SHARES, leave at least
$1,000 worth of shares in the account to keep it open (account minimums do
not apply to retirement accounts).
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service in
advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and the fund from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of shares,
(small solid bullet) Your account registration has changed within the last
30 days,
(small solid bullet) The check is being mailed to a different address than
the one on your account (record address),
(small solid bullet) The check is being made payable to someone other than
the account owner,
(small solid bullet) The redemption proceeds are being transferred to a
Fidelity account with a different registration,
(small solid bullet) You wish to set-up the bank wire feature, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be redeemed,
and
(small solid bullet) Any other applicable requirements listed in the table
on page .
Deliver your letter to your investment professional, or mail it to the
following address:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
Unless otherwise instructed, the transfer agent will send a check to the
record address.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE All account types except retirement (small solid bullet) Maximum check request: $100,000.
1-800-843-3001 OR YOUR
INVESTMENT PROFESSIONAL
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(phone_graphic) All account types (small solid bullet) You may exchange to the same class of other
Fidelity Advisor funds or to other Fidelity funds if
both accounts are registered with the same
name(s), address, and taxpayer ID number.
Mail or in
Person
(mail_graphic)
(hand_graphic) Individual, Joint Tenant, (small solid bullet) The letter of instruction must (with signature
Sole Proprietorship, UGMA, UTMA guaranteed) be signed by all persons required to
sign for transactions, exactly as their names
Retirement account appear on the account.
(small solid bullet) The account owner should complete a retirement
distribution form. Call 1-800-843-3001 or your
investment professional to request one.
Trust (small solid bullet) The trustee must sign the letter indicating capacity
as trustee. If the trustee's name is not in the
account registration, provide a copy of the trust
document certified within the last 60 days.
Business or Organization (small solid bullet) At least one person authorized by corporate
resolution to act on the account must sign the
letter (with signature guaranteed).
Executor, Administrator, (small solid bullet) Call 1-800-843-3001 or your investment
Conservator/Guardian professional for instructions.
Wire
(wire_graphic) All account types except retirement (small solid bullet) You must sign up for the wire feature before using
it. To verify that it is in place, call 1-800-843-3001.
Minimum wire: $1,000.
(small solid bullet) Your wire redemption request must be received
and accepted by the transfer agent before 4:00
p.m. Eastern time for money to be wired on the
next business day.
</TABLE>
INVESTOR SERVICES
Fidelity Advisor funds provide a variety of services to help you manage
your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that the transfer agent sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction that
affects your account balance or your account registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in the
fund. Call your investment professional if you need additional copies of
financial reports and prospectuses.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your Institutional Class shares and buy
Institutional Class shares of other Fidelity Advisor funds or shares of
other Fidelity funds, by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For details on policies
and restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see "Exchange
Restrictions," page .
FIDELITY ADVISOR SYSTEMATIC WITHDRAWAL PROGRAM lets you set up periodic
redemptions from your account. Accounts with a value of $10,000 or more in
Institutional Class are eligible for this program.
One easy way to pursue your financial goals is to invest money regularly.
Fidelity Advisor funds offer convenient services that let you transfer
money into your fund account, or between fund accounts, automatically.
While regular investment plans do not guarantee a profit and will not
protect you against loss in a declining market, they can be an excellent
way to invest for retirement, a home, educational expenses, and other
long-term financial goals. Certain restrictions apply for retirement
accounts. Call your investment professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC INVESTMENT PROGRAM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY ADVISOR FUND
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM MINIMUM
INITIAL ADDITIONAL FREQUENCY SETTING UP OR CHANGING
$1,000 $100 Monthly, bimonthly, (small solid bullet) For a new account, complete the appropriate section on the
quarterly, application.
or semi-annually (small solid bullet) For existing accounts, call your investment professional for an
application.
(small solid bullet) To change the amount or frequency of your investment, contact
your investment professional directly, or call 1-800-843-3001. Call
at least 10 business days prior to your next scheduled investment
date.
</TABLE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net income and capital gains
to shareholders each year. Each fund pays capital gains, if any, in
December and may pay additional capital gains after the close of its fiscal
year. Normally, dividends for Growth & Income, Equity Income, and Balanced
are distributed in March, June, September and December; dividends for
TechnoQuant Growth, Mid Cap, Equity Growth, Growth Opportunities, Strategic
Opportunities, and Large Cap are distributed in December; dividends for
Strategic Income, High Yield, Mortgage Securities, Government Investment,
Intermediate Bond, Short Fixed-Income, High Income Municipal, Municipal
Bond, Intermediate Municipal Income, Short-Intermediate Municipal Income,
California Municipal Income, and New York Municipal Income are declared
daily and paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. The funds offer four options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the same class of the
fund. If you do not indicate a choice on your application, you will be
assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested in additional shares of the same class of the
fund, but you will be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS PROGRAM. Your dividend distributions will be
automatically invested in the same class of shares of another identically
registered Fidelity Advisor fund. You will be sent a check for your capital
gain distributions or your capital gain distributions will be automatically
reinvested in additional shares of the same class of the fund.
If you select distribution option 2, 3, or 4 and the U.S. Postal Service
cannot deliver your checks, or if your checks remain uncashed for six
months, those checks will be reinvested in your account at the current NAV
and your election may be converted to the Reinvestment Option. To change
your distribution option, call your investment professional directly or
call 1-800-843-3001.
For retirement accounts, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
When each of TechnoQuant Growth, Mid Cap, Equity Growth, Growth
Opportunities, Strategic Opportunities, Large Cap, Growth & Income, Equity
Income and Balanced deducts a distribution from its NAV, the reinvestment
price is the applicable class's NAV at the close of business that day.
Dividends from High Yield, Strategic Income, Mortgage Securities,
Government Investment, Intermediate Bond, Short Fixed-Income, High Income
Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income and New
York Municipal Income will be reinvested at the applicable class's NAV on
the last day of the month. Capital gain distributions from High Yield,
Strategic Income, Mortgage Securities, Government Investment, Intermediate
Bond, Short Fixed-Income, High Income Municipal, Municipal Bond,
Intermediate Municipal Income, Short-Intermediate Municipal Income,
California Municipal Income and New York Municipal Income will be
reinvested at the NAV as of the date the applicable fund deducts the
distributions from its NAV. Distribution checks will be mailed within seven
days, or longer for a December ex-dividend date.
TAXES
As with any investment, you should consider how an investment in the funds
could affect you. Below are some of the funds' tax implications. If your
account is not a tax-deferred retirement account, be aware of these tax
implications.
TAXES ON DISTRIBUTIONS. Interest income that High Income Municipal,
Municipal Bond, Intermediate Municipal Income, Short-Intermediate Municipal
Income, California Municipal Income, and New York Municipal Income earn is
distributed to shareholders as income dividends. Interest that is federally
tax-free remains tax-free when it is distributed. Distributions from each
fund (except High Income Municipal, Municipal Bond, Intermediate Municipal
Income, Short-Intermediate Municipal Income, California Municipal Income,
and New York Municipal Income), however, are subject to federal income tax.
Each fund (except California Municipal Income and New York Municipal
Income) may also be subject to state or local taxes. If you live outside
the United States, your distributions from these funds could also be taxed
by the country in which you reside.
For federal tax purposes, income and short-term capital gain distributions
for each fund (except High Income Municipal, Municipal Bond, Intermediate
Municipal Income, Short-Intermediate Municipal Income, California Municipal
Income, and New York Municipal Income) are taxed as dividends; long-term
capital gain distributions are taxed as long-term capital gains.
However, for shareholders of High Income Municipal, Municipal Bond,
Intermediate Municipal Income, Short-Intermediate Municipal Income,
California Municipal Income, and New York Municipal Income, gain on the
sale of tax-free bonds results in taxable distributions. Short-term capital
gains and a portion of the gain on bonds purchased at a discount are taxed
as dividends, long-term capital gain distributions, if any, are taxed as
long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally free
from state and local income taxes. However, particular states may limit
this benefit, and some types of securities, such as repurchase agreements
and some agency-backed securities, may not qualify for the benefit. Ginnie
Mae securities and other mortgage-backed securities are notable exceptions
in most states. In addition, some states may impose intangible property
taxes. You should consult your own tax adviser for details and up-to-date
information on the tax laws in your state.
Distributions are taxable when they are paid, whether you take them in cash
or reinvest them. However, distributions declared in December and paid in
January are taxable as if they were paid on December 31.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each of High Income Municipal, Municipal Bond,
Intermediate Municipal Income, Short-Intermediate Municipal Income,
California Municipal Income and New York Municipal Income may invest up to
100% of its assets in these securities. Individuals who are subject to the
tax must report this interest on their tax returns.
A portion of the dividends from High Income Municipal, Municipal Bond,
Intermediate Municipal Income, Short-Intermediate Municipal Income,
California Municipal Income, and New York Municipal Income may be free from
state or local taxes. Income from investments in your state are often
tax-free to you. Each year, the transfer agent will send you a breakdown of
each of these funds' income from each state to help you calculate your
taxes.
To the extent that California Municipal Income's income dividends are
derived from interest on California state tax-free investments, they will
be free from California state personal income tax. Distributions derived
from obligations that are not California state tax-free obligations, as
well as distributions from short or long-term capital gains, are subject to
California state personal income tax. Corporate taxpayers should note that
the fund's income dividends and other distributions are not exempt from
California state franchise or corporate income taxes.
To the extent that New York Municipal Income's income dividends are derived
from state-tax free investments, they will be free from New York State and
City personal income taxes.
During the fiscal year ended 1996, 100% of the income dividends from High
Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income and New
York Municipal Income was free from federal income tax. During the fiscal
year ended 1996, 100% of California Municipal Income's income dividends was
free from California taxes, and 100% of New York Municipal Income's income
dividends was free from New York taxes. During the fiscal year ended 1996,
26.36% of High Income Municipal's, 0.79% of Municipal Bond's, 7.58% of
Intermediate Municipal Income's, 18.99% of Short-Intermediate Municipal
Income's, 5.5% of California Municipal Income's, and 0.09% of New York
Municipal Income fund's, income dividends were subject to the federal
alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges - are subject
to capital gains tax. A capital gain or loss is the difference between the
cost of your shares and the price you receive when you sell them.
Whenever you sell shares of a fund, the transfer agent will send you a
confirmation statement showing how many shares you sold and at what price.
You will also receive a consolidated transaction statement at least
quarterly. However, it is up to you or your tax preparer to determine
whether this sale resulted in a capital gain and, if so, the amount of tax
to be paid. BE SURE TO KEEP YOUR REGULAR ACCOUNT STATEMENTS; the
information they contain will be essential in calculating the amount of
your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
CURRENCY CONSIDERATIONS. For funds that can invest in foreign securities,
if a fund's dividends exceed its taxable income in any year, which is
sometimes the result of currency-related losses, all or a portion of the
fund's dividends may be treated as a return of capital to shareholders for
tax purposes. To minimize the risk of a return of capital, each fund may
adjust its dividends to take currency fluctuations into account, which may
cause the dividends to vary. Any return of capital will reduce the cost
basis of your shares, which will result in a higher reported capital gain
or a lower reported capital loss when you sell your shares. The statement
you receive in January will specify if any distributions included a return
of capital.
Undistributed net gains from currency transactions, if any, will generally
be distributed as a separate dividend in December.
EFFECT OF FOREIGN TAXES. Foreign governments may impose taxes on a fund and
its investments and these taxes generally will reduce the fund's
distributions. However, an offsetting tax credit or deduction may be
available to you. If so, your tax statement will show more taxable income
or capital gains than were actually distributed by the funds, but will also
show the amount of the available offsetting credit or deduction.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Each class's NAV is normally calculated as of the close of
business of the NYSE, normally 4:00 p.m. Eastern time.
A CLASS'S NAV is the value of a single share. The NAV of each class is
computed by adding that class's pro rata share of the value of the
applicable fund's investments, cash, and other assets, subtracting that
class's pro rata share of the value of the applicable fund's liabilities,
subtracting the liabilities allocated to that class, and dividing the
result by the number of shares of that class that are outstanding.
Each fund's assets are valued primarily on the basis of market quotations.
Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. Short-term securities with
remaining maturities of sixty days or less for which quotations are not
readily available are valued on the basis of amortized cost. This method
minimizes the effect of changes in a security's market value. In addition,
if quotations are not readily available, or if the values have been
materially affected by events occurring after the closing of a foreign
market, assets are valued by a method that the Board of Trustees believes
accurately reflects fair value.
THE OFFERING PRICE (price to buy one share) of Institutional Class shares
is its NAV. The REDEMPTION PRICE (price to sell one share) of Institutional
Class shares is its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and the transfer
agent may only be liable for losses resulting from unauthorized
transactions if it does not follow reasonable procedures designed to verify
the identity of the caller. Fidelity and the transfer agent will request
personalized security codes or other information, and may also record
calls. You should verify the accuracy of the confirmation statements
immediately after receipt. If you do not want the ability to redeem and
exchange by telephone, call the transfer agent for instructions. Additional
documentation may be required from corporations, associations, and certain
fiduciaries.
IF YOU ARE UNABLE TO REACH THE TRANSFER AGENT BY PHONE (for example, during
periods of unusual market activity), consider placing your order by mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted. Note the
following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) The funds do not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees a fund or the
transfer agent has incurred.
(small solid bullet) Automated Purchase Orders: For shares of High Yield,
Strategic Income, Mortgage Securities, Government Investment, High Income
Municipal, Municipal Bond, California Municipal Income, New York Municipal
Income, Intermediate Bond, Intermediate Municipal Income, Short-Fixed
Income, and Short-Intermediate Municipal Income begin to earn dividends as
of the day your funds are received.
(small solid bullet) Other Purchases: For shares of High Yield, Strategic
Income, Mortgage Securities, Government Investment, High Income Municipal,
Municipal Bond, California Municipal Income, New York Municipal Income,
Intermediate Bond, Intermediate Municipal Income, Short-Fixed Income, and
Short-Intermediate Municipal Income, you begin to earn dividends as of the
first business day following the day your funds are received.
AUTOMATED PURCHASE ORDERS. Institutional Class shares can be purchased or
sold through investment professionals utilizing an automated order
placement and settlement system that guarantees payment for orders on a
specified date.
CONFIRMED PURCHASES. Certain financial institutions that meet FDC's
creditworthiness criteria may enter confirmed purchase orders on behalf of
customers by phone, with payment to follow no later than close of business
on the next business day. If payment is not received by the next business
day, the order will be canceled and the financial institution will be
liable for any losses.
TO AVOID THE COLLECTION PERIOD associated with check purchases, consider
buying shares by bank wire, U.S. Postal money order, U.S. Treasury check,
or Federal Reserve check, or automatic investment plan.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted. Note the
following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on
the next business day, but if making immediate payment could adversely
affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares of High Yield, Strategic Income, Mortgage
Securities, Government Investment, Intermediate Bond, Short Fixed-Income,
High Income Municipal, Municipal Bond, Intermediate Municipal Income,
Short-Intermediate Municipal Income, California Municipal Income, and New
York Municipal Income will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(small solid bullet) Each fund may hold payment on redemptions until it is
reasonably satisfied that investments made by check have been collected,
which can take up to seven business days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays), when
trading on the NYSE is restricted, or as permitted by the SEC.
THE TRANSFER AGENT RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE
of $12.00 from accounts with a value of less than $2,500, subject to an
annual maximum charge of $60.00 per shareholder. Accounts opened after
September 30 will not be subject to the fee for that year. The fee, which
is payable to the transfer agent, is designed to offset in part the
relatively higher costs of servicing smaller accounts. The fee will not be
deducted from retirement accounts (except non-prototype retirement
accounts), accounts using a systematic investment program, certain (Network
Level I and III) accounts which are maintained through National Securities
Clearing Corporation (NSCC), or if total assets in Fidelity mutual funds
exceed $50,000. Eligibility for the $50,000 waiver is determined by
aggregating Fidelity mutual fund accounts (excluding contractual plans)
maintained (i) by FIIOC and (ii) through NSCC; provided those accounts are
registered under the same primary social security number.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $1,000, you will be
given 30 days' notice to reestablish the minimum balance. If you do not
increase your balance, the transfer agent reserves the right to close your
account and send the proceeds to you. Your shares will be redeemed at the
NAV on the day your account is closed.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC will, at its expense, provide promotional incentives such as sales
contests and luxury trips to investment professionals who support the sale
of shares of the funds. In some instances, these incentives will be offered
only to certain types of investment professionals, such as bank-affiliated
or non-bank affiliated broker-dealers, or to investment professionals whose
representatives provide services in connection with the sale or expected
sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging your Institutional
Class shares for Institutional Class shares of other Fidelity Advisor funds
or for shares of other Fidelity funds. However, you should note the
following:
(small solid bullet) The fund or class you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund or class, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge, you
pay the difference between that fund's sales charge and any sales charge
you may have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund performance
and shareholders, each fund reserves the right to temporarily or
permanently terminate the exchange privilege of any investor who makes more
than four exchanges out of the fund per calendar year. Accounts under
common ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify these exchange
privileges in the future.
APPENDIX A
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in the Aaa securities.
A -Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
short-comings.
C - Bonds which are rated C are the lowest-rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category. Those bonds in the Aa, A, Baa, Ba, and B groups
which Moody's believes possess the strongest investment attributes are
designated by the symbols Aa1, A1, Baa1, and B1.
DESCRIPTION OF S&P'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC - The rating CC typically is applied to debt subordinated to senior debt
that is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating also will
be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
DESCRIPTION OF MOODY'S INVESTORS SERVICE MUNICIPAL BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
CAA - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
short-comings.
C - Bonds which are rated C are the lowest-rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
There are nine basic rating categories for long-term obligations. They
range from AAA (highest quality) to C (lowest quality). Those bonds within
the AA, A, BAA, BA and B categories that Moody's believes possess the
strongest credit attributes within those categories are designated by the
symbols AA1, A1, BAA1, BA1 and B1.
DESCRIPTION OF STANDARD & POOR'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating will also
be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAI, in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do not
constitute an offer by the funds or by FDC to sell or to buy shares of the
funds to any person to whom it is unlawful to make such offer.
APPENDIX B
EQUITY GROWTH - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
EQUITY GROWTH - INSTITUTIONAL CLASS -0.57 15.57 44.84 6.93% 64.71 10.14 15.71 -0.04 40.12 16.89
% % % % % % % % %
Lipper Growth Funds AverageA 3.08% 14.79 26.91 -4.49 36.70 8.08% 10.63 -2.17 30.79 19.24
% % % % % % % %
S&P 500 5.10% 16.61 31.69 -3.10 30.47 7.62% 10.08 1.32% 37.58 22.96
% % % % % % %
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: -0.5700000000000001
Row: 2, Col: 1, Value: 15.57
Row: 3, Col: 1, Value: 44.84
Row: 4, Col: 1, Value: 6.930000000000001
Row: 5, Col: 1, Value: 64.71000000000001
Row: 6, Col: 1, Value: 10.14
Row: 7, Col: 1, Value: 15.71
Row: 8, Col: 1, Value: -0.04
Row: 9, Col: 1, Value: 40.12
Row: 10, Col: 1, Value: 16.89
(LARGE SOLID BOX) EQUITY GROWTH - INSTITUTIONAL
CLASS
GROWTH OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
GROWTH OPPORTUNITIES - 33.28 24.14 -1.65 42.68 15.03 22.17 2.86% 33.58 18.30
INSTITUTIONAL CLASS % % % % % % % %
Lipper Growth Funds AverageA 14.79 26.91 -4.49 36.70 8.08% 10.63 -2.17 30.79 19.24
% % % % % % % %
S&P 500 16.61 31.69 -3.10 30.47 7.62% 10.08 1.32% 37.58 22.96
% % % % % % %
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 0.0
Row: 2, Col: 1, Value: 33.28
Row: 3, Col: 1, Value: 24.14
Row: 4, Col: 1, Value: -1.65
Row: 5, Col: 1, Value: 42.68
Row: 6, Col: 1, Value: 15.03
Row: 7, Col: 1, Value: 22.17
Row: 8, Col: 1, Value: 2.86
Row: 9, Col: 1, Value: 33.58
Row: 10, Col: 1, Value: 18.3
(LARGE SOLID BOX) GROWTH OPPORTUNITIES -
INSTITUTIONAL CLASS
STRATEGIC OPPORTUNITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
STRATEGIC OPPORTUNITIES - -6.33 22.25 32.60 -7.17 23.08 12.87 20.44 -7.17 38.60 1.99%
INSTITUTIONAL CLASS % % % % % % % % %
Lipper Capital Appreciation FundsB -0.03 14.09 26.60 -8.24 39.91 8.78% 15.68 -3.38 30.34 16.31
% % % % % % % % %
S&P 500 5.10% 16.61 31.69 -3.10 30.47 7.62% 10.08 1.32% 37.58 22.96
% % % % % % %
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: -6.33
Row: 2, Col: 1, Value: 22.25
Row: 3, Col: 1, Value: 32.6
Row: 4, Col: 1, Value: -7.17
Row: 5, Col: 1, Value: 23.08
Row: 6, Col: 1, Value: 12.87
Row: 7, Col: 1, Value: 20.44
Row: 8, Col: 1, Value: -7.17
Row: 9, Col: 1, Value: 38.6
Row: 10, Col: 1, Value: 1.99
(LARGE SOLID BOX) STRATEGIC OPPORTUNITIES -
INSTITUTIONAL CLASS
EQUITY INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
EQUITY INCOME - INSTITUTIONAL CLASS -2.24 23.23 18.43 -14.2 29.81 14.94 18.80 7.50% 33.49 15.26
% % % 8% % % % % %
Lipper Equity Income Funds AverageC -2.18 16.74 22.18 -6.78 26.86 9.77% 13.66 -2.54 30.17 18.85
% % % % % % % % %
S&P 500 5.10% 16.61 31.69 -3.10 30.47 7.62% 10.08 1.32% 37.58 22.96
% % % % % % %
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: -2.24
Row: 2, Col: 1, Value: 23.23
Row: 3, Col: 1, Value: 18.43
Row: 4, Col: 1, Value: -14.28
Row: 5, Col: 1, Value: 29.81
Row: 6, Col: 1, Value: 14.94
Row: 7, Col: 1, Value: 18.8
Row: 8, Col: 1, Value: 7.5
Row: 9, Col: 1, Value: 33.49
Row: 10, Col: 1, Value: 15.26
(LARGE SOLID BOX) EQUITY INCOME -
INSTITUTIONAL CLASS
BALANCED - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
BALANCED - INSTITUTIONAL CLASS 20.89 24.60 -2.94 34.48 9.20% 19.66 -5.09 15.00 8.68%
% % % % % % %
Lipper Balanced Funds AverageD 12.34 19.57 -0.57 26.69 7.07% 10.91 -2.50 25.16 13.76
% % % % % % % %
S&P 500 16.61 31.69 -3.10 30.47 7.62% 10.08 1.32% 37.58 22.96
% % % % % % %
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 20.89
Row: 3, Col: 1, Value: 24.6
Row: 4, Col: 1, Value: -2.94
Row: 5, Col: 1, Value: 34.58
Row: 6, Col: 1, Value: 9.199999999999999
Row: 7, Col: 1, Value: 19.66
Row: 8, Col: 1, Value: -5.09
Row: 9, Col: 1, Value: 15.0
Row: 10, Col: 1, Value: 8.68
(LARGE SOLID BOX) BALANCED - INSTITUTIONAL CLASS
HIGH YIELD - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
HIGH YIELD - INSTITUTIONAL CLASS 17.24 3.64% 7.30% 34.94 23.09 20.45 -1.49 18.69 13.24
% % % % % % %
Lipper High Current Yield Funds 12.89 -0.58 -10.1 36.91 17.51 18.95 -3.85 16.43 13.67
AverageE % % 3% % % % % % %
Merrill Lynch High Yield Master Index 13.47 4.23% -4.35 34.58 18.16 17.18 -1.17 19.91 11.06
% % % % % % % %
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 17.24
Row: 3, Col: 1, Value: 3.64
Row: 4, Col: 1, Value: 7.3
Row: 5, Col: 1, Value: 34.94
Row: 6, Col: 1, Value: 23.09
Row: 7, Col: 1, Value: 20.45
Row: 8, Col: 1, Value: -1.49
Row: 9, Col: 1, Value: 18.69
Row: 10, Col: 1, Value: 13.24
(LARGE SOLID BOX) HIGH YIELD - INSTITUTIONAL
CLASS
STRATEGIC INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1995 1996
STRATEGIC INCOME - INSTITUTIONAL 22.41 13.04
CLASS % %
Lipper Multi-Sector Income Funds AverageF 16.92 11.74
% %
Merrill Lynch High Yield Master Index 19.91 11.06
% %
Consumer Price Index 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: nil
Row: 7, Col: 1, Value: nil
Row: 8, Col: 1, Value: nil
Row: 9, Col: 1, Value: 22.41
Row: 10, Col: 1, Value: 13.04
(LARGE SOLID BOX) STRATEGIC INCOME -
INSTITUTIONAL CLASS
MORTGAGE SECURITIES - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
MORTGAGE SECURITIES - 11.26 2.70% 6.72% 13.64 10.36 13.61 5.45% 6.71% 1.94% 17.02
INSTITUTIONAL CLASS % % % % %
Lipper U.S. Mortgage Funds 11.27 2.53% 7.47% 12.71 9.52% 15.00 6.38% 7.58% -4.83 16.29
AverageG % % % % %
Salomon Brothers Mortgage Index 13.44 4.06% 8.81% 15.16 10.90 15.64 7.37% 7.04% -1.43 16.77
% % % % % %
Consumer Price Index 1.10% 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 11.26
Row: 2, Col: 1, Value: 2.7
Row: 3, Col: 1, Value: 6.72
Row: 4, Col: 1, Value: 13.64
Row: 5, Col: 1, Value: 10.36
Row: 6, Col: 1, Value: 13.61
Row: 7, Col: 1, Value: 5.45
Row: 8, Col: 1, Value: 6.71
Row: 9, Col: 1, Value: 1.94
Row: 10, Col: 1, Value: 17.02
(LARGE SOLID BOX) MORTGAGE SECURITIES -
INSTITUTIONAL CLASS
GOVERNMENT INVESTMENT - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
GOVERNMENT INVESTMENT - 6.57% 11.75 8.37% 13.45 6.48% 9.36% -3.85 17.70 2.33%
INSTITUTIONAL CLASS % % % %
Lipper General U.S. Government 6.67% 12.46 8.22% 14.44 6.41% 9.42% -4.64 17.34 1.72%
Funds AverageH % % % %
Salomon Brothers Treasury/Agency 7.10% 14.24 8.78% 15.33 7.24% 10.74 -3.40 18.39 2.76%
Index % % % % %
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 6.57
Row: 3, Col: 1, Value: 11.75
Row: 4, Col: 1, Value: 8.370000000000001
Row: 5, Col: 1, Value: 13.45
Row: 6, Col: 1, Value: 6.48
Row: 7, Col: 1, Value: 9.360000000000001
Row: 8, Col: 1, Value: -3.85
Row: 9, Col: 1, Value: 17.7
Row: 10, Col: 1, Value: 2.33
(LARGE SOLID BOX) GOVERNMENT INVESTMENT -
INSTITUTIONAL CLASS
INTERMEDIATE BOND - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
INTERMEDIATE BOND - INSTITUTIONAL 2.32% 7.84% 12.11 7.91% 15.16 7.32% 12.08 -2.06 12.50 3.70%
CLASS % % % % %
Lipper Intermediate Investment Grade 2.13% 7.06% 11.67 7.22% 15.63 6.88% 9.52% -3.25 16.62 3.12%
Debt Funds AverageI % % % %
Lehman Brothers Intermediate 3.66% 6.67% 12.77 9.16% 14.62 7.17% 8.79% -1.93 15.33 4.05%
Government/Corporate Bond Index % % % %
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 2.32
Row: 2, Col: 1, Value: 7.84
Row: 3, Col: 1, Value: 12.11
Row: 4, Col: 1, Value: 7.91
Row: 5, Col: 1, Value: 15.16
Row: 6, Col: 1, Value: 7.319999999999999
Row: 7, Col: 1, Value: 12.08
Row: 8, Col: 1, Value: -2.06
Row: 9, Col: 1, Value: 12.5
Row: 10, Col: 1, Value: 3.7
(LARGE SOLID BOX) INTERMEDIATE BOND -
INSTITUTIONAL CLASS
SHORT FIXED-INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
SHORT FIXED-INCOME - INSTITUTIONAL 6.19% 10.31 5.87% 13.37 7.61% 9.49% -3.37 9.90% 4.69%
CLASS % % %
Lipper Short Investment Grade Bond 6.86% 10.22 7.87% 12.88 5.97% 6.45% -0.44 10.84 4.64%
Funds AverageJ % % % %
Lehman Brothers 1-3 Year 6.34% 10.97 9.69% 11.83 6.35% 5.55% 0.55% 10.96 5.14%
Government/Corporate Bond Index % % %
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 6.19
Row: 3, Col: 1, Value: 10.31
Row: 4, Col: 1, Value: 5.87
Row: 5, Col: 1, Value: 13.37
Row: 6, Col: 1, Value: 7.609999999999999
Row: 7, Col: 1, Value: 9.49
Row: 8, Col: 1, Value: -3.37
Row: 9, Col: 1, Value: 9.9
Row: 10, Col: 1, Value: 4.69
(LARGE SOLID BOX) SHORT FIXED-INCOME -
INSTITUTIONAL CLASS
HIGH INCOME MUNICIPAL - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1988 1989 1990 1991 1992 1993 1994 1995 1996
HIGH INCOME MUNICIPAL - 11.80 13.09 10.29 12.18 11.11 13.79 -8.05 16.84 3.09%
INSTITUTIONAL CLASS % % % % % % % %
Lipper High Yield Municipal Bond 11.28 10.11 5.13% 11.52 8.51% 11.41 -4.67 15.98 4.17%
Funds AverageK % % % % % %
Consumer Price Index 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: 11.8
Row: 3, Col: 1, Value: 13.09
Row: 4, Col: 1, Value: 10.29
Row: 5, Col: 1, Value: 12.18
Row: 6, Col: 1, Value: 11.11
Row: 7, Col: 1, Value: 13.79
Row: 8, Col: 1, Value: -8.050000000000001
Row: 9, Col: 1, Value: 16.84
Row: 10, Col: 1, Value: 3.09
(LARGE SOLID BOX) HIGH INCOME MUNICIPAL -
INSTITUTIONAL CLASS
MUNICIPAL BOND- INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
MUNICIPAL BOND - INSTITUTIONAL CLASS -1.56 12.30 9.56% 6.91% 11.91 8.93% 13.17 -8.49 18.15 4.02%
% % % % % %
Lipper General Municipal Debt Funds -0.94 11.53 9.65% 6.05% 12.09 8.79% 12.47 -6.50 16.84 3.30%
AverageL % % % % %
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: -1.56
Row: 2, Col: 1, Value: 12.3
Row: 3, Col: 1, Value: 9.56
Row: 4, Col: 1, Value: 6.91
Row: 5, Col: 1, Value: 11.91
Row: 6, Col: 1, Value: 8.93
Row: 7, Col: 1, Value: 13.17
Row: 8, Col: 1, Value: -8.49
Row: 9, Col: 1, Value: 18.15
Row: 10, Col: 1, Value: -4.02
(LARGE SOLID BOX) MUNICIPAL BOND- INSTITUTIONAL
CLASS
INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
INTERMEDIATE MUNICIPAL INCOME - 2.33% 7.38% 7.79% 6.37% 9.64% 7.28% 9.94% -5.43 14.37 4.15%
INSTITUTIONAL CLASS % %
Lipper Intermediate Municipal Debt 1.32% 7.57% 8.26% 6.59% 10.52 7.80% 10.18 -3.51 12.89 3.70%
Funds AverageM % % % %
Consumer Price Index 4.43% 4.42% 4.65% 6.11% 3.06% 2.90% 2.75% 2.67% 2.54% 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 2.33
Row: 2, Col: 1, Value: 7.38
Row: 3, Col: 1, Value: 7.79
Row: 4, Col: 1, Value: 6.37
Row: 5, Col: 1, Value: 9.639999999999999
Row: 6, Col: 1, Value: 7.28
Row: 7, Col: 1, Value: 9.94
Row: 8, Col: 1, Value: -5.430000000000001
Row: 9, Col: 1, Value: 14.37
Row: 10, Col: 1, Value: 4.149999999999999
(LARGE SOLID BOX) INTERMEDIATE MUNICIPAL
INCOME - INSTITUTIONAL CLASS
SHORT-INTERMEDIATE MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1995 1996
SHORT-INTERMEDIATE MUNICIPAL 8.75 3.67
INCOME - INSTITUTIONAL CLASS % %
Lipper Short- Intermediate Municipal 7.43 3.53
Debt Funds AverageN % %
Consumer Price Index 2.54 3.32
% %
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: nil
Row: 7, Col: 1, Value: nil
Row: 8, Col: 1, Value: nil
Row: 9, Col: 1, Value: 8.75
Row: 10, Col: 1, Value: 3.67
(LARGE SOLID BOX) SHORT-INTERMEDIATE MUNICIPAL
INCOME - INSTITUTIONAL CLASS
NEW YORK MUNICIPAL INCOME - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calendar year total returns+ 1996
NEW YORK MUNICIPAL INCOME - 3.81%
INSTITUTIONAL CLASS
Lipper New York Municipal Debt 3.15%
Funds AverageP
Consumer Price Index 3.32%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 2, Col: 1, Value: nil
Row: 3, Col: 1, Value: nil
Row: 4, Col: 1, Value: nil
Row: 5, Col: 1, Value: nil
Row: 6, Col: 1, Value: nil
Row: 7, Col: 1, Value: nil
Row: 8, Col: 1, Value: nil
Row: 9, Col: 1, Value: 0.0
Row: 10, Col: 1, Value: 0.0
(LARGE SOLID BOX) NEW YORK MUNICIPAL INCOME -
CLASS B
+INITIAL OFFERING OF INSTITUTIONAL CLASS SHARES FOR GROWTH OPPORTUNITIES,
BALANCED, HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, SHORT
FIXED-INCOME, HIGH INCOME MUNICIPAL, AND SHORT-INTERMEDIATE MUNICIPAL
INCOME TOOK PLACE ON JULY 3, 1995, AND DO NOT BEAR A SALES LOAD OR 12B-1
FEE. RETURNS PRIOR TO JULY 3, 1995, ARE THOSE OF CLASS T SHARES, THE
ORIGINAL CLASS OF THESE FUNDS AND INCLUDE A CLASS T 12B-1 FEE (AT A THEN
CURRENTLY APPLICABLE RATE OF 0.65% FOR GROWTH OPPORTUNITIES AND BALANCED,
0.25% FOR HIGH YIELD, STRATEGIC INCOME, GOVERNMENT INVESTMENT, AND HIGH
INCOME MUNICIPAL, AND 0.15% FOR SHORT FIXED-INCOME AND SHORT-INTERMEDIATE
MUNICIPAL INCOME). INITIAL OFFERING OF INSTITUTIONAL CLASS SHARES FOR
STRATEGIC OPPORTUNITIES TOOK PLACE ON JULY 3, 1995. INSTITUTIONAL CLASS
SHARES DO NOT BEAR A SALES LOAD OR 12B-1 FEE. RETURNS PRIOR TO JULY 3,
1995, ARE THOSE OF CLASS T SHARES AND INCLUDE A THEN CURRENTLY APPLICABLE
CLASS T 12B-1 FEE OF 0.65%. INITIAL OFFERING OF INSTITUTIONAL CLASS SHARES
OF MUNICIPAL BOND TOOK PLACE ON JULY 2, 1996. RETURNS PRIOR TO JULY 2,
1996, ARE THOSE OF INITIAL CLASS, THE ORIGINAL CLASS OF THE FUND WHICH DOES
NOT BEAR A 12B-1 FEE. INITIAL OFFERING OF INSTITUTIONAL CLASS SHARES OF
MORTGAGE SECURITIES IS SCHEDULED TO TAKE PLACE ON OR ABOUT FEBRUARY 28,
1997. RETURNS PRIOR TO THE INITIAL OFFERING DATE ARE THOSE OF THE INITIAL
CLASS, THE ORIGINAL CLASS OF THE FUND WHICH DOES NOT BEAR A 12B-1 FEE.
[A] THE LIPPER GROWTH FUNDS AVERAGE CURRENTLY REFLECTS THE PERFORMANCE OF
OVER 669 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[B] THE LIPPER CAPITAL APPRECIATION FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 189 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[C] THE LIPPER EQUITY INCOME FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 160 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[D] THE LIPPER BALANCED FUNDS AVERAGE CURRENTLY REFLECTS THE PERFORMANCE OF
OVER 272 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[E] THE LIPPER HIGH CURRENT YIELD FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 148 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[F] THE LIPPER MULTI-SECTOR INCOME FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 51 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[G] THE LIPPER U.S. MORTGAGE FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 59 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[H] THE LIPPER GENERAL U.S. GOVERNMENT BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 170 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[I] THE LIPPER INTERMEDIATE INVESTMENT GRADE BOND FUNDS AVERAGE CURRENTLY
REFLECTS THE PERFORMANCE OF OVER 176 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[J] THE LIPPER SHORT INVESTMENT GRADE BOND FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 95 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[K] THE LIPPER HIGH YIELD MUNICIPAL BOND FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 43 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[L] THE LIPPER GENERAL MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 225 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[M] THE LIPPER INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY REFLECTS
THE PERFORMANCE OF OVER 136 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[N] THE LIPPER SHORT MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 28 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
[O] THE LIPPER NEW YORK MUNICIPAL DEBT FUNDS AVERAGE CURRENTLY REFLECTS THE
PERFORMANCE OF OVER 96 MUTUAL FUNDS WITH SIMILAR OBJECTIVES.
