FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND-CLASS A & B
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND-CLASS A
FIDELITY ADVISOR HIGH YIELD FUND-CLASS A & B
FIDELITY ADVISOR INCOME & GROWTH FUND-CLASS A
FIDELITY ADVISOR SHORT FIXED-INCOME FUND-CLASS A
FUNDS OF
FIDELITY ADVISOR SERIES II
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-5 22 - 7297
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS:
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Advisor Government Investment Fund - Class A and Class
B, Fidelity Advisor Growth Opportunities Fund - Class A, Fidelity Advisor
High Yield Fund - Class A and Class B, Fidelity Advisor Income & Growth
Fund - Class A, and Fidelity Advisor Short Fixed-Income Fund - Class A (the
funds) will be held at the office of Fidelity Advisor Series II (the
trust), 82 Devonshire Street, Boston, Massachusetts 02109 on October 26,
1994, at 10:15 a.m. The purpose of the Meeting is to consider and act upon
the following Proposals, and to transact such other business as may
properly come before the Meeting or any adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of Coopers & Lybrand L.L.P. as
independent accountants of the trust.
3. To amend the Declaration of Trust to provide dollar-based voting rights
for shareholders of the trust.
4. To amend the Declaration of Trust regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to provide each fund with the ability
to invest all of its assets in another open-end investment company with
substantially the same investment objective and policies.
6. To adopt a new fundamental investment policy for each fund permitting a
fund to invest all of its assets in another open-end investment company
with substantially the same investment objective and policies.
7. To approve an amended management contract for each fund.
8. To approve a Sub-Advisory Agreement with FMR Far East for Growth
Opportunities Fund, Income & Growth Fund, and Short Fixed-Income Fund.
9. To approve a Sub-Advisory Agreement with FMR U.K. for Growth
Opportunities Fund, Income & Growth Fund, and Short Fixed-Income Fund.
10. To amend the Sub-Advisory Agreement with FMR Far East for
High Yield Fund.
11. To amend the Sub-Advisory Agreement with FMR U.K. for
High Yield Fund.
12. To amend the Class A Distribution and Service Plan of each fund.
13. To amend the Class B Distribution and Service Plan of Government
Investment Fund and High Yield Fund.
14. To replace Government Investment Fund's fundamental name test with an
identical non-fundamental policy.
15. To replace Government Investment Fund's fundamental defensive policy
with one that is non-fundamental.
16. To replace the fundamental investment policy concerning repurchase
agreement counterparties with a non-fundamental policy for
Government Investment Fund and Income & Growth Fund.
17. To replace Income & Growth Fund's fundamental defensive policy with one
that is non-fundamental.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
18. To amend the fundamental investment limitation concerning
diversification for Government Investment Fund, Growth Opportunities Fund,
Income & Growth Fund, and Short Fixed-Income Fund.
19. To amend the fundamental investment limitation concerning real estate
for Government Investment Fund, Growth Opportunities Fund, Income & Growth
Fund, and Short Fixed-Income Fund.
20. To amend the fundamental investment limitation concerning the issuance
of senior securities for Government Investment Fund, Growth Opportunities
Fund, Income & Growth Fund, and Short Fixed-Income Fund.
21. To eliminate the fundamental investment limitation concerning short
sales of securities for Growth Opportunities Fund, Income & Growth
Fund , and Short Fixed-Income Fund.
22. To eliminate the fundamental investment limitation concerning margin
purchases for Government Investment Fund, Growth Opportunities Fund, Income
& Growth Fund, and Short Fixed-Income Fund.
23. To amend the fundamental investment limitation concerning underwriting
for Government Investment Fund, Growth Opportunities Fund, Income & Growth
Fund, and Short Fixed-Income Fund.
24. To amend the fundamental investment limitation concerning borrowing for
Government Investment Fund, Growth Opportunities Fund, Income & Growth
Fund, and Short Fixed-Income Fund.
25. To amend the fundamental investment limitation concerning the
concentration of its investments within a single industry for Government
Investment Fund, Growth Opportunities Fund, Income & Growth Fund, and Short
Fixed-Income Fund.
26. To amend the fundamental investment limitation concerning the purchase
and sale of physical commodities for Growth Opportunities Fund and Short
Fixed-Income Fund.
27. To amend the fundamental investment limitation concerning lending for
Government Investment Fund, Growth Opportunities Fund, Income & Growth
Fund, and Short Fixed-Income Fund.
28. To eliminate the fundamental investment limitation concerning
investment in other investment companies for Government Investment Fund,
Growth Opportunities Fund, and Income & Growth Fund.
29. To eliminate the fundamental investment limitation concerning investing
in oil, gas, and other mineral exploration programs for Growth
Opportunities Fund.
The Board of Trustees has fixed the close of business on August 29, 1994
as the record date for the determination of the shareholders of each fund
entitled to notice of, and to vote at, such Meeting and any adjournments
thereof.
By order of the Board of Trustees,
ARTHUR S. LORING, Secretary
September 7 , 1994
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE TO THE FUNDS, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR
SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of assistance
to you and help you avoid the time and expense to the funds involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it appears
in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual signing.
This can be shown either in the form of the account registration itself or
by the individual executing the proxy card. For example:
REGISTRATION VALID
SIGNATURE
A. 1) ABC Corp. John Smith,
Treasurer
2) ABC Corp. John Smith,
Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Sharing Plan Ann B. Collins,
Trustee
2) ABC Trust Ann B. Collins,
Trustee
3) Ann B. Collins, Trustee Ann B. Collins,
Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND-CLASS A & B
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND-CLASS A
FIDELITY ADVISOR HIGH YIELD FUND-CLASS A & B
FIDELITY ADVISOR INCOME & GROWTH FUND-CLASS A
FIDELITY ADVISOR SHORT FIXED-INCOME FUND-CLASS A
TO BE HELD ON OCTOBER 26, 1994
This Proxy Statement is furnished in connection with a solicitation of
proxies made by, and on behalf of, the Board of Trustees of Fidelity
Advisor Series II (the trust) to be used at the Special Meeting of
Shareholders of Fidelity Advisor Government Investment Fund, Fidelity
Advisor Growth Opportunities Fund, Fidelity Advisor High Yield Fund,
Fidelity Advisor Income & Growth Fund, and Fidelity Advisor Short
Fixed-Income Fund, and at any adjournments thereof (the Meeting), to be
held October 26, 1994 at 10:15 a.m. at 82 Devonshire Street, Boston,
Massachusetts 02109, the principal executive office of the trust. The
purpose of the Meeting is set forth in the accompanying Notice. The
solicitation is made primarily by the mailing of this Proxy Statement and
the accompanying proxy card on or about September 7 , 1994.
Supplementary solicitations may be made by mail, telephone, telegraph, or
by personal interview by representatives of the trust. In addition, Boston
Financial Data Services may be paid rates based on each telephone call to
solicit shareholders on behalf of the funds at an anticipated cost of
$21,775. The expenses in connection with preparing this Proxy Statement and
its enclosures and of all solicitations will be paid by the funds. The
funds will reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to the beneficial owners of
shares.
If the enclosed proxy card is executed and returned, it may nevertheless
be revoked at any time prior to its use by written notification received by
the trust, by the execution of a later-dated proxy card, or by attending
the Meeting and voting in person. All proxy cards solicited by the Board of
Trustees that are properly executed and received by the Secretary prior to
the Meeting, and which are not revoked, will be voted at the Meeting.
Shares represented by such proxies will be voted in accordance with the
instructions thereon. If no specification is made on a proxy card, it will
be voted FOR the matters specified on the proxy card. All proxies not
voted, including broker non-votes, will not be counted toward establishing
a quorum. Shareholders should note that while votes to ABSTAIN will count
toward establishing a quorum, passage of any Proposal being considered at
the Meeting will occur only if a sufficient number of votes are cast FOR
the Proposal. Accordingly, with respect to Proposals 3 through 29, votes to
ABSTAIN and votes AGAINST will have the same effect in determining whether
the Proposal is approved.
If a quorum is present at the Meeting, but sufficient votes to approve one
or more of the proposed items are not received, or if other matters arise
requiring shareholder attention, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a
majority of those shares present at the Meeting or represented by proxy.
When voting on a proposed adjournment, the persons named as proxies will
vote for the proposed adjournment all shares that they are entitled to vote
with respect to each item, unless directed to vote AGAINST the item, in
which case such shares will be voted against the proposed adjournment with
respect to that item. A shareholder vote may be taken on one or more of the
items in this Proxy Statement prior to such adjournment if sufficient votes
have been received and it is otherwise appropriate. A copy of the fund's
annual report for the fiscal period ended October 31, 1993 has been mailed
or delivered to respective shareholders of each fund entitled to vote at
the meeting.
Shares of each fund issued and outstanding as of August 29 , 1994
are indicated in the following table:
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND - CLASS A 1 2,075,100
FIDELITY ADVISOR GOVERNMENT INVESTMENT FUND - CLASS B 78,809
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND - CLASS A 154,023,163
FIDELITY ADVISOR HIGH YIELD FUND - CLASS A 59,160,599
FIDELITY ADVISOR HIGH YIELD FUND - CLASS B 759,863
FIDELITY ADVISOR INCOME & GROWTH FUND - CLASS A 20 6,349,901
FIDELITY ADVISOR SHORT FIXED-INCOME FUND - CLASS A 85,891,425
As of August 29, 1994, Mr. John White, White Armature Works, Drawer
130, Man, West Virginia 25635 was known to the trust to own of record or
beneficially 16,393.44 shares or approximately 26% of Government Investment
Fund - Class B and Mr. Kenneth Stein, 1201 Elm Street, Dallas, Texas 75270
was known to the trust to own of record or beneficially 14,182.27 shares or
approximately 22% of Government Investment Fund - Class B; Cigna Capital
Corp., P.O. Box 2975, Hartford, Connecticut 06104 was known to the trust to
own 43,035,674 shares or approximately 22% of Growth Opportunities Fund -
Class A; Merrill Lynch, 4800 Deer Lake Drive East, Jacksonville, Florida
32246 was known to the trust to own of record or beneficially 64,832
shares or approximately 9% of High Yield Fund - Class B; and Cigna Capital
Corp., P.O. Box 2975, Hartford, Connecticut 06104 was known to the trust to
own 37,975,411.99 shares or approximately 25% of Income & Growth Fund -
Class A. To the knowledge of the trust, no other shareholder owned of
record or beneficially more than 5% of the outstanding shares of any of the
funds on that date. Shareholders of record at the close of business on
August 29, 1994 will be entitled to vote at the Meeting. Each such
shareholder will be entitled to one vote for each share held on that date.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS SUFFICIENT
TO APPROVE PROPOSALS 1 AND 2. APPROVAL OF PROPOSAL 3 REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF OUTSTANDING VOTING SECURITIES OF EACH
CLASS OF EACH FUND OF THE TRUST, A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES OF EACH FUND OF THE TRUST, AND A MAJORITY OF THE OUTSTANDING
VOTING SECURITIES OF THE ENTIRE TRUST. APPROVAL OF PROPOSALS 4 AND 5
REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING VOTING
SECURITIES OF THE ENTIRE TRUST. APPROVAL OF PROPOSAL 12 REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF
CLASS A SHAREHOLDERS. IN ORDER FOR CLASS B SHAREHOLDERS TO APPROVE
PROPOSAL 12 WITH RESPECTS TO CLASS B SHARES, AN AFFIRMATIVE VOTE OF A
MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF CLASS B
SH A REHOLDERS IS REQUIRED. APPROVAL OF PROPOSAL 13 REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF
CLASS B SHAREHOLDERS. APPROVAL OF PROPOSALS 6 THROUGH 11 AND 14 THROUGH 29
REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" OF THE APPROPRIATE FUNDS. UNDER THE INVESTMENT COMPANY ACT OF
1940 (THE 1940 ACT), A "MAJORITY VOTE OF THE OUTSTANDING VOTING SECURITIES"
MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR MORE OF THE SHARES
OF THE TRUST OR A FUND PRESENT AT THE MEETING OR REPRESENTED BY PROXY IF
THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING SHARES ARE PRESENT OR
REPRESENTED BY PROXY OR (B) MORE THAN 50% OF THE OUTSTANDING SHARES.
1. TO ELECT A BOARD OF TRUSTEES.
Pursuant to the provisions of the Declaration of Trust of Fidelity Advisor
Series II, the Trustees have determined that the number of Trustees shall
be fixed at twelve. It is intended that the enclosed proxy card will be
voted for the election as Trustees of the twelve nominees listed below,
unless such authority has been withheld in the proxy card.
Except for Mr. Cox, Mrs. Davis and Mr. Mann, all nominees named on the
following pages are currently Trustees of Fidelity Advisor Series II and
have served in that capacity continuously since originally elected or
appointed. Mr. Jones, Mr. Lynch, and Mr. McDonough were selected by the
trust's Nominating and Administration Committee (see page ) and were
appointed to the Board in May 1990, April 1990, and August 1989,
respectively. None of the nominees is related to one another. Those
nominees indicated by an asterisk (*) are "interested persons" of the trust
by virtue of, among other things, their affiliation with either the trust,
the funds' investment adviser, Fidelity Management & Research Company (FMR,
or the Adviser), or the funds' distribution agent, Fidelity Distributors
Corporation (Distributors). Each of the nominees is currently a Trustee or
General Partner, as the case may be, of other funds advised by FMR.
In the election of Trustees, those twelve nominees receiving the highest
number of votes cast at the Meeting, providing a quorum is present, shall
be elected.
Nominee Principal Occupation ** Year of
(Age) Election or
Appointme
nt
*J. Gary Burkhead Senior Vice President, is 1987
82 Devonshire Street President of FMR; and President
Boston, MA and a Director of FMR Texas
(53) Inc. (1989), Fidelity
Management & Research (U.K.)
Inc., and Fidelity Management &
Research (Far East) Inc.
Ralph F. Cox Consultant to Western Mining --
200 Rivercrest Drive Corporation (1994). Prior to
Forth Worth, TX February 1994, he was
(62) President of Greenhill Petroleum
Corporation (petroleum
exploration and production,
1990). Until March 1990, Mr.
Cox was President and Chief
Operating Officer of Union
Pacific Resources Company
(exploration and production). He
is a Director of Bonneville Pacific
Corporation (independent power,
1989), Sanifill Corporation
(non-hazardous waste, 1993),
and CH2M Hill Companies
(engineering). In addition, he
served on the Board of Directors
of the Norton Company
(manufacturer of industrial
devices, 1983-1990) and
continues to serve on the Board
of Directors of the Texas State
Chamber of Commerce, and is a
member of advisory boards of
Texas A&M University and the
University of Texas at Austin.
Nominee Principal Occupation ** Year of
(Age) Election or
Appointme
nt
Phyllis Burke Davis Prior to her retirement in --
P.O. Box 264 September of 1991, Mrs. Davis
Bridgehampton, NY was the Senior Vice President of
(62) Corporate Affairs of Avon
Products, Inc. She is currently a
Director of BellSouth
Corporation
(telecommunications), Eaton
Corporation (manufacturing,
1991), and the TJX Companies,
Inc. (retail stores, 1990), and
previously served as a Director
of Hallmark Cards, Inc.
(1985-1991) and Nabisco
Brands, Inc. In addition, she
serves as a Director of the New
York City Chapter of the National
Multiple Sclerosis Society, and is
a member of the Advisory
Council of the International
Executive Services Corps. and
the President's Advisory Council
of The University of Vermont
School of Business
Administration.
Richard J. Flynn Financial consultant. Prior to 1986
77 Fiske Hill September 1986, Mr. Flynn was
Sturbridge, MA Vice Chairman and a Director of
(70) the Norton Company
(manufacturer of industrial
devices). He is currently a
Director of Mechanics Bank and
a Trustee of College of the Holy
Cross and Old Sturbridge
Village, Inc.
*Edward C. Johnson President, is Chairman, Chief 1986
3d Executive Officer and a Director
82 Devonshire Street of FMR Corp.; a Director and
Boston, MA Chairman of the Board and of
(63) the Executive Committee of
FMR; Chairman and a Director
of FMR Texas Inc. (1989),
Fidelity Management &
Research (U.K.) Inc., and
Fidelity Management &
Research (Far East) Inc.
Nominee Principal Occupation ** Year of
(Age) Election or
Appointme
nt
E. Bradley Jones Prior to his retirement in 1984, 1990
3881-2 Lander Road Mr. Jones was Chairman and
Chagrin Falls, OH Chief Executive Officer of LTV
(66) Steel Company. Prior to May
1990, he was Director of
National City Corporation (a
bank holding company) and
National City Bank of Cleveland.
He is a Director of TRW Inc.
(original equipment and
replacement products),
Cleveland-Cliffs Inc. (mining),
NACCO Industries, Inc. (mining
and marketing), Consolidated
Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale
Materials Handling, Inc. (1989),
and RPM Inc. (manufacturer of
chemical products, 1990). In
addition, he serves as a Trustee
of First Union Real Estate
Investments, Chairman of the
Board of Trustees and a
member of the Executive
Committee of the Cleveland
Clinic Foundation, a Trustee and
a member of the Executive
Committee of University School
(Cleveland), and a Trustee of
Cleveland Clinic Florida.
Donald J. Kirk Professor at Columbia University 1987
680 Steamboat Road Graduate School of Business
Apartment #1 - North and a financial consultant. Prior
Greenwich, CT to 1987, he was Chairman of the
(61) Financial Accounting Standards
Board. Mr. Kirk is a Director of
General Re Corporation
(reinsurance) and Valuation
Research Corp. (appraisals and
valuations, 1993). In addition, he
serves as Vice Chairman of the
Board of Directors of the
National Arts Stabilization Fund
and Vice Chairman of the Board
of Trustees of the Greenwich
Hospital Association.
Nominee Principal Occupation ** Year of
(Age) Election or
Appointme
nt
*Peter S. Lynch Vice Chairman of FMR (1992). 1990
82 Devonshire Street Prior to his retirement on May
Boston, MA 31, 1990, he was a Director of
(51) FMR (1989) and Executive Vice
President of FMR (a position he
held until March 31, 1991); Vice
President of Fidelity Magellan
Fund and FMR Growth Group
Leader; and a Managing
Director of FMR Corp. Mr. Lynch
was also Vice President of
Fidelity Investments Corporate
Services (1991-1992).
He is a Director of W.R. Grace &
Co. (chemicals, 1989) and
Morrison Knudsen Corporation
(engineering and construction).
In addition, he serves as a
Trustee of Boston College,
Massachusetts Eye & Ear
Infirmary, Historic Deerfield
(1989) and Society for the
Preservation of New England
Antiquities, and as an Overseer
of the Museum of Fine Arts of
Boston (1990).
Gerald C. McDonough Chairman of G.M. Management 1989
135 Aspenwood Drive Group (strategic advisory
Cleveland, OH services). Prior to his retirement
(65) in July 1988, he was Chairman
and Chief Executive Officer of
Leaseway Transportation Corp.
(physical distribution services).
Mr. McDonough is a Director of
ACME-Cleveland Corp. (metal
working, telecommunications
and electronic products),
Brush-Wellman Inc. (metal
refining),York International Corp.
(air-conditioning and
refrigeration, 1989), Commercial
Intertech Corp. (water treatment
equipment, 1992), and
Associated Estates Realty
Corporation (a real estate
investment trust, 1993).
Edward H. Malone Prior to his retirement in 1985, 1988
5601 Turtle Bay Drive Mr. Malone was Chairman,
#2104 General Electric Investment
Naples, FL Corporation and a Vice
(69) President of General Electric
Company. He is a Director of
Allegheny Power Systems, Inc.
(electric utility), General Re
Corporation (reinsurance), and
Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee
of Corporate Property Investors,
the EPS Foundation at Trinity
College, the Naples
Philharmonic Center for the Arts,
and Rensselaer Polytechnic
Institute, and he is a member of
the Advisory Boards of Butler
Capital Corporation Funds and
Warburg, Pincus Partnership
Funds.
Marvin L. Mann Chairman of the Board, --
55 Railroad Avenue President, and Chief Executive
Greenwich, CT Officer of Lexmark International,
(61) Inc. (office machines, 1991).
Prior to 1991, he held positions
of Vice President of International
Business Machines Corporation
("IBM") and President and
General Manager of various IBM
divisions and subsidiaries. Mr.
Mann is a Director of M.A.
Hanna Company (chemicals,
1993) and Infomart (marketing
services, 1991), a Trammell
Crow Co. In addition, he serves
as the Campaign Vice Chairman
of the Tri-State United Way
(1993) and is a member of the
University of Alabama
President's Cabinet (1990).
Thomas R. Williams President of The Wales Group, 1988
21st Floor Inc. (management and financial
191 Peachtree Stree t , advisory services). Prior to
N.E. retiring in 1987, Mr. Williams
Atlanta, GA served as Chairman of the
(65) Board of First Wachovia
Corporation (bank holding
company), and Chairman and
Chief Executive Officer of The
First National Bank of Atlanta
and First Atlanta Corporation
(bank holding company). He is
currently a Director of BellSouth
Corporation
(telecommunications), ConAgra,
Inc. (agricultural products),
Fisher Business Systems, Inc.
(computer software), Georgia
Power Company (electric utility),
Gerber Alley & Associates, Inc.
(computer software), National
Life Insurance Company of
Vermont, American Software,
Inc. (1989), and AppleSouth Inc.
(restaurants, 1992).
** Except as otherwise indicated, each individual has held the office shown
or other offices in the same company for the last five years.
As of July 31, 1994, the nominees and officers of the trust owned, in the
aggregate, less than 1% of any of the fund's outstanding shares.
If elected, the Trustees will hold office without limit in time except
that (a) any Trustee may resign; (b) any Trustee may be removed by written
instrument, signed by at least two-thirds of the number of Trustees prior
to such removal; (c) any Trustee who requests to be retired or who has
become incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees; and (d) a Trustee
may be removed at any Special Meeting of shareholders by a vote of
two-thirds of the outstanding shares of the trust. In case a vacancy shall
for any reason exist, the remaining Trustees will fill such vacancy by
appointing another Trustee, so long as, immediately after such appointment,
at least two-thirds of the Trustees have been elected by shareholders. If,
at any time, less than a majority of the Trustees holding office has been
elected by the shareholders, the Trustees then in office will promptly call
a shareholder meeting for the purpose of electing a Board of Trustees.
Otherwise, there will normally be no meeting of shareholders for the
purpose of electing Trustees.
The trust's Board, which is currently composed of three interested and six
non-interested Trustees, met eleven times during the twelve months ended
October 31, 1993. It is expected that the Trustees will meet at least ten
times a year at regularly scheduled meetings.
As a group, the non-interested Trustees received fees and expenses of
$18,666 from the trust in their capacities as Trustees of the funds for the
fiscal period ended October 31, 1993. The non-interested Trustees also
served in similar capacities for other funds advised by FMR (see page
), and received additional compensation for such services.
The Board of Trustees has adopted a policy whereby non-interested
Trustees, upon reaching their 72nd birthday will resign. Under a defined
benefit retirement program, non-interested Trustees, upon reaching age 72,
are entitled to payments during their lifetime based on their basic Trustee
fees and their length of service.
The trust's Audit Committee is composed entirely of Trustees who are not
interested persons of the trust, of FMR or its affiliates and normally
meets four times a year, or as required, prior to meetings of the Board of
Trustees. Currently, Messrs. Kirk (Chairman), Flynn, and Williams are
members of the Committee. This Committee oversees and monitors the
financial reporting process, including recommending to the Board the
independent accountants to be selected for the trust (see Proposal 2),
reviewing internal controls and the auditing function (both internal and
external), reviewing the qualifications of key personnel performing audit
work, and overseeing compliance procedures. During the twelve months ended
October 31, 1993, the Committee held five meetings.
The trust's Nominating and Administration Committee is currently composed
of Messrs. Flynn (Chairman), McDonough, and Williams. The Committee members
confer periodically and hold meetings as required. The Committee is charged
with the duties of reviewing the composition and compensation of the Board
of Trustees, proposing additional non-interested Trustees, monitoring the
performance of legal counsel employed by the funds and the non-interested
Trustees, and acting as administrative committee under the Retirement Plan
for non-interested Trustees. During the twelve months ended October 31,
1993, the Committee held five meetings. The Nominating and Administration
Committee will consider nominees recommended by shareholders.
Recommendations should be submitted to the Committee in care of the
Secretary of the Trust. The trust does not have a compensation committee;
such matters are considered by the Nominating and Administration Committee.
2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
ACCOUNTANTS OF THE TRUST.
By a vote of the non-interested Trustees, the firm of Coopers & Lybrand L.
L. P. has been selected as independent accountants for the trust to sign or
certify any financial statements of the trust required by any law or
regulation to be certified by an independent accountant and filed with the
Securities and Exchange Commission (SEC) or any state. Pursuant to the 1940
Act, such selection requires the ratification of shareholders. In addition,
as required by the 1940 Act, the vote of the Trustees is subject to the
right of the trust, by vote of a majority of its outstanding voting
securities at any meeting called for the purpose of voting on such action,
to terminate such employment without penalty. Coopers & Lybrand L.L.P. has
advised the trust that it has no direct or material indirect ownership
interest in the trust.
The services provided to the trust include (1) audit of annual financial
statements and, if requested, limited review of unaudited semiannual
financial statements; (2) assistance and consultation in connection with
SEC filings; and (3) review of the federal income tax returns filed on
behalf of the trust. In recommending the selection of the trust's
accountants, the Audit Committee reviewed the nature and scope of the
services to be provided (including non-audit services) and whether the
performance of such services would affect the accountant's independence.
Representatives of Coopers & Lybrand L.L.P. are not expected to be present
at the Meeting, but have been given the opportunity to make a statement if
they so desire and will be available should any matter arise requiring
their presence.
3. TO AMEND THE DECLARATION OF TRUST TO PROVIDE DOLLAR-BASED VOTING RIGHTS
FOR SHAREHOLDERS OF THE TRUST.
The Board of Trustees has approved, and recommends that shareholders of
the trust approve, a Proposal to amend Article VIII, Section 1 of the
Declaration of Trust. The amendment would provide voting rights based on a
shareholder's total dollar interest in a fund (dollar-based voting), rather
than on the number of shares owned, for all shareholder votes for a fund.
As a result, voting power would be allocated in proportion to the value of
each shareholder's investment.
BACKGROUND. High Yield Fund, Growth Opportunities Fund, Income & Growth
Fund, Government Investment Fund, and Short Fixed-Income Fund are funds of
Fidelity Advisor Series II, an open-end management investment company
organized as a Massachusetts business trust. Shareholders of a class or
fund vote separately on matters concerning only that class or fund.
Shareholders vote on a fund-wide basis on matters that affect a fund as
whole, such as approving changes to fundamental investment policies or
limitations, and vote on a trust-wide basis on matters that affect the
trust as a whole, such as electing trustees or amending the Declaration of
Trust. Currently, under the Declaration of Trust, each share is entitled to
one vote, regardless of the relative value of the shares of each fund in
the trust.
The original intent of the one-share, one-vote provision was to provide
equitable voting rights as required by the 1940 Act. In the case where a
trust has several series or funds, such as Fidelity Advisor Series II,
voting rights may have become disproportionate since the net asset value
per share (NAV) of the separate funds diverge over time. The Staff of the
SEC has issued a "no-action" letter permitting a trust to seek shareholder
approval of a dollar-based voting system. The proposed amendments will
comply with the conditions stated in the no-action letter.
REASON FOR PROPOSAL. If approved, the amendment would provide a more
equitable distribution of voting rights than the one-share, one-vote system
currently in effect for certain votes. The voting power of shareholders
would be commensurate with the value of the shareholder's dollar investment
rather than with the number of shares held.
Under the current voting provisions, an investment in a fund with a lower
NAV may have significantly greater voting power than the same dollar amount
invested in a fund with a higher NAV. The following table shows the net
asset value of the shares of each class of each fund.
Fund Net Asset Value $1,000
as of July 31, investment in
1994 terms of shares
on July 31, 1994
High Yield Fund - Class A $ 11.28 88.652
High Yield Fund - Class B $ 11.28 88.652
Growth Opportunities Fund - Class $ 25.81 38.745
A
Income & Growth Fund - Class A $ 14.76 67.751
Government Investment Fund - $ 9.26 107.991
Class A
Government Investment Fund - $ 9.25 108.108
Class B
Short Fixed-Income Fund - Class $ 9.54 104.822
A
For example, Government Investment Fund - Class B shareholders
would have approximately 179 % greater voting power than Growth
Opportunities Fund - Class A shareholders because at current NAVs, a
$1,000 investment in Government Investment Fund- Class B
equal s 108.108 shares, whereas a $1,000 investment in
Growth Opportunities Fund - Class A would equal 38.745
shares. Accordingly, a one - share, one-vote system may provide
certain shareholders with a disproportionate ability to affect the vote
relative to shareholders of other funds in the trust. If dollar-based
voting had been in effect, each shareholder would have had 1,000 voting
shares. Their voting power would be proportionate to their economic
interest which FMR believes is a more equitable result, and which is the
result in a typical corporation where each voting share has an equal market
price.
On matters requiring trust-wide votes where all funds are required to
vote, or requiring fund-wide votes where all classes are required to vote,
shareholders who own shares with a lower NAV than other funds in the trust
or fund would give other shareholders in the trust or fund more voting
"power" than they currently have. On matters affecting only one class of
one fund, only shareholders of that class vote on the issue. In this
instance, under both the current Declaration of Trust and an amended
Declaration of Trust, all shareholders of the class would have the same
voting rights, since the NAV is the same for all shares in a single class.
AMENDMENT TO THE DECLARATION OF TRUST. Article VIII, Section 1 determines
the method of calculating voting rights for all shareholder votes for a
fund. If approved, Article VIII, Section 1 will be amended as follows
(material to be added is underlined and material to be deleted is
[bracketed]):
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote... On any matter
submitted to a vote of the Shareholders, all shares shall be voted by
individual Series, except (i) when required by the 1940 Act, Shares shall
be voted in the aggregate and not by individual Series; and (ii) when the
Trustees have determined that the matter affects only the interests of one
or more Series, then only the Shareholders of such Series shall be entitled
to vote thereon. [Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote, and each fractional Share shall be
entitled to a proportionate fractional vote.] [[A shareholder of each
Series shall be entitled to one vote for each dollar of net asset value
(number of Shares owned times net asset value per share of such Series), on
any matter on which such Shareholder is entitled to vote and each
fractional dollar amount shall be entitled to a proportionate fractional
vote.]] There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required or permitted by law, this Declaration of Trust or any Bylaws of
the Trust to be taken by Shareholders.
CONCLUSION. If approved, the amendment will be implemented on the
effective date of the next prospectus. The Trustees believe the proposed
amendment will benefit the trust by bringing greater equality in voting
rights amongst all shareholders of the trust. The Trustees recommend that
shareholders vote FOR the proposed amendment to the Declaration of Trust.
If the Proposal is not approved, the Declaration of Trust will remain
unchanged.
4. TO AMEND THE DECLARATION OF TRUST REGARDING SHAREHOLDER NOTIFICATION OF
APPOINTMENT OF TRUSTEES.
The trust's Declaration of Trust provides that in the case of a vacancy on
the Board of Trustees, the remaining Trustees shall fill the vacancy by
appointing a person they, in their discretion see fit, consistent with the
limitations of the 1940 Act. Section 16 of the 1940 Act states that a
vacancy may be filled by the Trustees, if after filling the vacancy, at
least two-thirds of the Trustees then holding office were elected by the
outstanding shareholders of the trust. It also states that if at any time
less than 50% of the Trustees were elected by shareholders, a shareholder
meeting must be called within 60 days for the purpose of electing Trustees
to fill the existing vacancies.
The Declaration of Trust currently requires that within three months of a
Trustee appointment, notification of such be mailed to each shareholder of
the trust. Trustees also may appoint a Trustee in anticipation of a current
Trustee's retirement or resignation, or in the event of an increase in the
number of Trustees. An appointment in this case would also require
shareholder notification within three months of the appointment under the
current Declaration of Trust.
Subject to shareholder approval, the Trustees intend to eliminate the
notification requirement from the trust's Declaration of Trust. The
language to be deleted from the Declaration of Trust is [bracketed].
ARTICLE IV
TRUSTEES
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number, or for any other reason,
exist, the remaining Trustees shall fill such vacancy by appointing such
other person as they in their discretion shall see fit consistent with the
limitations under the Investment Company Act of 1940. Such appointment
shall be evidenced by a written instrument signed by a majority of the
Trustees in office or by recording in the records of the Trust, whereupon
the appointment shall take effect. [Within three months of such appointment
the Trustees shall cause notice of such appointment to be mailed to each
Shareholder at his address as recorded on the books of the Trust.] An
appointment of a Trustee may be made by the Trustees then in office [and
notice thereof mailed to Shareholders as aforesaid] in anticipation of a
vacancy to occur by reason of retirement, resignation or increase in number
of Trustees effective at a later date, provided that said appointment shall
become effective only at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted this trust, the trust estate shall vest in
the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder.
The power of appointment is subject to the provisions of Section 16(a) of
the 1940 Act.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification to
all shareholders of a trust would be costly to the funds of the trust. If
the Proposal is approved, shareholders will be notified of Trustee
appointments in the next financial report for a fund. Other than
eliminating the notification requirement, this Proposal does not amend any
other aspect of Trustee resignation or appointment.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the Declaration of Trust's shareholder notification
requirement in the event of an appointment of a Trustee is in the best
interests of the trust's shareholders. The Trustees recommend voting FOR
the proposed amendment to the Declaration of Trust. If approved, the
amendment will take effect immediately after the shareholder meeting or
after any adjournments thereof. If the Proposal is not approved, the
Declaration of Trust's current section entitled "Resignation and
Appointment of Trustees" will remain unchanged.
5. TO AMEND THE DECLARATION OF TRUST TO PROVIDE EACH FUND WITH THE ABILITY
TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY WITH
SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
the funds approve, a Proposal to amend Article V, Section 1 of the
Declaration of Trust to clarify that the Trustees may authorize the
investment of all of a fund's assets in another open-end investment company
with substantially the same investment objective and policies ("Pooled Fund
Structure"). The purpose of the Pooled Fund Structure is to achieve
operational efficiencies by consolidating portfolio management while
maintaining different distribution and servicing structures. In order to
implement a Pooled Fund Structure, both the Declaration of Trust and the
funds' policies must permit the structure. Currently, each fund's policies
do not allow for such investments. Proposal 6 beginning on page seeks each
fund's shareholder approval to adopt a fundamental investment policy to
permit investment in another open-end investment company. This Proposal,
which amends the Declaration of Trust, clarifies the Board's ability to
implement the Pooled Fund Structure if a fund's policies permit it.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" structures under which several "feeder" funds invest all of
their assets in a single pooled investment, or "master" fund. For example,
an institutional equity fund with a high initial minimum investment amount
for large investors might pool its investments with a retail equity fund
designed for investors with lower minimums. This structure allows several
feeder funds with substantially the same objective but different
distribution and servicing features to combine their investments and manage
them as one master pool instead of managing them separately. The feeder
funds combine their investments by investing all of their assets in one
master pooled fund which would be organized as an open-end management
investment company (mutual fund). (Each feeder fund invested in a single
master pooled investment retains its own characteristics, but is able to
achieve operational efficiencies through investing together with the other
feeder funds in the Pooled Fund Structure.) The current Declaration of
Trust does not specifically provide the Trustees the ability to authorize
the Pooled Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually reviews
methods of structuring mutual funds to take maximum advantage of potential
efficiencies. While neither FMR nor the Trustees has determined that a fund
should invest in a Pooled Fund Structure, the Trustees believe it could be
in the best interest of each fund to adopt such a structure at a future
date. If this Proposal is approved, the Declaration of Trust amendment
would provide the Trustees with the power to authorize a fund to invest all
of its assets in a single open-end investment company. The Trustees will
authorize such a transaction only if a Pooled Fund Structure is permitted
under the fund's investment policies (see Proposal 6), if they determine
that a Pooled Fund Structure is in the best interest of a fund, and if,
upon advice of counsel, they determine that the investment will not have
material adverse tax consequences to the fund or its shareholders. The
Trustees will specifically consider the impact, if any, on fees paid by the
fund as a result of adopting a Pooled Fund Structure. Although the current
Declaration of Trust does not contain any explicit prohibition against
implementing a Pooled Fund Structure, the specific authority is being
sought in the event the Trustees deem it appropriate to adopt a Pooled Fund
Structure in the future.
AMENDMENT TO THE DECLARATION OF TRUST. If the Proposal is approved,
Article V, Section 1 of the Declaration of Trust will be amended as follows
(material to be added is underlined):
"Subject to any applicable limitation in the Declaration of Trust or the
Bylaws of the Trust, the Trustees shall have power and authority:
[[ (t) Notwithstanding any other provision hereof, to invest all of
the assets of any series in a single open-end investment company, including
investment by means of transfer of such assets in exchange for an interest
or interests in such investment company." ]]
CONCLUSION. The Trustees believe the proposed amendment will benefit the
funds by providing the Trustees with the flexibility to adopt a Pooled Fund
Structure in the future if permitted by a fund's investment policies and if
the Trustees determine it to be in the best interest of the fund. The
Trustees recommend that shareholders vote FOR the proposed amendment to the
Declaration of Trust. If approved, the amendment to the Declaration of
Trust will be implemented on the effective date of the next prospectus. If
the Proposal is not approved, Article V, Section 1 of the Declaration of
Trust will remain unchanged.
6. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR EACH FUND PERMITTING A
FUND TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT COMPANY
WITH SUBSTANTIALLY THE SAME INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that
shareholders of each fund approve, the adoption of a new fundamental
investment policy that would permit each fund to invest all of its assets
in another open-end investment company with substantially the same
investment objective and policies ("Pooled Fund Structure"). The purpose of
pooling would be to achieve operational efficiencies by consolidating
portfolio management while maintaining different distribution and servicing
structures.
BACKGROUND. A number of mutual funds have developed so called
"master-feeder" fund structures under which several "feeder" funds invest
all of their assets in a single pooled "master" fund. In order to implement
a Pooled Fund Structure, an amendment to the Declaration of Trust is
proposed, as is the adoption of a new fundamental investment policy.
Proposal 5 proposes to amend the Declaration of Trust, and if approved,
would allow the Trustees to authorize the conversion to a Pooled Fund
Structure when permitted by a fund's policies. This Proposal would add a
fundamental policy for each fund that permits a Pooled Fund Structure.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually review
methods of structuring mutual funds to take advantage of potential
efficiencies. While neither the Board nor FMR has determined that a fund
should invest in a master fund, the Trustees believe it could be in the
best interests of each fund to adopt such a structure at a future date.
At present, certain of each fund's fundamental investment policies and
limitations would prevent a fund from investing all of its assets in
another investment company, and would require a vote of shareholders before
such a structure could be adopted. To avoid the costs associated with a
subsequent shareholder meeting, the Trustees recommend that shareholders
vote to permit each fund's assets to be invested in a single Pooled Fund
Structure, without a further vote of shareholders, if the Trustees
determine that action to be in the best interest of a fund and its
shareholders. Approval of Proposal 5 provides the Trustees with explicit
authority to approve a Pooled Fund Structure. If shareholders approve this
Proposal, certain fundamental and non-fundamental policies and limitations
of each fund that currently prohibit investment in shares of one investment
company would be modified to permit the investment in a Pooled Fund. These
policies include each fund's limitations on investing more than 25% of
total assets in one industry, and on acting as an underwriter.
DISCUSSION. FMR may manage a number of mutual funds with similar
investment objectives, policies, and limitations but with different
features and services (Comparable Funds). Were these Comparable Funds to
pool their assets, operational efficiencies could be achieved, offering the
opportunity to reduce costs. Similarly, FMR anticipates that a Pooled Fund
Structure would facilitate the introduction of new Fidelity mutual funds,
increasing the investment options available to shareholders.
Each fund's method of operation and shareholder services would not be
materially affected by its investment in a Pooled Fund Structure, except
that the assets of a fund would be managed as part of a larger pool. Were a
fund to invest all of its assets in a Pooled Fund Structure, it would hold
only a single investment security, and the Pooled Fund would directly
invest in individual securities pursuant to its investment objective. The
Pooled Fund would be managed by FMR or an affiliate, such as FMR Texas in
the case of a money market fund. The Trustees would retain the right to
withdraw a fund's investments from a Pooled Fund at any time and would do
so if the Pooled Fund's investment objective and policies were no longer
appropriate for the fund. The fund would then resume investing directly in
individual securities as it does currently. Whenever a fund is asked to
vote at a shareholder meeting of the Pooled Fund, the fund will hold a
meeting of its shareholders if required by applicable laws or by the fund's
policies to vote on the matters to be considered at the Pooled Fund's
shareholder meeting. The fund will cast its votes at the Pooled Fund
meeting in the same proportion as the fund's shareholders voted at theirs.
The fund would otherwise continue its normal operations.
At present, the Trustees have not considered any specific Proposal to
authorize pooling of assets. The Trustees will authorize investing each
fund's assets in a Pooled Fund Structure only if they determine that
pooling is in the best interests of the fund and if, upon advice of
counsel, they determine that the investment will not have material adverse
tax consequences to the fund or its shareholders. In determining whether to
invest in a Pooled Fund Structure, the Trustees will consider, among other
things, the opportunity to reduce costs and to achieve operational
efficiencies. The Trustees will not authorize investment in a Pooled Fund
if doing so would materially increase costs (including fees) to
shareholders.
FMR intends to seek federal and state regulatory approval in order to
allow the Fidelity funds to invest in Pooled Funds. There is, of course, no
assurance that all necessary regulatory approvals will be obtained, or that
cost reductions or increased efficiencies will be achieved.
FMR may benefit from the use of a Pooled Fund if overall assets are
increased (since FMR's fees are based on assets). Also, FMR's expenses of
providing investment and other services to each fund may be reduced. If a
fund's investment in a Pooled Fund Structure were to reduce FMR's expenses
materially, the Trustees would consider whether a reduction in FMR's
management fee would be appropriate if and when a Pooled Fund Structure is
implemented.
PROPOSED FUNDAMENTAL POLICY. To allow each fund to invest in a Pooled Fund
at a future date, the Trustees recommend that each fund adopt the following
fundamental policy:
"The fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental
investment objective, policies, and limitations as the fund."
If the Proposal is adopted, the Trustees intend to adopt a non-fundamental
investment limitation for each fund which states:
"The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund."
CONCLUSION. The Board of Trustees recommends that each fund's shareholders
vote to adopt a new fundamental policy that would permit each fund, subject
to future review by the Board of Trustees as described above, to invest all
of its assets in an open-end investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
With respect to each fund, if shareholders approve the Proposal, it will be
implemented on the effective date of the next prospectus. With respect to
each fund, if the Proposal is not approved, the fund's current fundamental
investment policies will remain unchanged with respect to potential
investment in Pooled Funds.
7. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR EACH FUND.
The Board of Trustees has approved, and recommends that shareholders of
each fund approve, a proposal to amend each fund's management contract with
FMR (the Proposed Contract). The proposal would modify the management fee
that FMR receives from each fund to provide for lower fees when FMR's
assets under management exceed certain levels. THE PROPOSED CONTRACT WILL
RESULT IN A MANAGEMENT FEE WHICH IS THE SAME AS, OR LOWER THAN, THE FEE
PAYABLE UNDER THE PRESENT MANAGEMENT CONTRACT (THE CURRENT CONTRACT).
PROPOSED AMENDMENT TO THE MANAGEMENT CONTRACT. A copy of a Proposed
Contract, marked to indicate the proposed amendment, is supplied as Exhibit
1 . Except for the amendment to the management fee, and the addition
of Item 1(c) for Growth Opportunities Fund, Government Investment Fund and
Short-Fixed Income Fund, which discusses FMR's ability to use
broker-dealers on behalf of a fund, as discussed in this proposal, the
Proposed Contracts are substantially identical to each fund's
C urrent C ontract. (For a detailed discussion of each fund's
Current Contract, refer to the section entitled "Present Management
Contracts" beginning on page .)
If approved by shareholders, the Proposed Contract will take effect on
the first day of the month following shareholder approval and will
remain in effect through June 30, 1995 (Government Investment Fund, High
Yield Fund, and Short Fixed-Income Fund) and July 31, 1995 (Growth
Opportunities Fund and Income & Growth Fund) and thereafter subject to
continuation by the fund's Board of Trustees. If the Proposed Contract is
not approved by each fund's respective shareholders, the Current Contract
will continue in effect subject to continuation by the fund's Board of
Trustees.
The management fee is an annual percentage of a fund's average net assets,
calculated and paid monthly. The percentage is the sum of two components: a
group fee rate, which varies according to FMR's assets under management,
and a fixed individual fund fee rate (the "basic fee"). The basic fee for
Growth Opportunities Fund is subject to a performance adjustment as
described in the "Present Management Contracts" section on page . The
proposal would modify the group fee by providing for lower fee rates if
FMR's assets under management remain above $120 billion for Government
Investment Fund and Short Fixed-Income Fund, $138 billion for Income &
Growth Fund and Growth Opportunities Fund, and $156 billion for High Yield
Fund.
MODIFICATION TO GROUP FEE RATE. The group fee rate varies based on the
aggregate net assets of all registered investment companies having
management contracts with FMR. As group net assets increase, the group fee
rate declines. The Proposed Contract would not change the group fee
calculation for group net assets currently in effect. Above such levels of
group net assets, the group fee rate does not decline under the
C urrent C ontract, but under the Proposed Contract, it
declines as indicated in the tables below. These lower fee rates were
voluntarily implemented by FMR.
The group fee rate is calculated according to a graduated fee schedule
providing for different rates for different levels of group net assets. The
rate at which the fee declines is determined by fee "breakpoints" that
provide for lower fees when assets increase. The Proposed Contract would
add new breakpoints for group asset levels as illustrated in the tables
below . ( F or an explanation of how these breakpoints are
factored into the fee calculation, see "Present Management Contracts"
beginning on page .)
GROUP FEE RATE SCHEDULES
Equity Funds: Fixed Income Funds:
Growth Opportunities Fund High Yield Fund
Income & Growth Fund Government Investment Fund
Short Fixed-Income Fund
Average Current Propose Average Current Contract* Propose
Group Contract d Group d
Assets * Contract Assets Contract
($ billions) ($ billions)
Average Current Propose Average - High Propose
Group Contract d Group Government Yield d
Assets * Contract Assets Contract
($ billions) ($ billions) Investment
- Short
Fixed-
Income
102-138 .3100 .3100 84-120 .1500% .1500 .1500%
% % %
138-174 .3100 .3050 120-156 .1500% .1450 .1450%
% % %
156-174 .1500% .1450 .1400%
%
174-210 .3100 .3000 174 -192 .1500% .1400 .1400%
% % %
210-246 .3100 .2950 192-228 .1500% .1400 .1350%
% % %
246-282 .3100 .2900 228-264 .1500% .1400 .1300%
% % %
282-318 .3100 .2850 264-300 .1500% .1400 .1275%
% % %
318-354 .3100 .2800 300-336 .1500% .1400 .1250%
% % %
354-390 .3100 .2750 336-372 .1500% .1400 .1225%
% % %
Over .3100 .2700 Over .1500% .1400 .1200%
390 % % 372 %
* Does not reflect voluntary adoption of extended group fee rate
schedules.
The result at various levels of group net assets is illustrated by the
tables below.
EFFECTIVE ANNUAL FEE RATES
Equity Funds: Fixed Income Funds:
Growth Opportunities Fund High Yield Fund
Income & Growth Fund Government Investment Fund
Short Fixed-Income Fund
Average Current
Propose Average Current Contract* Propose
Group
Contrac d
Group
d
Assets
t* Contrac Assets
Contract
($ t ($
billions) billions)
Average Current
Propose Average -Governme High Propose
Group
Contrac d
Group
nt Yield d
Assets
t* Contrac Assets
Investment Contract
($ t ($ -Short
billions) billions) Fixed-
Income
150 .3375% .3371% 150 .1746% .1736 .1736
% %
200 .3306% .3284% 200 .1685% .1658 .1652
% %
250 .3265% .3219 % 250 .1648% .1 606 . 1587
% %
300 .3238% .3163 % 300 .1623% .1 572 .1 536
% %
350 .3218% .3113 % 350 .1605% .1 547 .1 494
% %
400 .3203% .3067 % 400 .1592% . 1529 .1 459
% %
* Does not reflect voluntary adoption of extended group fee rate
schedules.
Average group net assets for July 1994 were approximately $ 258
billion.
The annual individual fund fee rates are as follows: .30% (Government
Investment Fund , Growth Opportunities Fund , and Short
Fixed-Income Fund ); .45% (High Yield Fund ); and .20% (Income
& Growth Fund ). The sum of the group fee rate and the individual
fund fee rate is referred to as a fund's basic fee rate. One-twelfth (1/12)
of this annual management fee rate is applied to a fund's average net
assets for the current month, resulting in a dollar amount which is the
basic fee for that month.
For Growth Opportunities Fund, the basic fee is subject to an upward or
downward adjustment, depending on whether the fund's investment performance
exceeds or is exceeded by the Standard & Poor's Composite Index of 500
Stocks over the same period. The performance period consists of the
most recent month plus the previous 35 months. Each percentage point of
difference (up to a maximum difference of" 10) is multiplied by a
performance adjustment rate of .02%. Thus, the maximum annualized
adjustment rate is " .20%. This performance comparison is made at the end
of each month. One-twelfth of this rate is applied to the average daily net
assets for Growth Opportunities Fund over the entire performance period,
giving a dollar amount which is added to or subtracted from the basic fee.
Although the language of the Propos ed Contract relating to the
performance adjustment for Growth Opportunities Fund differs from the
language of the Current Contract, the substance of the performance fee
adjustment is not changed under the Proposed Contract.
COMPARISON OF MANAGEMENT FEES AND TOTAL EXPENSES. The following table
compares each fund's basic fee rate (including the performance adjustment
for Growth Opportunities Fund) under the terms of the Current Contract and
the Proposed Contract for July 1994 average group net assets of $ 258
billion.
Current Contract Proposed
Contract
Management
Management
Fee Rate * Fee Rate
Government Investment Fund .4643 % .4578 %
Growth Opportunities Fund . 6260 % .6 209 %
High Yield Fund .6100 % .6078 %
Income & Growth Fund .526 0 % .5209 %
Short Fixed-Income Fund .4643 % .4578 %
* Does not reflect voluntary adoption of extended group fee rate schedule.
The following table compares each fund's management fee (including the
performance adjustment for Growth Opportunities) and total expense ratio
under the terms of the Current Contract for the fiscal year ended October
31, 1993 to the fees and expenses the fund would have incurred if the
Proposed Contract had been in effect.
Current Contract * Proposed Contract
Manageme Total Manageme Total
nt Expense nt Fee Expense
Fee (000s) Ratio (000s) Ratio
Government $ 190,701 .69 % $ 189,369 .69 %
Investment Fund
Growth $ 8,274,666 1.64 % $ 8,248,430 1.64 %
Opportunities
Fund
High Yield Fund $ 1,539,700 1.11 % $ 1,537,530 1.11 % (dagger)
Income & Growth $ 4,595,753 1.51 % $ 4,575,245 1.51 %
Fund
Short $ 1,683,453 .95 % $ 1,671,436 .95 %
Fixed-Income
Fund
* Does not reflect voluntary adoption of extended group fee rate schedules.
(dagger) This information is based on an individual fund fee rate of
.35%. On November 1, 1993, shareholders of High Yield Fund approved an
increase of the individual fund fee rate from .35% to .45%.
TRANSACTIONS WITH BROKERS-DEALERS. Each fund may execute portfolio
transactions with broker-dealers that provide research and execution
services to the funds or other accounts over which FMR or its affiliates
exercise investment discretion. The selection of such broker-dealers is
generally made by FMR (to the extent possible consistent with execution
considerations) based upon the quality of the research and brokerage
services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds and to its other clients, and conversely, such
research provided by broker-dealers who have executed transaction orders on
behalf of other FMR clients may be useful to FMR in carrying out its
obligations to the funds. The receipt of such research has not reduced
FMR's normal independent research activities; however, it enables FMR to
avoid additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
funds to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
fund and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
The funds have been authorized by the Board of Trustees, consistent with
the federal securities laws and the rules and regulations of the Securities
and Exchange Commission, to place portfolio transactions through
broker-dealers who are affiliated with FMR and through broker-dealers who
provide research. The Proposed Contract for Government Investment Fund,
Growth Opportunities Fund, and Short Fixed-Income Fund expressly recognize
this authority. Both the Current Contract and the Proposed Contract for
Income & Growth Fund and High Yield Fund expressly recognize this
authority.
MATTERS CONSIDERED BY THE BOARD OF TRUSTEES. The non-interested Trustees
recommended in 1991, in 1993 , and again in 1994 , that the existing
group fee be reconsidered in light of the significant growth in the assets
of funds advised by FMR. The Combined Committee, a standing Committee of
the Board composed solely of non-interested Trustees, and the Board
considered revisions to the group fee component of the management fee on
various occasions during 1991 , 1993 , and 1994 .
FMR provided substantial information to the Committee to assist it in its
deliberations. In addition, the Committee requested and reviewed additional
data, including analyses prepared by independent counsel to both the funds
and the non-interested Trustees. In unanimously approving the Proposed
Contracts and recommending their approval by shareholders, the Trustees of
the funds, including the Independent Trustees, considering the best
interests of shareholders of the funds, took into account all factors they
deemed relevant. The factors considered by the Independent Trustees
included the nature, quality, and extent of the services furnished by FMR
to the funds; the necessity of FMR maintaining and enhancing its ability to
retain and attract high caliber personnel to serve the funds; the increased
complexity of the domestic and international securities markets; the
investment record of FMR in managing each fund; extensive financial,
personnel, and structural information as to the Fidelity organization,
including the revenues and expenses of FMR , Fidelity Service Co.
(Service, each fund's pricing and bookkeeping agent .) Fidelity
Investments Institutional Operations Company (FIIOC, transfer agent of
Class B shares ) relating to their mutual fund activities; whether
economies of scale were demonstrated in connection with FMR's provision of
investment management and shareholder services as assets increase; data on
investment performance, management fees and expense ratios of competitive
funds and other Fidelity funds; FMR's expenditures in developing enhanced
shareholder services for the funds; enhancements in the quality and scope
of the shareholder services provided to the funds' shareholders; the fees
charged and services offered by an affiliate of FMR for providing
investment management services to non-investment company accounts; and
possible "spin-off" benefits to FMR from serving as manager and from
affiliates of FMR serving as principal underwriter of the funds.
With regard to the inclusion in the Proposed Contract describing the
changes to portfolio transactions, which pertains to Government Investment,
Growth Opportunities and Short Fixed-Income, (Income & Growth and High
Yield's Current Contracts already include this provision), the Trustees
considered the value of research provided by the broker-dealers, the
quality of the execution services provided, and the level of commissions
paid. While Government Investment and Short Fixed-Income Fund do not
generally purchase securities through a broker-dealer by paying
commissions, the Board of Trustees determined that amending its Current
Contract to expressly recognize the authority of FMR to use affiliated
broker-dealers and broker-dealers who provide research services furthers
the goal of standardizing management contracts for Fidelity funds, and that
explicitly permitting all Fidelity funds to utilize certain broker-dealers
is beneficial to the fund.
CONCLUSION, ACTION OF THE BOARD OF TRUSTEES, AND RECOMMENDED SHAREHOLDER
ACTION. Based on its evaluation of the extensive materials presented and
assisted by the advice of independent counsel, the Board of Trustees
concluded (i) that the existing management fee rate structure was fair and
reasonable and (ii) that the proposed reduction in the group fee rate
structure was in the best interest of each fund's shareholders. The Board
of Trustees voted to approve the submission of the Proposed Contract to
shareholders of the funds and recommends that shareholders of each fund
vote FOR the Proposed Contract.
8. TO APPROVE A SUB-ADVISORY AGREEMENT WITH FMR FAR EAST FOR GROWTH
OPPORTUNITIES FUND, INCOME & GROWTH FUND AND SHORT FIXED-INCOME FUND.
In conjunction with its portfolio management responsibilities on behalf of
Growth Opportunities Fund, Short-Fixed Income Fund, and Income & Growth
Fund, FMR proposes to enter into sub-advisory agreements with affiliates
whose offices are geographically dispersed around the world. To strengthen
and coordinate these relationships, the Board of Trustees proposes that
shareholders of each fund approve a sub-advisory agreement (the Proposed
Agreement) between Fidelity Management & Research Far East Inc. (FMR Far
East) and FMR on behalf of each fund. The Proposed Agreement would allow
FMR not only to receive investment advice and research services from FMR
Far East, but also would permit FMR to grant FMR Far East investment
management authority, as well as the authority to buy and sell securities
if FMR believes it would be beneficial to each fund and its shareholders.
BECAUSE FMR PAYS ALL OF FMR FAR EAST'S FEES, THE PROPOSED AGREEMENT WOULD
NOT AFFECT THE FEES PAID BY EACH FUND TO FMR.
On June 16, 1994, the Board of Trustees agreed to submit the Proposed
Agreement to shareholders of each fund pursuant to a unanimous vote of both
the full Board of Trustees and those Trustees who were not "interested
persons" of the trust or FMR. A copy of the Proposed Agreement is attached
to this proxy statement as Exhibit 2.
FMR Far East, with its principal office in Tokyo, is a wholly-owned
subsidiary of FMR established in 1986 to provide investment research to FMR
with respect to foreign securities. This research complements other
research on foreign securities produced by FMR's U.S.-based research
analysts and portfolio managers, or obtained from broker-dealers or other
sources.
FMR Far East may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as investment
adviser, and to other clients. Currently, FMR Far East's only client other
than FMR is Fidelity International Limited (FIL), an affiliate of FMR
organized under the laws of Bermuda. FIL provides investment advisory
services to non-U.S. investment companies and institutional investors
investing in securities of issuers throughout the world. Edward C. Johnson
3d, President and a Trustee of the trust, is Chairman and a Director of FMR
Far East, Chairman and a Director of FIL, and a principal stockholder of
both FIL and FMR. For more information on FMR Far East, see the section
entitled "Activities and Management of FMR U.K. and FMR Far East" on page .
Under the Proposed Agreement, FMR Far East would act as an investment
consultant to FMR and would supply FMR with investment research information
and portfolio management advice as FMR reasonably requests on behalf of
each fund. FMR Far East would provide investment advice and research
services with respect to issuers located outside of the United States
focusing primarily on companies based in the Far East. Under the Proposed
Agreement with FMR Far East, FMR, NOT EACH FUND, would pay FMR Far East's
fee equal to 105% of its costs incurred in connection with the agreement.
Under the Proposed Agreement, FMR could also grant investment management
authority with respect to all or a portion of each fund's assets to FMR Far
East. If FMR Far East were to exercise investment management authority on
behalf of a fund, it would be required, subject to the supervision of FMR,
to direct the investments of the fund in accordance with the fund's
investment objective, policies, and limitations as provided in each fund's
prospectus or other governing instruments and such other limitations as
each fund may impose by notice in writing to FMR or FMR Far East. If FMR
grants investment management authority to FMR Far East with respect to all
or a portion of a fund's assets, FMR Far East would be authorized to buy or
sell stocks, bonds, and other securities for the fund subject to the
overall supervision of FMR and the Board of Trustees. In addition, the
Proposed Agreement would authorize FMR to delegate other investment
management services to FMR Far East, including, but not limited to,
currency management services (including buying and selling currency options
and entering into currency forward and futures contracts on behalf of each
fund), other transactions in futures contracts and options, and borrowing
or lending portfolio securities. If any of these investment management
services were delegated, FMR Far East would continue to be subject to the
control and direction of FMR and the Board of Trustees and to be bound by
the investment objective, policies, and limitations of each fund. If
granted investment management authority, FMR Far East would also execute
orders to purchase and sell securities as described in the "Portfolio
Transactions" section on page .
Allowing FMR to grant investment management authority to FMR Far East
would provide FMR increased flexibility in the assignment of portfolio
managers and give each fund access to managers located abroad who may have
more specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that each fund and its shareholders may
benefit from giving FMR, through FMR Far East, the ability to execute
portfolio transactions from points in the Far East that are physically
closer to foreign issuers and the primary markets in which their securities
are traded. Increasing FMR's proximity to foreign markets should enable
each fund to participate more readily in full trading sessions on foreign
exchanges, and to react more quickly to changing market conditions.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY EACH
FUND. To the extent that FMR granted investment management authority to FMR
Far East, FMR would pay FMR Far East 50% of its monthly management fee with
respect to the average net assets managed on a discretionary basis by FMR
Far East for investment management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
the first day of the first month following shareholder approval
and would continue in force until June 30, 1995 for Short Fixed-Income Fund
and July 31, 1995 for Growth Opportunities Fund and Income & Growth Fund,
and from year to year thereafter, but only as long as its continuance was
approved at least annually by (i) the vote, cast in person at a meeting
called for the purpose, of a majority of those Trustees who are not
"interested persons" of the trust or FMR and (ii) the vote of either a
majority of the Trustees or by the vote of a majority of the outstanding
shares of each fund.
The Proposed Agreement could be transferred to a successor of FMR Far East
without resulting in termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable
securities regulations. The Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and the Proposed
Agreement would terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees unanimously recommends that shareholders
of each fund vote FOR the Proposed Agreement. If the Proposed Agreement is
not approved by shareholders of a fund, the Board and FMR will consider
alternative means of obtaining the investment services provided under the
proposed Sub-Advisory Agreement.
9. TO APPROVE A SUB-ADVISORY AGREEMENT WITH FMR U.K. FOR GROWTH
OPPORTUNITIES FUND, INCOME & GROWTH FUND AND SHORT FIXED-INCOME FUND.
In conjunction with its portfolio management responsibilities on behalf of
Growth Opportunities Fund, Income & Growth Fund and Short-Fixed Income
Fund, FMR proposes to enter into sub-advisory agreements with affiliates
whose offices are geographically dispersed around the world. To
strengthen and coordinate these relationships, the Board of Trustees
proposes that shareholders of each fund approve a sub-advisory agreement
(the Proposed Agreement) between Fidelity Management & Research U.K. Inc.
(FMR U.K.) and FMR on behalf of each fund. The Proposed Agreement would
allow FMR not only to receive investment advice and research services from
FMR U.K., but also would permit FMR to grant FMR U.K. investment management
authority, as well as the authority to buy and sell securities if FMR
believes it would be beneficial to each fund and its shareholders. BECAUSE
FMR PAYS ALL OF FMR U.K.'S FEES, THE PROPOSED AGREEMENT WOULD NOT AFFECT
THE FEES PAID BY EACH FUND TO FMR.
On June 16, 1994, the Board of Trustees agreed to submit the proposed
agreement to shareholders of each fund pursuant to a unanimous vote of both
the full Board of Trustees and those Trustees who were not "interested
persons" of the trust or FMR. A copy of the proposed agreement is attached
to this proxy statement as Exhibit 3.
FMR U.K., with its principal office in London, is a wholly-owned
subsidiary of FMR established in 1986 to provide investment research to FMR
with respect to foreign securities. This research complements other
research on foreign securities produced by FMR's U.S.-based research
analysts and portfolio managers, or obtained from broker-dealers or other
sources.
FMR U.K. may also provide investment advisory services to FMR with respect
to other investment companies for which FMR serves as investment adviser,
and to other clients. Currently, FMR U.K.'s only client other than FMR is
Fidelity International Limited (FIL), an affiliate of FMR organized under
the laws of Bermuda. FIL provides investment advisory services to non-U.S.
investment companies and institutional investors investing in securities of
issuers throughout the world. Edward C. Johnson 3d, President and a Trustee
of the trust, is Chairman and a Director of FMR U.K., Chairman, and a
Director of FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR U.K., see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page .
Under the Proposed Agreement, FMR U.K. would act as an investment
consultant to FMR and would supply FMR with investment research information
and portfolio management advice as FMR reasonably requests on behalf of
each fund. FMR U.K. would provide investment advice and research services
with respect to issuers located outside of the United States focusing
primarily on companies based in Europe. Under the Proposed Agreement with
FMR U.K., FMR, NOT EACH FUND, would pay FMR U.K.'s fee equal to 110% of its
costs incurred in connection with the agreement.
Under the proposed agreement, FMR could also grant investment management
authority with respect to all or a portion of each fund's assets to FMR
U.K. If FMR U.K. were to exercise investment management authority on behalf
of a fund, it would be required, subject to the supervision of FMR, to
direct the investments of the fund in accordance with the fund's investment
objective, policies, and limitations as provided in each fund's prospectus
or other governing instruments and such other limitations as each fund may
impose by notice in writing to FMR or FMR Far East. If FMR grants
investment management authority to FMR U.K. with respect to all or a
portion of a fund's assets, FMR U.K. would be authorized to buy or sell
stocks, bonds, and other securities for the fund subject to the overall
supervision of FMR and the Board of Trustees. In addition, the proposed
agreement would authorize FMR to delegate other investment management
services to FMR U.K., including, but not limited to, currency management
services (including buying and selling currency options and entering into
currency forward and futures contracts on behalf of each fund), other
transactions in futures contracts and options, and borrowing or lending
portfolio securities. If any of these investment management services were
delegated, FMR U.K. would continue to be subject to the control and
direction of FMR and the Board of Trustees and to be bound by the
investment objective, policies, and limitations of each fund. If granted
investment management authority, FMR U.K. would also execute orders to
purchase and sell securities as described in the "Portfolio Transactions"
section on page .
Allowing FMR to grant investment management authority to FMR U.K. would
provide FMR increased flexibility in the assignment of portfolio managers
and give each fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that each fund and its shareholders may
benefit from giving FMR, through FMR U.K., the ability to execute portfolio
transactions from points in Europe that are physically closer to foreign
issuers and the primary markets in which their securities are traded.
Increasing FMR's proximity to foreign markets should enable each fund to
participate more readily in full trading sessions on foreign exchanges, and
to react more quickly to changing market conditions.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY EACH
FUND. To the extent that FMR granted investment management authority to FMR
U.K., FMR would pay FMR U.K. 50% of its monthly management fee with respect
to the average net assets managed on a discretionary basis by FMR U.K. for
investment management and portfolio execution services.
If approved by shareholders, the proposed agreement would take effect
on the first day of the first month following shareholder
approval and would continue in force until June 30, 1995 for
Short Fixed-Income Fund and July 31, 1995 for Growth Opportunities Fund and
Income & Growth Fund, and from year to year thereafter, but only as long as
its continuance was approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of those Trustees
who are not "interested persons" of the trust or FMR and (ii) the vote of
either a majority of the Trustees or by the vote of a majority of the
outstanding shares of each fund.
The Proposed Agreement could be transferred to a successor of FMR U.K.
without resulting in termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable
securities regulations. The Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and the Proposed
Agreement would terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees unanimously recommends that shareholders
of each fund vote FOR the Proposed Agreement. If the Proposed Agreement is
not approved by shareholders of a fund, the Board and FMR will consider
alternative means of obtaining the investment services provided under the
Proposed Sub-Advisory Agreement.
10. TO AMEND THE SUB-ADVISORY AGREEMENT WITH FMR FAR EAST FOR
HIGH YIELD FUND.
In conjunction with its portfolio management responsibilities on behalf of
High Yield Fund, FMR has entered into sub-advisory agreements with
affiliates whose offices are geographically dispersed around the world. To
strengthen and coordinate these relationships, the Board of Trustees
proposes that shareholders of the fund approve an amended sub-advisory
agreement (the Proposed Agreement) between Fidelity Management & Research
Far East Inc. (FMR Far East) and FMR on behalf of the fund. The Proposed
Agreement would allow FMR not only to receive investment advice and
research services from FMR Far East, but also would permit FMR to grant FMR
Far East investment management authority, as well as the authority to buy
and sell securities if FMR believes it would be beneficial to the fund and
its shareholders. BECAUSE FMR PAYS ALL OF FMR FAR EAST'S FEES, THE PROPOSED
AGREEMENT WOULD NOT AFFECT THE FEES PAID BY THE FUND TO FMR.
On June 16, 1994, the Board of Trustees agreed to submit the Proposed
Agreement to shareholders of the fund pursuant to a unanimous vote of both
the full Board of Trustees and those Trustees who were not "interested
persons" of the trust or FMR. If approved by shareholders, the Proposed
Agreement will replace the sub-advisory agreement currently in effect with
respect to the fund (the Current Agreement). The Current Agreement, dated
November 1, 1993, was approved by the fund's shareholders on October 20,
1993. A copy of the Proposed Agreement is attached to this proxy statement
as Exhibit 4.
FMR Far East, with its principal office in Tokyo, is a wholly-owned
subsidiary of FMR established in 1986 to provide investment research to FMR
with respect to foreign securities. This research complements other
research on foreign securities produced by FMR's U.S.-based research
analysts and portfolio managers, or obtained from broker-dealers or other
sources.
FMR Far East may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as investment
adviser, and to other clients. Currently, FMR Far East's only client other
than FMR is Fidelity International Limited (FIL), an affiliate of FMR
organized under the laws of Bermuda. FIL provides investment advisory
services to non-U.S. investment companies and institutional investors
investing in securities of issuers throughout the world. Edward C. Johnson
3d, President and a Trustee of the trust, is Chairman and a Director of FMR
Far East, Chairman, and a Director of FIL, and a principal stockholder of
both FIL and FMR. For more information on FMR Far East, see the section
entitled "Activities and Management of FMR U.K. and FMR Far East" on page .
Under the Current Agreement, FMR Far East acts as an investment consultant
to FMR and supplies FMR with investment research information and portfolio
management advice as FMR reasonably requests on behalf of the fund. FMR Far
East provides investment advice and research services with respect to
issuers located outside of the United States focusing primarily on
companies based in the Far East. Under the Current Agreement with FMR Far
East, FMR, NOT THE FUND, pays FMR Far East's fee equal to 105% of its costs
incurred in connection with the agreement. No fees have been paid by FMR
to FMR Far East on behalf of the fund.
Although FMR employees are expected to consult regularly with FMR Far
East, under the Current Agreement, FMR Far East has no authority to make
investment decisions on behalf of the fund. Under the Proposed Agreement,
FMR would continue to receive investment advice from FMR Far East, but it
could also grant investment management authority to FMR Far East with
respect to all or a portion of the fund's assets. If FMR Far East were to
exercise investment management authority on behalf of the fund, it would be
required, subject to the supervision of FMR, to direct the investments of
the fund in accordance with the fund's investment objective, policies, and
limitations as provided in the fund's Prospectus or other governing
instruments and such other limitations as the fund may impose by notice in
writing to FMR or FMR Far East. If FMR grants investment management
authority to FMR Far East with respect to all or a portion of the fund's
assets, FMR Far East would be authorized to buy or sell stocks, bonds, and
other securities for the fund subject to the overall supervision of FMR and
the Board of Trustees. In addition, the Proposed Agreement would authorize
FMR to delegate other investment management services to FMR Far East,
including, but not limited to, currency management services (including
buying and selling currency options and entering into currency forward and
futures contracts on behalf of the fund), other transactions in futures
contracts and options, and borrowing or lending portfolio securities. If
any of these investment management services were delegated, FMR Far East
would continue to be subject to the control and direction of FMR and the
Board of Trustees and to be bound by the investment objective, policies,
and limitations of the fund. If granted investment management authority,
FMR Far East would also execute orders to purchase and sell securities as
described in the "Portfolio Transactions" section beginning on page .
Allowing FMR to grant investment management authority to FMR Far East
would provide FMR increased flexibility in the assignment of portfolio
managers and give the fund access to managers located abroad who may have
more specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that the fund and its shareholders may
benefit from giving FMR, through FMR Far East, the ability to execute
portfolio transactions from points in the Far East that are physically
closer to foreign issuers and the primary markets in which their securities
are traded. Increasing FMR's proximity to foreign markets should enable the
fund to participate more readily in full trading sessions on foreign
exchanges, and to react more quickly to changing market conditions.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY THE
FUND. The fees paid by FMR to FMR Far East for investment advice as
described above would remain unchanged. However, to the extent that FMR
granted investment management authority to FMR Far East, FMR would pay FMR
Far East 50% of its monthly management fee with respect to the average net
assets managed on a discretionary basis by FMR Far East for investment
management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on the first day of the first month following shareholder
approval and would continue in force until June 30, 1995 and from
year to year thereafter, but only as long as its continuance was approved
at least annually by (i) the vote, cast in person at a meeting called for
the purpose, of a majority of those Trustees who are not "interested
persons" of the trust or FMR and (ii) the vote of either a majority of the
Trustees or by the vote of a majority of the outstanding shares of the
fund.
The Proposed Agreement could be transferred to a successor of FMR Far East
without resulting in termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable
securities regulations. The Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and the Proposed
Agreement would terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees unanimously recommends that shareholders
of the fund vote FOR the Proposed Agreement. If the Proposed Agreement is
not approved by shareholders of the fund, FMR's Current Agreement on behalf
of the fund will continue in effect.
11. TO AMEND THE SUB-ADVISORY AGREEMENT WITH FMR U.K. FOR HIGH YIELD
FUND.
In conjunction with its portfolio management responsibilities on behalf of
High Yield Fund, FMR has entered into sub-advisory agreements with
affiliates whose offices are geographically dispersed around the world. To
strengthen and coordinate these relationships, the Board of Trustees
proposes that shareholders of the fund approve an amended sub-advisory
agreement (the Proposed Agreement) between Fidelity Management & Research
U.K. Inc. (FMR U.K.) and FMR on behalf of the fund to replace FMR's
existing agreement with FMR U.K. The Proposed Agreement would allow FMR not
only to receive investment advice and research services from FMR U.K., but
also would permit FMR to grant FMR U.K. investment management authority, as
well as the authority to buy and sell securities if FMR believes it would
be beneficial to the fund and its shareholders. BECAUSE FMR PAYS ALL OF FMR
U.K.'S FEES, THE PROPOSED AGREEMENT WOULD NOT AFFECT THE FEES PAID BY THE
FUND TO FMR.
On June 16, 1994, the Board of Trustees agreed to submit the Proposed
Agreement to shareholders of the fund pursuant to a unanimous vote of both
the full Board of Trustees and those Trustees who were not "interested
persons" of the trust or FMR. If approved by shareholders, the Proposed
Agreement will replace the sub-advisory agreement currently in effect with
respect to the fund (the Current Agreement). The Current Agreement, dated
November 1, 1993 was approved by fund shareholders on October 20, 1993. A
copy of the Proposed Agreement is attached to this proxy statement as
Exhibit 5.
FMR U.K., with its principal office in London, is a wholly-owned
subsidiary of FMR established in 1986 to provide investment research to FMR
with respect to foreign securities. This research complements other
research on foreign securities produced by FMR's U.S.-based research
analysts and portfolio managers, or obtained from broker-dealers or other
sources.
FMR U.K. may also provide investment advisory services to FMR with respect
to other investment companies for which FMR serves as investment adviser,
and to other clients. Currently, FMR U.K.'s only client other than FMR is
Fidelity International Limited (FIL), an affiliate of FMR organized under
the laws of Bermuda. FIL provides investment advisory services to non-U.S.
investment companies and institutional investors investing in securities of
issuers throughout the world. Edward C. Johnson 3d, President and a Trustee
of the trust, is Chairman and a Director of FMR U.K., Chairman, and a
Director of FIL, and a principal stockholder of both FIL and FMR. For more
information on FMR U.K., see the section entitled "Activities and
Management of FMR U.K. and FMR Far East" on page .
Under the Current Agreement, FMR U.K. acts as an investment consultant to
FMR and supplies FMR with investment research information and portfolio
management advice as FMR reasonably requests on behalf of the fund. FMR
U.K. provides investment advice and research services with respect to
issuers located outside of the United States focusing primarily on
companies based in Europe. Under the Current Agreement with FMR U.K., FMR,
NOT THE FUND, pays FMR U.K.'s fee equal to 110% of its costs incurred in
connection with the agreement. No fees have been paid by FMR to FMR U.K.
on behalf of the fund.
Although FMR employees are expected to consult regularly with FMR U.K.,
under the Current Agreement, FMR U.K. has no authority to make investment
decisions on behalf of the fund. Under the Proposed Agreement, FMR would
continue to receive investment advice from FMR U.K., but it could also
grant investment management authority to FMR U.K. with respect to all or a
portion of the fund's assets. If FMR U.K. were to exercise investment
management authority on behalf of a fund, it would be required, subject to
the supervision of FMR, to direct the investments of the fund in accordance
with the fund's investment objective, policies, and limitations as provided
in the fund's Prospectus or other governing instruments and such other
limitations as the fund may impose by notice in writing to FMR or FMR U.K.
If FMR grants investment management authority to FMR U.K. with respect to
all or a portion of a fund's assets, FMR U.K. would be authorized to buy or
sell stocks, bonds, and other securities for the fund subject to the
overall supervision of FMR and the Board of Trustees. In addition, the
Proposed Agreement would authorize FMR to delegate other investment
management services to FMR U.K., including, but not limited to, currency
management services (including buying and selling currency options and
entering into currency forward and futures contracts on behalf of the
fund), other transactions in futures contracts and options, and borrowing
or lending portfolio securities. If any of these investment management
services were delegated, FMR U.K. would continue to be subject to the
control and direction of FMR and the Board of Trustees and to be bound by
the investment objective, policies, and limitations of the fund. If granted
investment management authority, FMR U.K. would also execute orders to
purchase and sell securities as described in the "Portfolio Transactions"
section on page .
Allowing FMR to grant investment management authority to FMR U.K. would
provide FMR increased flexibility in the assignment of portfolio managers
and give the fund access to managers located abroad who may have more
specialized expertise with respect to local companies and markets.
Additionally, the Trustees believe that the fund and its shareholders may
benefit from giving FMR, through FMR U.K., the ability to execute portfolio
transactions from points in Europe that are physically closer to foreign
issuers and the primary markets in which their securities are traded.
Increasing FMR's proximity to foreign markets should enable the fund to
participate more readily in full trading sessions on foreign exchanges, and
to react more quickly to changing market conditions.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY THE
FUND. The fees paid by FMR to FMR U.K. for investment advice as described
above would remain unchanged. However, to the extent that FMR granted
investment management authority to FMR U.K., FMR would pay FMR U.K. 50% of
its monthly management fee with respect to the average net assets managed
on a discretionary basis by FMR U.K. for investment management and
portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on the first day of the first month following shareholder
approval and would continue in force until June 30, 1995 and from
year to year thereafter, but only as long as its continuance was approved
at least annually by (i) the vote, cast in person at a meeting called for
the purpose, of a majority of those Trustees who are not "interested
persons" of the trust or FMR and (ii) the vote of either a majority of the
Trustees or by the vote of a majority of the outstanding shares of the
fund.
The Proposed Agreement could be transferred to a successor of FMR U.K.
without resulting in termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable
securities regulations. The Proposed Agreement would be terminable on 60
days' written notice by either party to the agreement and the Proposed
Agreement would terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees unanimously recommends that shareholders
of the fund vote FOR the Proposed Agreement. If the Proposed Agreement is
not approved by shareholders of the fund, FMR's Current Agreement on behalf
of the fund will continue in effect.
12. TO AMEND THE CLASS A DISTRIBUTION AND SERVICE PLAN OF EACH FUND.
The Board of Trustees has approved, and recommends that shareholders
approve, an amended Distribution and Service Plan for Class A shares (the
Amended Class A Plan). Each Amended Class A Plan must be approved by a
"majority," as defined in the Investment Company Act of 1940 (the 1940 Act)
of the outstanding voting securities of the Class A shareholders.
In addition, Class B shareholders (Government Investment Fund and High
Yield Fund) are being asked to approve the Amended Class A Plan. Class B
shares are offered to retail investors and pay a contingent deferred sales
charge which declines for Class B shares held up to a maximum of 5 years.
Class B shares convert automatically to Class A shares of the same Fidelity
Advisor Fund at NAV after a maximum holding period of 6 years. Due to this
conversion feature, and as a condition of an exemptive order received by
Fidelity which permits separate classes, if material changes are made to
the Class A Distribution and Service Plan, a "majority" (as defined by the
1940 Act) of Class B shareholders must approve the amended Class A
Distribution and Service Plan.
A copy of the Amended Class A Plan is attached to this Proxy Statement as
Exhibit 6.
Rule 12b-1 (the Rule), promulgated by the Securities and Exchange
Commission (SEC) under the 1940 Act, provides that in order for an
investment company (e.g., a mutual fund) to act as a distributor of its
shares, a written plan "describing all material aspects of the proposed
financing of distribution" must be adopted by the company. Under the Rule,
an investment company is deemed to be acting as a distributor of its shares
if it engages "directly or indirectly in financing any activity which is
primarily intended to result in the sale of shares issued by such company,
including, but not necessarily limited to, advertising, compensation of
underwriters, dealers, and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and
mailing of sales literature."
THE CURRENT CLASS A PLAN. The Trustees, as provided for by the Rule, have
approved a Distribution and Service Plan for Class A (the Plan). Under each
fund's Plan, Class A pays Fidelity Distributors Corporation (Distributors)
a fee at an annual rate of its average daily net assets throughout the
month. The determination of daily net assets is made at the close of
business each day throughout the month, but the net assets for purposes of
calculating the fee will exclude assets attributable to shares purchased
more than 144 months (12 years) prior to such date. Class A shares begin
accruing time upon initial purchase into Class A. Class B shares upon
conversion into Class A shares begin accruing time under the Class A Plan
as of their initial purchase into Class B. Pursuant to the Plan for each
fund, Class A pays Distributors a distribution fee at an annual rate of up
to .15% (Short Fixed-Income Fund), .40% (Government Investment Fund and
High Yield Fund) and .65% (Growth Opportunities Fund and Income & Growth
Fund) of its average net assets. Currently the Trustees have approved a
distribution fee for Class A at an annual rate of .25% of average net
assets for Government Investment Fund and High Yield Fund. Distributors may
pay all or a portion of such fee to securities dealers or other persons
(investment professionals) as distribution or service fees pursuant to
agreements with investment professionals. To the extent the fee is not paid
to such investment professionals, Distributors could use such fee for its
expenses incurred in the distribution of Class A shares. The Plan also
provides that to the extent that each fund's payment of management fees to
FMR might be considered to constitute the "indirect" financing of
activities "primarily intended to result in the sale of shares," such
payment is expressly authorized.
The Plan will continue in effect as long as its continuance is
specifically approved at least annually by a majority of the Board of
Trustee s , including a majority of the Trustees who are not
"interested persons" of the trust and who have no direct or indirect
financial interest in the operation of the Plan or any agreement related to
the Plan (the non-interested Trustees), cast in person at a meeting called
for the purpose of voting on the Plan. The Plan requires that the Trustees
receive, at least quarterly, a written report as to the amounts expended
during the quarter by FMR, or FDC, in connection with financing any
activity primarily intended to result in the sale of shares issued by the
fund and the purposes for which such expenditures were made.
Although the Plan contemplates that FMR and FDC may engage in various
distribution activities, it does not require them to perform any specific
type of distribution activity or to incur any specific level of expense for
such activities.
THE AMENDED CLASS A PLAN. The Amended Class A Plan is identical to the
current Plan with the exception of the provision which excludes assets
attributable to shares purchased more than 144 months prior to the date of
the distribution fee calculation (144-month limitation). When the Fidelity
Advisor funds were first introduced in the mid 1980's, the National
Association of Securities Dealers, Inc. (NASD) Rules of Fair Practice set a
limit on the amount of front-end sales charges which a fund could impose.
However, no similar limit existed for 12b-1 fees. The 144-month limitation
was an effort by FDC and the Board of Trustees to protect shareholders
against indefinite payment on a given amount of assets. The 144-month
period was intended to result in total distribution charges (front-end plus
12b-1 fees) roughly equivalent to the front-end sales charge limit then
imposed by the NASD.
In July 1993, the NASD amended its Rules of Fair Practice to establish a
combined limit on mutual fund sales loads and 12b-1 fees. Like the
144-month limitation, the NASD Rule restricts a mutual fund's total payment
of 12b-1 fees. Under the NASD Rule, a fund is subject to a limit on
aggregate payments of 7.25% of total new gross sales (6.25% if a service
fee is also imposed), plus interest. When the limit is reached, no further
sales loads by the fund may be paid to the distributor, and no further
payments under the 12b-1 plan can be made, until the fund has further gross
sales that result in an increased limit.
The NASD Rule has become the industry standard restricting distribution
charges. Regardless of whether the proposal is approved, each class is and
will continue to be subject to the NASD Rule. The NASD Rule addresses the
same concerns the 144-month limitation was intended to address. However,
the limitations of the NASD Rule are calculated differently than those of
the 144-month limitation. For example, using reasonable sales, redemption
and performance assumptions, there is a considerable likelihood that many
funds may never reach their NASD cap, because the cap is constantly
replenished by additional gross sales. To the extent that this is true,
funds which contain assets older than 144 months will pay more in 12b-1
fees if the proposal is approved than under the current Plan.
TRUSTEE CONSIDERATION. In determining to recommend the adoption of the
Amended Class A Plan, the Trustees considered a variety of factors
and were advised by counsel who are not counsel to FMR or FDC. The
Trustees, Distributors and FMR believe that the implementation of the
Amended Class A Plan would assist in the selling of shares and thus
increase its asset base, which in turn may prove beneficial to each fund
and its shareholders by spreading fixed costs over a larger asset base and
making additional monies available for investing. Positive cash flow
affords portfolio management a greater ability to diversify investments and
minimizes the need to sell securities to meet redemptions. In addition,
since each class is dependent primarily on investment professionals for
sales of its shares, the ongoing payment to investment professionals who
have sold shares (by reeallowance of the distribution fee) should provide
incentives to offer better and continuous services to current shareholders.
Investment professionals also allow investors access to investment
alternatives to which they might otherwise not have been exposed.
FMR may benefit if overall assets are increased (since FMR's fees are
based on assets). The Board believes that revenues received by FMR
contribute to its continuing ability to attract and retain a high caliber
of investment and other personnel and to develop and implement new systems
for providing services and information to shareholders. The Board considers
this to be an important benefit to each fund.
CONCLUSION. The Board of Trustees recommends that shareholders vote FOR
approval of the amendment to the Class A Distribution and Service Plan. If
Class A shareholders vote to approved the Amended Class A Plan, it will be
effective as to shares purchased into Class A irrespective of whether the
Class B shareholders vote to approve the amendment. If so approved, the
Amended Class A Plan will become effective the first day of the month
following shareholder approval. If the Amended Class A Plan is not approved
by Class A shareholders, the current Plan will remain in effect unchanged
for shares purchased into Class A. The effect of approval or disapproval of
the Amended Class A Plan by Class B shareholders will depend upon the
approval or disapproval of the proposed amendment to the Class B Plan by
Class B shareholders (see Proposal 13).
13. TO AMEND THE CLASS B DISTRIBUTION AND SERVICE PLAN OF GOVERNMENT
INVESTMENT FUND AND HIGH YIELD FUND.
The Board of Trustees has approved, and recommends that Class B
shareholders approve, an amended Distribution and Service Plan for Class B
shares (the Amended Class B Plan). Each Amended Class B Plan must be
approved by a "majority," as defined in the Investment Company Act of 1940
(the 1940 Act) of the outstanding voting securities of the Class B
shareholders.
In addition, Class B shareholders (Government Investment Fund and High
Yield Fund) are being asked to approve the Amended Class A Plan (see
Proposal 12).
A copy of the Amended Class B Plan is attached to this Proxy Statement as
Exhibit 7.
Rule 12b-1 (the Rule), promulgated by the Securities and Exchange
Commission (SEC) under the 1940 Act, provides that in order for an
investment company (e.g. a mutual fund) to act as a distributor of its
shares, a written plan "describing all material aspects of the proposed
financing of distribution" must be adopted by the company. Under the Rule,
an investment company is deemed to be acting as a distributor of its shares
if it engages "directly or indirectly in financing any activity which is
primarily intended to result in the sale of shares issued by such company,
including, but not necessarily limited to, advertising, compensation of
underwriters, dealers, and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and
mailing of sales literature."
THE CURRENT CLASS B PLAN. The Trustees, as provided for by the Rule, have
approved a Distribution and Service Plan for Class B (the Plan). Under each
fund's Plan, Class B pays Fidelity Distributors Corporation (Distributors)
a fee at an annual rate of its average daily net assets throughout the
month. The determination of daily net assets is made at the close of
business each day throughout the month, but the net assets for purposes of
calculating the fee will exclude assets attributable to shares purchased
more than 144 months (12 years) prior to such date. Shares converted from
Class B to Class A begin accruing time from the initial purchase of Class B
shares. Pursuant to the Plan for each fund, Class B pays Distributors a
distribution fee at an annual rate of .75% of its average net assets. Class
B also pays Distributors a service fee at an annual rate of .25% of its
average net assets with which Distributors compensates investment
professionals for personal service and/or the maintenance of shareholder
accounts. Distributors may pay all or a portion of such fee to securities
dealers or other persons (investment professionals) as distribution or
service fees pursuant to agreements with investment professionals. To the
extent the fee is not paid to such investment professionals, Distributors
could use such fee for its expenses incurred in the distribution of Class B
shares. The Plan also provides that to the extent that each fund's payment
of management fees to FMR might be considered to constitute the "indirect"
financing of activities "primarily intended to result in the sale of
shares," such payment is expressly authorized.
The Plan will continue in effect as long as its continuance is
specifically approved at least annually by a majority of the Board of
Trustee, including a majority of the Trustees who are not "interested
persons" of the trust and who have no direct or indirect financial interest
in the operation of the Plan or any agreement related to the Plan (the
non-interested Trustees), cast in person at a meeting called for the
purpose of voting on the Plan. The Plan requires that the Trustees receive,
at least quarterly, a written report as to the amounts expended during the
quarter by FMR, or FDC, in connection with financing any activity primarily
intended to result in the sale of shares issued by the fund and the
purposes for which such expenditures were made.
Although the Plan contemplates that FMR and FDC may engage in various
distribution activities, it does not require them to perform any specific
type of distribution activity or to incur any specific level of expense for
such activities.
THE AMENDED CLASS B PLAN. The Amended Class B Plan is identical to the
current Plan with the exception of the provision which excludes assets
attributable to shares purchased more than 144 months prior to the date of
the distribution fee calculation (144-month limitation). When the Fidelity
Advisor funds were first introduced in the mid 1980's, the National
Association of Securities Dealers, Inc. (NASD) Rules of Fair Practice set a
limit on the amount of front-end sales charges which a fund could impose.
However, no similar limit existed for 12b-1 fees. The 144-month limitation
was an effort by FDC and the Board of Trustees to protect shareholders
against indefinite payment on a given amount of assets. The 144-month
period was intended to result in total distribution charges (front-end plus
12b-1 fees) roughly equivalent to the front-end sales charge limit then
imposed by the NASD. Since Class B shares convert automatically to Class A
shares after 6 years, the 144-month limitation was included in the current
Plan to ensure that the Plan is consistent with the Class A Plan (see
Proposal 12), and to allow time to begin accruing upon purchase into
Class B shares.
In July 1993, the NASD amended its Rules of Fair Practice to establish a
combined limit on mutual fund sales loads and 12b-1 fees. Like the
144-month limitation, the NASD Rule restricts a mutual fund's total payment
of 12b-1 fees. Under the NASD Rule, a fund is subject to a limit on
aggregate payments of 7.25% of total new gross sales (6.25% if a service
fee is also imposed), plus interest. When the limit is reached, no further
sales loads by the fund may be paid to the distributor, and no further
payments under the 12b-1 plan can be made, until the fund has further gross
sales that result in an increased limit.
The NASD Rule has become the industry standard restricting distribution
charges. Regardless of whether the proposal is approved, each class is and
will continue to be subject to the NASD Rule. The NASD Rule addresses the
same concerns the 144-month limitation was intended to address. However,
the limitations of the NASD Rule are calculated differently than those of
the 144-month limitation. For example, using reasonable sales, redemption
and performance assumptions, there is a considerable likelihood that many
funds may never reach their NASD cap, because the cap is constantly
replenished by additional gross sales. To the extent that this is true,
funds which contain assets older than 144 months will pay more in 12b-1
fees if the proposal is approved than under the current Plan.
TRUSTEE CONSIDERATION. In determining to recommend the adoption of the
Amended Class B Plan, the trustees considered a variety of factors and were
advised by counsel who are not counsel to FMR or FDC. The Trustees,
Distributors and FMR believe that the implementation of the Amended Class B
Plan would assist in the selling of shares and thus increase its asset
base, which in turn may prove beneficial to each fund and its shareholders
by spreading fixed costs over a larger asset base and making additional
monies available for investing. Positive cash flow affords portfolio
management a greater ability to diversify investments and minimizes the
need to sell securities to meet redemptions. In addition, since each class
is dependent primarily on investment professionals for sales of its shares,
the ongoing payment to investment professionals who have sold shares (by
reallowance of the distribution fee) should provide incentives to offer
better and continuous services to current shareholders. Investment
professionals also allow investors access to investment alternatives to
which they might otherwise not have been exposed.
FMR may benefit if overall assets are increased (since FMR's fees are
based on assets). The Board believes that revenues received by FMR
contribute to its continuing ability to attract and retain a high caliber
of investment and other personnel and to develop and implement new systems
for providing services and information to shareholders. The Board considers
this to be an important benefit to each fund.
CONCLUSION. The Board of Trustees recommends that shareholders vote FOR
approval of the amendment to the Class B Distribution and Service Plan. If
Class B shareholders approve the Amended Class A Plan (see Proposal 12) and
the Amended Class B Plan, the amended Plans will become effective the first
day of the month following shareholder approval. If Class B shareholders do
not approve the amended Class B Plan, the current Class B Plan will remain
in effect unchanged. If Class B shareholders approve the Amended Class B
Plan, but do not approve the Amended Class A Plan (see Proposal 12) the
amended Class B Plan will become effective on the first day of the month
following shareholder approval and the Class A Plan will remain
unchanged for shares purchased into Class B . In this event, the
144-month period would commence for Class B shares simultaneously with
their conversion to Class A shares.
14. TO REPLACE GOVERNMENT INVESTMENT FUND'S FUNDAMENTAL NAME TEST WITH AN
IDENTICAL NON-FUNDAMENTAL POLICY.
The primary purpose of the this Proposal is to replace the fund's
fundamental name test policy with an identical non-fundamental
policy. Fundamental policies can be changed or eliminated only with
shareholder approval. Current SEC guidelines specify that if a fund's name
implies investment in a particular security type or industry, then the fund
should have an investment policy that, under normal conditions, at least
65% of the fund's total assets should be invested in the indicated security
type or industry ("name test" policy).
The fund's name test currently states that "under normal circumstances, at
least 65% of the Fund's total assets will be invested in government
securities. " If this Proposal is approved, the name test will remain
unchanged but it will become a non-fundamental policy. Although
the policy would be non-fundamental, under current SEC guidelines, the fund
could retain its current name only if it complies with the name test
policy.
While it is not currently anticipated that this change will have any
material impact on the way the fund is managed, approval of this Proposal
would permit the fund, in the future, to change its policy regarding types
of securities it purchases, consistent with its investment policy, subject
only to the supervision of the Trustees and applicable regulatory
requirements, without seeking additional approval from shareholders. The
fund's fundamental investment objective - to seek 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 - will remain
the same, and cannot be changed in the future without shareholder approval.
Changes in non-fundamental investment policies can be changed without
shareholder approval but are subject to the supervision of the Board of
Trustees, and to appropriate disclosure to fund shareholders and
prospective investors.
CONCLUSION. The Board of Trustees has considered this Proposal and
believes that changing the fund's name test from fundamental to
non-fundamental is in the best interests of the fund and its shareholders.
The Trustees recommend that shareholders vote FOR the proposed change to
the fund's investment policy. If the proposal is approved by shareholders,
it will implemented with the next effective prospectus. If not approved by
shareholders, the current fundamental policy will remain unchanged.
15. TO REPLACE GOVERNMENT INVESTMENT FUND'S FUNDAMENTAL DEFENSIVE POLICY
WITH ONE THAT IS NON-FUNDAMENTAL.
The primary purpose of this Proposal is to replace the fund's fundamental
temporary defensive with a more flexible non-fundamental policy. The fund's
temporary defensive policy is currently fundamental and states:
"[t]he Fund may for temporary or defensive purposes invest without limit
in U.S. government securities having a maturity of 365 days or less."
Fundamental policies can be changed or eliminated only with shareholder
approval. Changes in non-fundamental investment policies can be changed
without shareholder approval but are subject to the supervision of the
Board of Trustees, and to appropriate disclosure to fund shareholders and
prospective investors.
Although the fund wants to retain the ability to invest according to a
temporary defensive policy, it proposes to replace its current fundamental
policy with the following non-fundamental policy that is expected to become
standard for all Fidelity taxable bond funds.
The new non-fundamental defensive policy would permit the fund the
increased flexibility to invest in any type of investment-grade ,
short-term instruments, for temporary, defensive purposes. The current
policy limits temporary, defensive investments to U.S. government
securities having a maturity of 365 days or less. The proposed
non-fundamental defensive policy would be as follows:
"The fund also reserves the right to invest without limitation in
investment-grade money market or short-term debt instruments for temporary,
defensive purposes."
Under normal circumstances, the fund will invest primarily in obligations
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities. However, when FMR believes market conditions warrant a
temporary, defensive posture t he fund may also invest in
investment-grade money market or short-term instruments.
This change is not expected to have any significant effect on the fund's
management. A t this time, the proposed non-fundamental policy will
provide the fund with greater flexibility to react to changing market
conditions. The additional instruments in which the fund would be permitted
to invest for defensive purposes under the proposed policy, although
carrying greater credit risk than government securities, would be of no
lower quality than investment grade, and, by virtue of their short term,
would be likely to be less sensitive to interest rate changes than longer
term government securities.
CONCLUSION. The Board of Trustees has considered this Proposal and
believes that replacing the fund's fundamental defensive policy with one
that is non-fundamental is in the best interests of the fund and its
shareholders. The Trustees recommend that shareholders vote FOR the
proposed changes to the fund's investment policies. If shareholders approve
the Proposal, it will be implemented on the effective date of the next
prospectus. If the Proposal is not approved, the fund's current policy will
remain unchanged.
16. TO REPLACE THE FUNDAMENTAL INVESTMENT POLICY CONCERNING REPURCHASE
AGREEMENT COUNTERPARTIES WITH A NON-FUNDAMENTAL POLICY FOR
GOVERNMENT INVESTMENT FUND AND INCOME & GROWTH FUND.
The funds, as a matter of fundamental policy, limit repurchase agreements
to those member banks of the Federal Reserve System and primary dealers in
U.S. government securities whose creditworthiness has been reviewed and
found satisfactory by FMR. Other investment companies managed by FMR may
enter into such transactions with banks, such as U.S. branches of foreign
banks, that may not be members of the Federal Reserve System and with
dealers that are not primary dealers, but which are deemed by FMR to be
creditworthy and otherwise qualified to engage in these transactions. The
Trustees recommend eliminating this fundamental policy and replacing it
with a non-fundamental policy with respect to the specific parties with
which the funds may enter into repurchase agreements as follows:
"It is the policy of the fund to limit repurchase agreements to those
parties whose creditworthiness has been reviewed and found satisfactory by
FMR."
This policy would enable the funds to have broader flexibility when
engaging in repurchase agreements. The criteria used by FMR to evaluate the
creditworthiness of counterparties will remain unchanged. However, you
should note that by expanding the type of institutions with which the fund
may engage in a repurchase agreement, additional risks may be incurred. For
example, the risks of such transactions with U.S. branches of foreign banks
include future unfavorable political and economic developments and possible
withholding taxes, seizure of foreign deposits, currency controls, interest
limitations or other governmental restrictions which might affect the
payment of principal or interest.
CONCLUSION. The Board of Trustees believes that this Proposal will benefit
the funds by eliminating restrictions on engaging in repurchase agreements
only with specific parties. The Trustees recommend that shareholders vote
FOR the proposed changes to the funds' policies regarding repurchase
agreements. If shareholders approve the Proposal, it will be implemented on
the effective date of the next prospectus. If the Proposal is not approved,
the funds' current policies will remain unchanged.
17. TO REPLACE INCOME & GROWTH FUND'S FUNDAMENTAL DEFENSIVE POLICY WITH ONE
THAT IS NON-FUNDAMENTAL.
The purpose of this Proposal is to replace the fund's fundamental
temporary, defensive policy with a more flexible non-fundamental policy.
The fund's temporary defensive policy is currently fundamental and states:
"[t]he Fund may, for temporary defensive purposes, invest without limit in
short-term securities."
Fundamental policies can be changed or eliminated only with shareholder
approval. Changes in non-fundamental investment policies can be changed
without shareholder approval but are subject to the supervision of the
Board of Trustees, and to appropriate disclosure to fund shareholders and
prospective investors. Although the fund wants to retain the ability to
invest according to a temporary defensive policy, it proposes to replace
its current fundamental policy with the following non-fundamental policy
that is expected to become standard for all Fidelity equity funds.
The proposed non-fundamental defensive policy would be as follows:
"The fund also reserves the right to invest without limitation in
preferred stocks and investment-grade debt instruments for temporary,
defensive purposes."
Under normal circumstances, the fund will invest in a diversified
portfolio of equity and fixed-income securities with income, growth of
income and capital appreciation potential. However, when FMR believes
market conditions warrant a temporary, defensive posture, the fund may
invest without limit in preferred stocks and investment-grade debt which
normally offer reduced potential for capital loss or appreciation than
common stock.
Mutual funds are permitted, for temporary defensive purposes, to invest in
investments that fall outside of the fund's normal investment parameters.
Temporary defensive policies essentially permit mutual funds to invest more
conservatively than they otherwise would when market conditions warrant.
Income & Growth Fund's current temporary defensive policy allows the fund
to invest in obligations that are considered to be high quality. The
proposed policy would preserve this ability and would increase the
flexibility of the fund's temporary defensive policy by allowing it to
invest in preferred stock and investment-grade obligations. Preferred
stocks generally are considered to be more conservative than common stocks
since many pay a fixed dividend, and in the event that a corporation is
liquidated, the claims of owners of bonds and preferred stock take
precedence over the claims of common stock owners. Investment grade debt
securities have more credit risk than high-quality debt securities, but
generally carry lower risk than common stocks. The fund is currently
permitted to invest in investment-grade or lower-quality bonds for
non-defensive purposes (e.g., to seek capital appreciation). Such
investments would only be considered "defensive" if they were made to
reduce the fund's overall risk level and exposure to potential market
declines.
Although elimination of the fund's fundamental policies on investing for
temporary defensive purposes is unlikely to affect the way it invests at
this time, the proposed non-fundamental policy will provide the fund
with greater flexibility to react to changing market conditions. In
addition, the Board of Trustees believes that efforts to standardize the
fund's temporary defensive policy will facilitate FMR's investment
compliance efforts and are in the best interests of shareholders.
CONCLUSION. The Board of Trustees has considered this Proposal and
believes that replacing the fund's fundamental defensive policy with one
that is non-fundamental is in the best interests of the fund and its
shareholders. The Trustees recommend that shareholders vote FOR the
proposed changes to the fund's investment policies. If shareholders approve
the Proposal, it will be implemented on the effective date of the next
prospectus. If the Proposal is not approved, the fund's current policy will
remain unchanged.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 18 through 29 is to revise several of
the funds' investment limitations to conform to limitations which are the
standards for similar types of funds managed by FMR. The Board of Trustees
asked FMR to analyze the various fundamental and non-fundamental investment
limitations of the Fidelity funds, and, where practical and appropriate to
a fund's investment objective and policies, propose to shareholders
adoption of standard fundamental limitations and elimination of certain
other fundamental limitations. Generally, when fundamental limitations are
eliminated, Fidelity's standard non-fundamental limitations replace them.
By making these limitations non-fundamental, the Board of Trustees may
amend a limitation as they deem appropriate, without seeking shareholder
vote. The Board of Trustees would amend the limitations to respond, for
instance, to developments in the marketplace, or changes in federal or
state law. The costs of shareholder meetings if called for these purposes
are generally borne by the fund and its shareholders.
It is not anticipated that these Proposals will substantially affect
the way a fund is currently managed. However, FMR is presenting them to you
for your approval because FMR believes that increased standardization will
help to promote operational efficiencies and facilitate monitoring of
compliance with fundamental and non-fundamental investment limitations.
Although adoption of a new or revised limitation is not likely to have any
impact on the current investment techniques employed by a fund, it will
contribute to the overall objectives of standardization.
18. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION FOR GOVERNMENT INVESTMENT FUND, GROWTH OPPORTUNITIES FUND,
INCOME & GROWTH FUND, AND SHORT FIXED-INCOME FUND.
The current fundamental investment limitation concerning diversification
for Government Investment Fund, Growth Opportunities Fund, and Income &
Growth Fund states:
"The Fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United States or
its agencies or instrumentalities) if, as a result, more than 5% of the
value of its total assets would be invested in the securities of any single
issuer, or it would hold more than 10% of the outstanding voting securities
of such issuer, except that up to 25% of the Fund's assets may be invested
without regard to these limitations."
Short Fixed-Income Fund's current fundamental investment limitation
regarding diversification states:
"The Fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United States or
its agencies or instrumentalities) if, as a result, (a) more than 25% of
the value of its total assets would be invested in the securities of a
single issuer, or (b) with respect to 75% of its total assets, more than 5%
of the value of its total assets would be invested in the securities of a
single issuer, or it would own more than 10% of the outstanding voting
securities of any single issuer."
The Trustees recommend that shareholders vote to replace each fund's
fundamental investment limitation with the following fundamental investment
limitation governing diversification:
"The fund may not, with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, (a) more than 5% of the fund's total
assets would be invested in the securities of that issuer, or (b) the fund
would hold more than 10% of the outstanding voting securities of that
issuer."
The primary purpose of the Proposal is to revise each fund's fundamental
diversification limitation to conform to a limitation that is expected to
become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page .) The standard more closely
tracks the language of the 1940 Act defining a "diversified company." If
the Proposal is approved, the amended fundamental diversification
limitation cannot be changed without a future vote of shareholders.
Adoption of the proposed limitation concerning diversification is not
expected to affect the way in which funds are managed, the investment
performance of a fund, or the securities or instruments in which a fund
invests.
CONCLUSION. The Board of Trustees recommends voting FOR the proposed
amendment. The amended limitation, upon shareholder approval, will be
implemented on the effective date of the next prospectus. With respect to
each fund, if the Proposal is not approved by shareholders, the fund's
current limitation will remain unchanged.
19. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING REAL ESTATE
FOR GOVERNMENT INVESTMENT FUND, GROWTH OPPORTUNITIES FUND, INCOME & GROWTH
FUND, AND SHORT FIXED-INCOME FUND.
The fundamental investment limitation concerning real estate for
Government Investment Fund, Growth Opportunities Fund, and Income & Growth
Fund currently states:
"The Fund may not purchase or sell real estate (but this shall not prevent
the Fund from investing in marketable securities issued by companies such
as real estate investment trusts which deal in real estate or interests
therein and participation interests in pools of real estate mortgage
loans)."
Short Fixed-Income Fund's fundamental investment limitation concerning
real estate currently states:
"The Fund may not purchase or sell real estate unless acquired as a result
of ownership of securities (but this shall not prevent the Fund from
purchasing marketable securities issued by companies or other entities or
investment vehicles that deal in real estate or interests therein, nor
shall this prevent the Fund from purchasing interests in pools of real
estate mortgage loans)."
Subject to shareholder approval, the Trustees intend to replace each
fund's fundamental investment limitation with the following fundamental
investment limitation governing purchases and sales of real estate:
"The Fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall not prevent
the Fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business)."
The primary purpose of the proposed amendment is to clarify the types of
securities in which the fund is authorized to invest and to conform each
fund's fundamental real estate limitation to a limitation that is expected
to become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page .) If the Proposal is
approved, the new fundamental real estate limitation may not be changed
without a future vote of shareholders.
Adoption of the proposed limitation concerning real estate is not expected
to affect the way in which any fund is managed, the investment performance
of a fund, or the securities or instruments in which each fund invests. The
funds do not expect to acquire real estate. However, the proposed
limitation would clarify two points. First, the proposed limitation would
make it explicit that a fund may acquire a security or other instrument, of
which the payments of interest and principal may be secured by a mortgage
or other right to foreclose on real estate, in the event of default.
Second, the proposed limitation would clarify the fact that a fund may
invest without limitation in securities issued or guaranteed by companies
engaged in acquiring, constructing, financing, developing, or operating
real estate projects (e.g., securities of issuers that develop various
industrial, commercial, or residential real estate projects such as
factories, office buildings, or apartments). Any investments in these
securities are, of course, subject to a fund's investment objective and
policies and to other limitations regarding diversification and
concentration. The proposed limitation eliminates each fund's restriction
that securities issued by companies or other entities that deal in the real
estate industry be marketable. Each fund's investments in illiquid
securities will be limited to 10% its total assets under the existing
non-fundamental limitation.
To the extent that a fund buys securities and instruments of companies
engaged in the real estate business, the fund's performance will be
affected by the conditions of the real estate market. This industry is
sensitive to factors such as changes in real estate values and property
taxes, overbuilding, variations in rental income, and interest rates.
Performance could also be affected by the structure, cash flow, and
management skill of companies engaged in the real estate business.
CONCLUSION. The Board of Trustees has concluded that the adoption of the
proposed amendment will benefit each fund and its shareholders. The
Trustees recommend that shareholders of each fund vote FOR the proposed
amendment. The amended limitation, upon shareholder approval, will be
implemented on the effective date of the next prospectus. With
respect to each fund, if the Proposal is not approved, the fund's current
limitation will remain unchanged.
20. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING THE ISSUANCE
OF SENIOR SECURITIES FOR GOVERNMENT INVESTMENT FUND, GROWTH OPPORTUNITIES
FUND, INCOME & GROWTH FUND, AND SHORT-FIXED INCOME FUND.
The current fundamental investment limitation regarding the issuance of
senior securities for Government Investment Fund, Growth Opportunities
Fund, and Income & Growth Fund states:
"The Fund may not issue bonds or any other class of security preferred
over shares of the Fund in respect of the Fund's assets and interest."
Short-Fixed Income Fund's current fundamental investment limitation
regarding the issuance of senior securities states that:
"The Fund may not issue bonds or any other class of securities preferred
over shares of the Fund in respect of the Fund's assets or earnings,
provided that the Fund may establish additional series or classes of shares
in accordance with its Declaration of Trust."
The Trustees recommend that shareholders vote to replace this limitation
with the following fundamental investment limitation governing the issuance
of senior securities:
"The Fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940."
The primary purpose of the Proposal is to revise each fund's fundamental
senior securities limitation to conform to a limitation that is expected to
become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page .) If the Proposal is
approved, the new fundamental senior securities limitation cannot be
changed without a future vote of the fund's shareholders.
Adoption of the proposed limitation on senior securities is not expected
to affect the way in which funds are managed, the investment performance of
a fund, or the securities or instruments in which each fund invests.
However, the proposed limitation clarifies that the fund may issue senior
securities to the extent permitted under the 1940 Act.
Although the definition of a "senior security" involves complex statutory
and regulatory concepts, a senior security is generally thought of as an
obligation of a fund which has a claim to the fund's assets or earnings
that takes precedence over the claims of the fund's shareholders. The 1940
Act generally prohibits mutual funds from issuing senior securities;
however, mutual funds are permitted to engage in certain types of
transactions that might be considered "senior securities" as long as
certain conditions are satisfied. For example, a transaction which
obligates a fund to pay money at a future date (e.g., the purchase of
securities to be settled on a date that is further away than the normal
settlement period) may be considered a "senior security." A mutual fund is
permitted to enter into this type of transaction if it maintains a
segregated account containing liquid securities in an amount equal to its
obligation to pay cash for the securities at a future date. The
f unds utilize transactions that may be considered "senior
securities" only in accordance with applicable regulatory requirements
under the 1940 Act.
CONCLUSION. The Board of Trustees recommends voting FOR the proposed
amendment. The amended limitation, upon shareholder approval, will be
implemented on the effective date of next prospectus. With respect to each
fund, if the Proposal is not approved, the fund's current limitation will
remain unchanged.
21. TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING SHORT
SALES OF SECURITIES FOR GOVERNMENT INVESTMENT FUND, GROWTH OPPORTUNITIES
FUND, INCOME & GROWTH FUND, AND SHORT FIXED-INCOME FUND.
Government Investment Fund's current fundamental investment limitation on
selling securities short is as follows:
"The Fund may not sell securities short, unless it owns, or by virtue of
ownership of other securities has the right to obtain, securities
equivalent in kind and amount to the securities sold. This limitation shall
not limit the Fund's ability to take a short position in a futures contract
or forward contract, or to make initial and variation margin payments in
connection with purchases or sales of futures contracts or options on
futures contracts."
Growth Opportunities Fund's and Income & Growth Fund's current fundamental
investment limitation is as follows:
"The Fund may not sell securities short, unless it owns, or by virtue of
ownership of other securities has the right to obtain, securities
equivalent in kind and amount to the securities sold. This limitation shall
not limit the Fund's ability to take a short position in a futures contract
or forward contract."
Short-Fixed Income Fund's current fundamental investment limitation
is as follows:
"The Fund may not sell securities short, unless it owns, or by virtue of
ownership of other securities has the right to obtain, securities
equivalent in kind and amount to the securities sold short, and provided
that transactions in futures contracts are not deemed to constitute short
sales."
The Trustees recommend that shareholders of each fund vote to
eliminate its fundamental investment limitation. If the Proposal is
approved, the Trustees intend to replace the current fundamental investment
limitation with a non-fundamental investment limitation that could be
changed without a vote of shareholders. The proposed non-fundamental
limitation is set forth below, with a brief analysis of the substantive
differences between it and the current limitations.
In a short sale, an investor sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. In
an investment technique known as a short sale "against the box," an
investor sells securities short while owning the same securities in the
same amount, or having the right to obtain equivalent securities. The
investor could have the right to obtain equivalent securities, for example,
through its ownership of warrants, options, or convertible bonds. If the
Proposal is approved by shareholders of each respective fund, the Trustees
intend to adopt the following non-fundamental investment limitation on
short selling, which would permit short sales against the box:
"The Fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short."
The proposed non-fundamental limitation would clarify for each fund that
transactions in futures contracts are not deemed to constitute selling
securities short.
Certain state regulations currently prohibit mutual funds from entering
into short sales, other than short sales against the box. If the Proposal
is approved, however, the Board of Trustees would be able to change the
proposed non-fundamental limitation in the future, without a vote of
shareholders, if state regulations were to change to permit other types of
short sales, or if waivers from existing requirements were available,
subject to appropriate disclosure to investors.
Elimination of each fund's fundamental investment limitation on short
selling is unlikely to affect any fund's investment techniques at this
time. The Board of Trustees believes that efforts to standardize each
fund's investment limitation will facilitate FMR investment compliance
efforts (see "Adoption of Standardized Investment Limitations" on page )
and are in the best interest of shareholders.
CONCLUSION. The Board of Trustees recommends voting FOR the Proposal to
eliminate each fund's fundamental investment limitation regarding short
sales of securities. If approved, the Proposal will be implemented on the
effective date of the next prospectus. With respect to each fund, if the
Proposal is not approved, the fund's current limitation will remain
unchanged.
22. TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING MARGIN
PURCHASES FOR GOVERNMENT INVESTMENT FUND, GROWTH OPPORTUNITIES FUND, INCOME
& GROWTH FUND, AND SHORT FIXED-INCOME FUND.
Growth Opportunities Fund's and Income & Growth Fund's current fundamental
investment limitation concerning purchasing securities on margin is as
follows:
"The Fund may not purchase securities on margin, except that the Fund may
obtain such short-term credits as are necessary for the clearance of
transactions. This limitation shall not limit the Fund's ability to make
initial and variation margin payments in connection with purchases or sales
of futures contracts or of options on futures contracts."
Government Investment Fund's current fundamental investment limitation is
as follows:
"The Fund may not purchase securities on margin, except that the Fund may
obtain such short-term credits as are necessary for the clearance of
transactions. This limitation shall not limit the Fund's ability to take a
short position in a futures contract or forward contract, or to make
initial and variation margin payments in connection with purchases or sales
of futures contracts or of options on futures contracts."
Short-Fixed Income Fund's current fundamental investment limitation is as
follows:
"The Fund may not purchase any securities on margin, except that the Fund
may obtain such short-term credits as are necessary for the clearance of
transactions, and provided that the Fund may make initial and variation
margin payments in connection with transactions in futures contracts and
options on futures contracts."
The Trustees recommend that shareholders of each fund vote to eliminate
the above fundamental investment limitation. If the Proposal is approved,
the Trustees intend to adopt a non-fundamental limitation for each fund
that could be changed without a vote of shareholders. The proposed
non-fundamental limitation is set forth below, with a brief analysis of the
substantive differences between it and the current limitations.
Margin purchases involve the purchase of securities with money borrowed
from a broker. "Margin" is the cash or eligible securities that the
borrower places with a broker as collateral against the loan. Each fund's
current fundamental limitation prohibits the fund from purchasing
securities on margin, except to obtain short-term credits as may be
necessary for the clearance of transactions and for initial and variation
margin payments made in connection with the purchase and sale of futures
contracts and options on futures contracts. With these exceptions, mutual
funds are prohibited from entering into most types of margin purchases by
applicable SEC policies. The proposed non-fundamental limitation includes
these exceptions.
If the Proposal is approved by shareholders, the Trustees intend to adopt
the following non-fundamental investment limitation, which would prohibit
margin purchases except as permitted under the conditions referred to
above:
"The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin."
Although elimination of each fund's fundamental limitation on margin
purchases is unlikely to affect any fund's investment techniques at this
time, in the event of a change in federal regulatory requirements, the
funds may alter their investment practices in the future. The Board of
Trustees believes that efforts to standardize investment limitations will
facilitate FMR's investment compliance efforts (see "Adoption of
Standardized Investment Limitations" on page ) and are in the best
interests of shareholders.
CONCLUSION. The Trustees recommend voting FOR the Proposal to eliminate
each fund's fundamental investment limitation regarding margin purchases.
If approved, the new non-fundamental limitation will be implemented on the
effective date of the next prospectus. With respect to each fund, if the
Proposal is not approved, the fund's current limitation will remain
unchanged.
23. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING UNDERWRITING
FOR GOVERNMENT INVESTMENT FUND, GROWTH OPPORTUNITIES FUND, INCOME & GROWTH
FUND, AND SHORT FIXED-INCOME FUND.
Each Fund's current fundamental investment limitation concerning
underwriting states:
"The Fund may not underwrite securities issued by others (except to the
extent that the Fund may be deemed to be an underwriter within the meaning
of the Securities Act of 1933 in the disposition of restricted
securities.)"
Subject to shareholder approval, the Trustees intend to replace this
limitation with the following fundamental limitation governing
underwriting:
"The Fund may not underwrite securities issued by others, except to the
extent that the Fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted securities."
The primary purpose of the proposed amendment is to conform each fund's
fundamental investment limitation concerning underwriting to a limitation
which is expected to become the standard for all funds managed by FMR. (See
"Adoption of Standardized Investment Limitations on page .) If the Proposal
is approved, the new limitation may not be changed without a future vote of
shareholders.
Adoption of the proposed limitation concerning underwriting is not
expected to affect the way in which the fund is managed, the investment
performance of the fund, or the securities or instruments in which the fund
invests.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund. Accordingly, the Trustees recommend that
shareholders vote FOR the proposed amendment. The amended limitation, upon
shareholder approval, will be implemented on the effectiveness date of the
next revision. If the Proposal is not approved by the shareholders of a
fund, the fund's current limitation will remain unchanged.
24. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING BORROWING FOR
GOVERNMENT INVESTMENT FUND, GROWTH OPPORTUNITIES FUND, INCOME & GROWTH
FUND, AND SHORT FIXED-INCOME FUND.
The current fundamental investment limitation for Government Investment
Fund concerning borrowing states:
"The Fund may not borrow money, except that the Fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of the value of its total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed 33 1/3% of the Fund's total assets by reason
of a decline in net assets will be reduced within three days to the extent
necessary to comply with the 33 1/3% limitation. The Fund m ay engage
in reverse repurchase agreements and may not purchase any security while
borrowings representing more than 5% of its net assets are outstanding."
The current fundamental investment limitation for Growth Opportunities
Fund, Income & Growth Fund, and Short Fixed-Income Fund concerning
borrowing states:
"The Fund may not borrow money, except that the Fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of the value of its total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed 33 1/3% of the value of the Fund's total
assets by reason of a decline in net assets will be reduced within three
days to the extent necessary to comply with the 33 1/3% limitation. The
Fund may engage in reverse repurchase agreements and may not purchase any
security while borrowings representing more than 5% of its net assets are
outstanding."
Subject to shareholder approval, the Trustees intend to replace each
fund's current fundamental investment limitation with the following amended
fundamental investment limitation governing borrowing:
"The Fund may not borrow money, except that the fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed this amount will be reduced within three days (not including
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation."
The primary purpose of the Proposal is to revise each fund's fundamental
borrowing limitation to conform to a limitation that is expected to become
the standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page .) If the Proposal is approved, the amended
fundamental borrowing limitation cannot be changed without a future vote of
shareholders.
Adoption of the proposed limitation concerning borrowing is not expected
to affect the way in which any fund is managed, the investment performance
of a fund, or the securities or instruments in which a fund invests.
However, the Proposal would clarify several points. First, the proposed
limitation would require each fund to reduce borrowings that come to exceed
33 1/3% of total assets for any reason. Under the current limitations, each
fund must reduce borrowings that come to exceed 33 1/3% of total assets
only when such excess is the result of a decline in net assets. The
proposed limitation also specifically defines "three business days" to
exclude Sundays and holidays. In addition, each fund currently has a
limitation describing its policy of not purchasing a security while
borrowings representing more than 5% of total assets are outstanding
included in its fundamental borrowing limitation. Subject to shareholder
approval, the Trustees intend to replace th is component of each
current fundamental investment limitation with a similar
non-fundamental investment limitation that could be changed by vote of the
Trustees without further approval by shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit each fund. Accordingly, the Trustees recommend that
shareholders of the funds vote FOR the proposed amendment. The amended
limitation, upon shareholder approval, will be implemented on the effective
date of the next prospectus. With respect to each fund, if the Proposal is
not approved, the fund's current limitation will remain unchanged.
25. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING THE
CONCENTRATION OF INVESTMENTS WITHIN A SINGLE INDUSTRY FOR GOVERNMENT
INVESTMENT FUND, GROWTH OPPORTUNITIES FUND, INCOME & GROWTH FUND, AND SHORT
FIXED-INCOME FUND.
Each Fund's current fundamental investment limitation concerning the
concentration of its investments within a single industry states:
"The Fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United States or
its agencies or instrumentalities) if, as a result, more than 25% of the
Fund's total assets (taken at current value) would be invested in the
securities of issuers having their principal business activities in the
same industry."
Subject to shareholder approval, the Trustees of the f unds intend
to replace this fundamental investment limitation with the following
fundamental investment limitation governing concentration:
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities) if, as a result, more than 25% of the fund's
total assets would be invested in the securities of companies whose
principal business activities are in the same industry."
The primary purpose of the Proposal is to revise the funds' fundamental
concentration limitation to conform to a limitation which is expected to
become the standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page .) If the Proposal is
approved, the new fundamental concentration limitation could not be changed
without a future vote of shareholders. Adoption of the proposed limitation
on concentration is not expected to affect the way in which the
funds are managed, its investment performance, or the securities or
instruments in which it invests. However, the proposed limitation would
clarify that the funds cannot invest more than 25% of its total assets in
companies, as opposed to issuers whose principal business activities are in
the same industry.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the Funds. The Trustees recommend voting FOR the
proposed amendment. The new limitation, upon shareholder approval, will be
implemented on the effective date of the next prospectus. If the Proposal
is not approved, the Funds' current fundamental investment limitation will
remain unchanged.
26. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING THE PURCHASE
AND SALE OF PHYSICAL COMMODITIES FOR GROWTH OPPORTUNITIES FUND AND SHORT
FIXED-INCOME FUND.
Growth Opportunities Fund's current fundamental investment limitation
concerning commodities states:
"The Fund may not invest in physical commodities."
Short Fixed-Income Fund's current fundamental investment limitation
states:
"The Fund may not purchase or sell physical commodities unless acquired as
a result of the ownership of securities (but this shall not prevent the
Fund from purchasing and selling futures contracts)."
Subject to shareholder approval, the Trustees intend to replace the
fundamental investment limitation for each fund with the following
fundamental investment limitation governing commodities.
"The Fund may not purchase or sell physical commodities unless acquired as
a result of ownership of securities or other instruments (but this shall
not prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities)."
The primary purpose of this Proposal is to implement a fundamental
investment limitation on commodities that conforms to a limitation that is
expected to become the standard for all funds managed by FMR. (See
"Adoption of Standardized Investment Limitations" on page .) If the
Proposal is approved, the new fundamental commodities limitation cannot be
changed without a future vote of shareholders.
Adoption of the proposed limitation on commodities is not expected to
affect the way in which the funds are managed, the investment performance
of the funds, or the securities or instruments in which the funds invest.
However, the proposed limitation would clarify two points. First, the
proposed limitation would make it explicit that the funds may acquire
physical commodities as the result of ownership of instruments other than
securities. Second, the proposed limitation would clarify that the funds
may invest without limit in securities or other instruments backed by
physical commodities. Any investments of this type are, of course, subject
to each fund's investment objective, policies, and other limitations.
CONCLUSION. The Board of Trustees has concluded that the adoption of the
proposed amendment will benefit the funds and their shareholders. The
Trustees recommend that shareholders of each fund vote FOR the proposed
amendment. The amended limitation, upon shareholder approval, will be
implemented on the effective date of the next prospectus. If the Proposal
is not approved, the funds' current limitation will remain unchanged.
27. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING LENDING FOR
GOVERNMENT INVESTMENT FUND, GROWTH OPPORTUNITIES FUND, INCOME & GROWTH
FUND, AND SHORT FIXED-INCOME FUND.
The current fundamental investment limitation concerning lending for each
Fund follows:
"The Fund may not lend any securities or make any other loan if, as a
result, more than 33 1/3% of the Fund's total assets would be lent to other
parties, except (i) through the purchase of a portion of an issue of debt
securities in accordance with its investment objective, policies, and
limitations, or (ii) by engaging in repurchase agreements with respect to
portfolio securities."
Subject to shareholder approval, the Trustees intend to replace each
fund's limitation with the following fundamental investment limitation
governing lending:
"The Fund may not lend any security or make any other loan if, as a
result, more than 33 1/3% of its total assets would be lent to other
parties, but this limitation does not apply to purchases of debt securities
or to repurchase agreements."
The primary purpose of this Proposal is to revise each fund's fundamental
lending limitation to conform to a limitation expected to become the
standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page .) If the Proposal is approved, the new
fundamental lending limitation cannot be changed without a future vote of
shareholders.
Adoption of the proposed limitation on lending is not expected to affect
the way in which any fund is managed, the investment performance of a fund,
or the instruments in which a fund invests. However, the proposed
limitation would clarify two points. First, the proposed limitation
provides authority for each fund to acquire an entire issue of debt
securities. Ordinarily, if a fund purchases an entire issue of debt
securities, there may be greater risks of illiquidity and unavailability of
public information if the issuer has no other issue of securities
outstanding, and it may be more difficult to obtain pricing information to
be used in establishing the fund's daily share price. Second, the proposed
amendment eliminates the reference to "portfolio securities" in the
exception for repurchase agreements.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit each fund and is in the best interest of
shareholders. The Trustees recommend voting FOR the proposed amendment. The
amended limitation, upon shareholder approval, will be implemented on the
effective date of the next prospectus. With respect to each fund, if the
Proposal is not approved by shareholders, the fund's current limitation
will remain unchanged.
28. TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
INVESTMENT IN OTHER INVESTMENT COMPANIES FOR GOVERNMENT INVESTMENT FUND,
GROWTH OPPORTUNITIES FUND AND INCOME & GROWTH FUND.
Each fund's current fundamental investment limitation concerning
investment in other investment companies states:
"The Fund may not purchase securities of other investment companies,
except in the open market where no commission except the ordinary broker's
commission is paid, or as part of a merger or consolidation, and in no
event will such securities be purchased if, as a result, more than 10% of
the value of the total assets of the Fund would be invested in the
securities of other investment companies."
The Trustees recommend that shareholders of the funds vote to eliminate
the above fundamental investment limitation. If the Proposal is approved,
the Trustees intend to replace the current fundamental limitation with the
following non-fundamental limitation, which could be changed without a vote
of shareholders:
"The Fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger."
The ability of mutual funds to invest in other investment companies is
restricted by rules under the 1940 Act and by some state regulations. The
fund's current fundamental investment limitations recite certain of the
applicable federal and former state restrictions. The federal restrictions
will remain applicable to the funds whether or not they are recited in a
fundamental limitation. As a result, elimination of the above fundamental
limitation is not expected to have any impact on the fund's investment
practices, except to the extent that regulatory requirements may change in
the future. However, the Board of Trustees believes that the efforts to
standardize the Funds' investment limitations will facilitate FMR's
investment compliance efforts (see "Adoption of Standardized Investment
Limitations" on page ) and are in the best interests of the shareholders.
CONCLUSION. The Board of Trustees recommends voting FOR the Proposal to
eliminate each fund's fundamental investment limitation regarding
investments in other investment companies. If approved, the new
non-fundamental limitation will be implemented on the effective date of the
next prospectus. If the Proposal is not approved, the fund's current
limitation will remain unchanged.
29. TO ELIMINATE THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING INVESTING
IN OIL, GAS, AND OTHER MINERAL EXPLORATION PROGRAMS FOR GROWTH
OPPORTUNITIES FUND.
Currently, Growth Opportunities Fund maintains a fundamental investment
limitation specifying that the fund may not "invest in oil, gas, or other
mineral exploration or development programs." Investment in oil, gas, or
other mineral exploration programs is permitted under federal standards for
mutual funds, but currently is prohibited by some state regulations.
The Trustees recommend that shareholders vote to eliminate the above
fundamental investment limitation. If the Proposal is approved, the
Trustees intend to adopt the following non-fundamental investment
limitation, which could be changed without a shareholder vote:
"The Fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases."
The Proposal will have no current impact on the fund. However, adoption of
a standardized non-fundamental investment limitation will facilitate FMR's
investment compliance efforts (see "Adoption of Standardized Investment
Limitations" on page ), and will enable the fund to respond more promptly
if applicable state laws change in the future. In addition, the fund's new
limitation will, for the first time, specifically refer to leases.
CONCLUSION. The Board of Trustees recommends voting FOR the Proposal to
eliminate the fund's fundamental investment limitation concerning
investment in oil, gas, and other mineral exploration programs. If
approved, the Proposal will be implemented on the effective date of the
next prospectus. If the Proposal is not approved, the fund's current
limitation will remain unchanged.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the
contrary will be voted on such matters in accordance with the judgment of
the persons therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to a
number of investment companies whose average net assets for July, 1994,
were in excess of $ 200 billion. The Fidelity family of funds
currently includes a number of funds with a broad range of investment
objectives and permissible portfolio compositions. The Boards of these
funds are substantially identical to that of this trust. In addition, FMR
serves as investment adviser to certain other funds which are generally
offered to limited groups of investors. Information concerning the advisory
fees, net assets, and total expenses of the funds advised by FMR is
contained in the Table of Average Net Assets and Expense Ratios in Exhibit
8.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc. (FMR
U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far East),
both wholly owned subsidiaries of FMR formed in 1986, supply investment
research information, and may supply portfolio management services to FMR
in connection with certain funds advised by FMR. FMR Texas Inc., a wholly
owned subsidiary of FMR formed in 1989, supplies portfolio management and
research services in connection with certain money market funds advised by
FMR.
FMR, its officers and directors, its affiliated companies and personnel,
and the Trustees, from time to time have transactions with various banks,
including the custodian banks for certain of the funds advised by FMR.
Those transactions which have occurred to date have included mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
The Consolidated Statement of Financial Condition of Fidelity Management &
Research Company and subsidiaries as of December 31, 1993 is shown
beginning on page .
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board; J.
Gary Burkhead, President; and Peter S. Lynch, Vice Chairman. Each of the
Directors is also a Trustee of the trust. Messrs. Johnson 3d, Burkhead,
John H. Costello, Margaret L. Eagle, Robert E. Haber, Curtis Hollingsworth,
Donald G. Taylor, George A. Vanderheiden, Gary L. French, Arthur S. Loring,
William J. Hayes, Robert A. Lawrence, Thomas J. Steffanci are currently
officers of the trust and officers or employees of FMR or FMR Corp. With
the exception of Mr. Costello , all of these persons are stockholders
of FMR Corp. FMR's address is 82 Devonshire Street, Boston, Massachusetts
02109, which is also the address of the Directors of FMR.
All of the stock of FMR is owned by a parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts, which was organized on October
31, 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions, Fidelity Service Co., which is
the transfer and shareholder servicing agent for certain of the retail
funds advised by FMR, Fidelity Investments Institutional Operations
Company, which performs shareholder servicing functions for certain
institutional customers, and Fidelity Investments Retail Marketing Company,
which provides marketing services to various companies within the Fidelity
organization. Messrs. Johnson 3d, Burkhead, William L. Byrnes, James C.
Curvey, Caleb Loring, Jr., and Ms. Abigail P. Johnson are the Directors of
FMR Corp. On June 3 0 , 1994, Messrs. Johnson 3d, Burkhead,
Curvey, and Loring, Jr., and Ms . Johnson owned approximately
2 4%, 3%, 3 %, 13 %, and 2 4 %, respectively, of the
voting common stock of FMR Corp. In addition, various Johnson family
members and various trusts for the benefit of Johnson family members, for
which Messrs. Burkhead, Curvey, or Loring, Jr. are Trustees, owned in the
aggregate approximately 32 % of the voting common stock of FMR Corp.
Messrs. Johnson 3d, Burkhead, and Curvey owned approximately 2%, 3% and 1%,
respectively, of the non-voting common and equivalent stock of FMR Corp. In
addition, various trusts for the benefit of members of the Johnson family,
for which Mr. Loring, Jr. is the sole Trustee, and other trusts for the
benefit of Johnson family members, through limited partnership interests in
a partnership the corporate general partner of which is controlled by Mr.
Johnson 3d, Mr. Loring, Jr., and other Johnson family members, together
owned approximately 43% of the non-voting common and equivalent stock of
FMR Corp. Through ownership of voting common stock, Edward C. Johnson 3d
(President and a Trustee of the trust), Johnson family members, and various
trusts for the benefit of the Johnson family form a controlling group with
respect to FMR Corp.
During the period November 1, 1992 through June 30 , 1994, the
following transactions were entered into by officers and/or Trustees of the
fund or of FMR Corp. involving more than 1% of the voting common,
non-voting common and equivalent stock or preferred stock of FMR Corp. Mr.
C. Bruce Johnstone redeemed an aggregate of 25,500 shares of
non-voting common stock for an aggregate cash payment of approximately
$ 3.4 million. Mr. Edward C. Johnson 3d converted 2,064 shares of
voting common stock into 2,064 shares of non-voting common stock. Mr. Caleb
Loring, Jr. purchased 1,064 shares of voting common stock with a cash
payment of approximately $166,000.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed in
1986 to provide investment research information with respect to certain
funds for which FMR acts as investment adviser. Under sub-advisory
agreements with FMR U.K. and FMR Far East, FMR pays fees equal to 110% of
FMR U.K.'s costs and 105% of FMR Far East's costs, respectively, in
connection with research services provided for the benefit of certain
Fidelity funds.
On November 1, 1993, FMR, on behalf of High Yield Fund, entered into
sub-advisory agreements with FMR U.K. and FMR Far East pursuant to which
FMR U.K. and FMR Far East supply FMR with investment research and
recommendations concerning foreign securities for the benefit of the
Fund. No fees have been paid by FMR to FMR Far East or FMR U.K. on
behalf of High Yield Fund.
The Statements of Financial Condition of FMR U.K. and FMR Far East as of
December 31, 1993 are shown on pages and respectively.
Funds managed by FMR with respect to which FMR currently has sub-advisory
agreements with either FMR U.K. or FMR Far East, and the net assets of each
of these funds, are indicated in the Table of Average Net Assets and
Expense Ratios in Exhibit 8.
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and J. Gary Burkhead, President. Each of the Directors is also a
Trustee of the trust. Messrs. Johnson 3d and Burkhead are currently
officers of the trust and officers or employees of FMR U.K. and FMR Far
East. Messrs. Johnson 3d and Burkhead are stockholders of FMR Corp. The
affiliations of Messrs. Johnson 3d and Burkhead are described in Proposal
1. The principal business address of the Directors and FMR U.K. and FMR Far
East is 82 Devonshire Street, Boston, Massachusetts.
BALANCE SHEETS
The Consolidated Statements of Financial Condition of FMR, FMR U.K., and
FMR Far East as of December 31, 1993 (audited) are shown on pages
through 77 .
PRESENT MANAGEMENT CONTRACTS OF EACH FUND
Each Fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or of FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include providing
facilities for maintaining each fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of the fund's shares under federal and
state law; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
Fidelity Service Co., State Street Bank and/or Fidelity Investments
Institutional Operations Company, each Fund pays all of its expenses,
without limitation, that are not assumed by those parties. Each fund pays
for typesetting, printing, and mailing proxy material to existing
shareholders, legal expenses, and its proportionate share of the fees of
the custodian, auditor, and non-interested Trustees. Although the
management contract provides that each fund will pay for typesetting,
printing, and mailing prospectuses, statements of additional information,
notices, and reports to shareholders, the Trust has entered into a revised
transfer agent agreement with the Transfer Agent(s), pursuant to which the
Transfer Agent bears the cost of providing these services to shareholders.
Other expenses paid by each fund includes interest, taxes, brokerage
commissions, each fund's proportionate share of insurance premiums and
Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. Each fund is also liable for such
nonrecurring expenses as may arise, including costs of any litigation to
which the fund may be a party and any obligation it may have to indemnify
its officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated December
30, 1988 (Growth Opportunities Fund, Government Investment Fund, Short
Fixed-Income Fund, Income & Growth Fund) and November 1, 1993 (High Yield
Fund). Contracts were approved by shareholders on November 16, 1988 (Growth
Opportunities Fund, Government Investment Fund, Short Fixed-Income Fund,
Income & Growth Fund) and October 20, 1993 (High Yield Fund). For services
of FMR under the contracts, each fund pays FMR a monthly management fee
composed of the sum of a group fee rate and an individual fund fee rate
(the "basic fee").
For Growth Opportunities, the basic fee is subject to an upward or
downward adjustment, depending on whether the fund's investment performance
exceeds or is exceeded by the Standard & Poor's 500 Composite Stock Price
Index over the same period. See "Computing the Performance Adjustment for
Growth Opportunities Fund," page .
COMPUTING THE BASIC FEE. The group fee rate is based on the monthly
average net assets of all of the registered investment companies with which
FMR has management contracts and is calculated on a cumulative basis
pursuant to the graduated fee rate schedule shown on the left of the
following tables. On the right, the effective fee rate schedules are the
result of cumulatively applying the annualized rates at varying asset
levels. For example, the effective annual group fee rate at $ 258
billion of group net assets - their approximate level for July 1994 - was
. 3209 % (equity funds) and .1578 % (fixed income funds), which
is the weighted average of the respective fee rates for each level of group
net assets up to $ 258 billion.
Equity Funds:
Growth Opportunities Fund
Income & Growth Fund
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE
RATES
Average Annualized Group Effective
Group Fee Rate Net Annual
Assets Assets Fee Rate
$ 0 - 3 billion .520% $ 0.5 billion .5200%
3 - 6 .490 25 .4238
6 - 9 .460 50 .3823
9 - 12 .430 75 .3626
12 - 15 .400 100 .3512
15 - 18 .385 125 .3430
18 - 21 .370 150 .3371
21 - 24 .360 175 .3325
24 - 30 .350 200 .3284
30 - 36 .345 225 .32 49
36 - 42 .340 250 .32 19
42 - 48 .335 275 .319 0
48 - 66 .325 300 .31 63
66 - 84 .320 325 .31 37
84 - 102 .315 350 .31 1 3
102 - 138 .310 375 .3090
138 - 174 .305 400 .3067
174 - 2 10 .300
2 10 - 246 .295
2 46 - 282 .290
282 - 318 .285
318 - 354 .280
354 - 390 .275
Over 3 90 .2 70
Fixed Income Funds:
High Yield Fund
Government Investment Fund
Short Fixed - Income Fund
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE
RATES
Average Annualized Group Effective
Group Fee Rate Net Annual
Assets Assets Fee Rate
$ 0 - 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .16 18
36 - 42 .1700 250 .1 587
42 - 48 .1650 275 .1 560
48 - 66 .1600 300 .15 36
66 - 84 .1550 325 .15 14
84 - 120 .1500 350 .1 494
120 - 1 56 .1450 375 .1476
1 56 - 192 .1400 400 .1459
192 - 228 .13 50
2 28 - 264 .13 00
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
Over 3 72 .1 200
* The rates shown for average group assets in excess of $138 billion and
$174 billion (Equity Funds Schedule) were adopted by FMR on a voluntary
basis on January 1, 1992 and August 1, 1994, respectively. The rates
shown for average group assets in excess of $1 20 billion (Fixed-Income
Funds Schedule) were adopted by FMR on a voluntary basis on August
1, 1994 . Each set of new breakpoints was adopted pending shareholder
approval of a new management contract reflecting the extended schedule. The
extended schedule provides for lower management fees as total assets under
management increase.
Based on the average net assets of the funds advised by FMR for July
1994, the annual basic fee rate would be calculated as follows:
Group Individual Fund Basic
Fee Rate Fee Rate Fee Rate
Government Investment Fund .1578% + .30% = .4578%
Growth Opportunities Fund .3209 % + .30% = .6209 %
High Yield Fund .1578% + .45% = .6078%
Income & Growth Fund .3209 % + .20% = .5209 %
Short Fixed-Income Fund .1578 % + .30% = .4578 %
One twelfth of this annual basic fee rate is then applied to the fund's
average net assets for the current month, giving a dollar amount which is
the fee for that month.
COMPUTING THE PERFORMANCE ADJUSTMENT FOR GROWTH OPPORTUNITIES FUND. The
basic fee for Growth Opportunities Fund is subject to upward or downward
adjustment, depending upon whether, and to what extent, the fund's
investment performance for the performance period exceeds, or is exceeded
by, the record of the Standard & Poor's 500 Composite Stock Price Index
(S&P 500) over the same period. The performance period consists of the most
recent month plus the previous 35 months. Each percentage point of
difference (up to a maximum difference of " 10) is multiplied by a
performance adjustment rate of .02%. Thus, the maximum annualized
adjustment rate is " .20%. This performance comparison is made at the
end of each month. One twelfth of this rate is then applied to the fund's
average net assets for the entire performance period, giving a dollar
amount which will be added to (or subtracted from) the basic fee.
Growth Opportunities Fund's performance is calculated based on change in
net asset value. For purposes of calculating the performance adjustment,
any dividends or capital gain distributions paid by the fund are treated as
if reinvested in fund shares at the NAV as of the record date for payment.
The record of the S&P 500 is based on change in value and is adjusted for
any cash distributions from the companies whose securities compose the S&P
500.
Because the adjustment to the basic fee is based on the fund's performance
compared to the investment record of the S&P 500, the controlling factor is
not whether the fund's performance is up or down per se, but whether it is
up or down more or less than the record of the S&P 500. Moreover, the
comparative investment performance of the fund is based solely on the
relevant performance period without regard to the cumulative performance
over a longer or shorter period of time.
MANAGEMENT FEES. For the fiscal year ended October 31, 1993, 1992, and
1991, FMR received payments from each fund as shown in the following tables
for its services as investment adviser, including any applicable
performance adjustment for Growth Opportunities Fund. If FMR had not
voluntarily adopted the extended group fee rate schedule, these fees would
have been higher.
Management Fees Percentage of Average Net
Assets
1993 1992 1991 1993 1992 1991
Government $ 186,973 $ 78,107 $ 54,488 .46% .47% .48%
Investment
Growth Opportunities$ 8,250,306 $ 2,747,645 $ 844,358 .68% .69% .70%
High Yield $ 1,539,682 $ 397,638 $ 124,674 .51% .52% .53%
Income & Growth $ 4,578,813 $ 1,291,531 $ 476,397 .53% .53% .54%
Short Fixed-Income$ 1,674,841 $ 368,993 $ 80,803 .47% .47 % .48 %
For fiscal 1993, 1992, and 1991, the upward performance adjustments for
Growth Opportunities Fund amounted to $709,376, $240,501, and $70,060,
respectively.
During the fiscal years ended October 31, 1993, 1992, and 1991, FMR
voluntarily agreed to reimburse Government Investment Fund and Short-Fixed
Income Fund to the extent that aggregate operating expenses (excluding
taxes, interest, brokerage commissions and extraordinary expenses) exceeded
certain levels, as shown below.
Expense Limit Expenses Amount of
(as a percent Borne by Reimburseme
of Average FMR nt
net (per share)
assets
Government
Investment Fund
1993 .68 % $ .059074 $ 259, 551
1992 1.10% .065081 112,760
1991 1.10% .127786 154,741
Short-Fixed Income
Fund
1993 0 $ 0 $ 0
1992 .90% .013792 98,881
1991 .90% .083915 141,643
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2 % of the first $30 million, 2% of
the next $70 million, and 1% of average net assets in excess of $100
million. When calculating a fund's expenses for purposes of this
regulation, each fund may exclude interest, taxes, brokerage commissions,
and extraordinary expenses, as well as a portion of its distribution plan
expenses and custodian fees attributable to investments in foreign
securities.
FMR may, from time to time, agree to voluntarily reimburse a fund for
expenses above a specified percentage of average net assets. FMR retains
the ability to be repaid for these expense reimbursement in the amount that
expenses fall below the limit prior to the end of the fiscal year.
Reimbursement by the fund will lower its yield and total return.
SUB-ADVISERS (HIGH YIELD FUND ONLY). On November 1, 1993, FMR entered into
sub-advisory agreements with FMR U.K. and FMR Far East pursuant to which
FMR U.K. and FMR Far East supply FMR with investment research and
recommendations concerning foreign securities for the benefit of High Yield
Fund.
FMR U.K. and FMR Far East, both wholly owned subsidiaries of FMR, were
formed in 1986 and registered under the Investment Advisers Act on May 11,
1987 to research and to make recommendations with respect to companies
located outside of North America.
The sub-advisory agreements provide that FMR, and not High Yield Fund, may
pay fees to FMR U.K. and FMR Far East equal to 110% and 105%, respectively,
of FMR U.K.'s and FMR Far East's costs incurred in connection with each
agreement, said costs to be determined in relation to the assets of the
Fund that benefit from the services of the sub-advisers. No fees had
been paid by FMR to either FMR Far East or FMR U.K. on behalf of High Yield
Fund.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in its
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR
considers various relevant factors, including, but not limited to, the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions; and arrangements for payment of fund
expenses. Commissions for foreign investments traded on foreign exchanges
will generally be higher than for U.S. investments and may not be subject
to negotiation.
Each fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers is
generally made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of research
and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of each fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause a
fund to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to each
fund and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services. Ltd. (FBSL), subsidiaries of
FMR Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. Prior to September 4, 1992, FBSL operated under the name
Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary of
Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman of
FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family, own directly or indirectly more than 25% of
the voting common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute fund portfolio transactions on national
securities exchanges in accordance with approved procedures and applicable
SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of
each fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
Each fund's annual portfolio turnover rates for the fiscal years ended
October 31, 1993 and 1992 are illustrated in the following table.
1993 1992
Government Investment Fund 333% 315%
Growth Opportunities Fund 69% 94%
High Yield Fund 79% 100%
Income & Growth Fund 200% 3 8 9%
Short Fixed-Income Fund 58% 57%
Because a high turnover rate increases transaction costs and may
increase taxable gains, FMR carefully weighs the anticipated benefits of
short-term investing against these consequences.
The tables below list the total brokerage commissions paid; the
percentage of brokerage commissions paid to brokerage firms that provided
research services; the total dollar value of brokerage commissions paid to
firms that provided research services; and the commissions paid to FBSI in
dollars and as a percentage of the dollar value of all transactions in
which brokerage commissions were paid for the fiscal period ended October
31, 1993 for each of the funds. The differences in the percentage of
brokerage commissions paid to FBSI and the percentage of transactions
effected through FBSI are a result of low commission rates charged by FBSI
in comparison to those charged by unaffiliated broker-dealers. There were
no brokerage commissions paid by the funds to FBSL for the fiscal period
ended October 31, 1993.
Total
% Paid to
Amount
Commission Firms
Paid to
s Providing
Firms
Research Providing
Research
Fidelity Advisor Government
0 0 0
Investment Fund
Fidelity Advisor Growth
$ 2,583,165 59.23% $ 1,529,935
Opportunities Fund
Fidelity Advisor High Yield 0 0 0
Fund
Fidelity Advisor Income & 2,998,137 64.9% 1,946,410
Growth Fund
Fidelity Advisor Short-Fixed
0 0 0
Income Fund
To
% To
Transac
FBSI FBSI tions
Through
FBSI
Fidelity Advisor Government Investment Fund -- -- --
Fidelity Advisor Growth Opportunities Fund $ 899,767 34.83% 49.0%
Fidelity Advisor High Yield Fund -- -- --
Fidelity Advisor Income and Growth Fund $ 796,821 26.6% 38.30%
Fidelity Advisor Short-Fixed Income Fund -- -- --
From time to time the Trustees will review whether the recapture for the
benefit of a fund of some portion of the brokerage commissions or similar
fees paid by that fund on portfolio transactions is legally permissible and
advisable. Each fund seeks to recapture soliciting broker-dealer fees on
the tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine, in the exercise of their business judgment,
whether it would be advisable for a fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for the fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a detrimental
effect on the price or value of a security as far as the fund is concerned.
In other cases, however, the ability of the fund to participate in volume
transactions will produce better executions and prices for the fund. It is
the current opinion of the Trustees that the desirability of retaining FMR
as investment adviser to the funds outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
State Street is transfer, dividend-disbursing and shareholder servicing
agent for Class A shares of each fund and maintains its shareholder
records. State Street has delegated certain transfer, dividend paying and
shareholder services to Fidelity Investment Institutional Operations
Company (FIIOC), 82 Devonshire Street, Boston, Massachusetts 02109, an
affiliate of FMR. Under a revised fee arrangement effective January 1,
1993, the funds pay a per account fee and monetary transaction fee of $30
and $6, respectively. For accounts that FIIOC maintains on behalf of State
Street, FIIOC receives all such fees. For accounts as to which FIIOC
provides limited services, FIIOC may receive a portion (currently up to $20
and $6, respectively) of related per account fees and monetary transaction
fees, less applicable charges and expenses of State Street for account
maintenance and transactions.
FIIOC is the transfer and shareholder servicing agent for Class B shares
of Government Investment Fund and High Yield Fund. Under its contract with
Class B, FIIOC pays out-of-pocket expenses associated with providing
transfer agent services, and FIIOC bears the expense of typesetting,
printing and mailing of Prospectuses, Statements of Additional Information,
reports, notices and statements to shareholders. FIIOC is paid a per
account fee of $95 and a monetary transaction fee of $20 or $17.50,
depending on the nature of the services provided.
Fidelity Service Company (Service), an affiliate of FMR, performs the
calculations necessary to determine the funds' NAV and dividends and
maintains the funds' accounting records. Prior to July 1, 1991, the annual
fee for these pricing and bookkeeping services was based on two schedules,
one pertaining to the funds' average net assets, and one pertaining to the
type and number of transactions made. The fee rates in effect as of July 1,
1991 for the fixed-income funds are based on the funds' average net
assets, specifically, .04% for the first $500 million of average net assets
and .02% for average net assets in excess of $500 million. The fee rates
in effect as of July 1, 1991 for the equity funds are .06% for the first
$500 million of average net assets in excess of $500 million. The fee
is limited to a minimum of $45,000 and a maximum of $750,000 per year.
For pricing and bookkeeping fees, including related out-of-pocket expenses
paid to Service for fiscal 1993, 1992, and 1991, were as follows:
1993 1992 199 1
Government Investment Fund $ 46,457 $ 45,676 $ 44,87 9
Growth Opportunities Fund $ 513,950 $ 236,689 $ 106,308
High Yield Fund $ 121,204 $ 46,036 $ 47,445
Income & Growth Fund $ 410,561 $ 148,775 $ 109,371
Short Fixed-Income Fund $ 143,813 $ 47,624 $ 46,011
Service also receives fees for administering the funds' securities lending
program. Securities lending fees are based on the number and duration of
individual securities loans. There were no fees paid to Service for
securities lending.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders wishing
to submit Proposals for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written Proposals to the Secretary of
the Trust, 82 Devonshire Street, Boston, Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of FIIOC, P.O. Box 789, Boston,
Massachusetts 02102, whether other persons are beneficial owners of shares
for which proxies are being solicited and, if so, the number of copies of
the Proxy Statements and Annual Reports you wish to receive in order to
supply copies to the beneficial owners of the respective shares.
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Fidelity Management & Research Company
(a Wholly-Owned Subsidiary of FMR Corp.):
We have audited the accompanying consolidated statement of financial
condition of Fidelity Management & Research Company as of December 31,
1993. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the consolidated financial position of Fidelity
Management & Research Company as of December 31, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
________
ASSETS
($000)
Cash and cash equivalents $ 109
Management fees receivable 103,826
Invested assets:
Managed funds (market value $59,845,000) 56,416
Other investments (fair value $25,816,000) 20,822
Property and equipment, net 141,584
Deferred income taxes 35,910
Note receivable from affiliate 11,250
Prepaid expenses and other assets 9,597
Total Assets $ 379,514
LIABILITIES AND STOCKHOLDER'S EQUITY
Payable to mutual funds $ 8,580
Accounts payable and accrued expenses 30,349
Payable to parent company 235,232
Other liabilities 3,871
Total Liabilities 278,032
Stockholder's equity:
Common stock, $.30 par value;
authorized 50,000 shares;
issued and outstanding
26,500 shares 8
Additional paid-in capital 50,074
Retained earnings 51,400
Total Stockholder's Equity 101,482
Total Liabilities and Stockholder's Equity $ 379,514
The accompanying notes are an integral part
of the consolidated statement of financial condition.
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT
OF FINANCIAL CONDITION
________
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fidelity Management & Research Company and Subsidiaries (the Company)
provide investment management and advisory services and other services
principally for the Fidelity Investments Family of Funds. The Company also
provides computer support and systems development services to affiliated
companies.
On March 1, 1993, ownership of the Company's wholly-owned subsidiary,
Fidelity Investments Institutional Services Company, Inc. was distributed
to the Company's parent. As of that date, this subsidiary had total assets
and stockholder's equity of approximately $73,000,000, and $60,000,000,
respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated statement of financial condition includes the accounts of
Fidelity Management & Research Company and its wholly-owned subsidiaries.
All intercompany accounts have been eliminated.
INVESTED ASSETS
Managed funds investments (consisting primarily of Fidelity Mutual Funds)
are carried at the lower of aggregate cost or market. Other investments
consist primarily of investments in limited partnerships which are carried
at cost. Certain restrictions exist with respect to the sale or transfer of
these investments to third parties. For managed funds investments and other
investments, fair value is determined by the quoted market price except in
the case of restricted investments which are valued based on management's
assessment of fair value. When the Company has determined that an
impairment, which is deemed other than temporary, in the market or fair
value of an investment has occurred, the carrying value of the investment
is reduced to its net realizable value.
INCOME TAXES
The Company is included in the consolidated federal and certain state
income tax returns filed by FMR Corp.
Effective January 1, 1993, FMR Corp. and the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Adoption of this statement did not have a material impact on the Company's
financial position.
FIDELITY MANAGEMENT & RESEARCH COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO CONSOLIDATED STATEMENT
OF FINANCIAL CONDITION
(CONTINUED)
________
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation of furniture and equipment is computed over the
estimated useful lives of the related assets, which are principally three
to five years, using the straight-line method. Leasehold improvements are
amortized over the lesser of their economic useful lives or the period of
the lease. Maintenance and repairs are charged to operations when incurred.
Renewals and betterments of a nature considered to materially extend the
useful life of the assets are capitalized.
PENSION AND PROFIT SHARING PLANS
The Company participates in FMR Corp.'s noncontributory defined benefit
pension plan covering all of its eligible employees. There are no
statistics available for the actuarial data of this separate company. There
are no unfunded vested benefits.
The Company also participates in FMR Corp.'s defined contribution profit
sharing and retirement plans covering substantially all eligible employees.
B. PROPERTY AND EQUIPMENT, NET
At December 31, 1993, property and equipment, at cost, consist of (in
thousands):
Furniture $ 1,853
Equipment (principally computer related) 320,141
Leasehold improvements 6,712 328,706
Less: Accumulated depreciation and amortization 187,122
$ 141,584
C. NOTE RECEIVABLE FROM AFFILIATE
On December 2, 1993, the Company issued a non-recourse mortgage to an
affiliate for property located in Irving, Texas. The $11,250,000 note
receivable is due on January 1, 2009, and accrues interest at 7.6325%.
Payments of principal and interest are due monthly.
D. TRANSACTIONS WITH AFFILIATED COMPANIES
In connection with its operations, the Company provides services to and
obtains services from affiliated companies. Transactions related to these
services are settled, in the normal course of business, through an
intercompany account with the Company's parent, FMR Corp. The terms of
these transactions may not be the same as those which would otherwise exist
or result from agreements and transactions among unrelated parties.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Fidelity Management & Research (U.K.) Inc.
(a Wholly-Owned Subsidiary of Fidelity Management & Research Company):
We have audited the accompanying statement of financial condition of
Fidelity Management & Research (U.K.) Inc. as of December 31, 1993. This
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Fidelity Management &
Research (U.K.) Inc. as of December 31, 1993, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
________
ASSETS
Investments (market value $3,180,192) $ 2,537,448
Equipment, net of accumulated
depreciation of $859,335 914,770
Accounts receivable from parent 2,806,932
Deferred income taxes 23,520
Total Assets $ 6,282,670
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Subordinated loan $ 1,608,100
Accounts payable to affiliate 1,452,719
Income taxes payable 173,009
Other liabilities 131
Total Liabilities 3,233,959
Stockholder's equity:
Common stock, $1 par value;
authorized 300,000 shares;
issued and outstanding 100 shares 100
Additional paid-in capital 900
Retained earnings 3,047,711
Total Stockholder's Equity 3,048,711
Total Liabilities and Stockholder's Equity $ 6,282,670
The accompanying notes are an integral part
of the statement of financial condition.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
NOTES TO STATEMENT OF
FINANCIAL CONDITION
________
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF REPORTING
The statement of financial condition is presented in accordance with United
States generally accepted accounting principles. The functional and
reporting currency for Fidelity Management & Research (U.K.) Inc. (the
Company) is the U.S. dollar.
BUSINESS
The Company is a wholly-owned subsidiary of Fidelity Management & Research
Company (the parent). The Company is a registered investment advisor and
provides research and investment advisory services under subadvisory
agreements with its parent. The Company also provides research advice to
the parent and an affiliate pursuant to a research joint venture agreement.
Intercompany transactions are settled during the normal course of business.
INVESTMENTS
Investments consist of shares held in Fidelity mutual funds and are carried
at the lower of aggregate cost or market. The fair value of investments is
equal to the quoted market price.
EQUIPMENT
Equipment is stated at cost less accumulated depreciation. Depreciation is
computed over the estimated useful lives of the related assets, which vary
from three to five years, using the straight-line method. Maintenance and
repairs are charged to operations when incurred.
SUBORDINATED LOAN
The Company has a subordinated loan payable to its parent and due on March
31, 1994. The loan is subordinated in all respects to the rights of senior
creditors. Interest is payable annually at a rate of 4.375%. Repayment or
modification of this loan is subject to regulatory approval.
INCOME TAXES
The Company is included in the consolidated federal income tax return filed
by FMR Corp., the parent Company of Fidelity Management & Research Company.
The Company is allocated a charge by FMR Corp. representing the sum of the
applicable foreign and U.S. statutory income tax rates.
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
NOTES TO STATEMENT
OF FINANCIAL CONDITION
(CONTINUED)
________
A. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INCOME TAXES, CONTINUED:
Effective January 1, 1993, FMR Corp. and the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes",
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Adoption of this statement did not have a material impact on the Company's
financial position.
B. NET CAPITAL REQUIREMENT:
The Company is subject to certain financial regulatory resource rules which
require the Company to maintain a certain level of net capital (as
defined). At December 31, 1993, the minimum net capital requirement of
approximately $422,000 has been satisfied by the Company.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
________
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Fidelity Management & Research (Far East) Inc.
(a Wholly-Owned Subsidiary of Fidelity Management & Research Company):
We have audited the accompanying statement of financial condition of
Fidelity Management & Research (Far East) Inc. as of December 31, 1993.
This financial statement is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Fidelity Management &
Research (Far East) Inc. as of December 31, 1993, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993
________
ASSETS
Cash $ 24,294
Investments (market value $618,049) 569,958
Furniture and equipment, net of
accumulated depreciation of $10,704 642
Prepaid expenses and other assets 143,427
Receivable from parent company 840,906
Total Assets $ 1,579,227
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Payable to affiliate $ 795,567
Income taxes payable 168,646
Total Liabilities 964,213
Stockholder's equity:
Common stock, $1 par value;
authorized 300,000 shares;
issued and outstanding 100 shares 100
Additional paid-in capital 900
Retained earnings 614,014
Total Stockholder's Equity 615,014
Total Liabilities and Stockholder's Equity $ 1,579,227
The accompanying notes are an integral part
of the statement of financial condition.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
(A WHOLLY-OWNED SUBSIDIARY OF FIDELITY MANAGEMENT & RESEARCH COMPANY)
NOTES TO STATEMENT
OF FINANCIAL CONDITION
________
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS
Fidelity Management & Research (Far East) Inc. (the Company) is a
wholly-owned subsidiary of Fidelity Management & Research Company (the
parent). The Company is a registered investment advisor and provides
research advice to the parent and an affiliate pursuant to a research joint
venture agreement. Intercompany transactions are settled during the normal
course of business.
INVESTMENTS
Investments consist of shares held in a Fidelity mutual fund and are
carried at the lower of cost or market. The fair value of investments is
equal to the quoted market price.
FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost less accumulated depreciation.
Depreciation is computed over the estimated useful lives of the related
assets, which vary from three to five years, using the straight-line
method. Maintenance and repairs are charged to operations when incurred.
INCOME TAXES
The Company is included in the consolidated federal income tax return filed
by FMR Corp., the parent company of Fidelity Management & Research Company.
The Company is allocated a charge by FMR Corp. representing the sum of the
applicable foreign and U.S. statutory income tax rates.
Effective January 1, 1993, FMR Corp. and the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Adoption of this statement did not have a material impact on the Company's
financial position.
EXHIBIT 1
The language to be added to the current contract is
[[ underlined; ]] the language to be deleted is set forth in
[brackets.]
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY ADVISOR SERIES II:
(NAME OF PORTFOLIO)
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
(FOR GOVERNMENT INVESTMENT FUND, SHORT FIXED-INCOME FUND, AND
INCOME & GROWTH FUND: [Agreement made this 30th day of December,
1988]) ( FOR HIGH YIELD FUND: [Agreement made this 1st day of
November, 1993]) (FOR GROWTH OPPORTUNITIES FUND: [Modification
made this 30th day of December, 1988]) [[ MODIFICATION made this
1st day of November, 1994 ]] by and between Fidelity Advisor Series
II , formerly called Plymouth Fund, a Massachusetts business trust
which may issue one or more series of shares of beneficial interest
(hereinafter called the [ " Trust"] [[ "Fund") ]] , on
behalf of (NAME OF PORTFOLIO) (hereinafter called the "Portfolio"),
and Fidelity Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser").
FOR HIGH YIELD FUND AND GROWTH OPPORTUNITIES FUND: Required authorization
and approval by shareholders and Trustees having been obtained, the Fund,
on behalf of the Portfolio, and [Fidelity Management & Research Company]
[[ the Adviser ]] hereby consent, pursuant to Paragraph
6 of the existing Management Contract (FOR HIGH YIELD FUND: [dated
December 30, 1988,] [[ modified November 1, 1993 ]] )
(FOR GROWTH OPPORTUNITIES FUND: [dated November 1, 1987] [[ modified
December 30, 1988) ]] to a modification of said Contract in the
manner set forth below. The (FOR GROWTH OPPORTUNITIES FUND:
[modifications shall take effect upon the execution of this modification of
the] [[ Modified Management Contract) ]] Modified Management
Contract shall when executed by duly authorized officers of the Portfolio
and the Adviser, take effect on (For High Yield Portfolio: [November 1,
1993]) [[ the later of November 1, 1994 or the first day of the month
following approval. ]]
FOR GOVERNMENT INVESTMENT FUND, SHORT-FIXED INCOME FUND, AND INCOME &
GROWTH FUND: [[ Required authorization and approval by shareholders
and Trustees having been obtained, the Fund, on behalf of the Portfolio,
and the Adviser hereby consent, pursuant to Paragraph 6 of the existing
Management Contract dated December 30, 1988 to a modification of said
Contract in the manner set forth below. The Modified Management Contract
shall when executed by duly authorized officers of the Fund and the
Adviser, take effect on the later of November 1, 1994 or the first day of
the month following approval. ]]
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(FOR GOVERNMENT INVESTMENT FUND, SHORT FIXED-INCOME FUND, AND GROWTH
OPPORTUNITIES FUND <CURRENT CONTRACTS FOR INCOME & GROWTH FUND AND HIGH
YIELD FUND CONTAIN THIS PARAGRAPH (C)>: [[ (c) The Adviser shall
place all orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Adviser, which
may include brokers or dealers affiliated with the Adviser. The Adviser
shall use its best efforts to seek to execute portfolio transactions at
prices which are advantageous to the Portfolio and at commission rates
which are reasonable in relation to the benefits received. In selecting
brokers or dealers qualified to execute a particular transaction, brokers
or dealers may be selected who also provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act
of 1934) to the Portfolio and/or the other accounts over which the Adviser
or its affiliates exercise investment discretion. The Adviser is authorized
to pay a broker or dealer who provides such brokerage and research services
a commission for executing a portfolio transaction for the Portfolio which
is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or
dealer. This determination may be viewed in terms of either that particular
transaction or the overall responsibilities which the Adviser and its
affiliates have with respect to accounts over which they exercise
investment discretion. The Trustees of the Fund shall periodically review
the commissions paid by the Portfolio to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits to the Portfolio.) ]]
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
SECTION 3 FOR GOVERNMENT INVESTMENT FUND, SHORT FIXED-INCOME FUND, AND HIGH
YIELD FUND: 3. The Adviser will be compensated on the following basis for
the services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as practicable
after the last day of each month, composed of a Group Fee and an Individual
Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the fund's Declaration of Trust or other
organizational document) determined as of the close of business on each
business day throughout the month. The Group Fee Rate shall be determined
on a cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
$ 0 - 3 billion .3700%
3 - 6 .3400%
6 - 9 .3100%
9 - 12 .2800%
12 - 15 .2500%
15 - 18 .2200%
18 - 21 .2000%
21 - 24 .1900%
24 - 30 .180 0 %
30 - 36 . 1750%
36 - 42 .1700%
42 - 48 .1650%
48 - 66 .1600%
66 - 84 .1550%
(For Fidelity Advisor High Yield Fund only:
84 - [[ 102 ]] [120] .1500%
[Over] 120 - [[ 156 .1450%
156 - 192 .1400%
192 - 228 [[ .1350%
228 - 264 .1300%
264 - 300 .1275%
300 - 336 .1250%
336 - 372 .1225%
Over 372 ]] .1200%) ]]
(For Fidelity Advisor Government Investment Fund and Fidelity Advisor
Short Fixed-Income Fund:
[over] 84 - [[ 1 2 0 .1500%
120 - 156 [[ .1450%
156 - 192 .1400%
192 - 228 .1350%
228 - 264 .1300%
264 - 300 .1275%
300 - 336 .1250%
336 - 372 .1225%
Over 3 72]] .1200%) ]]
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
(FIDELITY ADVISOR HIGH YIELD FUND: .45%./FIDELITY ADVISOR GOVERNMENT
INVESTMENT FUND AND FIDELITY ADVISOR SHORT-FIXED INCOME FUND: .30%.)
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust or
other organizational document) determined as of the close of business on
each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
SECTION 3 FOR GROWTH OPPORTUNITIES FUND: The Adviser will be compensated
on the following basis for the services and facilities to be furnished
hereunder. The Adviser shall receive a monthly management fee, payable
[[ monthly ]] as soon as practicable after the last day of each
month, [[ composed of a ]] [basic fee and a performance
adjustment to the basic fee based upon the investment performance of the
Portfolio in relation to] [[ Basic Fee and a Performance Adjustment.
The Performance Adjustment is added to or subtracted from the Basic Fee
depending on whether the Portfolio experienced better or worse performance
than ]] the Standard & Poor's [Daily Stock Price Index of 500 Common
Stocks (the "Index"). The basic fee and performance adjustment]
[[ 500 Composite Stock Price Index (the "Index"). The Performance
Adjustment is not cumulative. An increased fee will result even though the
performance of the Portfolio over some period of time shorter than the
performance period has been behind that of the Index, and, conversely, a
reduction in the fee will be made for a month even though the performance
of the Portfolio over some period of time shorter than the performance
period has been ahead of that of the Index. The Basic Fee and the
Performance Adjustment ]] will be computed as follows:
[Basic Fee Rate:]
[The basic fee rate shall be composed of two elements.]
[[ (a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum
of the Group Fee Rate and the Individual Fund Fee Rate calculated to the
nearest millionth decimal place as follows: ]]
(i) Group Fee Rate. The Group [[ Fee Rate ]] shall be based
upon the monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the [charter of each
investment company)] [[ fund's Declaration of Trust or other
organizational document) ]] determined as of the close of business on
each business day throughout the month. The Group [[ Fee
Rate ]] shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate (for each level)
$ 0 - 3 billion .52%
3 - 6 .49%
6 - 9 .46%
9 - 12 .43%
12 - 15 .40%
15 - 18 .385%
18 - 21 .37%
21 - 24 .36%
24 - 30 .35%
30 - 36 .345%
36 - 42 .34%
42 - 48 .335%
48 - 66 .325%
66 - 84 .32%
84 - 102 .315%
[Over] 102 - [[ 138 .310%
138 - 174 [[ .305%
174 - 210 .300%
210 - 246 .295%
246 - 282 .290%
282 - 318 .285%
318 - 354 .280%
354 - 390 .275%
Over 390 ]] .270% ]]
(ii) Individual Fund Fee Rate. The Individual Fund [[ Fee
Rate ]] shall be .30%.
[[ (b) Basic Fee. One-twelfth of the ]] Basic Fee
[[ Rate ]] shall be applied to the average of the net assets of
the Portfolio (computed in the manner set forth in the
[[ Fund's ]] Declaration of Trust [of the Fund)] [[ or
other organizational document) ]] determined as of the close of
business on each business day throughout the month. The [basic fee will be
subject to upward or downward adjustment on the basis of the Portfolio's
investment performance as follows:] [[ resulting dollar amount
comprises the Basic Fee. ]]
[[ (c) Performance Adjustment Rate: The Performance Adjustment Rate
is 0.02% for each percentage point (the performance of the Portfolio and
the Index each being calculated to the nearest percentage point ]]
[An adjustment to the monthly basic fee will be made by applying a
performance adjustment rate to the average net assets of the Portfolio over
the performance period. The resulting dollar figure will be added to or
subtracted from the basic fee depending on whether the Portfolio
experienced better or worse performance than the performance index.
The performance adjustment rate is 0.02% for each percentage point rounded
to the nearer point (the higher point if exactly one half point)] that the
Portfolio's investment performance for the performance period was better or
worse than the record of the Index as then constituted. The maximum
performance adjustment rate is 0.20%.
The performance period [will commence] [[ commenced ]] with
the first day of the first full month following the effective date of the
Fund's registration statement. During the first eleven months of the
[operation of the Contract] [[ performance period for the
Portfolio, ]] there will be no performance adjustment. Starting with
the twelfth month of [operation] [[ the performance period, ]]
the performance adjustment will take effect. Following the twelfth month a
new month will be added to the performance period until the performance
period equals 36 months. Thereafter the performance period will consist of
the current month plus the previous 35 months.
The Portfolio's investment performance will be measured by comparing (i)
the opening net asset value of one share of the Portfolio on the first
business day of the performance period with (ii) the closing net asset
value of one share of the Portfolio as of the last business day of such
period. In computing the investment performance of the Portfolio and the
investment record of the Index, distributions of realized capital gains,
the value of capital gains taxes per share paid or payable on undistributed
realized long-term capital gains accumulated to the end of such period and
dividends paid out of investment income on the part of the Portfolio, and
all cash distributions of the [companies whose stocks comprise]
[[ securities included in ]] the Index, will be treated as
reinvested in accordance with Rule 205-1 or any other applicable rules
under the Investment Advisers Act of 1940, as the same from time to time
may be amended.
[The adjustment to the basic fee will not be cumulative. An increased fee
will result even though the performance of the Portfolio over some period
of time shorter than]
[[ (d) Performance Adjustment. One-twelfth of the annual
Performance Adjustment Rate will be applied to the average of the net
assets of the Portfolio (computed in the manner set forth in the Fund's
Declaration of Trust or other organizational document) determined as of the
close of business on each business day throughout the month ]] and
the performance period [has been behind that of the Index, and conversely,
a reduction in the fee will be made for a month even though the performance
of the Portfolio over same period of time shorter than the performance
period has been ahead of that of the Index.]
(e) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect for that month. The Basic Fee
Rate will be computed on the basis of and applied to net assets averaged
over that month ending on the last business day on which this Contract is
in effect. The amount of this Performance Adjustment to the Basic Fee will
be computed on the basis of and applied to net assets averaged over the
36-month period ending on the last business day on which this Contract is
in effect provided that if this Contract has been in effect less than 36
months, the computation will be made on the basis of the period of time
during which it has been in effect.
SECTION 3 FOR INCOME & GROWTH FUND: 3. [[ The Adviser will be
compensated on the following basis ]] for the services and facilities
to be furnished hereunder, the Adviser shall receive a monthly management
fee, payable [[ monthly ]] as soon as practicable after the
last day of each month, [[ composed of a Group Fee and Individual
Fund Fee ]] [which shall be computed as follows]:
[The Basic Fee rate shall be composed of two elements.]
([i] a) Group Fee Rate. The Group Fee rate shall be based upon the
monthly average of the net assets of the registered investment companies
having Advisory and Service or Management Contracts with the Adviser
(computed in the manner set forth in [the charter of each investment
company] [[ Fund's Declaration of Trust or other organizational
document) ]] determined as of the close of business on each business
day throughout the month. The Group Fee rate shall be determined on a
cumulative basis pursuant to the following schedule:
Average Net Assets Annualized Fee Rate (for each level)
$ 0 - 3 billion .520%
3 - 6 .490%
6 - 9 .460%
9 - 12 .430%
12 - 15 .400%
15 - 18 .385%
18 - 21 .370%
21 - 24 .360%
24 - 30 .350%
30 - 36 .345%
36 - 42 .340%
42 - 48 .335%
48 - 66 .325%
66 - 84 .320%
84 - 102 .315%
[Over] 102 - [[ 138 .310%
138 - 174 [[ .305%
174 - 210 .300%
210 - 246 .295%
246 - 282 .290%
282 - 318 .285%
318 - 354 .280%
354 - 390 .275%
Over 390 ]] .270% ]]
([ii] b) Individual [Portfolio] [[ Fund ]] Fee Rate. The
Individual [Portfolio] [[ Fund ]] Fee rate shall be .20%.
The sum of the [cumulative] Group Fee Rate, calculated as described above
to the nearest millionth, and the Individual [Portfolio]
[[ Fund ]] Fee rate shall constitute the Annual
[[ Managemen ]] t Fee Rate. One-twelfth of the Annual
[[ Management ]] Fee Rate shall be applied to the average of
the net assets of the Portfolio (computed in the manner set forth in the
[[ Fund's ]] Declaration of Trust [of the Trust] [[ or
other organizational document) ]] determined as of the close of
business on each business day throughout the month.
In case of [initiation or] termination of this Contract during any month,
the fee for that month shall be reduced proportionately on the basis of the
number of business days during which it is in effect, and the fee computed
upon the average net assets for the business days it is so in effect for
that month.
4. It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until ( FOR
GROWTH OPPORTUNITIES FUND AND INCOME & GROWTH FUND: July 31, [1989]
[[ 1995 ]] ) ( FOR HIGH YIELD FUND: June 30, [1994]
[[ 1995 ]] ) ( FOR GOVERNMENT INVESTMENT FUND AND SHORT
FIXED-INCOME FUND: [May 31, 1989] [[ June 30, 1995 ]] ) and
indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY ADVISOR SERIES II on behalf of ( NAME OF PORTFOLIO ).
[signature lines omitted]
EXHIBIT 2
FORM OF
SUB-ADVISORY AGREEMENT
FOR
[ GROWTH OPPORTUNITIES FUND,
INCOME & GROWTH FUND,
AND
SHORT FIXED-INCOME FUND ]
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR SERIES II
ON BEHALF OF
[FUND NAME]
AGREEMENT made this 1st day of [November], 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"); and FIDELITY ADVISOR SERIES II, a MASSACHUSETTS
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of [FUND NAME]
(hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information may
include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money, or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor shall place all
orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 105% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until (For Short
Fixed-Income Fund: June 30; For Growth Opportunities Fund and Income &
Growth Fund: July 31), 1995 and indefinitely thereafter, but only so long
as the continuance after such period shall be specifically approved at
least annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[Signature lines omitted.]
EXHIBIT 3
FORM OF
SUBADVISORY AGREEMENT
FOR
[ GROWTH OPPORTUNITIES FUND,
INCOME & GROWTH FUND,
AND
SHORT FIXED-INCOME FUND ]
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY ADVISOR SERIES II
ON BEHALF OF
[FUND NAME]
AGREEMENT made this 1st day of [November], 1994, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the "Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"); and FIDELITY ADVISOR SERIES II, a MASSACHUSETTS
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of [FUND NAME]
(hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) Investment Advice: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information may
include written and oral reports and analyses.
(b) Investment Management: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) Subsidiaries and Affiliates: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor shall place all
orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub-Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) Investment Advisory Fee: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The
Sub-Advisory Fee shall not be reduced to reflect expense reimbursements or
fee waivers by the Advisor, if any, in effect from time to time.
(b) Investment Management Fee: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) Provision of Multiple Services: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until (For Short
Fixed-Income Fund: June 30,; For Growth Opportunities Fund and Income &
Growth Fund: July 31,) 1995 and indefinitely thereafter, but only so long
as the continuance after such period shall be specifically approved at
least annually by vote of the Trust's Board of Trustees or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[Signature lines omitted]
EXHIBIT 4
The language to be added to the current contract is
[[ underlined ]] ; the language to be deleted is set forth in
[brackets].
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR SERIES II
ON BEHALF OF
FIDELITY ADVISOR HIGH YIELD FUND
AGREEMENT made this 1st day of November, [1993,] [[ 1994 ]] ,
by and between Fidelity Management & Research [(Far East) Inc., a
Massachusetts corporation with principal offices at 82 Devonshire Street,
Boston, Massachusetts (hereinafter called the "SubAdviser") and Fidelity
Management & Research] Company, a Massachusetts corporation with principal
offices at 82 Devonshire Street, Boston, Massachusetts (hereinafter called
the [[ "Advisor"); Fidelity Management & Research (Far East) Inc.
(hereinafter called the "Sub-Advisor"); and ]] [Adviser").
WHEREAS the Adviser has entered into a Management Contract with] Fidelity
Advisor Series II, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the "
[Fund"] [[ Trust") ]] [,] on behalf of Fidelity Advisor High
Yield [Fund] [[ Portfolio ]] (hereinafter called the
"Portfolio").
[[ WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, ]] pursuant to which the
[Adviser] [[ Advisor ]] is to act as investment [adviser to]
[[ manager of ]] the Portfolio[,]; and
WHEREAS the [SubAdviser has personnel in Asia and the Pacific Basin and
was formed] [[ Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and have
been formed in part ]] for the purpose of researching and compiling
information and recommendations with respect to the economies of various
countries [and issuers located outside of North America, principally in
Asia and the Pacific Basin.] [[ , and securities of issuers located in
such countries, and providing investment advisory services in connection
therewith; ]]
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the [Adviser] [[ Trust, the Advisor ]]
and the [SubAdviser] [[ Sub-Adviso ]] r agree as follows:
1. [The SubAdviser shall act as an investment consultant to the Adviser
and shall furnish the Adviser factual information, research reports and
investment recommendations relating to non U.S. issuers of
securities located in, and the economies of, various countries outside the
U.S., all as the Adviser may reasonably require. Such information shall
include written and oral reports and analyses.
2. The SubAdviser will be compensated by the Adviser on the following
basis for the services to be furnished hereunder: the Adviser agrees to pay
the SubAdviser a monthly fee equal to 105% of the SubAdviser's costs
incurred in connection with the agreement, said costs to be determined in
relation to the assets of the Portfolio that benefits from the services of
the subadviser.
3. It is understood] [[ Duties: The Advisor may, in its discretion,
appoint the Sub-Advisor to perform one or more of the following services
with respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be advised
or managed by the Sub-Advisor shall be as agreed upon from time to time by
the Advisor and the Sub-Advisor. The Sub-Advisor shall pay the salaries and
fees of all personnel of the Sub-Advisor performing services for the
Portfolio relating to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information may
include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money, or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor : The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub- Advisor shall place all
orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub- Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub- Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub- Advisory Fee shall be equal to 105% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The Sub-
Advisory Fee shall not be reduced to reflect expense reimbursements or fee
waivers by the Advisor, if any, in effect from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub- Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood ]] that Trustees, officers,
and shareholders of the [Fund] Trust are or may be or become interested in
the [Adviser and the SubAdviser] [[ Advisor or the
Sub-Advisor ]] as directors, officers or otherwise and that
directors, officers and stockholders of the [Adviser and the SubAdviser]
[[ Advisor or the Sub-Advisor ]] are or may be or become
similarly interested in the [Fund] [[ Trust, ]] and that the
[Adviser] [[ Advisor ]] or the [SubAdviser]
[[ Sub-Advisor ]] may be or become interested in the [Fund]
[[ Trust ]] as a shareholder or otherwise.
[4. The SubAdviser shall for all purposes be an independent contractor and
not an agent or employee of the Adviser or the Fund. The SubAdviser shall
have no authority to act for, represent, bind or obligate the Adviser or
the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.
5. The Services of the SubAdviser to the Adviser] [[ 7. Services to
Other Companies or Accounts: The services of the Sub-Advisor to the
Advisor ]] are not to be deemed to be exclusive, the [SubAdviser]
[[ Sub-Advisor ]] being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the [SubAdviser's] [[ Sub- Advisor's ]]
ability to meet all of its obligations [with respect to rendering
investment advice] hereunder. [[ The Sub-Advisor shall for all
purposes be an independent contractor and not an agent or employee of the
Advisor or the Trust.
8. Standard of Care ]] : In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the [SubAdviser, the SubAdviser] [[
Sub-Advisor, the Sub-Advisor ]] shall not be subject to liability to
the [Adviser,] [[ Advisor ]] , the [Fund]
[[ Trust ]] or to any shareholder of the Portfolio for any act
or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding
or sale of any security.
[6.] [[ 9. Duration and Termination of Agreement; Amendments:
]]
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph [6] [[ 9, ]] this Agreement shall continue in force
until June 30, [1994] [[ 1995 ]] and indefinitely thereafter,
but only so long as the continuance after such period shall be specifically
approved at least annually by vote of the [Fund's]
[[ Trust's ]] Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the
[Adviser,] [[ Adviso ]] r, the [SubAdviser] [[
Sub-Advisor ]] and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding voting
securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph [6] 9, the terms of any continuance or modification of
[the] [[ this ]] Agreement must have been approved by the vote
of a majority of those Trustees of the [Fund] [[ Trust ]] who
are not parties to [such] [[ this ]] Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either the [Adviser,] [[ Advisor, ]] the [SubAdviser]
[[ Sub-Advisor ]] or the Portfolio may, at any time on sixty
(60) [days] [[ days' ]] prior written notice to the other
parties, terminate this Agreement, without payment of any penalty, by
action of its Board of Trustees or Directors, or [[ with respect to
the Portfolio ]] by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
[7. The SubAdviser] [[ 10. Limitation of Liability: The
Sub-Adviso ]] r is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust [of the
Fund] [[ or other organizational document of the Trust ]] and
agrees that any obligations of the [Fund] [[ Trust ]] or the
Portfolio arising in connection with this Agreement shall be limited in all
cases to the Portfolio and its assets, and the [SubAdviser]
[[ Sub-Adviso ]] r shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio. Nor
shall the [SubAdviser] [[ Sub-Advisor ]] seek satisfaction of
any such obligation from the Trustees or any individual Trustee.
[[ 11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof. ]]
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
[Investment Company] [[ 1940 ]] Act [of 1940] as now in effect
or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
Signature lines omitted
EXHIBIT 5
The language to be added to the current contract is
[[ underlined ]] ; the language to be deleted is set forth in
[brackets].
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY ADVISOR SERIES II
ON BEHALF OF
FIDELITY ADVISOR HIGH YIELD FUND
AGREEMENT made this 1st day of November, [1993,] [[ 1994 ]] ,
by and between Fidelity Management & Research [(U.K.) Inc., a Massachusetts
corporation with principal offices at 82 Devonshire Street, Boston,
Massachusetts (hereinafter called the "SubAdviser") and Fidelity Management
& Research] Company, a Massachusetts corporation with principal offices at
82 Devonshire Street, Boston, Massachusetts (hereinafter called the
[[ "Advisor"); Fidelity Management & Research (U.K.) Inc.
(hereinafter called the "Sub-Advisor"); and ]] [Adviser").
WHEREAS the Adviser has entered into a Management Contract with] Fidelity
Advisor Series II, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the "
[Fund"] [[ Trust" ]] ) [,] on behalf [[ of ]]
Fidelity Advisor High Yield Fund (hereinafter called the "Portfolio").
[[ WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, ]] pursuant to which the
[Adviser] [[ Advisor ]] is to act as investment [adviser to]
[[ manager of ]] the Portfolio[,]; and
WHEREAS the [SubAdviser has personnel in Western Europe and was formed]
[[ Sub-Advisor and its subsidiaries and other affiliated persons have
personnel in various locations throughout the world and have been formed in
part ]] for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries [and
issuers located outside of North America, principally in Western
Europe.] [[ , and securities of issuers located in such countries, and
providing investment advisory services in connection therewith; ]]
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the [Adviser] [[ Trust, the Advisor ]]
and the [SubAdviser] [[ Sub-Adviso ]] r agree as follows:
1. [The SubAdviser shall act as an investment consultant to the Adviser
and shall furnish the Adviser factual information, research reports and
investment recommendations relating to non U.S. issuers of
securities located in, and the economies of, various countries outside the
U.S., all as the Adviser may reasonably require. Such information shall
include written and oral reports and analyses.
2. The SubAdviser will be compensated by the Adviser on the following basis
for the services to be furnished hereunder: the Adviser agrees to pay the
SubAdviser a monthly fee equal to 110% of the SubAdviser's costs incurred
in connection with the agreement, said costs to be determined in relation
to the assets of the Portfolio that benefits from the services of the
subadviser.
3. It is understood] [[ Duties: The Advisor may, in its discretion,
appoint the Sub-Advisor to perform one or more of the following services
with respect to all or a portion of the investments of the Portfolio. The
services and the portion of the investments of the Portfolio to be advised
or managed by the Sub-Advisor shall be as agreed upon from time to time by
the Advisor and the Sub-Advisor. The Sub-Advisor shall pay the salaries and
fees of all personnel of the Sub-Advisor performing services for the
Portfolio relating to research, statistical and investment activities.
(a) Investment Advice: If and to the extent requested by the Advisor, the
Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations as the Advisor may reasonably require. Such information may
include written and oral reports and analyses.
(b) Investment Management: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) Subsidiaries and Affiliates: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor : The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub- Advisor shall place all
orders for the purchase and sale of portfolio securities for the
Portfolio's account with brokers or dealers selected by the Sub-Advisor,
which may include brokers or dealers affiliated with the Advisor or
Sub-Advisor. The Sub- Advisor shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or to the other
accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub- Advisor on the
following basis for the services to be furnished hereunder.
(a) Investment Advisory Fee: For services provided under subparagraph (a)
of paragraph 1 of this Agreement, the Advisor agrees to pay the Sub-Advisor
a monthly Sub-Advisory Fee. The Sub- Advisory Fee shall be equal to 110% of
the Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph (a) of paragraph 1 of this Agreement. The Sub-
Advisory Fee shall not be reduced to reflect expense reimbursements or fee
waivers by the Advisor, if any, in effect from time to time.
(b) Investment Management Fee: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub- Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) Provision of Multiple Services: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood ]] that Trustees, officers,
and shareholders of the [Fund] [[ Trust ]] are or may be or
become interested in the [Adviser and the SubAdviser] [[ Advisor or
the Sub-Advisor ]] as directors, officers or otherwise and that
directors, officers and stockholders of the [Adviser and the SubAdviser]
[[ Advisor or the Sub-Advisor ]] are or may be or become
similarly interested in the [Fund] Trust, and that the [Adviser]
[[ Advisor ]] or the [SubAdviser] [[ Sub-Adviso ]] r
may be or become interested in the [Fund] [[ Trust ]] as a
shareholder or otherwise.
[4. The SubAdviser shall for all purposes be an independent contractor and
not an agent or employee of the Adviser or the Fund. The SubAdviser shall
have no authority to act for, represent, bind or obligate the Adviser or
the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.
5. The Services of the SubAdviser to the Adviser] [[ 7. Services to
Other Companies or Accounts: The services of the Sub-Advisor to the Advisor
]] are not to be deemed to be exclusive, the [SubAdviser]
[[ Sub-Advisor ]] being free to render services to others and
engage in other activities, provided, however, that such other services and
activities do not, during the term of this Agreement, interfere, in a
material manner, with the [SubAdviser's] [[ Sub- Advisor's ]]
ability to meet all of its obligations [with respect to rendering
investment advice] hereunder. [[ The Sub-Advisor shall for all
purposes be an independent contractor and not an agent or employee of the
Advisor or the Trust. ]]
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the [SubAdviser, the SubAdviser] [[ Sub-Advisor, the
Sub-Adviso ]] r shall not be subject to liability to the
[Adviser,] [[ Advisor ]] , the [Fund] [[ Trus ]] t or
to any shareholder of the Portfolio for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
[6.] 9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph [6] 9, this Agreement shall continue in force until June 30,
[1994] [[ 1995 ]] and indefinitely thereafter, but only so long
as the continuance after such period shall be specifically approved at
least annually by vote of the [Fund's] [[ Trust's ]] Board of
Trustees or by vote of a majority of the outstanding voting securities of
the Portfolio.
(b) This Agreement may be modified by mutual consent of the
[Adviser,] [[ Advisor ]] , the [SubAdviser] [[
Sub-Advisor ]] and the Portfolio, such consent on the part of the
Portfolio to be authorized by vote of a majority of the outstanding voting
securities of the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph [6] 9, the terms of any continuance or modification of [the]
[[ this ]] Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund] [[ Trust ]] who are
not parties to [such] [[ this ]] Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either the [Adviser,] [[ Advisor, ]] the [SubAdviser]
[[ Sub-Advisor ]] or the Portfolio may, at any time on sixty
(60) [days] [[ days ]] ' prior written notice to the other
parties, terminate this Agreement, without payment of any penalty, by
action of its Board of Trustees or Directors, or [[ with respect to
the Portfolio ]] by vote of a majority of its outstanding voting
securities. This Agreement shall terminate automatically in the event of
its assignment.
[7. The SubAdviser] [[ 10. Limitation of Liability: The Sub-
Advisor ]] is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust [of the
Fund] [[ or other organizational document of the Trust ]] and
agrees that any obligations of the [Fund] Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the [SubAdviser] [[
Sub-Advisor ]] shall not seek satisfaction of any such obligation
from the shareholders or any shareholder of the Portfolio. Nor shall the
[SubAdviser] [[ Sub-Advisor ]] seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
[[ 11. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions
thereof. ]]
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the
[Investment Company] [[ 1940 ]] Act [of 1940] as now in effect
or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[Signature lines omitted]
EXHIBIT 6
The language to be added to the current contract is [[underlined]]; the
language to be deleted is set forth in [brackets].
FORM OF
DISTRIBUTION AND SERVICE PLAN
CLASS A SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for [[ the Class A shares of
[CLASS NAME] ("Class A), a class of shares of [FUND NAME] (the
"Fund") ]] , a portfolio of [[ [TRUST NAME] (the
"Trust"). ]]
2. The [[ Trust ]] has entered into a General Distribution
Agreement on behalf of the Fund with Fidelity Distributors Corporation (the
"Distributor"), (for Advisor Income & Growth Fund: [a wholly-owned
subsidiary of Fidelity Management & Research Company (the "Advisor")]
) under which the Distributor uses all reasonable efforts, consistent
with its other business, to secure purchasers of the Fund's shares of
beneficial interest (the "Shares"). Such efforts may include, but neither
are required to include nor are limited to, the following: (1) formulation
and implementation of marketing and promotional activities, such as mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; (2) preparation, printing and distribution of sales
literature; (3) preparation, printing and distribution of prospectuses of
the Fund and reports to recipients other than existing shareholders of the
Fund; (4) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Distributor may, from time to
time, deem advisable; (5) making payments to securities dealers and others
engaged in the sale of Shares or who engage in shareholder support
services; and (6) providing training, marketing and support to such dealers
and others with respect to the sale of Shares.
3. In consideration for the services provided and the expenses incurred by
the Distributor pursuant to the General Distribution Agreement, the Fund
shall pay to the Distributor a (for Short Fixed-Income Fund: [monthly])
fee at the annual rate of (for Growth Opportunities Fund and Income
and Growth Fund: .65%) (Short Fixed-Income Fund: .15%) (for Government
Investment Fund and High Yield Fund: .40%) (revised for Income & Growth
Fund: [[ (or such lesser amount as the Trustees may, from time to time,
determine) of its average daily net assets ]] [, such fee to be
computed and paid monthly] [[ throughout the month. The determination of
daily net assets shall be made at the close of business each day throughout
the month and computed in the manner specified in the Fund's then current
Prospectus for the determination of the net asset value of the Fund's
shares )]] , [but excluding assets attributable to shares purchased
more than 144 months prior to such day]. The Distributor may use all or any
portion of the fee received pursuant to the Plan to compensate securities
dealers or other persons who have engaged in the sale of Shares or in
shareholder support services pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities authorized
under paragraph 2 hereof.
4. The Fund presently pays, and will continue to pay, a management fee to
Fidelity Management & Research Company (the "Adviser") pursuant to a
management agreement between the Fund and the Adviser (the "Management
Contract"). It is recognized that the Adviser may use its management fee
revenue, as well as its past profits or its resources from any other
source, to reimburse the Distributor for expenses incurred in connection
with the distribution of Shares, including the activities referred to in
paragraphs 2 and 3 hereof. To the extent that the payment of management
fees by the Fund to the Adviser should be deemed to be indirect financing
of any activity primarily intended to result in the sale of Shares within
the meaning of Rule 12b-1, then such payment shall be deemed to be
authorized by this Plan.
5. This Plan shall become effective upon the first business day of the
month following approval by a vote of at least a "majority of the
outstanding voting securities of the Fund" (as defined in the Act), this
Plan having been approved by a vote of a majority of the Trustees of the
Trust, including a majority of Trustees who are not "interested persons" of
the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement
related to the Plan (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain in
effect until July 31, [[ 1990 ]] , (for Growth Opportunities
Fund and Short Fixed Income Fund: [1988]) (for Income and Growth Fund,
Government Investment Fund, and High Yield Fund: [1987]) and from year
to year thereafter; provided, however, that such continuance is subject to
approval annually by a vote of a majority of the Trustees of the Trust,
including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on this Plan. This Plan may be
amended at any time by the Board of Trustees, provided that (a) any
amendment to increase materially the fee provided for in paragraph 3 hereof
or any amendment of the Management Contract to increase the amount to be
paid by the Fund thereunder shall be effective only upon approval by a vote
of a majority of the outstanding voting securities of the Fund, and (b) any
material amendment of this Plan shall be effective only upon approval in
the manner provided in the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of
a majority of the outstanding voting securities of the Fund.
8. During the existence of this Plan, the Trust shall require the Adviser
and/or the Distributor to provide the Trust, for review by the Trust's
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any activity
primarily intended to result in the sale of shares of the Fund (making
estimates of such costs where necessary or desirable) and the purposes for
which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of shares of the Fund (for Growth Opportunities Fund: [Plymouth
Class]).
10. Consistent with the limitation of shareholder liability as set forth
in the Trust's Declaration of Trust, any obligation assumed by the Fund
pursuant to this Plan and any agreement related to this Plan shall be
limited in all cases to the Fund and its assets and shall not constitute an
obligation of any shareholder of the Trust or of any other series of shares
of the Trust.
11. If any provision of the Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
EXHIBIT 7
The language to be added to the current contract is underlined; the
language to be deleted is set forth in [brackets].
FORM OF
DISTRIBUTION AND SERVICE PLAN
CLASS B SHARES
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for the Class B shares of Fidelity
Advisor Limited Term Bond Fund ("Class B"), a class of shares of Fidelity
Advisor Limited Term Bond Fund (the "Fund"), a series of Fidelity Advisor
Series IV (the "Trust").
2. The Trust has entered into a General Distribution Agreement on behalf
of the Fund with Fidelity Distributors Corporation (the "Distributor")
under which the Distributor uses all reasonable efforts, consistent with
its other business, to secure purchasers of the Fund's shares of beneficial
interest (the "shares"). Such efforts may include, but neither are required
to include nor are limited to, the following: (1) formulation and
implementation of marketing and promotional activities, such as mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; (2) preparation, printing and distribution of sales
literature; (3) preparation, printing and distribution of prospectuses of
the Fund and reports to recipients other than existing shareholders of the
Fund; (4) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Distributor may, from time to
time, deem advisable; (5) making payments to securities dealers and others
engaged in the sale of shares or who engage in shareholder support services
("Investment Professionals"); and (6) providing training, marketing and
support to Investment Professionals with respect to the sale of shares.
3. In accordance with such terms as the Trustees may, from time to time
establish, and in conjunction with its services under the General
Distribution Agreement with respect to shares of Class B ("Class B
Shares"), the Distributor is hereby specifically authorized to make
payments to Investment Professionals in connection with the sale of the
Class B Shares. Such payments may be paid as a percentage of the dollar
amount of purchases of Class B Shares attributable to a particular
Investment Professional, or may take such other form as may be approved by
the Trustees.
4. In consideration for the services provided and the expenses incurred by
the Distributor pursuant to the General Distribution Agreement and
paragraphs 2 and 3 hereof, all with respect to the Class B Shares:
(a) Class B shall pay to the Distributor a monthly distribution fee at
the annual rate of 0.75% (or such lesser amount as the Trustees may, from
time to time, determine) of the average daily net assets of Class B
throughout the month. The determination of daily net assets shall be made
at the close of business each day throughout the month and computed in the
manner specified in the Fund's then current Prospectus for the
determination of the net asset value of Class B Shares[, but shall exclude
assets attributable to (i) Class B Shares purchased more than 144 months
prior to such date or (ii) any other class of shares of the Fund]. The
Distributor may, but shall not be required to, use all or any portion of
the distribution fee received pursuant to the Plan to compensate Investment
Professionals who have engaged in the sale of Class B Shares or in
shareholder support services pursuant to agreements with the Distributor,
or to pay any of the expenses associated with other activities authorized
under paragraphs 2 and 3 hereof; and
(b) In addition, the Plan recognizes that the Distributor may, in
accordance with such terms as the Trustees may from time to time establish,
receive all or a portion of any sales charges, including contingent
deferred sales charges, which may be imposed upon the sale or redemption of
Class B Shares.
5. Separate from any payments made as described in paragraph 4 hereof,
Class B shall also pay to the Distributor a service fee at the annual rate
of 0.25% (or such lesser amount as the Trustees may, from time to time,
determine) of the average daily net assets of Class B throughout the month.
The determination of daily net assets shall be made at the close of
business each day throughout the month and computed in the manner specified
in the Fund's then current Prospectus for the determination of the net
asset value of Class B Shares, but shall exclude assets attributable to any
other class of shares of the Fund. In accordance with such terms as the
Trustees may from time to time establish, the Distributor may use all or a
portion of such service fees to compensate Investment Professionals for
personal service and/or the maintenance of shareholder accounts, or for
other services for which "service fees" lawfully may be paid in accordance
with applicable rules and regulations.
6. The Fund presently pays, and will continue to pay, a management fee to
Fidelity Management and Research Company (the "Adviser") pursuant to a
management agreement between the Fund and the Adviser (the "Management
Contract"). It is recognized that the Adviser may use its management fee
revenue, as well as its past profits or its resources from any other
source, to reimburse the Distributor for expenses incurred in connection
with the distribution of Class B Shares, including the activities referred
to in paragraphs 2 and 3 hereof. To the extent that the payment of
management fees by the Fund to the Adviser should be deemed to be indirect
financing of any activity primarily intended to result in the sale of Class
B Shares within the meaning of Rule 12b-1, then such payment shall be
deemed to be authorized by this Plan.
7. This Plan shall become effective upon the first business day of the
month following approval by "a vote of at least a majority of the
outstanding voting securities" (as defined in the Act) of Class B, this
Plan having been approved by a vote of a majority of the Trustees of the
Trust, including a majority of Trustees who are not "interested persons" of
the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related
to the Plan (the "Independent Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan.
8. This Plan shall, unless terminated as hereinafter provided, remain in
effect until [date], and from year to year thereafter; provided, however,
that such continuance is subject to approval annually by a vote of a
majority of the Trustees of the Trust, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on this Plan. This Plan may be amended at any time by the Board of
Trustees, provided that (a) any amendment to increase materially the fees
provided for in paragraphs 4 and 5 hereof or any amendment of the
Management Contract to increase the amount to be paid by the Fund
thereunder shall be effective only upon approval by a vote of a majority of
the outstanding voting securities of Class B in the case of this Plan, or
upon approval by a vote of the majority of the outstanding voting
securities of the Fund, in the case of the Management Contract, and (b) any
material amendment of this Plan shall be effective only upon approval in
the manner provided in the first sentence of paragraph 7.
9. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of
a majority of the outstanding voting securities of Class B.
10. During the existence of this Plan, the Trust shall require the Adviser
and/or the Distributor to provide the Trust, for review by the Trustees,
and the Trustees shall review, at least quarterly, a written report of the
amounts expended in connection with financing any activity primarily
intended to result in the sale of Class B Shares (making estimates of such
costs where necessary or desirable) and the purposes for which such
expenditures were made.
11. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of Class B Shares.
12. Consistent with the limitation of shareholder liability as set forth
in the Trust's Declaration of Trust, any obligation assumed by Class B
pursuant to this Plan and any agreement related to this Plan shall be
limited in all cases to Class B and its assets and shall not constitute an
obligation of any shareholder of the Trust or of any other class of the
Fund, series of the Trust or class of such series.
13. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
EXHIBIT 8
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS (A)
RATIO OF RATIO OF NET
ADVISORY FEES ADVISORY FEES
TO AVERAGE TO AVERAGE RATIO OF
AVERAGE NET ASSETS NET ASSETS EXPENSES TO
INVESTMENT FISCAL NET ASSETS PURSUANT TO PAID AVERAGE NET
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) ADVISORY CONTRACT TO FMR
(B) ASSETS (C)
GROWTH AND INCOME
Balanced (3) 7/31/93 $ 2,154.5 0.53% 0.53% 0.93%
Dividend Growth (3) 7/31/93** 9.2 0.62(dagger) - 2.50(dagger)
Global Balanced (1) 7/31/93** 35.7 0.77(dagger) 0.77(dagger) 2.12(dagger)
Growth & Income 7/31/93 5,195.4 0.53 0.53 0.83
Puritan (3) 7/31/93 6,319.2 0.47 0.47 0.74
Advisor Income &
Growth 10/31/93 870.1 0.53 0.53 1.51
International Growth
& Income (2) 10/31/93 301.5 0.77 0.77 1.52
Advisor Equity Portfolio
Income :
Class A (3) 11/30/93 19.1 0.50 0.50 1.77
Institutional Class (3) 11/30/93 167.8 0.50 0.50 0.79
Convertible Securities (3) 11/30/93 782.6 0.53 0.53 0.92
Equity-Income II (3) 11/30/93 3,544.3 0.53 0.53 0.88
Variable Insurance
Products:
Equity-Income 12/31/93 952.1 0.53 0.53 0.62
Equity-Income (3) 1/31/94 6,040.5 0.38 0.38 0.66
Real Estate (3) 1/31/94 417.9 0.63 0.63 1.13
Utilities Income (3) 1/31/94 1,394.4 0.53 0.53 0.86
U.S. Equity Index 2/28/94 1,647.0 0.28 - 0.28
Market Index 4/30/94 300.9 0.45 0.45 0.45
Fidelity Fund (3) 6/30/94 1,545.0 0.41 0.41 0.65
ASSET ALLOCATION
Asset Manager 9/30/93 4,704.2 0.72 0.72 1.09
Asset Manager:
Growth (3)(4) 9/30/93 566.0 0.73 0.63 1.19
Asset Manager:
Income (3)(4) 9/30/93 79.1 0.44 - 0.65
Variable Insurance
Products II:
Asset Manager (3) 12/31/93 1,432.9 0.72 0.72 0.88
Index 500 12/31/93 20.8 0.28 - 0.28
GROWTH
RATIO OF RATIO OF NET
ADVISORY FEES ADVISORY FEES
TO AVERAGE TO AVERAGE RATIO OF
AVERAGE NET ASSETS NET ASSETS EXPENSES
TO
INVESTMENT FISCAL NET ASSETS PURSUANT TO PAID AVERAGE
NET
OBJECTIVE AND FUND YEAR END (A) (MILLIONS) ADVISORY CONTRACT TO FMR
(B)
ASSETS (C)
Blue Chip Growth 7/31/93 589.5 0.72 0.72 1.25
Low-Priced Stock (3) 7/31/93 2,048.8 0.76 0.76 1.12
OTC Portfolio 7/31/93 1,202.7 0.74 0.74 1.08
Advisor Strategic
Opportunities (3) 9/30/93 $ 219.2 0.54% 0.54% 1.57%
Destiny I 9/30/93# 2,920.5 0.60(dagger) 0.60(dagger) 0.65(dagger)
Destiny II 9/30/93# 1,100.8 0.71(dagger) 0.71(dagger) 0.84(dagger)
Strategic
Opportunities (3) 9/30/93 19.2 0.54 0.54 0.89
Advisor Emerging Asia
Fund, Inc. (5) 10/31/94** 117.0 1.01(dagger) 1.01(dagger) 1.86(dagger)
Advisor Global
Resources (3) 10/31/93 14.4 0.77 0.77 2.62
Advisor Growth
Opportunities 10/31/93 1,204.5 0.68 0.68 1.64
Advisor Overseas (2) 10/31/93 65.5 0.77 0.77 2.38
Canada (2) 10/31/93 61.1 0.86 0.86 2.00
Capital Appreciation (3) 10/31/93 1,139.1 0.48 0.48 0.86
Disciplined Equity (3) 10/31/93 622.1 0.70 0.70 1.09
Diversified
International (2) 10/31/93 119.1 0.73 0.73 1.47
Emerging Markets (2) 10/31/93 144.4 0.77 0.77 1.91
Europe (2) 10/31/93 488.3 0.64 0.64 1.25
Europe Capital
Appreciation (2) 10/31/94** 231.8 0.78(dagger) 0.78(dagger) 1.58(dagger)
Japan (1) 10/31/93 98.4 0.77 0.77 1.71
Latin America (2) 10/31/93** 114.6 0.77(dagger) 0.77(dagger) 1.94(dagger)
Overseas (2) 10/31/93 1,025.1 0.77 0.77 1.27
Pacific Basin (1) 10/31/93 251.2 0.80 0.80 1.59
Southeast Asia (1) 10/31/93** 139.3 0.77(dagger) 0.71(dagger) 2.00(dagger)
Stock Selector (3) 10/31/93 459.7 0.71 0.71 1.10
Value (3) 10/31/93 1,100.8 0.72 0.72 1.11
Worldwide (2) 10/31/93 148.9 0.78 0.78 1.40
Advisor Equity Portfolio
Growth :
Class A (3) 11/30/93 176.0 0.66 0.66 1.84
Institutiona l Class (3) 11/30/93 226.7 0.66 0.66 0.94
Emerging Growth (3) 11/30/93 620.6 0.80 0.80 1.19
Growth Company (3) 11/30/93 2,119.8 0.75 0.75 1.07
New Millennium 11/30/93** 187.5 0.68(dagger) 0.68(dagger) 1.32(dagger)
Retirement Growth (3) 11/30/93 2,404.1 0.76 0.76 1.05
Congress Street 12/31/93 63.4 0.46 0.46 0.61
Contrafund (3) 12/31/93 4,138.1 0.69 0.69 1.06
Exchange 12/31/93 187.7 0.54 0.54 0.57
Trend (3) 12/31/93 1,296.7 0.65 0.65 0.92
Variable Insurance
Products:
Growth 12/31/93 $ 1,016.0 0.63% 0.63% 0.71%
Overseas (2) 12/31/93 398.7 0.77 0.77 1.03
Mid-Cap Stock (3) 1/31/95** 17.6 0.62(dagger) 0.62(dagger) 2.23(dagger)
Select Portfolios:
Air Transportation (3) 2/28/94 17.8 0.63 0.63 2.31
American Gold 2/28/94 313.4 0.63 0.63 1.49
Automotive (3) 2/28/94 133.8 0.63 0.63 1.68
Biotechnology (3) 2/28/94 549.9 0.63 0.63 1.61
Brokerage and Investment
Management (3) 2/28/94 69.3 0.63 0.63 1.77
Chemicals (3) 2/28/94 27.4 0.63 0.63 1.93
Computers (3) 2/28/94 41.2 0.63 0.63 1.89
Construction and
Housing (3) 2/28/94 42.1 0.63 0.63 1.66
Consumer Products (3) 2/28/94 9.0 0.63 0.49 2.48
Defense and
Aerospace (3) 2/28/94 4.6 0.63 - 2.53
Developing
Communications (3) 2/28/94 177.0 0.63 0.63 1.56
Electronics (3) 2/28/94 54.3 0.63 0.63 1.67
Energy (3) 2/28/94 126.1 0.63 0.63 1.66
Energy Service (3) 2/28/94 94.0 0.63 0.63 1.65
Environmental
Services (3) 2/28/94 56.6 0.63 0.63 2.03
Financial Services (3) 2/28/94 168.8 0.62 0.62 1.63
Food and Agriculture (3) 2/28/94 110.1 0.62 0.62 1.64
Health Care (3) 2/28/94 552.3 0.63 0.63 1.55
Home Finance (3) 2/28/94 224.4 0.63 0.63 1.58
Industrial Equipment (3) 2/28/94 58.2 0.63 0.63 1.68
Industrial Materials (3) 2/28/94 33.8 0.64 0.64 2.08
Insurance (3) 2/28/94 22.4 0.63 0.63 1.93
Leisure (3) 2/28/94 88.1 0.63 0.63 1.53
Medical Delivery (3) 2/28/94 105.8 0.63 0.63 1.79
Multimedia (3) (6) 2/28/94 62.8 0.63 0.63 1.63
Natural Gas (3) 2/28/94** 45.1 0.63(dagger) 0.63(dagger) 1.93(dagger)
Paper and Forest
Products (3) 2/28/94 27.0 0.64 0.64 2.07
Precious Metals and
Minerals (3) 2/28/94 378.4 0.63 0.63 1.55
Regional Banks (3) 2/28/94 201.0 0.62 0.62 1.60
Retailing (3) 2/28/94 $ 57.7 0.62% 0.62% 1.83%
Software and Computer
Services (3) 2/28/94 172.2 0.63 0.63 1.57
Technology (3) 2/28/94 163.4 0.63 0.63 1.54
Telecommunications (3) 2/28/94 353.3 0.63 0.63 1.53
Transportation (3) 2/28/94 10.5 0.63 0.63 2.39
Utilities (3) 2/28/94 310.9 0.63 0.63 1.35
Magellan (3) 3/31/94 29,816.4 0.76 0.76 0.99
Small Cap Stock 4/30/94** 572.2 0.68(dagger) 0.68(dagger) 1.18(dagger)
Fidelity Fifty (3) 6/30/94 44.2 0.63 0.63 1.58
CURRENCY PORTFOLIOS
Deutsche Mark
Peformance, L.P. 12/31/93 8.4 0.50 - 1.50
Sterling
Performance, L.P. 12/31/93 3.0 0.50 - 1.50
Yen Performance, L.P. 12/31/93 4.0 0.50 - 1.50
INCOME
Ginnie Mae 7/31/93 953.2 0.47 0.47 0.80
Mortgage Securities 7/31/93 428.9 0.47 0.47 0.76
Spartan Limited Maturity
Government 7/31/93 1,653.7 0.65 0.65 0.65
Spartan Ginnie Mae 8/31/93 766.9 0.65 0.41 0.41
Government Securities 9/30/93** 616.6 0.47(dagger) 0.47(dagger)
0.69(dagger)
Short-Intermediate
Government 9/30/93 167.6 0.47 0.18 0.61
Spartan Investment
Grade Bond (3) 9/30/93 59.1 0.65 0.65 0.65
Spartan Short-Term
Income (3) 9/30/93 547.0 0.65 0.20 0.20
Advisor Government
Investment 10/31/93 40.8 0.46 - 0.68
Advisor High Yield 10/31/93 299.1 0.51 0.51 1.11
Advisor Short Fixed
Income 10/31/93 359.6 0.47 0.47 0.95
Advisor Institutional
Limited Term Bond:
Class A 11/30/93 174.3 0.42 0.42 0.64
Institutional Class 11/30/93 22.5 0.42 0.42 1.23
Institutional Short-
Intermediate
Government:
Class I 11/30/93 $ 255.2 0.45% 0.45% 0.45%
Class II 11/30/94** .1 0.45(dagger) 0.45(dagger) 0.70(dagger)
Advisor Emerging
Markets Income 12/31/94** 6.2 0.71(dagger) - 1.50(dagger)
Global Bond (2) 12/31/93 434.1 0.71 0.71 1.17
New Markets Income (2) 12/31/93** 114.6 0.71(dagger) 0.28(dagger)
1.24(dagger)
Short-Term World
Income (2) 12/31/93 400.1 0.62 0.62 1.00
Spartan Bond
Strategist (3) 12/31/93** 15.4 0.70(dagger) 0.70(dagger) 0.70(dagger)
Variable Insurance
Products:
High Income 12/31/93 343.1 0.51 0.50 0.64
Variable Insurance
Products II:
Investment Grade
Bond 12/31/93 98.9 0.47 0.47 0.68
Spartan Long-Term
Government Bond 1/31/94 85.8 0.65 0.65 0.65
U.S. Bond Index 2/28/94 190.2 0.32 - 0.32
Capital & Income (3) 4/30/94 2,644.6 0.71 0.71 0.97
Intermediate Bond (3) 4/30/94 1,782.5 0.31 0.31 0.64
Investment Grade Bond (3) 4/30/94 1,026.3 0.41 0.41 0.74
Short-Term Bond (3) 4/30/94 2,230.0 0.46 0.46 0.80
Spartan Government
Income 4/30/94 397.4 0.65 0.65 0.65
Spartan High Income 4/30/94 671.4 0.75 0.75 0.75
Spartan Short-Intermediate
Government 4/30/94 61.7 0.65 0.10 0.10
The North Carolina Capital
Management Trust:
Term Portfolio 6/30/94 74.1 0.41 0.41 0.41
MONEY MARKET
Daily Money Fund:
Capital Reserves:
Money Market (4) 7/31/93 443.3 0.50 0.31 0.95
U.S. Government
Money Market (4) 7/31/93 269.5 0.50 0.38 0.95
Money Market (4) 7/31/93 1,554.7 0.50 0.50 0.61
U.S. Treasury (4) 7/31/93 $ 2,841.7 0.50% 0.50% 0.57%
U.S. Treasury
Income (4) 7/31/93 1,166.9 0.42 0.20 0.20
Spartan U.S. Treasury
Money Market (4) 7/31/93 2,138.9 0.55 0.42 0.42
Daily Income Trust (4) 8/31/93 2,302.8 0.30 0.30 0.57
Money Market Trust:
Domestic Money
Market (4) 8/31/93 690.3 0.42 0.42 0.42
Retirement Government
Money Market (4) 8/31/93 1,338.8 0.42 0.42 0.42
Retirement Money
Market (4) 8/31/93 1,661.1 0.42 0.42 0.42
U.S. Government (4) 8/31/93 297.5 0.42 0.42 0.42
U.S. Treasury (4) 8/31/93 181.5 0.42 0.42 0.42
U.S. Government
Reserves (4) 9/30/93 1,139.5 0.43 0.43 0.73
Cash Reserves (4) 11/30/93 9,761.4 0.14 0.13 0.48
State and Local Asset
Management Series:
Government Money
Market (4) 11/30/93 844.5 0.43 0.43 0.43
Variable Insurance
Products:
Money Market (4) 12/31/93 307.3 0.14 0.13 0.22
Select Money Market (4) 2/28/94 462.6 0.13 0.13 0.72
Institutional Cash:
Domestic Money
Market (4) 3/31/94 762.8 0.20 0.12 0.18
Money Market :
Class A (4) 3/31/94 5,263.1 0.20 0.15 0.18
Class B (4) 3/31/94** 34.4 0.20(dagger) 0.15(dagger) 0.50(dagger)
U.S. Government (4) 3/31/94 4,830.3 0.20 0.14 0.18
U.S. Treasury (4) 3/31/94 1,898.0 0.20 0.15 0.18
U.S. Treasury II:
Class A (4) 3/31/94 4,916.5 0.20 0.14 0.18
Class B (4) 3/31/94** 1.5 0.20(dagger) 0.14(dagger) 0.50(dagger)
Spartan Money Market (4) 4/30/94 4,512.4 0.45 0.31 0.31
Spartan U.S. Governmenrt
Money Market (4) 4/30/94 799.3 0.45 0.45 0.45
The North Carolina
Capital Management Trust:
Cash Portfolio (4) 6/30/94 1,391.7 0.39 0.39 0.39
TAX-EXEMPT INCOME
Daily Money Fund:
Capital Reserves:
Municipal Money
Market (4) 7/31/93 $ 91.7 0.50% 0.22% 0.95%
Spartan Aggressive
Municipal 8/31/93** 6.4 0.60(dagger) 0.60(dagger) 0.60(dagger)
Spartan Intermediate
Municipal 8/31/93** 82.6 0.55(dagger) - -
Spartan Maryland
Municipal Income 8/31/93** 13.4 0.55(dagger) - -
Spartan Municipal
Income 8/31/93 869.8 0.55 0.47 0.47
Spartan Municipal
Money Market (4) 8/31/93 1,561.2 0.50 0.27 0.27
Spartan Short-
Intermediate
Municipal 8/31/93# 819.9 0.55(dagger) 0.55(dagger) 0.55(dagger)
Advisor High Income
Municipal 10/31/93 316.4 0.42 0.42 0.92
Daily Tax-Exempt
Money (4) 10/31/93 504.9 0.50 0.50 0.61
Spartan New Jersey
Municipal Money
Market (4) 10/31/93 329.1 0.50 0.44 0.44
Tax-Exempt Money
Market Trust (4) 10/31/93 2,789.6 0.27 0.27 0.49
Advisor Institutional
Limited Term
Tax-Exempt:
Class A 11/30/93 22.1 0.42 0.24 0.65
Institutional Class 11/30/93 15.4 0.42 - 0.90
Advisor Short-Inter-
Mediate Tax Exempt 11/30/94** 6.5 0.41(dagger) - 0.75(dagger)
Connecticut Municipal
Money Market (4) 11/30/93 300.3 0.42 0.42 0.61
High Yield Tax-Free 11/30/93 2,161.9 0.42 0.42 0.56
New Jersey Tax-Free
Money Market (4) 11/30/93 357.5 0.42 0.42 0.63
Spartan Connecticut
Municipal:
High Yield 11/30/93 450.4 0.55 0.55 0.55
Money Market (4) 11/30/93 128.5 0.50 0.24 0.24
Spartan Florida Municipal:
Income 11/30/93 $ 377.5 0.55% 0.25% 0.25%
Money Market (4) 11/30/93 204.4 0.50 0.18 0.18
Spartan New Jersey
Municipal High Yield 11/30/93 399.2 0.55 0.55 0.55
Aggressive Tax-Free 12/31/93 891.9 0.47 0.47 0.64
Insured Tax-Free 12/31/93 426.3 0.42 0.42 0.61
Limited Term
Municipals 12/31/93 1,174.6 0.41 0.41 0.57
Michigan Tax-Free:
High Yield 12/31/93 528.9 0.42 0.42 0.59
Money Market (4) 12/31/93 161.3 0.42 0.41 0.62
Minnesota Tax-Free 12/31/93 320.0 0.42 0.42 0.61
Municipal Bond 12/31/93 1,279.8 0.37 0.37 0.49
Ohio Tax-Free:
High Yield 12/31/93 442.1 0.41 0.41 0.57
Money Market (4) 12/31/93 244.4 0.42 0.42 0.59
Spartan Pennsylvania
Municipal:
High Yield 12/31/93 283.2 0.55 0.55 0.55
Money Market (4) 12/31/93 218.8 0.50 0.50 0.50
Massachusetts Tax-Free:
High Yield 1/31/94 1,365.4 0.41 0.41 0.54
Money Market (4) 1/31/94 577.0 0.41 0.41 0.66
New York Tax-Free:
High Yield 1/31/94 477.9 0.41 0.41 0.58
Insured 1/31/94 395.2 0.41 0.41 0.58
Money Market (4) 1/31/94 564.0 0.41 0.41 0.62
Spartan Massachusetts
Municipal Money
Market (4) 1/31/94 339.5 0.50 0.40 0.40
Spartan New York
Municipal:
High Yield 1/31/94 427.7 0.55 0.55 0.55 Intermediate 1/31/94** 4.3
0.55(dagger) - -
Money Market (4) 1/31/94 446.6 0.50 0.50 0.50
California Tax-Free:
High Yield 2/28/94 588.0 0.41 0.41 0.57
Insured 2/28/94 299.5 0.41 0.29 0.48
Money Market (4) 2/28/94 540.0 0.41 0.41 0.64
Spartan California
Municipal:
High Yield 2/28/94 598.5 0.55 0.52 0.52
Intermediate 2/28/94** $ 7.7 0.55(dagger)% -% -%
Money Market (4) 2/28/94 944.0 0.50 0.21 0.21
Institutional Tax-
Exempt Cash (4) 5/31/94 2,549.9 0.20 0.14 0.18
(a) All fund data are as of the fiscal year end noted in the chart or as of
June 30, 1994, if fiscal year end figures are not yet available. Average
net assets are computed on the basis of average net assets of each fund at
the close of business on each business day throughout its fiscal period.
(b) Reflects reductions for any expense reimbursement paid by or due from
FMR pursuant to voluntary or state expense limitations.
(c) Reflects reductions for any expense reimbursement paid by or due from
FMR pursuant to voluntary or state expense limitations, or paid by or due
from brokers to which cer
tain portfolio trades have been directed.
(dagger) Annualized
# Year end changed
** Less than a complete fiscal year
(1) Fidelity Management & Research Company has entered into sub-advisory
agreements with the following affiliates: Fidelity Management & Research
(U.K.) Inc. (FMR U.K.), Fidelity Management & Research (Far East) Inc. (FMR
Far East), Fidelity Investments Japan Ltd. (FIJ), Fidelity International
Investment Advisors (FIIA), and Fidelity International Investment Advisors
(U.K.) Limited (FIIAL U.K.), with respect to the fund.
(2) Fidelity Management & Research Company has entered into sub-advisory
agreements with the following affiliates: FMR U.K., FMR Far East, FIJ (New
Markets Income and Advisor Emerging Markets only), FIIA, and FIIAL U.K.,
with respect to the fund.
(3) Fidelity Management & Research Company has entered into sub-advisory
agreements with FMR U.K. and FMR Far East, with respect to the fund.
(4) Fidelity Management & Research Company has entered into a sub-advisory
agreement with FMR Texas Inc., with respect to the fund.
(5) Fidelity Management & Research Company has entered into sub-advisory
agreements with FIIA and FIJ, with respect to the fund.
(6) Effective April 25, 1994, Select Broadcast and Media Portfolio has been
renamed to Multimedia Portfolio.
FAII-PXS-994 CUSIP #315807305/FUND #165
CUSIP #315807701/FUND #665
CUSIP #315807206/FUND #168
CUSIP #315807404/FUND #170
CUSIP #315807107/FUND #167
CUSIP #315807602/FUND #667
CUSIP #315807503/FUND #173
Vote this proxy card TODAY! Your prompt response will
save your fund t he expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- --------------------
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR SHORT FIXED-INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Thomas R. Williams , or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series II which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
October 26, 1994 at 10:15 a.m. and at any adjournments thereof. All powers
may be exercised by a majority of said proxy holders or substitutes voting
or acting or, if only one votes and acts, then by that one. This Proxy
shall be voted on the proposals described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and
the accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
ASFI-PXC-894 cusip # 315807503/fund# 173
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- --------------------
1. To elect the 12 nominees specified [ ] FOR all nominees [ ] 1.
below as Trustees: J. Gary Burkhead, listed (except as WITHHOLD
Ralph F. Cox, Phyllis Burke Davis, marked to the contrary authority to
Richard J. Flynn, Edward C. Johnson below). vote for all
3d, E. Bradley Jones, Donald J. Kirk, nominees.
Peter S. Lynch, Gerald C.
McDonough, Edward H. Malone,
Marvin L. Mann, and Thomas R.
Williams (INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
__________________________________________________________________________
___________________
2. To ratify the selection of Coopers & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Lybrand LLP as independent
accountants of the trust .
3. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
provide dollarbased voting rights.
4. To amend the Declaration of Trust FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
provide the ability to invest all of the
fund's assets in another open-end
investment company.
6. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
investment policy permitting the fund
to invest all of its assets in another
open-end investment company.
7. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 7 .
contract.
8. To approve a Sub-Advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
Agreement with FMR Far East.
9. To approve a Sub-Advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
Agreement with FMR U.K.
12. To approve an amended Class A FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
Distribution Service Plan .
18. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 18.
limitation concerning diversification.
19. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 19.
limitation concerning real estate.
20. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 20.
limitation concerning the issuance of
senior securities.
21. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 21.
investment limitation concerning
short sales of securities.
22. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 22.
investment limitation concerning
margin purchases.
23. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 23.
limitation concerning underwriting.
24. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 24.
limitation concerning borrowing.
25. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 25.
limitation concerning concentration of
its investment within a single
industry.
26. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 26.
limitation concerning the purchase
and sale of physical commodities.
27. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 27.
limitation concerning lending.
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- --------------------
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR INCOME & GROWTH FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Thomas R. Williams , or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series II which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
October 26, 1994 at 10:15 a.m. and at any adjournments thereof. All powers
may be exercised by a majority of said proxy holders or substitutes voting
or acting or, if only one votes and acts, then by that one. This Proxy
shall be voted on the proposals described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and
the accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
AIG-PXC-894 cusip # 315807404/fund# 170
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
1. To elect the 12 nominees specified [ ] FOR all [ ] 1.
below as Trustees: J. Gary Burkhead, nominees listed WITHHOLD
Ralph F. Cox, Phyllis Burke Davis, (except as marked to authority to
Richard J. Flynn, Edward C. Johnson the contrary below). vote for all
3d, E. Bradley Jones, Donald J. Kirk, nominees.
Peter S. Lynch, Gerald C.
McDonough, Edward H. Malone,
Marvin L. Mann, and Thomas R.
Williams (INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
__________________________________________________________________________
___________________
2. To ratify the selection of Coopers & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
L ybrand LLP as independent
accountants of the trust.
3. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
provide dollar-based voting rights.
4. To amend the Declaration of Trust FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
provide the ability to invest all of the
fund's assets in another open-end
investment company.
6. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
investment policy permitting the fund
to invest all of its assets in another
open-end investment company.
7. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
contract.
8. To approve a Sub-Advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
Agreement with FMR Far East.
9. To approve a Sub-Advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
Agreement with FMR U.K.
12. To approve an amended Class A FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
Distribution Service Plan.
16. To replace the fund am ental FOR [ ] AGAINST [ ] ABSTAIN [ ] 16.
investment policy concerning
repurchase agreement counterparties
with one that is non-fundamental.
17. To replace the fundamental defensive FOR [ ] AGAINST [ ] ABSTAIN [ ] 17.
policy with one that is
non-fundamental.
18. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 18.
limitation concerning diversification.
19. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 19.
limitation concerning real estate.
20. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 20.
limitation concerning the issuance of
senior securities.
21. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 21.
investment limitation concerning
short sales of securities.
22. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 22.
investment limitation concerning
margin purchases.
23. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 23.
limitation concerning underwriting.
24. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 24.
limitation concerning borrowing.
25. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 25.
limitation concerning concentration of
its investment within a single
industry.
27. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 27.
limitation concerning lending.
28. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 28.
investment limitation concerning
investment in other investment
companies.
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR HIGH YIELD FUND-CLASS B
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Thomas R. Williams , or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series II which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
October 26, 1994 at 10:15 a.m. and at any adjournments thereof. All powers
may be exercised by a majority of said proxy holders or substitutes voting
or acting or, if only one votes and acts, then by that one. This Proxy
shall be voted on the proposals described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and
the accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
AHYB-PXC-894 cusip # 315807701/fund# 665
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
1. To elect the 12 nominees specified [ ] FOR all nominees [ ] 1.
below as Trustees: J. Gary Burkhead, listed (except as WITHHOLD
Ralph F. Cox, Phyllis Burke Davis, marked to the contrary authority to
Richard J. Flynn, Edward C. Johnson below). vote for all
3d, E. Bradley Jones, Donald J. Kirk, nominees.
Peter S. Lynch, Gerald C.
McDonough, Edward H. Malone,
Marvin L. Mann, and Thomas R.
Williams (INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
__________________________________________________________________________
___________________
2. To ratify the selection of Coopers & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Lybrand as independent accountants.
3. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
provide dollar-based voting rights.
4. To amend the Declaration of Trust FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
provide the ability to invest all of the
fund's assets in another open-end
investment company.
6. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
investment policy permitting the fund
to invest all of its assets in another
open-end investment company.
7. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
contract.
10. To approve an amended FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
Sub-Advisory Agreement with FMR
Far East.
11. To approve an amended Sub-Advisor FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
Agreement with FMR U.K.
12. To approve an amended Class A FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
Distribution Service Plan.
13. To approve an amended Class B FOR [ ] AGAINST [ ] ABSTAIN [ ] 13.
Distribution and Service Plan.
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR HIGH YIELD FUND-CLASS A
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Thomas R. Williams or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series II which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
October 26, 1994 at 10:15 a.m. and at any adjournments thereof. All powers
may be exercised by a majority of said proxy holders or substitutes voting
or acting or, if only one votes and acts, then by that one. This Proxy
shall be voted on the proposals described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and
the accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
AHYA-PXC-894 cusip # 315807305/fund# 165
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
1. To elect the 12 nominees specified [ ] FOR all nominees [ ] 1.
below as Trustees: J. Gary Burkhead, listed (except as WITHHOLD
Ralph F. Cox, Phyllis Burke Davis, marked to the contrary authority to
Richard J. Flynn, Edward C. Johnson below). vote for all
3d, E. Bradley Jones, Donald J. Kirk, nominees.
Peter S. Lynch, Gerald C.
McDonough, Edward H. Malone,
Marvin L. Mann, and Thomas R.
Williams (INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
__________________________________________________________________________
___________________
2. To ratify the selection of Coopers & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Lybrand as independent accountants.
3. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
provide dollar-based voting rights.
4. To amend the Declaration of Trust FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
provide the ability to invest all of the
fund's assets in another open-end
investment company.
6. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
investment policy permitting the fund
to invest all of its assets in another
open-end investment company.
7. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
contract.
10. To approve an amended FOR [ ] AGAINST [ ] ABSTAIN [ ] 10.
Sub-Advisory Agreement with FMR
Far East.
11. To approve an amended Sub-Advisor FOR [ ] AGAINST [ ] ABSTAIN [ ] 11.
Agreement with FMR U.K.
12. To approve an amended Class A FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
Distribution Service Plan.
165
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Thomas R. Williams , or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series II: Fidelity Advisor Growth Opportunities
Fund which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the fund to be held at the office of the trust at 82
Devonshire St., Boston, MA 02109, on October 26, 1994 at 10:15 a.m. and at
any adjournments thereof. All powers may be exercised by a majority of
said proxy holders or substitutes voting or acting or, if only one votes
and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt
of the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
AGRO-PXC-894 cusip # 315807206/fund# 168
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
1. To elect the 12 nominees specified [ ] FOR all nominees [ ] 1.
below as Trustees: J. Gary Burkhead, listed (except as WITHHOLD
Ralph F. Cox, Phyllis Burke Davis, marked to the contrary authority to
Richard J. Flynn, Edward C. Johnson below). vote for all
3d, E. Bradley Jones, Donald J. Kirk, nominees.
Peter S. Lynch, Gerald C.
McDonough, Edward H. Malone,
Marvin L. Mann, and Thomas R.
Williams (INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
__________________________________________________________________________
___________________
2. To ratify the selection of Coopers & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Lybrand as independent accountants.
3. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
provide dollar-based voting rights.
4. To amend the Declaration of Trust FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
provide the ability to invest all of the
fund's assets in another open-end
investment company.
6. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
investment policy permitting the fund
to invest all of its assets in another
open-end investment company.
7. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
contract.
8. To approve a Sub-Advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
Agreement with FMR Far East.
9. To approve a Sub-Advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
Agreement with FMR U.K.
12. To approve an amended Class A FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
Distribution Service Plan.
18. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 18.
limitation concerning diversification.
19. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 19.
limitation concerning real estate.
20. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 20.
limitation concerning the issuance of
senior securities.
21. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 21.
investment limitation concerning
short sales of securities.
22. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 22.
investment limitation concerning
margin purchases.
23. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 23.
limitation concerning underwriting.
24. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 24.
limitation concerning borrowing.
25. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 25.
limitation concerning concentration of
its investment within a single
industry.
26. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 26.
limitation concerning purchase and
sale of physical commodities.
27. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 27.
limitation concerning lending.
28. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 28.
investment limitation concerning
investment in other investment
companies.
29. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 29.
investment limitation concerning
investing in oil, gas, and other mineral
exploration programs.
Vote this proxy card TODAY! Your prompt response will
save the fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR GOVERNMENT INVESTMENT
FUND-CLASS B
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthus S. Loring, and Thomas R. Williams or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series II which the undersigned is entitled to
vote at the Special Meeting of Shareholders of the fund to be held at the
office of the trust at 82 Devonshire St., Boston, MA 02109, on October 26,
1994 at 10:15 a.m. and at any adjournments thereof. All powers may be
exercised by a majority of said proxy holders or substitutes voting or
acting or, if only one votes and acts, then by that one. This Proxy shall
be voted on the proposals described in the Proxy Statement as specified on
the reverse side. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
AGOVB-PXC-894 cusip # 315807602/fund# 217
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
1. To elect the 12 nominees specified [ ] FOR all nominees [ ] 1.
below as Trustees: J. Gary Burkhead, listed (except as WITHHOLD
Ralph F. Cox, Phyllis Burke Davis, marked to the contrary authority to
Richard J. Flynn, Edward C. Johnson below). vote for all
3d, E. Bradley Jones, Donald J. Kirk, nominees.
Peter S. Lynch, Gerald C.
McDonough, Edward H. Malone,
Marvin L. Mann, and Thomas R.
Williams (INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME(S) OF THE
NOMINEE(S) ON THE LINE BELOW.)
__________________________________________________________________________
___________________
2. To ratify the selection of Coopers & FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
Lybrand as independent accountants.
3. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
provide dollar-based voting rights.
4. To amend the Declaration of Trust FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
regarding shareholder notification of
appointment of Trustees.
5. To amend the Declaration of Trust to FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
provide the ability to invest all of the
fund's assets in another open-end
investment company.
6. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
investment policy permitting the fund
to invest all of its assets in another
open-end investment company.
7. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
contract.
12. To approve an amended Class A FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
Distribution Service Plan.
13. To approve an amended Class B FOR [ ] AGAINST [ ] ABSTAIN [ ] 13.
Distribution and Service Plan.
14. To replace a fundamental name test FOR [ ] AGAINST [ ] ABSTAIN [ ] 14.
with an identical non-fundamental
policy.
15. To replace the fundamental defensive FOR [ ] AGAINST [ ] ABSTAIN [ ] 15.
policy with one that is
non-fundamental.
16. To replace the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 16.
policy concerning repurchase
agreement counterparties with one that
is non-fundamental.
18. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 18.
limitation concerning diversification.
19. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 19.
limitation concerning real estate.
20. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 20.
limitation concerning the issuance of
senior securities.
22. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 22.
investment limitation concerning
margin purchases.
23. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 23.
limitation concerning underwriting.
24. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 24.
limitation concerning borrowing.
25. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 25.
limitation concerning concentration of
its investment within a single industry.
27. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 27.
limitation concerning lending.
28. To eliminate the fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 28.
investment limitation concerning
investment in other investment
companies.
Vote this proxy card TODAY! Your prompt response will
save your fund the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------
- ---------------------------------------------------------------
FIDELITY ADVISOR SERIES II: FIDELITY ADVISOR GOVERNMENT INVESTMENT
FUND-CLASS A
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C.
Johnson 3d, Arthur S. Loring, and Thomas R. Williams , or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series II which the u ndersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be
held at the office of the trust at 82 Devonshire St., Boston, MA 02109, on
October 26, 1994 at 10:15 a.m. and at any adjournments thereof. All powers
may be exercised by a majority of said proxy holders or substitutes voting
or acting or, if only one votes and acts, then by that one. This Proxy
shall be voted on the proposals described in the Proxy Statement as
specified on the reverse side. Receipt of the Notice of the Meeting and
the accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When signing
in a fiduciary capacity, such as executor, administrator, trustee,
attorney, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
Date _____________, 1994
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
AGOVA-PXC-894 cusip # 315807107/fund# 167
Please refer to the Proxy Statement discussion of each of these matters.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, said attorneys shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
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1. To elect the 12 nominees specified below as [ ] FOR all nominees [ ] 1.
Trustees: J. Gary Burkhead, Ralph F. Cox, Phyllis listed (except as WITHHOLD
Burke Davis, Richard J. Flynn, Edward C. Johnson marked to the contrary authority to
3d, E. Bradley Jones, Donald J. Kirk, Peter S. below). vote for all
Lynch, Gerald C. McDonough, Edward H. Malone, nominees.
Marvin L. Mann, and Thomas R. Williams
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE THE NAME(S) OF
THE NOMINEE(S) ON THE LINE BELOW.)
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2. To ratify the selection of Coopers & Lybrand asFOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
independent accountants.
3. To amend the Declaration of Trust to provide FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
dollar-based voting rights.
4. To amend the Declaration of Trust regarding FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
shareholder notification of appointment of Trustees.
5. To amend the Declaration of Trust to provide the FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
ability to invest all of the fund's assets in another
open-end investment company.
6. To adopt a new fundamental investment policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
permitting the fund to invest all of its assets in another
open-end investment company.
7. To approve an amended management contract. FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
12. To approve an amended Class A Distribution Plan. FOR [ ] AGAINST [ ] ABSTAIN [ ] 12.
14. To replace a fundamental name test with an identical FOR [ ] AGAINST [ ] ABSTAIN [ ] 14.
non-fundamental policy.
15. To replace the fundamental defensive policy with one FOR [ ] AGAINST [ ] ABSTAIN [ ] 15.
that is non-fundamental.
16. To replace the fundamental investment policy FOR [ ] AGAINST [ ] ABSTAIN [ ] 16.
concerning repurchase agreement counterparties with
one that is non-fundamental.
18. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 18.
concerning diversification.
19. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 19.
concerning real estate.
20. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 20.
concerning the issuance of senior securities.
22. To eliminate the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 22.
concerning margin purchases.
23. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 23.
concerning underwriting.
24. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 24.
concerning borrowing.
25. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 25.
concerning concentration of its investment witin a
single industry.
27. To amend the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 27.
concerning lending.
28. To eliminate the fundamental investment limitation FOR [ ] AGAINST [ ] ABSTAIN [ ] 28.
concerning investment in other investment
companies.
URGENT PROXY MATERIALS ...
PLEASE CAST YOUR VOTE NOW!
Dear Fidelity Advisor Funds Shareholder:
In October, we are holding a special shareholder meeting for the following
Fidelity Advisor Funds:
(solid bullet) Fidelity Advisor Government Investment Fund -- Class A and
Class B
(solid bullet) Fidelity Advisor Growth Opportunities Fund -- Class A
(solid bullet) Fidelity Advisor High Yield Fund -- Class A and Class B
(solid bullet) Fidelity Advisor Income & Growth Fund -- Class A
(solid bullet) Fidelity Advisor Short Fixed-Income Fund -- Class A
The matters to be discussed are important, and directly affect your
investment. As a shareholder, you cast one vote for each share and
fractional votes for fractional shares of each Fund you own. YOU MAY THINK
YOUR VOTE IS INSIGNIFICANT, BUT EVERY VOTE IS CRITICALLY IMPORTANT. We
must continue sending requests to vote until a majority of the shares are
voted prior to the meeting. Additional mailings are expensive, and these
costs are charged directly to the funds.
THIS PACKAGE CONTAINS A SEPARATE VOTING CARD FOR EACH FUND YOU OWN. IF
THERE IS MORE THAN ONE CARD IN YOUR PACKAGE, IT IS IMPORTANT THAT YOU VOTE
EACH CARD. If you have purchased shares in any fund(s) after the most
recent annual report record date(s), you will find a copy of the annual
report enclosed.
The enclosed Proxy Statement details the proposals under consideration. A
list of each issue can be found on first page of the Proxy Statement.
After you have read the material, PLEASE CAST YOUR VOTE PROMPTLY BY SIGNING
AND RETURNING THE ENCLOSED PROXY CARD(S). It is important that you sign
your proxy card exactly as it appears on the registration of the proxy
card. A postage-paid envelope has been provided. Your time will be well
spent, and you will help save the cost of additional mailings.
These proposals have been carefully considered by the Funds' Board of
Trustees, which is responsible for protecting your interests as a
shareholder. THE BOARD BELIEVES THESE PROPOSALS ARE FAIR AND REASONABLE,
AND RECOMMENDS THAT YOU APPROVE THEM. If you have any questions about any
of the proposals, please do not hesitate to contact your investment
professional immediately.
IN THE WEEKS AHEAD, YOU MAY RECEIVE MAILINGS SIMILAR TO THIS IF YOU OWN
OTHER FIDELITY ADVISOR FUNDS. THESE WILL BE SEPARATE PROXIES, AND, LIKE
THIS ONE, WILL REQUIRE YOUR PROMPT ATTENTION. REMEMBER, THIS IS YOUR
OPPORTUNITY TO VOICE YOUR OPINION ON MATTERS AFFECTING YOUR FUNDS. YOUR
PARTICIPATION IS EXTREMELY IMPORTANT NO MATTER HOW MANY OR HOW FEW SHARES
YOU OWN.
Thank you. We appreciate your prompt action.
Sincerely,
Paul J. Hondros
President
LG942410035
FAII-pxl-994
Differences between printed and EDGAR versions of enclosed Proxy Statement
1. Text in printed version which is underscored to show insertions have
been enclosed with [[ ]] in the EDGAR version.