SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[X] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[ ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(IF YOU CHECKED "FILED BY REGISTRANT ABOVE" DO NOT FILL THIS IN:
NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE
REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH
TRANSACTION APPLIES:
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH
TRANSACTION APPLIES:
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11:
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
(5) TOTAL FEE PAID:
[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE 0-11(A) (2)
AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID PREVIOUSLY. IDENTIFY THE
PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF
ITS FILING.
(1) AMOUNT PREVIOUSLY PAID:
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
(3) FILING PARTY:
(4) DATE FILED:
FIDELITY ADVISOR MUNICIPAL INCOME FUND:
(FORMERLY FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND)
CLASS A
CLASS B
CLASS T
CLASS C
INSTITUTIONAL CLASS
A FUND OF
FIDELITY ADVISOR SERIES V
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109
1-800-522-7297
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Fidelity Advisor Municipal Income Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Advisor Municipal Income Fund (the fund), a
series of Fidelity Advisor V (the trust), will be held at the office
of the trust, 82 Devonshire Street, Boston, Massachusetts 02109 on
April 15, 1998, at 9:00 AM. 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 approve an amended management contract for the fund.
2. To amend the fundamental investment policy on diversification for
the fund to exclude investments in other investment companies
from the limitation.
3. To approve an agreement and plan providing for the reorganization
of the fund.
The Board of Trustees has fixed the close of business on February 16,
1998 as the record date for the determination of the shareholders of
the fund and each class entitled to notice of, and to vote at, such
Meeting and any adjournments thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
February 16, 1998
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN
IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES. IN ORDER TO AVOID UNNECESSARY EXPENSE, WE
ASK YOUR COOPERATION IN MAILING YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in
validating your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it
appears in the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy card. For
example:
REGISTRATION VALID SIGNATURE
A. 1) ABC CORP. JOHN SMITH, TREASURER
2) ABC CORP. JOHN SMITH, TREASURER
C/O JOHN SMITH, TREASURER
B. 1) ABC CORP. PROFIT SHARING PLAN ANN B. COLLINS, TRUSTEE
2) ABC TRUST ANN B. COLLINS, TRUSTEE
3) ANN B. COLLINS, TRUSTEE 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 SERIES V:
FIDELITY ADVISOR MUNICIPAL INCOME FUND
(FORMERLY FIDELITY ADVISOR HIGH INCOME MUNICIPAL FUND)
CLASS A
CLASS B
CLASS T
CLASS C
INSTITUTIONAL CLASS
TO BE HELD ON APRIL 15, 1998
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 V (the trust) to be used at the Special
Meeting of Shareholders of Fidelity Advisor Municipal Income Fund (the
fund) and at any adjournments thereof (the Meeting), to be held on
April 15, 1998 at 9:00 AM at 82 Devonshire Street, Boston,
Massachusetts 02109, the principal executive office of the trust and
Fidelity Management & Research Company (FMR), the fund's investment
adviser.
The purpose of the Meeting is set forth in the accompanying Notice.
The solicitation will be made primarily by the mailing of this Proxy
Statement and the accompanying proxy card on or about February 16,
1998. Supplementary solicitations may be made by mail, telephone,
telegraph, facsimile, electronic means or by personal interview by
representatives of the trust. In addition, Management Information
Services Corp. (MIS) and D.F. King & Co., Inc. may be paid on a
per-call basis to solicit shareholders on behalf of the fund at an
anticipated cost of approximately $________. The expenses in
connection with preparing this Proxy Statement and its enclosures and
of all solicitations will be paid by the fund, provided the expenses
do not exceed Class A's expense cap of 0.90%, Class B's expense cap of
1.65%, Class T's expense cap of 1.00%, Class C's expense cap of 1.75%,
and Institutional Class's expense cap of 0.75%. Expenses exceeding
each class's expense cap will be paid by FMR. The fund will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of shares. The
principal business address of Fidelity Distributors Corporation (FDC),
the fund's principal underwriter and distribution agent, is 82
Devonshire Street, Boston, Massachusetts 02109.
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 are
not revoked will be voted at the Meeting. Shares represented by such
proxies will be voted in accordance with the instructions thereon. If
no specification is made on a proxy card, it will be voted FOR the
matters specified on the proxy card. Only proxies that are voted will
be counted towards establishing a quorum. Broker non-votes are not
considered voted for this purpose. Shareholders should note that while
votes to ABSTAIN will count toward establishing a quorum, passage of
any proposal being considered at the Meeting will occur only if a
sufficient number of votes are cast FOR the proposal. Accordingly,
votes to ABSTAIN and votes AGAINST will have the same effect in
determining whether the proposal is approved.
The fund may also arrange to have votes recorded by telephone. D.F.
King & Co., Inc. may be paid on a per call basis for vote-by-phone
solicitations on behalf of the fund at an anticipated cost of
approximately $______. The expenses in connection with telephone
voting will be paid by the fund, provided the expenses do not exceed
Class A's expense cap of 0.90%, Class B's expense cap of 1.65%, Class
T's expense cap of 1.00%, Class C's expense cap of 1.75%, and
Institutional Class's expense cap of 0.75%. Expenses exceeding each
class's expense cap will be paid by FMR. If the fund records votes by
telephone, it will use procedures designed to authenticate
shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to
confirm that their instructions have been properly recorded. Proxies
voted by telephone may be revoked at any time before they are voted in
the same manner that proxies voted by mail may be revoked.
If a quorum is not present at the Meeting, or if a quorum is present
at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring
shareholder attention, the persons named as proxy agents may propose
one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of
a majority of those shares present at the Meeting or represented by
proxy. When voting on a proposed adjournment, the persons named as
proxy agents will vote FOR the proposed adjournment all shares that
they are entitled to vote with respect to each item, unless directed
to vote AGAINST the item, in which case such shares will be voted
AGAINST the proposed adjournment with respect to that item. A
shareholder vote may be taken on one or more of the items in this
Proxy Statement prior to such adjournment if sufficient votes have
been received and it is otherwise appropriate.
Shares of each class issued and outstanding as of December 31, 1997
are indicated in the following table:
Fidelity Advisor Municipal Income Fund:
Class A __________
Class B __________
Class T __________
Class C __________
Institutional Class __________
As of December 31, 1997, the Trustees and officers of the fund own,
in the aggregate, less than __% of the outstanding shares of the fund.
To the knowledge of the trust, [no shareholder owner of record more
than 5% of the outstanding shares of the fund or any class of the
fund.]/[substantial (5% or more) record ownership of the fund on
December 31, 1997 was a follows: for Class A - __________ (__%); for
Class B - __________ (__%); for Class T - __________ (__%); for Class
C - __________ (__%);and for Institutional Class - __________ (__%).
To the knowledge of the trust, no other shareholder owned of record or
beneficially more than 5% of the outstanding shares of the fund or a
class of the fund on that date.]
Shareholders of record at the close of business on February 16, 1998
will be entitled to vote at the Meeting. Each such shareholder will be
entitled to one vote for each dollar of net asset value held on that
date.
FOR A FREE COPY OF THE FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
OCTOBER 31, 1997 CALL 1-800-522-7297 OR WRITE TO FIDELITY DISTRIBUTORS
CORPORATION AT 82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109.
VOTE REQUIRED: APPROVAL OF PROPOSAL 1 THROUGH 3 REQUIRES THE
AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES"
OF THE FUND. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT),
THE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" MEANS
THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR MORE OF THE VOTING
SECURITIES PRESENT AT THE MEETING OR REPRESENTED BY PROXY IF THE
HOLDERS OF MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES ARE
PRESENT OR REPRESENTED BY PROXY OR (B) MORE THAN 50% OF THE
OUTSTANDING VOTING SECURITIES. BROKER NON-VOTES ARE NOT CONSIDERED
"PRESENT" FOR THIS PURPOSE.
1. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY ADVISOR
MUNICIPAL INCOME FUND
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has
approved, and recommends that shareholders of the fund approve, a
proposal to adopt an amended management contract with FMR (the Amended
Contract). The Amended Contract modifies the management fee that FMR
receives from the fund to provide for lower fees when FMR's assets
under management exceed certain levels. In addition, the Amended
Contract allows FMR and the trust, on behalf of the fund, to modify
the Management Contract subject to the requirements of the 1940 Act.
The existing Management Contract currently requires the vote of a
majority of the fund's outstanding voting securities to authorize all
amendments. See "Modification of Management Contract Amendment
Provisions" on page 5 for more details. THE AMENDED CONTRACT WILL
RESULT IN A MANAGEMENT FEE THAT IS THE SAME AS, OR LOWER THAN, THE FEE
PAYABLE UNDER THE PRESENT MANAGEMENT CONTRACT (THE PRESENT CONTRACT).
(For information on FMR, see the section entitled "Activities and
Management of FMR" on page 14.)
PROPOSED AMENDMENT TO THE PRESENT MANAGEMENT CONTRACT. A copy of the
Amended Contract, marked to indicate the proposed amendment, is
supplied as Exhibit 1 on page 19. Except for the modifications
discussed above, it is substantially identical to the Present
Contract. (For a detailed discussion of the fund's Present Contract,
refer to the section entitled "Present Management Contract" beginning
on page 14.) If approved by shareholders, the Amended Contract will
take effect on May 1, 1998 (or, if later, the first day of the first
month following approval) and will remain in effect through June 30,
1998 and thereafter, but only as long as its continuance is approved
at least annually by (i) the vote, cast in person at a meeting called
for the purpose, of a majority of the Independent Trustees 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. If the Amended
Contract is not approved, the Present Contract will continue in effect
through June 30, 1998, and thereafter only as long as its continuance
is approved at least annually as above.
The management fee is an annual percentage of the fund's average net
assets (the management fee rate), calculated and paid monthly. The
management fee rate is the sum of two components: a Group Fee Rate,
which varies according to assets under management by FMR, and a fixed
Individual Fund Fee Rate. The Amended Contract modifies the Group Fee
Rate by providing for lower fee rates if FMR's assets under management
remain above $408 billion.
MODIFICATION TO GROUP FEE RATE. The Group Fee Rate varies based upon
the monthly average of the aggregate net assets of all registered
investment companies having management contracts with FMR (assets
under management by FMR). For example, as assets under management by
FMR increase, the Group Fee Rate declines. The Amended Contract would
not change the group fee calculation for assets under management by
FMR of $372 billion or less. Above $408 billion in assets under FMR's
management, the Group Fee Rate declines under both the Present
Contract and the Amended Contact, but under the Amended Contract, it
declines faster. Group Fee Rates that are lower than those contained
in the fund's Present Contract have been voluntarily implemented by
FMR on January 1, 1996.
The Group Fee Rate is calculated according to a graduated schedule
providing for different rates for different levels of assets under
management by FMR. The rate at which the Group Fee Rate declines is
determined by fee "breakpoints" that provide for lower fee rates when
assets increase. The Amended Contract adds new fee breakpoints for
assets under FMR's management above $408 billion as illustrated in the
following table. (For an explanation of how the Group Fee Rate is used
to calculate the management fee, see the section entitled "Present
Management Contract" beginning on page 14.)
GROUP FEE RATE BREAKPOINTS
PRESENT CONTRACT AMENDED CONTRACT
AVERAGE GROUP PRESENT AVERAGE GROUP AMENDED
ASSETS CONTRACT* ASSETS CONTRACT
($ BILLIONS) ($ BILLIONS)
OVER 372 .1200% 372 - 408 .1200%
408 - 444 .1175%
444 - 480 .1150%
480 - 516 .1125%
OVER 516 .1100%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on January 1, 1996.
The result at various levels of group net assets is illustrated by the
table below.
EFFECTIVE ANNUAL GROUP FEE RATES
Group Net Present Amended
Assets Contract* Contract
($ billions)
150 .1736% .1736%
200 .1652% .1652%
250 .1587% .1587%
300 .1536% .1536%
350 .1494% .1494%
400 .1459% .1459%
450 .1430% .1427%
500 .1407% .1399%
550 .1388% .1372%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on January 1, 1996.
Assets under FMR's management for October 31, 1997 were approximately
$550 billion.
COMPARISON OF MANAGEMENT FEES. For October 31, 1997, average assets
under management by FMR were $550 billion. The fund's management fee
rate under the Amended Contract would have been .3872%, compared to
.3888% under the Present Contract. The following chart compares the
fund's management fee as calculated under the terms of the Present
Contract for 1997 to the management fee the fund would have incurred
if the Amended Contract had been in effect.
Present Contract Amended Contract
Management Management Percentage
Fee* Fee Difference
$1,830,122 $1,826,657 <0.1833%>
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on January 1, 1996.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the Securities and Exchange
Commission. In contrast, the Present Contract explicitly requires the
vote of a majority of the outstanding voting securities of the fund to
authorize all amendments. Generally, the proposed modification to the
Present Contract's amendment provisions will allow FMR and the trust,
on behalf of the fund, to amend the Management Contract without
shareholder vote IF THE 1940 ACT PERMITS THEM TO DO SO. For example,
under current interpretations of Section 15 of the 1940 Act, the
Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease
without the delay of having to first conduct a proxy solicitation. In
short, the proposed modification gives FMR and the trust added
flexibility to amend the Management Contract subject to 1940 Act
constraints. Of course, any future amendments to the Management
Contract would require the approval of the fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board
of Trustees meets eleven times a year. The Board of Trustees,
including the Independent Trustees, believe that matters bearing on
the appropriateness of the fund's management fees are considered at
most, if not all, of their meetings. While the full Board of Trustees
or the Independent Trustees, as appropriate, act on all major matters,
a significant portion of the activities of the Board of Trustees
(including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive
session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the
Independent Trustees on October 16, 1997. The Board of Trustees
considered and approved the modifications to the Group Fee Rate
schedule during the two month period from November to December 1995.
The Board of Trustees received materials relating to the Amended
Contract in advance of the meeting at which the Amended Contract was
considered, and had the opportunity to ask questions and request
further information in connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings Trustees receive materials specifically relating to the
Amended Contract. These materials include (i) information on the
investment performance of the fund, a peer group of funds and an
appropriate index or combination of indices, (ii) sales and redemption
data in respect of the fund, (iii) the economic outlook and the
general investment outlook in the markets in which the fund invests,
and (iv) notable changes in the fund's investments. The Board of
Trustees and the Independent Trustees also consider periodically other
material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of the fund's shares, (3)
the procedures employed to determine the value of the fund's assets,
(4) the allocation of the fund's brokerage, if any, including
allocations to brokers affiliated with FMR, (5) FMR's management of
the relationships with the fund's custodian and subcustodians, (6) the
resources devoted to and the record of compliance with the fund's
investment policies and restrictions and with policies on personal
securities transactions, and (7) the nature, cost, and audit of
non-investment management services provided by FMR and its affiliates.
In response to questions raised by the Independent Trustees,
additional information was furnished by FMR including, among other
items, information on and analysis of (a) the overall organization of
FMR, (b) the choice of performance indices and benchmarks, (c) the
composition of peer groups of funds, (d) transfer agency and
bookkeeping fees paid to affiliates of FMR, (e) investment
performance, (f) investment management staffing, (g) the potential for
achieving further economies of scale, (h) operating expenses paid to
third parties, and (i) the information furnished to investors,
including the fund's shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as
all-important or controlling, and the following summary does not
detail all the matters considered. Matters considered by the Board of
Trustees and the Independent Trustees in connection with their
approval of the Amended Contract include the following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether the fund has operated within
its investment objective and its record of compliance with its
investment restrictions. They also reviewed the fund's investment
performance as well as the performance of a peer group of mutual
funds, and the performance of an appropriate index or combination of
indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees annually review a report detailing the background of the
fund's portfolio manager, and the fund's investment objective and
discipline. The Independent Trustees have also had discussions with
senior management of FMR responsible for investment operations, and
the senior management of Fidelity's fixed income group. Among other
things they considered the size, education, and experience of FMR's
investment staff, its use of technology, and FMR's approach to
recruiting, training and retaining portfolio managers and other
research, advisory and management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent
of administrative and shareholder services performed by FMR and
affiliated companies, both under the Amended Contract and under
separate agreements covering transfer agency functions and pricing,
bookkeeping and securities lending services, if any. The Board of
Trustees and the Independent Trustees have also considered the nature
and extent of FMR's supervision of third party service providers,
principally custodians and subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees
considered the fund's expense ratio and expense ratios of a peer group
of funds. They also considered the amount and nature of fees paid by
shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of
the Fidelity funds, including the fund. This consideration included an
extensive review of FMR's methodology in allocating its costs to the
management of the fund. The Board of Trustees and the Independent
Trustees have concluded that the cost allocation methodology employed
by FMR has a reasonable basis and is appropriate in light of all of
the circumstances. They considered the profits realized by FMR in
connection with the operation of the fund and whether the amount of
profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund
businesses that may benefit from or be related to the fund's business.
The Board of Trustees and the Independent Trustees also considered
FMR's profit margins in comparison with available industry data, both
accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent Trustees
considered whether there have been economies of scale in respect of
the management of the Fidelity funds, whether the Fidelity funds
(including the fund) have appropriately benefitted from any economies
of scale, and whether there is potential for realization of any
further economies of scale. The Board of Trustees and the Independent
Trustees have concluded that FMR's mutual fund business presents some
limited opportunities to realize economies of scale and that these
economies are being shared between fund shareholders and FMR in an
appropriate manner. The Independent Trustees have also concluded that
the existing group fee structure should be continued, but determined
that it would be appropriate to change the group fee structure as
proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the
fund and the fund's shareholders for services provided by FMR and its
affiliates, including fees for services like transfer agency, fund
accounting and direct shareholder services. They also considered the
allocation of fund brokerage to brokers affiliated with FMR and the
receipt of sales loads and payments under Rule 12b-1 plans in respect
of certain of the Fidelity funds. The Board of Trustees and the
Independent Trustees also considered the revenues and profitability of
FMR businesses other than its mutual fund business, including FMR's
retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, credit card, insurance,
publishing, real estate, international research and investment funds,
and others. The Board of Trustees and the Independent Trustees
considered the intangible benefits that accrue to FMR and its
affiliates by virtue of their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of
investing in a fund that is part of a large family of funds offering a
variety of investment disciplines and providing for a large variety of
fund and shareholder services. With regard to the proposed
modification to the Present Contract's amendment provisions, the Board
of Trustees and the Independent Trustees considered the benefit to
shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the
delays and potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded
(i) that the existing management fee structure is fair and reasonable
and (ii) that the proposed modifications to the management fee
structure, that is the reduction of the Group Fee Rate schedule, and
the proposed modification to the Present Contract's amendment
provisions are in the best interest of the fund's shareholders. The
Board of Trustees, including the Independent Trustees, voted to
approve the submission of the Amended Contract to shareholders of the
fund and recommends that shareholders of the fund vote FOR the Amended
Contract. If approved, the Amended Contract will take effect on the
first day of the first month following shareholder approval.
2. TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION.
The fund's current fundamental investment limitation concerning
diversification is as follows:
"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 Trustees recommend that shareholders of the fund vote to replace
the fund's current fundamental investment limitation with the
following amended 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, ((or securities of other investment companies)))
if, as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer."
The percentage limits in the proposed fundamental limitation
concerning diversification are the percentage limitations imposed by
the 1940 Act for diversified investment companies. The amended
fundamental diversification limitation makes one change from the
current limitation: subject to applicable 1940 Act limitations, it
would permit the fund to invest without limit in the securities of
other investment companies. Pursuant to an order of exemption granted
by the SEC, the fund may invest up to 25% of total assets in
non-publicly offered money market or short-term bond funds (the
Central Funds) managed by FMR or an affiliate of FMR. The Central
Funds do not currently pay investment advisory, management, or
transfer agent fees, but do pay minimal fees for services, such as
custodian, auditor, and Independent Trustees fees. FMR anticipates
that making use of the Central Funds will benefit the fund by
enhancing the efficiency of cash management and by providing increased
short-term investment opportunities.
If this proposal is approved, the amended fundamental diversification
limitation cannot be changed without the approval of the shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit the fund and its shareholders. The Trustees
recommend voting FOR the proposal. The amended fundamental
diversification limitation, upon shareholder approval, will become
effective when the disclosure is revised to reflect the changes. If
the proposal is not approved by the shareholders of the fund, the
fund's current fundamental diversification limitation will remain
unchanged.
3. TO APPROVE AN AGREEMENT AND PLAN PROVIDING FOR THE REORGANIZATION
OF FIDELITY ADVISOR MUNICIPAL INCOME FUND FROM A SEPARATE SERIES OF
ONE MASSACHUSETTS BUSINESS TRUST TO ANOTHER.
The Board of Trustees has approved an Agreement and Plan of
Reorganization (the Plan of Reorganization) in the form attached to
this Proxy Statement as Exhibit 2. The Plan of Reorganization provides
for the reorganization of the fund from a separate series of the trust
to a newly-established, separate series of Fidelity Advisor Series II
(Advisor II), a Massachusetts business trust (the Reorganization).
The investment objective, policies, and limitations of the fund will
not change except as approved by shareholders and as described in this
proxy statement. A separate series of Advisor II will carry on the
business of the fund following the Reorganization (the Series). The
Series, which has not yet commenced business operations, will have an
investment objective, policies, and limitations identical to those of
the fund (except as they may be modified pursuant to a vote of the
shareholders as proposed in this proxy statement). Since both the
trust and Advisor II are Massachusetts business trusts, organized
under substantially similar Declarations of Trust, the rights of the
security holders of the fund under state law and the governing
documents are expected to remain unchanged after the Reorganization
nor will the Reorganization affect the operation of the fund in a
material manner. The same individuals serve as Trustees of both
trusts. Both trusts are authorized to issue an unlimited number of
shares of beneficial interest, and each Declaration of Trust permits
the Trustees to create one or more additional series or funds. Advisor
II's fiscal year will be the same as that of the trust, although the
Trustees may change the fiscal year at their discretion.
FMR, the fund's investment adviser, will be responsible for the
investment management of the Series, subject to the supervision of the
Board of Trustees, under a management contract substantively identical
to the contract in effect between FMR and the fund immediately prior
to the Closing Date (including as it may be modified pursuant to a
vote of shareholders of the fund as proposed in this Proxy
Statement)(the New Management Contract).
The fund's distribution agent FDC will distribute shares of the
Series under a General Distribution Agreement substantively identical
to the contract in effect between FDC and the fund immediately prior
to the Closing Date.
REASON FOR THE PROPOSED REORGANIZATION. The fund is presently
organized as a series of the trust, which has three series of shares
or funds. The Board of Trustees unanimously recommends reorganization
of the fund to a separate series of Advisor II (i.e., into the Series)
which will succeed to the business of the fund. Moving the fund from
the trust to Advisor II will consolidate and streamline the production
of certain financial reports and legal documents. THE PROPOSED CHANGE
WILL HAVE NO MATERIAL EFFECT ON SHAREHOLDERS OR THE MANAGEMENT OF THE
FUND.
The proposal to present the Plan of Reorganization to shareholders
was approved by the Board of Trustees of the trust, including all of
the Trustees who are not interested persons of FMR, on October 16,
1997. The Board of Trustees recommend that fund shareholders vote FOR
the approval of the Plan of Reorganization described below. Such a
vote encompasses approval of the reorganization of the fund to a
separate series of Advisor II; temporary waiver of certain investment
limitations of the fund to permit the Reorganization (see "Temporary
Waiver of Investment Restrictions" on page 13); and authorization of
the trust, as sole shareholder of the Series, to approve (i) New
Management Contract for the Series between Advisor II and FMR, with
respect to the Series and (ii) Distribution and Service Plans for each
class of the fund under Rule 12b-1, substantively identical to the
contract or Plan, as the case may be, in effect with the fund or Class
immediately prior to the Closing Date (the New Plans). If shareholders
of the fund do not approve the Plan of Reorganization, the fund will
continue to operate as a series of the trust.
SUMMARY OF THE PLAN OF REORGANIZATION. The following discussion
summarizes the important terms of the Plan of Reorganization. This
summary is qualified in its entirety by reference to the Plan of
Reorganization itself.
On the Closing Date of the Reorganization (defined below), the fund
will transfer all of its assets to the Series, a series of shares of
Advisor II established for the purpose of effecting the
Reorganization, in exchange for the assumption by the Series of all of
the liabilities of the fund and the issuance of shares of beneficial
interest of the corresponding classes of the Series (Series Shares)
equal to the number of fund shares outstanding on the Closing Date.
Immediately thereafter, the fund will distribute one Series Share of
the applicable class for each fund share (the Fund Shares) held by the
shareholder on the Closing Date to each fund shareholder, in
liquidation of such Fund Shares. Immediately after this distribution
of the Series Shares, the fund will be terminated and, as soon as
practicable thereafter, will be wound up and liquidated.UPON
COMPLETION OF THE REORGANIZATION, EACH FUND SHAREHOLDER WILL BE THE
OWNER OF FULL AND FRACTIONAL SERIES SHARES EQUAL IN NUMBER,
DENOMINATION, AND AGGREGATE NET ASSET VALUE TO HIS OR HER FUND SHARES
The Plan of Reorganization authorizes the trust as the then sole
initial shareholder of the Series or class, as appropriate, to approve
(i) the New Management Contract and (ii) the New Plans.
Advisor II's Trustees hold office without time limits 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 removal; (c) any Trustee who requests to be retired by
written instrument signed by a majority of the other Trustees or who
is unable to serve due to physical or mental incapacity by reason of
disease or otherwise, death, or for any other reason, may be retired;
and (d) a Trustee may be removed at any Special Meeting of the
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
shareholders, the Trustees then in office will promptly call a
shareholders' 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 New Management Contract and the New Plans will take effect on the
Closing Date. The New Management Contract will continue in force until
June 30, 1999. The New Plans will continue in force until April 30,
1999. The New Management Contract will continue in force thereafter
from year to year so long as its continuance is approved at least
annually by (i) the vote of a majority of the Trustees who are not
"interested persons" of the trust, FMR, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) by the
vote of a majority of the Trustees or by the vote of a majority of the
outstanding shares of the Series. The New Plans will continue in
effect only if approved annually by a vote of the Trustees and of
those Trustees who are not interested persons, cast in person at a
meeting called for that purpose. The New Management Contract will be
terminable without penalty on sixty days' written notice either by the
trust, or FMR, as the case may be, and will terminate automatically in
the event of its assignment. The New Plans may be terminable at any
time, without the payment of any penalty, by a vote of a majority of
the Independent Trustees or by a vote of a majority of the outstanding
voting securities of the applicable class.
Assuming the Plan of Reorganization is approved, it is currently
contemplated that the Reorganization will become effective at the
close of business on February 26, 1999 (the Closing Date). However,
the Reorganization may become effective at such other date as the
parties may agree in writing.
The obligations of Advisor Series II and the trust under the Plan of
Reorganization are subject to various conditions as stated therein.
Notwithstanding the approval of the Plan of Reorganization by fund
shareholders, the Plan of Reorganization may be terminated or amended
at any time prior to the Reorganization by action of the Trustees to
provide against unforeseen events, if (1) there is a material breach
by the other party of any representation, warranty, or agreement
contained in the Plan of Reorganization to be performed at or prior to
the Closing Date or (2) it reasonably appears that a party will not or
cannot meet a condition of the Plan of Reorganization. Either trust
may at any time waive compliance with any of the covenants and
conditions contained in, or may amend, the Plan of Reorganization,
provided that such waiver or amendment does not materially adversely
affect the interests of fund shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS AND PLANS. Advisor II's
transfer agent will establish an account for the Series' shareholders
containing the appropriate number and denominations of Series Shares
to be received by each holder of Fund Shares under the Plan of
Reorganization. Such accounts will be identical in all material
respects to the accounts currently maintained by the fund's transfer
agent for the fund's shareholders. Fund shareholders who are receiving
payment under a withdrawal plan with respect to Fund Shares will
retain the same rights and privileges as to Series Shares under the
Plan of Reorganization. Similarly, no further action will be necessary
in order to continue any automatic investment plan or retirement plan
currently maintained by a fund shareholder with respect to Fund
Shares.
EXPENSES. The fund and the Series shall each be responsible for all
of their respective expenses of the Reorganization, estimated at
$9,000 in the aggregate, provided that they do not exceed Class A's
expense cap of 0.90%, Class B's expense cap of 1.65%, Class T's
expense cap of 1.00%, Class C's expense cap of 1.75%, and
Institutional Class's expense cap of 0.75%. Expenses exceeding each
class's expense cap, as applicable, will be paid by FMR.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS. Certain fundamental
investment restrictions of the fund, which prohibit the fund from
acquiring more than a stated percentage of ownership of another
company, might be construed as restricting the fund's ability to carry
out the Reorganization. By approving the Plan of Reorganization, fund
shareholders will be agreeing to waive, only for the purpose of the
Reorganization, those fundamental investment restrictions that could
prohibit or otherwise impede the transaction.
TAX CONSEQUENCES OF THE REORGANIZATION. Each trust has received an
opinion from their counsel, Kirkpatrick & Lockhart LLP, that the
Reorganization will constitute a tax-free reorganization within the
meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended. Accordingly, no gain or loss will be recognized for
federal income tax purposes by the fund, the Series, or the fund's
shareholders upon (1) the transfer of the fund's assets in exchange
solely for the Series Shares and the assumption by the trust on behalf
of the Series of the fund's liabilities or (2) the distribution of
Series Shares to the fund's shareholders in liquidation of their Fund
Shares. The opinion further provides, among other things, that (a) the
basis for federal income tax purposes of the Series Shares to be
received by each fund shareholder will be the same as that of his or
her Fund Shares immediately prior to the Reorganization; and (b) each
fund shareholder's holding period for his or her Series Shares will
include the fund shareholder's holding period for his or her Fund
Shares, provided that said Fund Shares were held as capital assets on
the date of the exchange.
CONCLUSION. The Board of Trustees has concluded that the proposed
Plan of Reorganization to reorganize the fund into a separate series
of another Massachusetts business trust is in the best interest of the
fund's shareholders. The Trustees recommend that the fund's
shareholders vote FOR the approval of the Plan of Reorganization as
described above. Such a vote encompasses approval of the
reorganization of the fund to a separate series of a Massachusetts
business trust; temporary waiver of certain investment limitations of
the fund to permit the Reorganization (see "Temporary Waiver of
Investment Restrictions" on page 13); authorization of the trust, as
sole shareholder of the Series, to approve (i) the New Management
Contract and (ii) the New Plans. If approved, the Plan of
Reorganization will take effect on the Closing Date. If the Plan of
Reorganization is not approved, the fund will continue to operate as a
series of the trust.
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. Information concerning the advisory
fees, net assets, and total expenses of funds with investment
objectives similar to the fund and advised by FMR is contained in the
Table of Average Net Assets and Expense Ratios in Exhibit 3 beginning
on page 38.
FMR, its officers and directors, its affiliated companies, 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 that 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 Directors of FMR are Edward C. Johnson 3d, Chairman of the Board
and of the Executive Committee; Robert C. Pozen, President; and Peter
S. Lynch, Vice Chairman. Each of the Directors is also a Trustee of
the trust. Messrs. Johnson 3d, Pozen, J. Gary Burkhead, John H.
Costello, Eric D. Roiter, Thomas D. Maher, Thomas Simpson, Richard A.
Silver, Leonard M. Rush, Fred L. Henning, Jr., Dwight D. Churchill,
and Mr. George A. Fischer are currently officers of the trust and
officers or employees of FMR or FMR Corp. With the exception of Mr.
Costello, Mr. Silver, Mr. Rush, and ______, all of these persons hold
or have options to acquire stock of FMR Corp. The principal business
address of each of the Directors of FMR is 82 Devonshire Street,
Boston, Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on
October 31, 1972. Members of Mr. Edward C. Johnson 3d's family are the
predominant owners of a class of shares of common stock, representing
approximately 49% of the voting power of FMR Corp., and, therefore,
under the 1940 Act may be deemed to form a controlling group with
respect to FMR Corp.
During the period October 31, 1997 through December 31, 1997 the
following transactions were entered into by Trustees and nominees as
Trustee of the trust involving more than 1% of the voting common,
non-voting common and equivalent stock, or preferred stock of FMR
Corp.
[TABLE, IF NEEDED]
PRESENT MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other
services. Under its management contract with the fund, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of the fund in accordance with its
investment objective, policies, and limitations. FMR also provides the
fund with all necessary office facilities and personnel for servicing
the fund's investments, compensates all officers of the fund and all
Trustees who are "interested persons" of the trust or of FMR, and all
personnel of the fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include
providing facilities for maintaining the fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with the fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining the fund's records and the
registration of the fund's shares under federal and state laws;
developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees. Services provided by affiliates of FMR will continue
under the proposed management contract described in proposal 1.
In addition to the management fee payable to FMR, the fund reimburses
UMB Bank, n.a. (UMB) for its services as the fund's custodian and
transfer agent. Although the fund's current management contract
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices, and
reports to the shareholders, the trust, on behalf of the fund has
entered into a revised transfer agent agreement with UMB, pursuant to
which UMB bears the costs of providing these services to existing
shareholders. Other expenses paid by the fund include interest, taxes,
brokerage commissions, and the fund's proportionate share of insurance
premiums and Investment Company Institute dues. The fund is also
liable for such non-recurring expenses as may arise, including costs
of any litigation to which the fund may be a party, and any obligation
it may have to indemnify the trust's officers and Trustees with
respect to litigation.
UMB has entered into a sub-contract with Fidelity Service Company,
Inc. (FSC), an affiliate of FMR, under the terms of which FSC performs
the processing activities associated with providing transfer agent
with shareholder servicing functions for the fund. Under the
sub-contract, FSC bears the expense of typesetting, printing, and
mailing prospectuses, statements of additional information, and all
other reports, notices, and statements to shareholders, except proxy
statements. FSC also pays all out-of-pocket expenses associated with
transfer agent services. Transfer agent fees and pricing and
bookkeeping fees, including reimbursement for out-of-pocket expenses,
paid to FSC by UMB on behalf of the fund for the fiscal year ended
October 31, 1997 were $1,040,259.
The fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. The
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of
the fund, which are continuously offered. Promotional and
administrative expenses in connection with the offer and sale of
shares are paid by FMR. Sales charge revenue paid to, and retained by,
FDC for fiscal 1997 amounted to $231,346 and $67,295, respectively.
FDC collected deferred sales charge revenue of $174,350 during fiscal
1997.
FMR is the fund's manager pursuant to a management contract dated
December 1, 1994, which was approved by shareholders on November 16,
1994. The management contract approved by shareholders on November 16,
1994 provided for lower fees when FMR's assets under management exceed
certain levels.
For the services of FMR under the contract, the fund pays FMR a
monthly management fee composed of the sum of two elements: a group
fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts and is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown below on the left. The schedule
below on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $550 billion of group net assets - the approximate level for
October 31, 1997 - was .1377%, which is the weighted average of the
respective fee rates for each level of group net assets up to $__
billion.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Annualized Group Effective
Group 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 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350
228 - 264 .1300
264 300 .1275
300 336 .1250
336 372 .1225
Over 372 .1200
Under the fund's current management contract with FMR, the group fee
rate is based on schedule with breakpoints ending at .1200% for
average assets in excess of $372 billion.
On January 1, 1996, FMR voluntarily added new breakpoints to the
revised schedule for average group assets in excess of $372 billion,
pending shareholder approval of a new management contract reflecting
the revised schedule and additional breakpoints. The revised group fee
rate schedule and its extensions provide for lower management fee
rates as FMR's assets under management increase. The revised group fee
rate schedule for average group assets in excess of $156 billion and
up to $372 billion with additional breakpoints voluntarily adopted by
FMR for average group assets in excess of $372 billion is as follows:
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
372 - 408 .1200 325 .1514
408 - 444 .1175 350 .1494
444 - 480 .1150 375 .1476
480 - 516 .1125 400 .1459
Over 516 .1100 425 .1443
450 .1427
475 .1413
500 .1399
525 .1385
550 .1372
The individual fund fee rate is 0.25%. Based on the average group net
assets of the funds advised by FMR for October 31, 1997, the annual
management fee rate would be calculated as follows:
Amended Individual Fund Management Fee Rate
Group Fee Rate Fee Rate
0.1372% + 0.25% = 0.3872%
One-twelfth of this annual management fee rate is applied to the
fund's net assets averaged for the month, giving a dollar amount,
which is the fee for that month.
During fiscal 1997, FMR received $1,826,656 for its services as
investment adviser to the fund. This fee was equivalent to 0.39% of
the average net assets of the fund.
FMR may, from time to time, voluntarily reimburse all or a portion of
a class's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year. Expense
reimbursements by FMR will increase the applicable class's total
return and yield and repayment of the reimbursement by the applicable
class will lower total return and yield.
During fiscal 1997, FMR voluntarily agreed, subject to revision or
termination, to reimburse each class to the extent that its aggregate
operating expenses, including management fees, were in excess of Class
A's expense cap of 0.90%, Class B's expense cap of 1.65%, Class T's
expense cap of 1.00%, Class C's expense cap of 1.75%, and
Institutional Class's expense cap of 0.75%. If this reimbursement had
not been in effect, for fiscal 1997, FMR would have received fees
amounting to $40,489 for Class A and $20,901 for Institutional Class,
which would have been equivalent to 2.16% and 1.95%, respectively, of
average net assets of the fund (after reduction for compensation to
the non-interested Trustees).
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of each fund by FMR pursuant to authority contained
in the fund's management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) an indirect subsidiary of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions
charged by non-affiliated, qualified brokerage firms for similar
services.
During fiscal 1997 the fund paid no brokerage commissions to
affiliated brokers.
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 Fidelity Investments
Institutional Operations Company, Inc., 82 Devonshire Street, Boston,
Massachusetts 02109, whether other persons are beneficial owners of
shares for which proxies are being solicited and, if so, the number of
copies of the Proxy Statement and Annual Reports you wish to receive
in order to supply copies to the beneficial owners of the respective
shares.
Exhibit 1
((UNDERLINED)) DISCLOSURE WILL BE ADDED;
[BRACKETED] DISCLOSURE WILL BE DELETED.
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY ADVISOR SERIES V:
FIDELITY ADVISOR [HIGH INCOME MUNICIPAL] ((MUNICIPAL INCOME)) FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
[MODIFICATION] ((AMENDMENT)) made this [1st day of December, 1994,]((
day of , 1998)), by and between Fidelity Advisor Series V, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Fund"), on
behalf of Fidelity Advisor [High Income Municipal] ((Municipal
Income)) Fund (hereinafter called the "Portfolio"), and Fidelity
Management & Research Company, a Massachusetts corporation
(hereinafter called the "Adviser")(( as set forth in its entirety
below)).
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]((1)), [1988] ((1994)), 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 Adviser, take effect on December 1, 1994.]
((The Amended Management Contract shall, when executed by duly
authorized officers of the Fund and Adviser, take effect on May 1,
1998 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.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or
dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other
accounts over which the Adviser or its affiliates exercise investment
discretion. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in
good faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities which the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Trustees of the Fund shall
periodically review the commissions paid by the Portfolio to determine
if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of
the Fund are or may be or become interested in the Adviser as
directors, officers or otherwise and that directors, officers and
stockholders of the Adviser are or may be or become similarly
interested in the Fund, and that the Adviser may be or become
interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the
services and facilities to be furnished hereunder. The Adviser shall
receive a monthly management fee, payable monthly as soon as
practicable after the last day of each month, composed of a Group Fee
and an Individual Fund Fee.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the
monthly average of the net assets of the registered investment
companies having Advisory and Service or Management Contracts with the
Adviser (computed in the manner set forth in the fund's Declaration of
Trust or other organizational document) determined as of the close of
business on each business day throughout the month. The Group Fee
Rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate (for each level)
0 - $ 3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
[Over 372] [.1200]
((372)) - ((408)) ((.1200))
((408)) - ((444)) ((.1175))
((444)) - ((480)) ((.1150))
((480)) - ((516)) ((.1125))
((Over)) - ((516)) ((.1100))
(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.25%.
The sum of the [Cumulative] Group Fee Rate, calculated as described
above to the nearest millionth, and the Individual Fund Fee Rate shall
constitute the Annual Management Fee Rate. One-twelfth of the Annual
Management Fee Rate shall be applied to the average of the net assets
of the Portfolio (computed in the manner set forth in the Fund's
Declaration of Trust or other organizational document) determined as
of the close of business on each business day throughout the month.
(c) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the
number of business days during which it is in effect, and the fee
computed upon the average net assets for the business days it is so in
effect for that month.
4. It is understood that the Portfolio will pay all its expenses
[other than those expressly stated to be payable by the Adviser
hereunder], which expenses payable by the Portfolio shall include,
without limitation, (i) interest and taxes; (ii) brokerage commissions
and other costs in connection with the purchase or sale of securities
and other investment instruments; (iii) fees and expenses of the
Fund's Trustees other than those who are "interested persons" of the
Fund or the Adviser; (iv) legal and audit expenses; (v) custodian,
registrar and transfer agent fees and expenses; (vi) fees and expenses
related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities
laws; (vii) expenses of printing and mailing reports and notices and
proxy material to shareholders of the Portfolio; (viii) all other
expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other
registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums
for fidelity and other coverage; (x) its proportionate share of
association membership dues; (xi) expenses of typesetting for printing
Prospectuses and Statements of Additional Information and supplements
thereto; (xii) expenses of printing and mailing Prospectuses and
Statements of Additional Information and supplements thereto sent to
existing shareholders; and (xiii) such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or
proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and
officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and
engage in other activities, provided, however, that such other
services and activities do not, during the term of this Contract,
interfere, in a material manner, with the Adviser's ability to meet
all of its obligations with respect to rendering services to the
Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security(( or other investment
instrument)).
6. (a) Subject to prior termination as provided in sub-paragraph (d)
of this paragraph 6, this Contract shall continue in force until June
30, [1995]((1998)) and indefinitely thereafter, but only so long as
the continuance after such date shall be specifically approved at
least annually by vote of the Trustees of the Fund or by vote of a
majority of the outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent[, such consent on
the part of the Fund to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.](( subject to the
provisions of Section 15 of the 1940 Act, as modified by or
interpreted by any applicable order or orders of the Securities and
Exchange Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.))
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment
of any penalty, by action of its Trustees or Board of Directors, as
the case may be, or with respect to the Portfolio by vote of a
majority of the outstanding voting securities of the Portfolio. This
Contract shall terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust
((or other organizational document)) and agrees that the obligations
assumed by the Fund pursuant to this Contract shall be limited in all
cases to the Portfolio and its assets, and the Adviser shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio or any other Portfolios of the Fund. In
addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of ((any)) [the] Portfolio
under [this Contract] ((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 V
on behalf of Fidelity Advisor [High Income
Municipal] ((Municipal Income))
Fund
[SIGNATURE LINES OMITTED]
FIDELITY MANAGEMENT & RESEARCH COMPANY
[SIGNATURE LINES OMITTED]
Exhibit 2
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the Agreement) is made as
of the 16th day of October 1997, by and between Fidelity Advisor
Municipal Income Fund (the Fund), a separate series of Fidelity
Advisor Series V (Advisor Series V) and Fidelity Advisor Series II
(the Trust), each a business trust duly formed under the laws of the
Commonwealth of Massachusetts.
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the Code). The
reorganization will comprise: (a) the transfer of all of the assets
of the Fund to a series of the Trust (the Series) solely in exchange
for shares of beneficial interest of the applicable classes of the
Series (the Trust Series Shares) and the assumption by the Series of
the Fund's liabilities; and (b) the constructive distribution of such
Trust Series Shares of the applicable classes by the Fund to its
shareholders (Fund Shareholder) in complete liquidation and
termination of the Fund in exchange for all of the Fund's outstanding
shares of the corresponding classes (Fund Shares). The Fund shall
receive shares of the applicable classes of the Series equal to the
number and class of Fund Shares on the Closing Date (as defined
below). Immediately thereafter, the Fund shall then distribute to each
Fund Shareholder one Trust Series Share for each Fund Share held by
the shareholder on the Closing Date. The foregoing transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises and subject to the terms and
conditions herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Advisor Series V on behalf of the Fund represents and warrants as
follows:
(a) The Fund is a series of Advisor Series V, a business trust duly
formed, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to own all of its
properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local
authorizations to carry out its business as now being conducted and to
carry out this Agreement;
(b) The Fund is duly registered as an open-end management investment
company under the Investment Company Act of 1940 (the 1940 Act), as
amended, or is a series of a registrant and such registration is in
full force and effect;
(c) The Fund is not in, and the execution, delivery and performance
of this Agreement will not result in, violation of any provision of
the Amended and Restated Declaration of Trust or the Fund's Bylaws,
or, to the Fund's knowledge, of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Fund is a party or
by which the Fund is bound or result in the acceleration of any
obligation or the imposition of any penalty under any agreement,
judgment or decree to which the Fund is a party or is bound;
(d) The Fund has no material contracts or other commitments (other
than this Agreement) that will not be terminated without liability to
the Fund on or prior to the Closing Date;
(e) To the Fund's knowledge, no material legal, administrative, or
other proceeding or investigation of, or before, any court or
governmental body presently is pending or threatened against the Fund
or any of its properties or assets which assert liability on the part
of the Fund, except as previously disclosed in writing to the Trust.
The Fund knows of no facts that might form the basis for the
institution of such proceedings;
(f) The Fund has filed or will file all federal and state tax returns
which, to the knowledge of the Fund's officers, are required to be
filed by the Fund and has paid or will pay all federal and state taxes
shown to be due on said returns or provision shall have been made for
the payment thereof, and, to the best of the Fund's knowledge, no such
return is currently under audit and no assessment has been asserted
with respect to such returns;
(g) All of the issued and outstanding shares of the Fund are, and at
the Closing Date will be, duly and validly issued and outstanding and
fully paid and nonassessable as a matter of Massachusetts law (except
as disclosed in the Fund's Statement of Additional Information), and
have been offered for sale in conformity with all applicable federal
securities laws. All of the issued and outstanding shares of the Fund
will, at the Closing Date, be held by the persons and in the amounts
as certified in accordance with the provisions of this Agreement;
(h) The information to be furnished by the Fund for use in
applications for orders, registration statements, proxy materials and
other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete and
shall comply in all material respects with federal securities and
other laws and regulations thereunder applicable thereto;
(i) At both the Valuation Time (as defined in Section 4) and the
Closing Date (as defined in Section 6), the Fund will have the full
right, power, and authority to sell, assign, transfer, and deliver its
portfolio securities and any other assets of the Fund to be
transferred to the Series pursuant to this Agreement. As of the
Closing Date, subject only to the delivery of the Fund's portfolio
securities and any such other assets as contemplated by this
Agreement, the Series will acquire the Fund's portfolio securities and
any such other assets subject to no encumbrances, liens, or security
interests (except for those that may arise in the ordinary course and
are disclosed to the Series) and without any restrictions upon the
transfer thereof;
(j) The execution, delivery, and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of the Fund, and this Agreement
constitutes a valid and binding obligation of the Fund enforceable in
accordance with its terms, subject to shareholder approval;
(k) To the best of the knowledge of the Fund's management, there is
no plan or intention by the Fund's shareholders to sell, exchange or
otherwise dispose of any of the Trust Series Shares to be received in
the Reorganization;
(l) The Fund shares are widely held and may be purchased and redeemed
upon request;
(m) No consideration other than Trust Series Shares will be issued in
exchange for the Fund Shares in the Reorganization;
(n) Immediately following consummation of the Reorganization, the
Fund Shareholders will own all of the Trust Series Shares and will own
such shares solely by reason of their ownership of the Fund Shares
immediately prior to the Reorganization;
(o) Immediately following the consummation of the Reorganization, the
Trust will hold on behalf of the Series the same assets and be subject
to the same liabilities that the Fund held or was subject to
immediately prior thereto, except for assets used to pay expenses
incurred in connection with the Reorganization. Assets used to pay
expenses and all distributions (except for distributions and
redemptions arising in the ordinary course of the Fund's business as
an open-end investment company) made by the Fund immediately preceding
the Reorganization will, in the aggregate, constitute less than 1% of
the net assets of the Fund;
(p) At the time of the Reorganization, the Fund will not have
outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire stock
in the Fund;
(q) There is no intercompany indebtedness between the Series and the
Fund that was issued, acquired or that will be settled at a discount;
(r) The Fund's liabilities to be assumed by the Series in the
Reorganization were incurred by the Fund in the ordinary course of its
business and are associated with the assets to be transferred;
(s) The Fund's shareholders each will pay their own expenses, if any,
incurred in connection with the Reorganization;
(t) The fair market value of the Fund's assets to be transferred by
the Fund to the Series will equal or exceed the Fund's liabilities to
be assumed by the Series plus the liabilities to which the transferred
assets are subject;
(u) The Fund is a regulated investment company as defined in Section
851 of the Internal Revenue Code of 1986, as amended;
(v) At the time of the Reorganization, the Fund is not under the
jurisdiction of a court in a proceeding under Title 11 of the United
States Code or similar case within the meaning of Section 368(a)(3)(A)
of the Code;
(w) To the Fund's knowledge, no consent, approval, authorization, or
order of any court or governmental authority is required for the
consummation by the Fund of the transactions contemplated by this
Agreement, except such as have been obtained under the Securities Act
of 1933 (the 1933 Act), the Securities Exchange Act of 1934 (the 1934
Act), and the 1940 Act;
(x) The Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown as belonging to it on
its statement of assets and liabilities as of April 30, 1997 and those
incurred in the ordinary course of the Fund's business as an
investment company since April 30, 1997; and
(y) The Fund will be liquidated immediately after the Reorganization.
2. REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants as follows:
(a) The Trust is a business trust duly formed, validly existing, and
in good standing under the laws of the Commonwealth of Massachusetts.
It has all necessary federal, state, and local authorizations to carry
out its business as now being conducted and to carry out this
Agreement;
(b) The Trust is duly registered as an open-end management investment
company under the 1940 Act, and the Series is a duly established and
designated series of the Trust;
(c) The Trust is not in, and the execution, delivery and performance
of this Agreement will not result in, violation of any provision of
the Amended and Restated Declaration of Trust or the Trust's Bylaws,
or, to the Trust's knowledge, of any agreement, indenture, instrument,
contract, lease or other undertaking to which the Trust is a party or
by which the Trust is bound or result in the acceleration of any
obligation or the imposition of any penalty under any agreement,
judgment or decree to which the Trust is a party or is bound;
(d) To the Trust's knowledge, no material legal, administrative, or
other proceeding or investigation of, or before, any court or
governmental body presently is pending or threatened against the Trust
or any of its properties or assets which assert liability on the part
of the Trust, except as previously disclosed in writing to the Trust.
The Trust knows of no facts that might form the basis for the
institution of such proceedings;
(e) The Trust intends for the Series to be a regulated investment
company, under Section 851 of the Code;
(f) Prior to the Closing Date, there shall be no issued and
outstanding Trust Series Shares or any other securities issued by the
Series (except for the one share that may be issued to FMR); Trust
Series Shares issued in connection with the transactions contemplated
herein will be, duly and validly issued and outstanding, fully paid
and non-assessable under Massachusetts law on the Closing Date;
(g) The execution, delivery, and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
corporate action on the part of the Trust, and, upon its proper
execution, this Agreement will constitute a valid and binding
obligation of the Trust enforceable against the Series in accordance
with its terms;
(h) As of the Closing Date, the Trust Series Shares will have been
duly authorized and, when so issued and delivered, will be duly and
validly issued shares of the Series, fully paid and non-assessable
under Massachusetts law except that under Massachusetts law,
shareholders of a Massachusetts business trust, under certain
circumstances, may be held personally liable for obligations of the
Trust;
(i) The fair market value of the Trust Series Shares to be received
by the Fund Shareholders will be equal to the fair market value of
their Fund Shares constructively surrendered in exchange therefor;
(j) The Trust has no plan or intention on behalf of the Series to
issue additional Trust Series Shares following the Reorganization
except for issuance of shares arising in the ordinary course of the
business of the Series as the series of an open-end investment
company;
(k) The Trust has no plan or intention to reacquire the Trust Series
Shares issued to the Fund Shareholders pursuant to the Reorganization
other than through redemptions arising in the ordinary course of the
business of the Series as a series of an open-end investment company;
(l) Following the Reorganization, the Trust, on behalf of the Series,
will continue the Fund's historic business;
(m) The Trust has no plan or intention to sell or otherwise dispose
of any of the Fund's assets to be acquired by the Series in the
Reorganization, except for dispositions made in the ordinary course of
its business and dispositions necessary to maintain the status of the
Series as a regulated investment company under Section 851 of the
Code;
(n) The information to be furnished by the Trust with respect to the
Series for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby shall be accurate
and complete and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(o) The Trust, on behalf of the Series, shall use all reasonable
efforts to obtain the approvals and authorizations required by the
1933 Act and the 1940 Act as it may deem appropriate in order to
operate after the Closing Date; and
(p) To the Trust's knowledge, no consent, approval, authorization, or
order of any court or governmental authority is required for the
consummation by the Series of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933 Act, the
1934 Act, and the 1940 Act.
3. REORGANIZATION
(a) Subject to the requisite approval of the shareholders of the Fund
and to the other terms and conditions contained herein, the Fund
agrees to assign, convey, transfer, and deliver to the Series
established by the Trust solely for the purpose of acquiring all of
the assets of the Fund, which Series has not issued any Trust Series
Shares (except for one share of each class that may be issued to FMR)
or commenced operations, as of the Closing Date all of the assets of
the Fund of any kind and nature existing on the Closing Date. The
Series agrees in exchange therefor (1) to assume all of the Fund's
liabilities existing on or after the Closing Date, whether or not
determinable on the Closing Date, and (2) to issue and deliver to the
Fund the number of full and fractional Trust Series Shares of the
applicable classes equal to the value and number of full and
fractional shares of the corresponding classes of the Fund outstanding
at the time of the closing, as described in paragraph 6, as of the
Closing Date provided for in Section 6(a).
(b) The assets of the Fund to be acquired by the Series and allocated
thereto shall include, without limitation, all cash, cash equivalents,
securities, receivables (including interest or dividends receivables),
claims, choses in action, and other property owned by the Fund, and
any deferred or prepaid expenses shown as an asset on the books of the
Fund on the Closing Date. The Fund will pay or cause to be paid to the
Series any dividend or interest payments received by it on or after
the Closing Date with respect to the assets transferred to the Series
hereunder, and the Series will retain any dividend or interest
payments received by it after the Valuation Time (as defined in
Section 4) with respect to the assets transferred hereunder without
regard to the payment date thereof. The assets of the Fund to be
assumed by the Series and allocated thereto, shall include (except as
otherwise provided herein) all of the Fund's liabilities, debts,
obligations, and duties,of whatever kind or nature, whether absolute,
accrued, contingent,or otherwise, whether or not on the Closing Date,
and whether or not specifically referred to in this Agreement.
(c) Immediately upon delivery to the Fund of the Trust Series Shares,
the individual Trustees of Advisor Series V or any officer duly
authorized by them, on the Advisor Series V's behalf as the then sole
shareholder of the Series, shall (1) approve (i) a Management Contract
between the Trust on behalf of the Series and FMR, (ii) a Distribution
and Service Plan under Rule 12b-1 under the 1940 Act between the Trust
on behalf of the Series and Fidelity Distributors Corporation (FDC)
substantively identical to the contracts, agreements and plans
currently in effect with the Fund or class immediately prior to the
Closing Date (as defined below), except as to the parties to such
contract, agreement and plan, (iii) the independent accountants who
currently serve in that capacity for the Fund, and (iv) the adoption
of revised fundamental policies described in Proposals 2 of the Proxy
Statement.
(d) Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable (the Liquidation Date), the Fund will
constructively distribute the Trust Series Shares of the applicable
classes pro rata in proportion to their respective shares of
beneficial interest of the corresponding classes of the Fund to Fund
Shareholders of record determined as of the Valuation Time on the
Closing Date in accordance with the Fund's Amended and Restated
Declaration of Trust, in liquidation of such Fund. Such distribution
will be accomplished by the Fund's transfer agent opening accounts on
the share records of the Series in the names of such Fund Shareholders
and transferring the Trust Series Shares of the applicable classes
thereto. Each Fund Shareholder's account shall be credited with the
respective pro rata number of full and fractional (rounded to the
third decimal place) Trust Series Shares of the applicable classes due
that shareholder. All outstanding Fund Shares, including any
represented by certificates, shall simultaneously be canceled on the
Fund's share transfer records. The Series shall not issue certificates
representing Trust Series Shares in connection with such distribution.
(e) Immediately after the distribution of the Trust Series Shares as
set forth in Section 3(d), the Fund shall be liquidated and terminated
and any such further actions shall be taken in connection therewith as
required by applicable law.
(f) Any transfer taxes payable upon issuance of Trust Series Shares
in a name other than that of the registered holder on the Fund's books
of the Fund Shares constructively exchanged for the Trust Series
Shares shall be paid by the person to whom such Trust Series Shares
are to be issued, as a condition of such transfer.
(g) Any reporting responsibility of the Fund is and shall remain the
responsibility of the Fund up to and including the date on which it is
liquidated.
4. VALUATION
(a) The valuation time shall be the close of business of the New York
Stock Exchange on the Closing Date (the Valuation Time), or such other
date as may be mutually agreed upon in writing by the parties hereto.
(b) The value of the Fund's net assets to be acquired by the Series
hereunder shall be the net asset value per share computed as of the
Valuation Time, using the valuation procedures set forth in the Fund's
then current Prospectus and Statement of Additional Information.
(c) The number, value, class, and denomination of full and fractional
Trust Series Shares to be issued in exchange for the Fund's net assets
shall be equal to the number, value, class, and denomination of full
and fractional Fund Shares outstanding on the Closing Date.
(d) All computations pursuant to this Section shall be made by
Fidelity Service Company, Inc. (FSC), a wholly-owned subsidiary of FMR
Corp., in accordance with its regular practice as pricing agent for
the Fund.
5. FEES; EXPENSES
(a) The Trust and the Fund each represent that there is no person who
dealt with it who by reason of such dealings is entitled to any
broker's or finder's fees or commissions arising out of the
transactions contemplated hereby.
(b) The Fund shall be responsible for all expenses, fees and other
charges in connection with the transactions contemplated by the
agreement, subject to FMR's voluntary expense limitation (2.5% of
average net assets), if applicable, provided that they do not exceed
Class A's expense cap of 0.90%, Class B's expense cap of 1.65%, Class
T's expense cap of 1.00%, Class C's expense cap of 1.75%, and
Institutional Class's expense cap of 0.75%, as applicable. Expenses
exceeding the each class's expense cap, as applicable, will be paid by
FMR, but not including costs incurred in connection with the purchase
or sale of portfolio securities.
6. CLOSING DATE
(a) The transfer of the Fund's assets in exchange for the assumption
by the Series of the Fund's liabilities and the issuance of Trust
Series Shares, as described above, together with related acts
necessary to consummate the same, (the Closing), unless otherwise
provided herein, shall occur at the principal office of Advisor Series
V and the Trust, 82 Devonshire Street, Boston, Massachusetts, on
February 26, 1999 or at such other place or date as the parties may
agree in writing (the Closing Date). All acts taking place at the
Closing shall be deemed to take place simultaneously as of the
Valuation Time or at such other time and/or place as the parties may
agree.
(b) In the event that, on the Closing Date: (i) any of the markets
for securities held by the Fund are closed to trading, or (ii) trading
thereon is restricted, or (iii) trading or reporting of trading on
said markets or elsewhere is disrupted, all so that accurate appraisal
of the total net asset value of the Fund is impracticable, the Closing
Date shall be postponed until the first business day after the day
when such trading shall have been fully resumed and reporting shall
have been restored, or such other date as the parties may agree.
(c) The Fund shall deliver at the Closing a certificate of an
authorized officer stating that it has notified UMB Bank, n.a. (UMB),
as custodian for the Fund, of the Fund's reorganization to a series of
the Trust.
(d) UMB, as transfer agent for the Fund, shall deliver at the Closing
a certificate as to the conversion on its books and records of each
Fund Shareholder account to an account as a holder of Trust Series
Shares. The Trust shall issue and deliver a confirmation to the Fund
evidencing the Trust Series Shares to be credited as of the Closing
Date or provide evidence satisfactory to the Fund that such Trust
Series Shares have been credited to the Fund's account on the books of
the Trust. At the Closing, each party shall deliver to the other such
bills of sale, checks, assignments, stock certificates, receipts or
other documents as such other party or its counsel may reasonably
request.
7. SHAREHOLDER MEETING AND TERMINATION OF THE FUND
(a) The Fund agrees to call a meeting of its shareholders (the
Shareholder's Meeting) to consider and act upon this Agreement and to
take all other action necessary to obtain approval of the transactions
contemplated hereby.
(b) The Fund agrees that as soon as reasonably practicable after
distribution of the Trust Series Shares, the Fund shall be liquidated
and terminated as a series of Advisor Series V pursuant to its Amended
and Restated Declaration of Trust, any further actions shall be taken
in connection therewith as required by applicable law, and on and
after the Closing Date the Fund shall not conduct any business except
in connection with its liquidation and termination.
8. CONDITIONS TO OBLIGATIONS OF THE TRUST
The obligations of the Trust hereunder shall be subject to the
following conditions:
(a) That the Fund furnishes to the Trust a statement, dated as of the
Closing Date, signed by an officer of Advisor Series V, certifying
that as of the Valuation Time and the Closing Date all representations
and warranties of the Fund made in this Agreement are true and correct
in all material respects and that the Fund has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such dates;
(b) That the Fund furnishes the Trust with copies of the resolutions,
certified by an officer of Advisor Series V, evidencing the adoption
of this Agreement and the approval of the transactions contemplated
herein by the requisite vote of the holders of the outstanding shares
of beneficial interest of the Fund;
(c) That the Fund shall deliver to the Trust at the Closing a
statement of its assets and liabilities, together with a certificate
as to the aggregate asset value of the Fund's portfolio securities,
all as of the Valuation Time, certified on the Fund's behalf by its
Treasurer or Assistant Treasurer;
(d) That the Fund's custodian shall deliver to the Trust a
certificate identifying the assets of the Fund held by such custodian
as of the Valuation Time on the Closing Date and stating that at the
Valuation Time: (i) the assets held by the custodian will be
transferred to the Series; (ii) the Fund's assets have been duly
endorsed in proper form for transfer in such condition as to
constitute good delivery thereof; and (iii) to the best of the
custodian's knowledge, all necessary taxes in conjunction with the
delivery of the assets, including all applicable federal and state
stock transfer stamps, if any, have been paid or provision for payment
has been made;
(e) That the Fund's transfer agent shall deliver to the Trust at the
Closing a certificate setting forth the number of shares of the Fund
outstanding as of the Valuation Time and the name and address of each
holder of record of any such shares and the number of shares held of
record by each such shareholder;
(f) That the Fund calls a Shareholder's Meeting to consider and act
upon this Agreement and to take all other action necessary to obtain
approval of the transactions contemplated hereby;
(g) That the Fund delivers to the Trust a certificate of an officer
of Advisor Series V, dated the Closing Date, that there has been no
material adverse change in the Fund's financial position since April
30, 1997, other than changes in the market value of its portfolio
securities, or changes due to net redemptions of its shares, dividends
paid, or losses from operations; and
(h) That all of the issued and outstanding shares of beneficial
interest of the Fund shall have been offered for sale and sold in
conformity with all applicable state securities laws and, to the
extent that any audit of the records of the Fund or its transfer agent
by the Trust or its agents shall have revealed otherwise, the Fund
shall have taken all actions that in the opinion of the Trust are
necessary to remedy any prior failure on the part of the Fund to have
offered for sale and sold such shares in conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF THE FUND
The obligations of the Fund hereunder shall be subject to the
following conditions:
(a) That the Trust shall have executed and delivered to the Fund an
Assumption of Liabilities, certified by an officer of the Trust, dated
as of the Closing Date pursuant to which Trust on behalf of the Series
will assume all of the liabilities of the Fund existing at the
Valuation Time in connection with the transactions contemplated by
this Agreement;
(b) That the Trust furnishes to the Fund a statement, dated as of the
Closing Date, signed by an officer of Trust, certifying that as of the
Valuation Time and the Closing Date all representations and warranties
of the Series made in this Agreement are true and correct in all
material respects, and the Trust has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such dates; and
(c) That the Fund shall have received an opinion of Kirkpatrick &
Lockhart LLP, counsel to the Fund and the Trust, to the effect that
the Trust Series Shares are duly authorized and upon delivery to the
Fund as provided in this Agreement will be validly issued and will be
fully paid and nonassessable under Massachusetts law.
10. CONDITIONS TO OBLIGATIONS OF THE FUND AND THE TRUST
The obligations of the Fund and the Trust hereunder shall be subject
to the following conditions:
(a) That this Agreement shall have been adopted and the transactions
contemplated herein shall have been approved by the requisite vote of
the holders of the outstanding shares of beneficial interest of the
Fund;
(b) That all consents of other parties and all other consents,
orders, and permits of federal, state, and local regulatory
authorities (including those of the Commission and of state blue sky
and securities authorities, including "no action" positions of such
federal or state authorities) deemed necessary by the Trust or the
Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except
where failure to obtain any such consent, order, or permit would not
involve a risk of a material adverse effect on the assets or
properties of the Trust or the Fund, provided that either party hereto
may for itself waive any of such conditions;
(c) That all proceedings taken by either the Fund or the Series in
connection with the transactions contemplated by this Agreement and
all documents incidental thereto shall be satisfactory in form and
substance to it and its counsel, Kirkpatrick & Lockhart LLP;
(d) That the Trust shall have taken all necessary action so that the
Series shall be a series of a registered open-end investment company
under the 1940 Act immediately after the closing.
(e) That there shall not be any material litigation pending with
respect to the matters contemplated by this Agreement;
(f) That the Trust and the Fund shall have received an opinion of
Kirkpatrick & Lockhart LLP satisfactory to the Trust and the Fund that
for federal income tax purposes:
(i) The Reorganization will be a reorganization under Section
368(a)(1)(F) of the Code, and the Fund and the Series will each be
parties to the Reorganization under section 368(b) of the Code;
(ii) No gain or loss will be recognized by the Fund upon the
transfer of all of its assets to the Series in exchange solely for the
Trust Series Shares of the applicable classes and the assumption of
the Fund's liabilities followed by the distribution of those the Trust
Series Shares to the shareholders of the corresponding classes of the
Fund in liquidation of the Fund;
(iii) No gain or loss will be recognized by the Series on the
receipt of the Fund's assets in exchange solely for the the Trust
Series Shares and the assumption of the Fund's liabilities;
(iv) The basis of the Fund's assets in the hands of the Series will
be the same as the basis of such assets in the Fund's hands
immediately prior to the Reorganization;
(v) The Series' holding period in the assets to be received from the
Fund will include the Fund's holding period in such assets;
(vi) A Fund Shareholder will recognize no gain or loss on the
exchange of his or her shares of beneficial interest in the Fund for
the Trust Series Shares in the Reorganization;
(vii) A Fund Shareholder's basis in the the Trust Series Shares to
be received by him or her will be the same as his or her basis in the
Fund Shares exchanged therefor;
(viii) A Fund Shareholder's holding period for his or her Trust
Series Shares will include the holding period of the Fund Shares
exchanged, provided that those Fund Shares were held as capital assets
on the date of the Reorganization.
Notwithstanding anything herein to the contrary, neither the Fund nor
the Trust may waive the conditions set forth in this subsection 10(f).
11. COVENANTS OF THE FUND AND THE TRUST
(a) The Fund covenants to operate its business in the ordinary course
between the date hereof and the Closing Date, it being understood that
such ordinary course of business will include the payment of customary
dividends and distributions.
(b) The Fund covenants that the Trust Series Shares are not being
acquired for the purpose of making any distribution thereof, other
than in accordance with the terms of this Agreement.
(c) The Fund covenants that it will assist the Trust in obtaining
such information as the Trust reasonably requests concerning the
beneficial ownership of Fund Shares.
(d) The Fund covenants that its liquidation and termination will be
effected in the manner provided in its Amended and Restated
Declaration of Trust in accordance with applicable law and, after the
Closing Date, the Fund will not conduct any business except in
connection with its liquidation and termination.
12. TERMINATION; WAIVER
(a) The Trust and the Fund may terminate this Agreement by mutual
agreement. In addition, either the Trust or the Fund may at its option
terminate this Agreement at or prior to the Closing Date because:
(i) Of a material breach by the other of any representation,
warranty, or agreement contained herein to be performed at or prior to
the Closing Date; or
(ii) A condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
(b) In the event of any such termination, there shall be no liability
for damages on the part of the Trust or the Fund, or their respective
Trustees or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES
(a). This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter
hereof, constitutes the only understanding with respect to such
subject matter, may not be changed except by a letter of agreement
signed by each party hereto and shall be construed in accordance with
and governed by the laws of the Commonwealth of Massachusetts.
(b) This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the respective
President, any Vice President, or Treasurer of the Series or the Fund;
provided, however, that following the shareholders' meeting called by
the Fund pursuant to Section 7 of this Agreement, no such amendment
may have the effect of changing the provisions for determining the
number of the Series Shares to be received by the Fund shareholders
under this Agreement to the detriment of such shareholders without
their further approval.
(c) Either Fund may waive any condition to its obligations hereunder,
provided that such waiver does not have any material adverse effect on
the interests of such Fund's shareholders.
The representations, warranties, and covenants contained in the
Agreement, or in any document delivered pursuant hereto or in
connection herewith, shall survive the consummation of the
transactions contemplated hereunder.
14. DECLARATIONS OF TRUST
A copy of the Declaration of Trust of the Trust and Advisor Series V,
as restated and amended, is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust and
Advisor Series V as trustees and not individually and that the
obligations of the Fund and the Series under this instrument are not
binding upon any of such Fund's or Trust's Trustees, officers, or
shareholders individually but are binding only upon the assets and
property of such Fund or Series. The Fund and the Trust each agrees
that its obligations hereunder apply only to such Fund and the Series,
respectively, and not to its shareholders individually or to the
Trustees of such Fund or Series.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment
or transfer of any rights or obligations hereunder shall be made by
any party without the written consent of the other party. Nothing
herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation other than the
parties hereto and their respective successors and assigns any rights
or remedies under or by reason of this Agreement.
This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.
FIDELITY ADVISOR SERIES V
Fidelity Advisor Municipal Income Fund
[SIGNATURE LINES OMITTED]
FIDELITY ADVISOR SERIES II:
Fidelity Advisor Municipal Income Fund
[SIGNATURE LINES OMITTED]
EXHIBIT 3
[TABLE TO BE UPDATED]
FUNDS ADVISED BY FMR - TABLE OF AVERAGE NET ASSETS AND EXPENSE RATIOS
(A)
INVESTMENT FISCAL AVERAGE RATIO OF NET
OBJECTIVE AND FUND YEAR END (A) NET ASSETS ADVISORY FEES
(MILLIONS)(B) TO AVERAGE
NET ASSETS
PAID
TO FMR (C)
TAX-EXEMPT INCOME
Advisor Intermediate
Municipal Income
Class A
Class T
Class B
Class C
Institutional Class
Advisor Municipal Bond
Class A
Class T
Class B
Institutional Class
Initial Class
Advisor Municipal
Income (formerly
High Income
Municipal)
Class A
Class T
Class B
Class C
Institutional Class
Advisor
Short-Intermediate
Municipal Income
Class A
Class T
Institutional Class
Limited Term Municipal
Income
New York Insured
Municipal Income
New York Municipal
Income
Municipal Bond
Spartan Aggressive
Municipal
Spartan Municipal
Income
Spartan
Short-Intermediate
Municipal Income
Spartan Intermediate
Municipal Income
Spartan Arizona
Municipal Income
Spartan California
Municipal Income
Spartan Connecticut
Municipal Income
Spartan Florida
Municipal Income
Spartan Massachusetts
Municipal Income
Spartan Maryland
Municipal Income
Spartan Michigan
Municipal Income
Spartan Minnesota
Municipal Income
Spartan New Jersey
Municipal Income
Spartan New York
Intermediate
Municipal Income
Spartan New York
Municipal Income
Spartan Ohio Municipal
Income
Spartan Pennsylvania
Municipal Income
Footnotes to be updated later
(a) All fund data are as of the fiscal year end noted in the chart or
as of January 31, 1997 if fiscal year end figures are not yet
available.
(b) 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.
(c) Reflects reductions for any expense reimbursement paid by or due
from FMR pursuant to voluntary or state expense limitations. Funds so
affected are indicated by an (*).
(dagger) Annualized
** Less than a complete fiscal year
(Z) The ratio of net advisory fees to average net assets paid to FMR
represents the amount as of the prior fiscal year end. Updated ratios
will be presented for each class of shares of the fund when the next
fiscal year end figures are available.
AHIM-PXS-0298 cusip #
315916833/fund# 257
cusip # 315916205/fund# 169
cusip # 315916304/fund# 669
cusip # 315916791/fund# 490
cusip # 315916882/fund# 679
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 V: FIDELITY ADVISOR MUNICIPAL INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward
C. Johnson 3d, Eric D. Roiter, and Phyllis Burke Davis, or any one or
more of them, attorneys, with full power of substitution, to vote all
shares of Fidelity Advisor Series V: Fidelity Advisor Municipal Income
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 April 15, 1998 at 9:00 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 _____________, 1998
_______________________________________
_______________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
fund# 257, 169, 669, 490, 679
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 approve an amended management contract for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
fund.
2. To amend the fundamental investment policy on FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
diversification for the fund to exclude investments in
other investment companies from the limitation.
3. To approve an agreement and plan providing for the FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
reorganization of the fund.
AHIM-PXC-0298 cusip #
315916833/fund# 257
cusip # 315916205/fund# 169
cusip # 315916304/fund# 669
cusip # 315916791/fund# 490
cusip # 315916882/fund# 679