DEFA14C 1 defa1doc.htm

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:

[ ]

Preliminary Proxy Statement

[ ]

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

[ ]

Definitive Proxy Statement

[ ]

Definitive Additional Materials

[X]

Soliciting Material under Rule 14a-12

Fidelity Advisor Series I

(Name of Registrant as Specified In Its Charter)

Fidelity Advisor Series II

(Name of Registrant as Specified In Its Charter)

Fidelity Contrafund

(Name of Registrant as Specified In Its Charter)

Fidelity Securities Fund

(Name of Registrant as Specified In Its Charter)

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:

Q1. How is the performance adjustment calculated?

A1. Performance adjustments are calculated monthly based on trailing 36-month fund returns vs. a stated benchmark. The standard performance adjustment rate is +/- 2 bps (annualized) for each percentage point of out-performance or underperformance, with a maximum adjustment of +/- 20 bps.

For example, for a fund that outperformed its index by 8 percentage points over 36 months, the performance adjustment rate would be +16 bps (2 bps multiplied by 8).

The resulting bps rate is applied to average net assets for the 36-month performance period to arrive at an annualized dollar amount.

Q2. Does the maximum +/- 20 bps performance fee range mean that a fund's expense ratio will never be impacted by more or less than 20 bps due to a performance adjustment?

A2. No, since Fidelity applies performance adjustments to 36-month average assets rather than current assets, performance fees can be more than 20 bp or less than -20 bp when measured against current assets.

For example, for a fund that outperformed its index by 8 percentage points, the performance adjustment rate would be +16 bp (2 bp multiplied by 8). If the fund's current assets were the same as its 36-month average assets, the performance adjustment would be 16 bp based on current assets also. However, if the fund's current assets were double its 36-month average assets, the performance adjustment would be just 8 bp based on current assets. Similarly, if the fund's current assets were half the 36-month average, the performance adjustment would be 32 bp based on current assets.

Q3. Performance Adjustments will not impact the management fee until 36 months from now, correct?

A3. Incorrect. We expect the addition of the performance fee adjustment to take place throughout 2007 as shareholders of the different funds vote on the proposals. Specifically, the performance period will begin for each fund on the first of the month following shareholder approval.

However, there will not be any performance adjustments until the twelfth month after shareholder approval. The calculation will be the same as stated in Answer #1.

Each month after that, another month's performance will be included in the calculation until the 36-month performance period is reached. After that time, the performance adjustment will be based on the most recent 36 months.

Q4. Can you please walk me through an example of how the performance adjustment would increase the management fee?

A4. Yes. Let's begin our example with the assumption we have received shareholder approval in December 2006.

  • The Performance Period would begin the month after shareholder approval, or January 1, 2007.
  • The Performance Adjustment begins to take effect in the 12th month of the Performance Period. In this case, the first adjustment would apply in December 2007.
  • The fund's performance relative to its performance adjustment index will be based on the 12 month period 1/1/07 through 12/31/07.
  • Let's assume our fund outperforms the benchmark by 5 percentage points, or 500 basis points, over that period.
  • The Performance Adjustment Rate will equal 10 bps (2 bps for every 100 bps of out-performance, or 2*5 = 10 bps).
  • We will make the assumption that the average assets over the same performance period (1/1/07 through 12/31/07) was $1 billion.
  • A Performance Fee Adjustment of $83,333 ((10 bps * $1billion)/12) will be applied in Dec. ´07.
  • Let's assume the average assets for Dec. ´07 are also $1 billion with a base management fee rate of 57 bps.
  • Basic Management Fee in Dollars for Dec. ´07 = ($1B * 57 bp) / 12 = $475,000
  • Total Management Fee including Performance Adjustment in Dollars for Dec. ´07 = $558,333 ($475,000+$83,333)
  • Effective Total Management Fee Rate for Dec. ´07 = ($558,333 / $1B)*12 = 67 BP (a basic management fee of 57 bp and a positive performance fee of 10 bp)

Note: Keep in mind that the management fee and performance fee are calculated monthly and the total management fee shown in the prospectus (bp) and Annual Report ($) is the aggregation of 12 months of calculations.

Q5. Will a performance adjustment affect the expense ratio stated in the prospectus?

A5. Yes. Because the management fee, which is a component of the expense ratio, may be adjusted upward or downward with the performance adjustment, the expense ratio disclosed in a fund's prospectus will be impacted by the performance adjustment.

Note: The expense ratio shown in the prospectus reflects the fund's expenses in effect for the fund's prior fiscal period (12 months). As a result, the current management fee rate and total expense ratio may be higher or lower than the rate disclosed in the prospectus fee table, which reflects the performance adjustments for the most recent fiscal period.

Q6. Why is Fidelity doing this?

A6. Fidelity and the funds' Board of Trustees believe this makes sense for shareholders because it more closely aligns our economic interests directly with theirs.

Fidelity's performance adjustment is structured so that when a fund's performance beats its index's performance, we receive a higher management fee, and when a fund's performance lags its index's performance, the fund's management fee is reduced.

Q7. Is Fidelity's maximum +/- 20 bps performance fee range typical among fund competitors?

A7. Performance fee ranges vary widely among competitor funds with performance fees. However wide the range is, though, the law requires it to be symmetrical on the positive and negative sides.

Some characteristics are common between Fidelity and competitors. For example, like Fidelity, most competitor complexes use a securities index (vs. a peer group) for the performance adjustment index, and several complexes uses a 36-month performance period (although many use a 12-month performance period).

Q8. Are performance fees common in the mutual fund industry?

A8. No. Approximately 30-40 fund complexes use performance fees, with Fidelity being one of the largest users in terms of number of funds with performance fees. In addition, as of 12/31/06, Fidelity had more assets subject to performance adjustments than any other fund complex.

Q9. How many Fidelity funds have management fees with a performance adjustment component?

A9. Approximately 50 Fidelity funds have management fees with a performance adjustment component. (See Page 4 and 5 for the list of funds.) Performance adjustments are typically put on Fidelity's growth-oriented domestic equity and international equity funds, subject to the availability of suitable indexes.

Fidelity funds that have management fees with a Performance Adjustment component

Advisor Growth Opportunities

\\\\\\\\\\\\\\\\\\\\\\\

Russell 1000 Growth (2/1/07)

Advisor Overseas

MSCI EAFE

Advisor International Discovery*

MSCI EAFE

Advisor International Small Cap*

MSCI EAFE Small Cap

Advisor Intl Small Cap Opps*

MSCI EAFE Small Cap

Advisor International Value*

MSCI EAFE Value

Advisor Large Cap Growth*

Russell 1000 Growth

Advisor Large Cap Value*

Russell 1000 Value

Advisor Mid Cap Growth*

Russell Mid Cap Growth

Advisor Mid Cap Value*

Russell Mid Cap Value

Advisor Small Cap Growth*

Russell 2000 Growth

Advisor Small Cap Value*

Russell 2000 Value

Aggressive Growth

Russell Mid-Cap Growth

Aggressive International

MSCI AC World Free Ex US

Blue Chip Growth

Russell 1000 Growth

Blue Chip Value

Russell 1000 Value

Canada

S&P/TSX Composite

Capital Appreciation

S&P 500

Contrafund

S&P 500

Convertible Securities

ML All Convertible Securities

Disciplined Equity

S&P 500

Diversified International

MSCI EAFE

Dividend Growth

S&P 500

Europe

MSCI Europe

Europe Capital Appreciation

MSCI Europe

Fidelity Fifty

S&P 500

Focused Stock

S&P 500

Growth Company

Russell 3000 Growth

Growth Discovery Fund

Russell 3000 Growth (2/1/07)

Independence Fund

S&P 500

Japan

TOPIX

Large Cap Stock

S&P 500

Low-Priced Stock

Russell 2000

Magellan

S&P 500

Mid-Cap Stock

S&P Mid-Cap 400

New Millennium

S&P 500

OTC Portfolio

NASDAQ Composite

Overseas

MSCI EAFE

Pacific Basin

MSCI AC Pacific Free

Small Cap Independence

Russell 2000

Small Cap Retirement

Russell 2000

Small Cap Stock Fund

Russell 2000

Southeast Asia

MSCI AC Far East ex-Japan Free

Stock Selector

S&P 500

Trend

Russell 1000 Growth (2/1/07)

Utilities

Russell 3000 Utilities

Value

Russell Mid Cap Value

Value Discovery

Russell 3000 Value

Worldwide

MSCI World

Advisor classes pending

* Fund also has a retail class

Past performance is no guarantee of future results.

All indices are unmanaged and assume the reinvestment of all distributions. It is not possible to invest directly in an index

Stock values fluctuate in response to the activities of individual companies and general market and economic conditions.

Fidelity Investments Institutional Services Co., Inc.

82 Devonshire Street

Boston, Massachusetts 02109

456405.1.0

Please read the proxy statements when they become available because they contain important information. The preliminary and definitive proxy statements can be accessed free of charge on www.sec.gov.