FMR Corp. and Subsidiaries - Page 5

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          planned and executed by Fidelity Investments Retail Marketing Co.           
          (Retail Marketing).  The marketing efforts of the institutional             
          RIC's are planned and executed by FIIS.  In addition to marketing           
          and distribution efforts on behalf of existing RIC's, Retail                
          Marketing and FIIS are responsible for coordinating the                     
          establishment and introduction of new RIC's for retail and                  
          institutional distribution, respectively.                                   
               The majority of the funds managed by petitioner are retail             
          funds.  All except two of these retail funds are "open-end"                 
          funds, which means that shareholders in the RIC may redeem their            
          shares upon demand at a price based upon net asset value.  During           
          the years in issue, many of the equity retail RIC's were "load              
          funds", which means that the sale of shares in the RIC's was                
          subject to a sales charge.  Most of the institutional and all the           
          fixed income and money market RIC's were "no-load" funds, not               
          subject to a sales charge.  During the years in issue, petitioner           
          began to eliminate the load charge for most of the equity RIC's             
          it managed, either temporarily or permanently.3  Petitioner also            
          expanded its "exchange privilege" so that a shareholder could               
          redeem the shares in one RIC to purchase shares in another RIC in           
          the Fidelity family incurring little or no additional load                  
          charge, depending upon whether the load on the purchased shares             
          was greater or less than the load on the redeemed shares.                   

               3Currently, most of the retail funds managed and advised by            
          petitioner are "no-load" mutual funds.                                      




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